SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
---
Pre-Effective Amendment No. / /
Post-Effective Amendment No. / /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT / X /
OF 1940
Amendment No. / /
(Check appropriate box or boxes.)
ALPHA ANALYTICS INVESTMENT TRUST - FILE NOS. 333- AND 811-
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(Exact Name of Registrant as Specified in Charter)
1901 AVENUE OF THE STARS, SUITE 123, LOS ANGELES, CA 90067
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (310) 556-4660
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ROBERT E. GIPSON, ALPHA ANALYTICS INVESTMENT TRUST,
1901 AVENUE OF THE STARS, SUITE 123, LOS ANGELES, CA 90067
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(Name and Address of Agent for Service)
With copy to:
Donald S. Mendelsohn, Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, Cincinnati, Ohio 45202
Approximate Date of Proposed Public Offering: December 1, 1998.
It is proposed that this filing will become effective:
/ / immediately upon filing pursuant to paragraph (b)
/ / on pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) 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.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
<PAGE>
ALPHA ANALYTICS INVESTMENT TRUST
CROSS REFERENCE SHEET
FORM N-1A
ALPHA ANALYTICS VALUE FUND
ALPHA ANALYTICS SMALL CAP QUANT FUND
ITEM SECTION IN COMBINED PROSPECTUS
1........................Cover Page
2........................Summary of Fund Expenses
3........................Performance Information
4........................The Fund, Investment Objective and Strategies and
Risk Considerations, Operation of the Fund, General
Information
5........................Operation of the Fund
5A.......................None
6........................Cover Page, Dividends and Distributions, Taxes,
General Information, How to Redeem Shares
7........................Cover Page, How to Invest in the Fund, Share Price
Calculation, Operation of the Fund, How to Redeem
Shares
8........................How to Redeem Shares
9........................None..
13........................Investment Objective and Strategies and Risk
Considerations
15........................General Information
SECTION IN STATEMENT OF
ITEM ADDITIONAL INFORMATION
10........................Cover Page
11........................Table of Contents
12........................None..
13........................Additional Information About Fund Investments and
Risk Considerations, Investment Limitations
14........................Trustees and Officers
15........................Description of the Trust
16........................The Investment Adviser, Custodian, Transfer Agent,
Accountants, Trustees and Officers
17........................Portfolio Transactions and Brokerage
18........................Description of the Trust
19........................Determination of Share Price
20........................None..
21........................Distributor
22........................Investment Performance
23........................None..
<PAGE>
PROSPECTUS _______________, 1998
ALPHA ANALYTICS INVESTMENT TRUST
ALPHA ANALYTICS VALUE FUND
ALPHA ANALYTICS SMALL CAP QUANT FUND
1901 Avenue of the Stars, Suite 123
Los Angeles, CA 90067
For Information, Shareholder Services and Requests:
(888) ___-____
ALPHA ANALYTICS VALUE FUND: The investment objective of Alpha Analytics Value
Fund is to provide long term capital appreciation. The Fund seeks to achieve its
objective by pursuing a relative value philosophy, investing in stocks of
companies that possess above-average financial characteristics in terms of
balance sheet strength and profitability measures and that are attractively
priced relative to the market and to the prices at which such stocks have sold
on a historical basis. The Fund's sub-adviser uses fundamental analysis to
select quality companies that are selling at the low end of their historical
relative valuation levels based on price/earnings, price/book, price/sales, and
price/cash flow analysis.
ALPHA ANALYTICS SMALL CAP QUANT FUND: The investment objective of Alpha
Analytics Small Cap Quant Fund is to provide long term capital appreciation. The
Fund seeks to achieve its objective by investing in stocks which have
characteristics empirically associated with growth in share price. The Fund's
adviser uses a computer-driven quantitative investment model developed by the
Fund's portfolio manager to evaluate stocks based on value and momentum
indicators.
The Funds are "no-load," which means that investors incur no sales
charges, commissions or deferred sales charges on the purchase or redemption of
their shares. Shareholders are charged a redemption fee in some cases. Each Fund
is one of the mutual funds comprising Alpha Analytics Investment Trust, an
open-end management investment company.
This Prospectus provides the information a prospective investor ought
to know before investing and should be retained for future reference. A
Statement of Additional Information dated ___________________, 1998 has been
filed with the Securities and Exchange Commission (the "SEC"), is incorporated
herein by reference, and can be obtained without charge by calling the Fund at
the phone number listed above. The SEC maintains a Web Site (http://www.sec.gov)
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
SUMMARY OF FUND EXPENSES
The tables below are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
each Fund. The expense information is based on estimated amounts for the current
fiscal year. The expenses are expressed as a percentage of average net assets.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE FUND PERFORMANCE
OR EXPENSES, BOTH OF WHICH MAY VARY.
Shareholders should be aware that each Fund is a no-load fund and,
accordingly, a shareholder does not pay any sales charge or commission upon
purchase or redemption of shares of the Fund. The Funds do impose a redemption
fee on shares redeemed less than one year from the date of purchase. Unlike most
other mutual funds, the Funds do not pay directly for transfer agency, pricing,
custodial, auditing or legal services, nor do they pay directly any general
administrative or other significant operating expenses. The Adviser pays all of
the expenses of each Fund except brokerage, taxes, interest, fees and expenses
of non-interested person trustees and extraordinary expenses.
<TABLE>
<CAPTION>
ALPHA ALPHA
ANALYTICS ANALYTICS
SHAREHOLDER TRANSACTION EXPENSES VALUE FUND SMALL CAP
QUANT FUND
-------------------------
<S> <C> <C>
Sales Load Imposed on Purchases None None
Sales Load Imposed on Reinvested Dividends None None
Deferred Sales Load None None
Maximum Redemption Fees (as a % of redemption amount)(1) 2.00% 2.00%
Exchange Fees
None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 1.30% 1.30%
12b-1 Charges None None
Other Expenses2 0.00% 0.00%
Total Fund Operating Expenses3 1.30% 1.30%
<FN>
(1) EACH FUND CHARGES A REDEMPTION FEE OF 2% ON SHARES REDEEMED LESS THAN 90
DAYS, AND 1% ON SHARES REDEEMED BETWEEN 91 AND 364 DAYS, FROM THE DATE OF
PURCHASE. 2 [EACH FUND ESTIMATES THAT OTHER EXPENSES (FEES AND EXPENSES OF THE
TRUSTEES WHO ARE NOT "INTERESTED PERSONS" AS DEFINED IN THE INVESTMENT COMPANY
ACT) WILL BE LESS THAN OF .01% OF AVERAGE NET ASSETS FOR THE FIRST FISCAL YEAR.]
3 EACH FUND'S TOTAL OPERATING EXPENSES ARE EQUAL TO THE MANAGEMENT FEE PAID TO
THE ADVISER BECAUSE THE ADVISER PAYS ALL OF THE FUND'S OPERATING EXPENSES
(EXCEPT AS DESCRIBED IN FOOTNOTE 2). THROUGH _______, 1999, THE ADVISER HAS
AGREED TO WAIVE A PORTION OF ITS FEES SO THAT THE TOTAL EXPENSES OF EACH FUND
WILL BE 1.30% OF AVERAGE DAILY NET ASSETS.
</FN>
</TABLE>
EXAMPLE As a shareholder in a Fund, you would pay the following expenses on a
$1,000 investment, assuming (1) a 5% annual return and (2) redemption at the end
of each time period:
1 YEAR 3 YEARS
------ -------
Alpha Analytics Value Fund $13 $41
Alpha Analytics Small Cap Quant Fund $13 $41
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THE FUNDS
Alpha Analytics Value Fund and Alpha Analytics Small Cap Quant Fund
(each a "Fund" or collectively the "Funds") were organized as series of Alpha
Analytics Investment Trust, an Ohio business trust (the "Trust") on August 18,
1998. This prospectus offers shares of each Fund and each share represents an
undivided, proportionate interest in a Fund. The investment adviser to each Fund
is Alpha Analytics Investment Group, LLC (the "Adviser"). The Adviser has
retained Cambiar Investors, Inc. to serve as sub-adviser to the Alpha Analytics
Value Fund (the "Sub-Adviser").
INVESTMENT OBJECTIVE AND STRATEGIES
ALPHA ANALYTICS VALUE FUND: The investment objective of Alpha Analytics Value
Fund (the "Value Fund") is to provide long term capital appreciation. The Fund
seeks to achieve its objective by pursuing a relative value philosophy,
investing in stocks of companies that possess above-average financial
characteristics in terms of balance sheet strength and profitability measures
and that are attractively priced relative to the market and to the prices at
which such stocks have sold on a historical basis. The Sub-Adviser uses
fundamental analysis to select quality companies that are selling at the low end
of their historical relative valuation levels based on price/earnings,
price/book, price/sales, and price/cash flow analysis.
In addition to using these quantitative factors, the Sub-Adviser seeks
to identify companies experiencing positive developments not yet recognized by
the market and having the potential to increase 50% in market value within 12 to
18 months (although it is not always realized). It is anticipated that the Value
Fund will invest primarily in equity securities of well established U.S.
companies that are relatively large in terms of revenues, assets and market
capitalization. A security may be sold if positive developments are realized
(for example, a target price is achieved), if the price moves too far too fast,
if the security becomes overweighted or if positive developments fail to unfold.
Market timing is not a part of the Sub-Adviser's investment strategy.
ALPHA ANALYTICS SMALL CAP QUANT FUND: The investment objective of Alpha
Analytics Small Cap Quant Fund (the "Small Cap Quant Fund") is to provide long
term capital appreciation. The Fund seeks to achieve its objective by investing
in stocks which have characteristics empirically associated with growth in share
price. The Adviser uses a computer-driven quantitative investment model
developed by the Fund's portfolio manager to evaluate stocks based on value and
momentum indicators. The Adviser believes that it will be able to maximize
expected return while minimizing risks by purchasing stocks selected by the
model. A security may be sold when it achieves its targeted price, or when it
declines significantly in value from its peak or purchase price, with respect to
the market. The Adviser may deviate from the model for liquidity needs.
It is anticipated that the Fund will invest primarily in equity
securities of U.S. companies with smaller market capitalizations. Under normal
circumstances, at least 65% of the Small Cap Quant Fund's assets will be
invested in smaller capitalization stocks, defined by the Adviser as those
stocks with market capitalization of less than $1.5 billion. By investing in
smaller capitalization companies, the Fund will be subject to the risks
associated with such companies. Smaller capitalization companies may experience
higher growth rates and higher failure rates than do larger capitalization
companies. Companies in which the Fund is likely to invest may have limited
product lines, markets or financial resources and may lack management depth. The
trading volume of securities of smaller capitalization companies is normally
less than that of larger capitalization companies, and therefore may
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<PAGE>
disproportionately affect their market price, tending to make them rise more in
response to buying demand and fall more in response to selling pressure than is
the case with larger capitalization companies.
GENERAL: Although each Fund intends to invest primarily in common stocks, each
Fund may invest in other types of securities and utilize various investment
techniques. See "Investment Policies and Techniques and Risk Considerations" on
page __ for a more detailed discussion of each Fund's investment practices. For
temporary defensive purposes under abnormal market or economic conditions, each
Fund may hold all or a portion of its assets in money market instruments
(including money market funds) or U.S. government repurchase agreements. Each
Fund may also invest in such instruments at any time to maintain liquidity or
pending selection of investments in accordance with its policies. If a Fund
acquires securities of a money market fund, the shareholders of the Fund will be
subject to additional management fees.
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, no fund can give any assurance that its investment objective will
be achieved. Shareholders should be aware that the Adviser is a newly formed
company and has not previously managed assets organized as a mutual fund, and
that the Small Cap Quant Fund's portfolio manager has limited experience in the
investment management area. In addition, it should be noted that the Funds have
no operating history. Rates of total return quoted by a Fund may be higher or
lower than past quotations, and there can be no assurance that any rate of total
return will be maintained.
HOW TO INVEST IN THE FUNDS
Each Fund is "no-load" and shares of each Fund are sold directly to
investors on a continuous basis, subject to a minimum initial investment of
$5,000 ($2,000 for an IRA) and minimum subsequent investments of $250. These
minimums may be waived by the Adviser for accounts participating in an automatic
investment program. Investors choosing to purchase or redeem their shares
through a broker/dealer or other institution may be charged a fee by that
institution. Investors choosing to purchase or redeem shares directly from a
Fund will not incur charges on purchases or redemptions, except as described
below under "How To Redeem Shares - Redemption Fee".
INITIAL PURCHASE
BY MAIL - You may purchase shares of a Fund by completing and signing
the investment application form which accompanies this Prospectus and mailing
it, in proper form, together with a check (subject to the above minimum amounts)
made payable to the appropriate fund, and sent to American Data Services, Inc.,
the Funds' transfer agent (the "Transfer Agent") at the P.O. Box listed below.
If you prefer overnight delivery, use the overnight address listed below.
U.S. Mail: Overnight:
Alpha Analytics Funds Alpha Analytics Funds
c/o American Data Services, Inc. c/o American Data Services, Inc.
P.O. Box 5536 Hauppauge Corporate Center
Hauppauge, New York 11788-0132 150 Motor Parkway
Hauppauge, New York 11788-5108
Your purchase of shares of a Fund will be effected at the next share
price calculated after receipt of your investment.
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<PAGE>
BY WIRE - You may also purchase shares of a Fund by wiring federal
funds from your bank, which may charge you a fee for doing so. If money is to be
wired, you must call the Transfer Agent at 888-_______ to set up your account
and obtain an account number. You should be prepared at that time to provide the
information on the application. Then, you should provide your bank with the
following information for purposes of wiring your investment:
Star Bank, N.A. Cinti/Trust for: ALPHA ANALYTICS VALUE FUND
ABA #0420-0001-3 D.D.A.#
Attn: Mutual Fund ALPHA ANALYTICS SMALL CAP QUANT FUND
Account Name _________________ D.D.A.#
(write in shareholder name)
For the Account # ______________
(write in account number)
You are required to mail a signed application to the Custodian at the
above address in order to complete your initial wire purchase. Wire orders will
be accepted only on a day on which the Fund, Custodian and Transfer Agent are
open for business. A wire purchase will not be considered made until the wired
money is received and the purchase is accepted by the Fund. Any delays which may
occur in wiring money, including delays which may occur in processing by the
banks, are not the responsibility of the Fund or the Transfer Agent. There is
presently no fee for the receipt of wired funds, but the right to charge
shareholders for this service is reserved by the Fund.
ADDITIONAL INVESTMENTS
You may purchase additional shares of any Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail purchase request must contain your name, the name of your
account(s), your account number(s), and the name of the Fund. Checks should be
made payable to the appropriate fund and should be sent to the address listed
above. A bank wire should be sent as outlined above.
AUTOMATIC INVESTMENT PLAN
You may make regular investments in a Fund with an Automatic Investment
Plan by completing the appropriate section of the account application and
attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting [$150] or more from your bank
checking account. You may change the amount of your monthly purchase at any
time. Please contact the Transfer Agent to obtain withdrawal dates and the date
your request must be received to be included in the next withdrawal.
TAX SHELTERED RETIREMENT PLANS
Since the Funds are oriented to longer term investments, shares of the
Funds may be an appropriate investment medium for tax sheltered retirement
plans, including: individual retirement plans (IRAs); simplified employee
pensions (SEPs); SIMPLE plans; 401(k) plans; qualified corporate pension and
profit sharing plans (for employees); tax deferred investment plans (for
employees of public school systems and certain types of charitable
organizations); and other qualified retirement
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<PAGE>
plans. You should contact the Transfer Agent for the procedure to open an IRA or
SEP plan, as well as more specific information regarding these retirement plan
options. Consultation with an attorney or tax adviser regarding these plans is
advisable. Custodial fees for an IRA will be paid by the shareholder by
redemption of sufficient shares of the Fund from the IRA unless the fees are
paid directly to the IRA custodian. You can obtain information about the IRA
custodial fees from the Transfer Agent.
OTHER PURCHASE INFORMATION
Dividends begin to accrue after you become a shareholder. The Funds do
not issue share certificates. All shares are held in non-certificate form
registered on the books of each of the Funds and the Funds' Transfer Agent for
the account of the shareholder. The rights to limit the amount of purchases and
to refuse to sell to any person are reserved by the Funds. If your check or wire
does not clear, you will be responsible for any loss incurred by the Funds. If
you are already a shareholder, the Funds can redeem shares from any identically
registered account in the Funds as reimbursement for any loss incurred. You may
be prohibited or restricted from making future purchases in the Funds.
HOW TO REDEEM SHARES
All redemptions will be made at the net asset value determined after
the redemption request has been received by the Transfer Agent in proper order.
Shareholders may receive redemption payments in the form of a check or federal
wire transfer. The proceeds of the redemption may be more or less than the
purchase price of your shares, depending on the market value of the Fund's
securities at the time of your redemption. Presently there is no charge for wire
redemptions; however, the Funds reserve the right to charge for this service.
Any charges for wire redemptions will be deducted from the shareholder's Fund
account by redemption of shares. Investors choosing to purchase or redeem their
shares through a broker/dealer or other institution may be charged a fee by that
institution.
BY MAIL - You may redeem any part of your account in a Fund at no
charge by mail. Your request should be addressed to:
Alpha Analytics Funds
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, New York 11788-0132
"Proper order" means your request for a redemption must include your
letter of instruction, including the Fund name, account number, account name(s),
the address and the dollar amount or number of shares you wish to redeem. This
request must be signed by all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered. For all redemptions, the
Funds require that signatures be guaranteed by a bank or member firm of a
national securities exchange. Signature guarantees are for the protection of
shareholders. At the discretion of each of the Funds or American Data Services,
Inc., a shareholder, prior to redemption, may be required to furnish additional
legal documents to insure proper authorization.
BY TELEPHONE - You may redeem any part of your account in a Fund by
calling the Transfer Agent 888-_______. You must first complete the Optional
Telephone Redemption and Exchange
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<PAGE>
section of the investment application to institute this option. The Fund, the
Transfer Agent and the Custodian are not liable for following redemption or
exchange instructions communicated by telephone that they reasonably believe to
be genuine. However, if they do not employ reasonable procedures to confirm that
telephone instructions are genuine, they may be liable for any losses due to
unauthorized or fraudulent instructions. Procedures employed may include
recording telephone instructions and requiring a form of personal identification
from the caller.
The telephone redemption and exchange procedures may be terminated at
any time by the Funds or the Transfer Agent. During periods of extreme market
activity it is possible that shareholders may encounter some difficulty in
telephoning the Funds, although neither the Funds nor the Transfer Agent has
ever experienced difficulties in receiving and in a timely fashion responding to
telephone requests for redemptions or exchanges. If you are unable to reach the
Funds by telephone, you may request a redemption or exchange by mail.
REDEMPTION FEE - Shares held less than 90 days, and shares held between
91 and 364 days, and redeemed [(including exchanges]) from a Fund are subject to
a short term redemption fee equal to 1.0% and 3.0%, respectively, of the net
asset value of shares redeemed. Solely for purposes of calculating the one-year
holding period, each Fund uses the "first-in, first out" (FIFO) method. That is,
the date of any redemption or exchange will be compared to the earliest purchase
date. If this holding period is less than one year, the applicable fee will be
assessed. The fee will be prorated if a portion of the shares being redeemed or
exchanged has been held for more than one year, or the shares are subject to
more than one fee level. Shares acquired through reinvested dividend or capital
gain distributions are exempt from the fee.
ADDITIONAL INFORMATION - If you are not certain of the requirements for
a redemption please call the Transfer Agent at 888 ___-____. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has cleared, which normally
may take up to fifteen days. Also, when the New York Stock Exchange is closed
(or when trading is restricted) for any reason other than its customary weekend
or holiday closing or under any emergency circumstances, as determined by the
Securities and Exchange Commission, the Funds may suspend redemptions or
postpone payment dates.
Because the Funds incur certain fixed costs in maintaining shareholder
accounts, each Fund reserves the right to require any shareholder to redeem all
of his or her shares in the Fund on 30 days' written notice if the value of his
or her shares in the Fund is less than $5,000 due to redemption, or such other
minimum amount as the Fund may determine from time to time. An involuntary
redemption constitutes a sale. You should consult your tax adviser concerning
the tax consequences of involuntary redemptions. A shareholder may increase the
value of his or her shares in the Fund to the minimum amount within the 30 day
period. Each share of each Fund is subject to redemption at anytime if the Board
of Trustees determines in its sole discretion that failure to so redeem may have
materially adverse consequences to all or any of the shareholders of the Funds.
SHARE PRICE CALCULATION
The value of an individual share in each Fund (the net asset value) is
calculated by dividing the total value of the Fund's investments and other
assets (including accrued income), less any
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liabilities (including estimated accrued expenses), by the number of shares
outstanding, rounded to the nearest cent. Net asset value per share is
determined as of the close of the New York Stock Exchange (4:00 p.m., Eastern
time) on each day that the exchange is open for business, and on any other day
on which there is sufficient trading in the Fund's securities to materially
affect the net asset value.
The net asset value per share of the Fund will fluctuate.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Adviser's opinion, the last bid price does not accurately reflect the current
value of the security. All other securities for which over-the-counter market
quotations are readily available are valued at their last bid price. When market
quotations are not readily available, when the Adviser determines the last bid
price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Adviser, subject to review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Adviser believes such prices accurately reflect the fair market
value of such securities. A pricing service utilizes electronic data processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Adviser, subject to review of the Board of Trustees. Short
term investments in fixed income securities with maturities of less than 60 days
when acquired, or which subsequently are within 60 days of maturity, are valued
by using the amortized cost method of valuation, which the Board has determined
will represent fair value.
DIVIDENDS AND DISTRIBUTIONS
Each Fund intends to distribute substantially all of its net investment
income as dividends to its shareholders on an annual basis, and intends to
distribute its net long term capital gains and its net short term capital gains
at least once a year.
Income dividends and capital gain distributions are automatically
reinvested in additional shares at the net asset value per share on the
distribution date. An election to receive a cash payment of dividends and/or
capital gain distributions may be made in the application to purchase shares or
by separate written notice to the Transfer Agent. Shareholders will receive a
confirmation statement reflecting the payment and reinvestment of dividends and
summarizing all other transactions. If cash payment is requested, a check
normally will be mailed within five business days after the payable date. If you
withdraw your entire account, all dividends accrued to the time of withdrawal,
including the day of withdrawal, will be paid at that time. You may elect to
have distributions on shares held in IRAs and 403(b) plans paid in cash only if
you are 59 1/2 years old or permanently and totally disabled or if you otherwise
qualify under the applicable plan.
TAXES
Each Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended. By so qualifying,
a Fund will not be subject to federal income
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<PAGE>
taxes to the extent that it distributes substantially all of its net investment
income and any realized capital gains.
For federal income tax purposes, dividends paid by each Fund from
ordinary income are taxable to shareholders as ordinary income, but may be
eligible in part for the dividends received deduction for corporations. Pursuant
to the Tax Reform Act of 1986 (the "Tax Reform Act"), all distributions of net
short term capital gains to individuals are taxed at the same rate as ordinary
income. All distributions of net capital gains to corporations are taxed at
regular corporate rates. Any distributions designated as being made from net
realized long term capital gains are taxable to shareholders as long term
capital gains regardless of the holding period of the shareholder.
Each Fund will mail to each shareholder after the close of the calendar
year a statement setting forth the federal income tax status of distributions
made during the year. Dividends and capital gains distributions may also be
subject to state and local taxes. Shareholders are urged to consult their own
tax advisers regarding specific questions as to federal, state or local taxes
and the tax effect of distributions and withdrawals from the Fund.
On the application or other appropriate form, each of the Funds will
request the shareholder's certified taxpayer identification number (social
security number for individuals) and a certification that the shareholder is not
subject to backup withholding. Unless the shareholder provides this information,
each Fund will be required to withhold and remit to the U.S. Treasury 31% of the
dividends, distributions and redemption proceeds payable to the shareholder.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, a Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed with respect to a specific account in any year, the applicable
Fund may make a corresponding charge against the account.
OPERATION OF THE FUNDS
Each Fund is a diversified series of Alpha Analytics Investment Trust,
an open-end management investment company organized as an Ohio business trust on
August 18, 1998. The Board of Trustees supervises the business activities of the
Funds. Like other mutual funds, the Funds retain various organizations to
perform specialized services. The Trust retains Alpha Analytics Investment
Group, LLC, 1901 Avenue of the Stars, Suite 123, Los Angeles, CA 90067 (the
"Adviser") to manage the assets of each Fund. The Adviser was established in
______ 1998 and is controlled by _________. Each Fund is authorized to pay the
Adviser a fee equal to an annual average rate of 1.50% of the Fund's average
daily net assets. Through ______, 1999, the Adviser has agreed to waive a
portion of its fees so that the total expenses of each Fund will be 1.30% of
average daily net assets. The Adviser pays all of the operating expenses of each
Fund except brokerage, taxes, interest, fees and expenses of non-interested
person trustees and extraordinary expenses. In this regard, it should be noted
that most investment companies pay their own operating expenses directly, while
the Funds' expenses, except those specified above, are paid by the Adviser.
John M. Gipson, _________ of the Adviser, is primarily responsible for
the day-to-day management of the Small Cap Quant Fund's portfolio. Mr. Gipson
received his Ph.D. in theoretical physics from Yale University in 1982. He
subsequently persued a career in science. Since January 1992, he was worked as
the senior scientist for NVI, Inc. at NASA's Goddard Spaceflight Center. He has
been an active and successful individual investor. In addition to managing his
own portfolio
- 9 -
<PAGE>
he has worked as a financial consultant. Mr. Gipson joined the Adviser in
_______, 1998.
The Adviser has entered into a Sub-Advisory Agreement with Cambiar
Investors, Inc., 8400 East Prentice Avenue, Suite 460, Englewood, CA 80111
("Cambiar") to serve as the sub-adviser of the Value Fund. Cambiar, a Colorado
corporation, was formed in 1973. It is a wholly-owned subsidiary of United Asset
Management Corporation, a holding company established in 1980 for the purpose of
acquiring and owning firms engaged primarily in institutional investment
management. Cambiar provides investment management services to corporations,
foundations, endowments, pension and profit-sharing plans, trusts, estates and
other institutions and individuals. As of _______, 1998, Cambiar had over $____
billion in assets under management. The investment decisions of the Value Fund
are made by a committee of Cambiar, which is primarily responsible for the
day-to-day management of the Fund's portfolio.
Each Fund retains American Data Services, Inc., 150 Motor Parkway,
Hauppauge, New York 11788-5108 (the "Administrator") to manage the Funds'
business affairs and provide the Funds with administrative services, including
all regulatory reporting and necessary office equipment, personnel and
facilities. Each Fund also retains American Data Service, Inc. (the "Transfer
Agent") to serve as transfer agent, dividend paying agent and shareholder
service agent. For its services as Administrator and Transfer Agent, American
Data Services, Inc. receives a monthly fee from the Adviser based on assets and
the number of shareholder accounts serviced, subject to an annual minimum fee of
$42,000.
Each Fund retains ADS Distributors, Inc., P.O. Box 5536, Hauppauge, New
York 11788-0132 (the "Distributor") to act as the principal distributor of the
Funds' shares. The services of the Administrator, Transfer Agent and Distributor
are operating expenses paid by the Adviser.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its obligation of seeking best
qualitative execution, the Adviser may give consideration to sales of shares of
a Fund as a factor in the selection of brokers and dealers to execute portfolio
transactions. The Adviser (not the Funds) may pay certain financial institutions
(which may include banks, brokers, securities dealers and other industry
professionals) a "servicing fee" for performing certain administrative functions
for Fund shareholders to the extent these institutions are allowed to do so by
applicable statute, rule or regulation.
SUB-ADVISER'S HISTORICAL PERFORMANCE
Set forth below are certain performance data provided by the
Sub-Adviser relating to the composite of separately managed accounts of clients
of the Sub-Adviser. These accounts have the same investment objective as the
Value Fund, and were managed using substantially similar, though not in all
cases identical, investment strategies, techniques and policies as those
contemplated for use by the Sub-Adviser in managing the Value Fund. The
performance data for the managed accounts is net of all fees and expenses. The
investment returns of the Value Fund may differ from those of the separately
managed accounts because such separately managed accounts may have fees and
expenses that differ from those of the Value Fund. Further, the separately
managed accounts are not subject to investment limitations, diversification
requirements, and other restrictions imposed by the 1940 Act and Internal
Revenue Code; such conditions, if applicable, may have lowered the returns for
the separately managed accounts. The results presented are not intended to
predict or suggest the return to be experienced by the Value Fund or the return
an investor might achieve by investing in the Value Fund.
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<PAGE>
CAMBIAR INVESTORS, INC. -- COMPOSITE RETURNS
FOR INDIVIDUAL YEARS ENDED DECEMBER 31
(PERCENTAGE RETURNS NET OF MANAGEMENT FEES)
CALENDAR YEARS CAMBIAR S&P 500
INVESTORS, INC. INDEX
- -------------- -------------------------
1975......................................................... 34.80% 37.20 %
1976......................................................... 32.40% 23.80 %
1977......................................................... 14.40% (7.20)%
1978......................................................... 22.50% 6.60 %
1979......................................................... 24.00% 18.40 %
1980......................................................... 25.50% 32.40 %
1981......................................................... 9.80% (4.90)%
1982......................................................... 33.30% 21.60 %
1983......................................................... 22.60% 22.40 %
1984......................................................... 2.90% 6.10 %
1985......................................................... 29.30% 31.57 %
1986......................................................... 23.67% 18.21 %
1987......................................................... 6.10% 5.17 %
1988......................................................... 17.11% 16.50 %
1989......................................................... 23.23% 31.43 %
1990......................................................... 2.83% (3.19)%
1991......................................................... 31.51% 30.55 %
1992......................................................... 9.56% 7.68 %
1993......................................................... 13.66% 10.00 %
1994......................................................... 1.00% 1.33 %
1995......................................................... 33.54% 37.50 %
1996......................................................... 23.92% 23.25 %
1997......................................................... 33.69% 33.36 %
Cumulative (1/1/75-12/31/97).............................. 6,517.30% 3,299.40 %
1-year period ended 12/31/97 (average annual)............... 33.69% 33.36 %
5-year period ended 12/31/97 (average annual)............... 20.49% 20.30 %
10-year period ended 12/31/98 (average annual).............. 18.44% 18.04 %
23-Year Mean (1/1/75-12/31/97)............................... 20.50% 17.40 %
Value of $1 invested during (1/1/75-12/31/97)............... $65.17 $32.99
- ---------
Notes:
1. The annualized return is calculated from monthly data, allowing for
compounding. This methodology of calculating returns is different than the
SEC Standard, which may produce different results.
2. The cumulative return means that $1 invested in the account on January 1,
1975 had grown to $65.19 by December 31, 1997.
3. The 23-year mean is the arithmetic average of the annual returns for the
calendar years listed. 4. The S&P 500 Index is an unmanaged index which
assumes reinvestment of dividends and is generally considered representative
of securities similar to those invested in by the Adviser for the purpose of
the composite performance numbers set forth above.
5. During the period shown (1/1/75-12/31/97), fees on the Adviser's individual
accounts ranged from 0.25% to 2.0% (25 basis points to 200 basis points).
The Adviser's returns presented above are
- 11 -
<PAGE>
net of the maximum fee of 2.0%. Net returns to investors vary depending on
the management fee.
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
This section contains general information about various types of
securities and investment techniques that the Funds may purchase or employ. The
Statement of Additional Information provides more information.
EQUITY SECURITIES. Equity securities include common stock, rights and warrants.
Common stocks, the most familiar type, represent an equity (ownership) interest
in a corporation. Warrants are options to purchase equity securities at a
specified price for a specific time period. Rights are similar to warrants, but
normally have a short duration and are distributed by the issuer to its
shareholders. Although equity securities have a history of long-term growth in
value, their prices fluctuate based on changes in a company's financial
condition and on overall market and economic conditions.
Each Fund may invest up to [25%] of its assets in foreign equity
securities by purchasing American Depository Receipts ("ADRs"). ADRs are
certificates evidencing ownership of shares of a foreign-based issuer held in
trust by a bank or similar financial institution. They are alternatives to the
direct purchase of the underlying securities in their national markets and
currencies. The Small Cap Quant Fund may also purchase the equity securities of
Canadian companies. To the extent that a Fund does invest in foreign securities,
such investments may be subject to special risks. Purchases of foreign
securities are usually made in foreign currencies and, as a result, the Fund may
incur currency conversion costs and may be affected favorably or unfavorably by
changes in the value of foreign currencies against the U.S. dollar. In addition,
there may be less information publicly available about a foreign company than
about a U.S. company, and foreign companies are not generally subject to
accounting, auditing and financial reporting standards and practices comparable
to those in the U.S. Other risks associated with investments in foreign
securities include changes in restrictions on foreign currency transactions and
rates of exchanges, changes in the administrations or economic and monetary
policies of foreign governments, the imposition of exchange control regulations,
the possibility of expropriation decrees and other adverse foreign governmental
action, the imposition of foreign taxes, less liquid markets, less government
supervision of exchanges, brokers and issuers, difficulty in enforcing
contractual obligations, delays in settlement of securities transactions and
greater price volatility. In addition, investing in foreign securities will
generally result in higher commissions than investing in similar domestic
securities.
Investments in equity securities are subject to inherent market risks
and fluctuations in value due to earnings, economic conditions and other factors
beyond the control of the Adviser. As a result, the return and net asset value
of a Fund will fluctuate. Securities in a Fund's portfolio may not increase as
much as the market as a whole and some undervalued securities may continue to be
undervalued for long periods of time. Although profits in some Fund holdings may
be realized quickly, it is not expected that most investments will appreciate
rapidly.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. Each Fund may purchase securities
on a when- issued or delayed delivery basis. Delivery of and payment for these
securities may take place as long as a month or more after the date of the
purchase commitment. The value of these securities is subject to market
fluctuation during this period and no income accrues to the Fund until
settlement takes place. The Fund maintains with the Custodian a segregated
account containing high grade liquid securities in an amount at least equal to
these commitments. In when-issued and delayed delivery
- 12 -
<PAGE>
transactions, the Fund relies on the seller to complete the transaction. The
seller's failure to complete the transaction may cause the Fund to miss a price
or yield considered to be advantageous. [A Fund may engage in these types of
purchases in order to buy securities that fit within its investment objective at
attractive prices, not to increase its investment leverage.]
REPURCHASE AGREEMENTS. Each Fund may invest in repurchase agreements fully
collateralized by U.S. Government obligations. A repurchase agreement is a
short-term investment in which the purchaser (i.e., the Fund) acquires ownership
of a U.S. Government obligation (which may be of any maturity) and the seller
agrees to repurchase the obligation at a future time at a set price, thereby
determining the yield during the purchaser's holding period (usually not more
than seven days from the date of purchase). Any repurchase transaction in which
the Fund engages will require full collateralization of the seller's obligation
during the entire term of the repurchase agreement. In the event of a bankruptcy
or other default of the seller, the Fund could experience both delays in
liquidating the underlying security and losses in value. However, each Fund
intends to enter into repurchase agreements only with Star Bank, N.A. (the
Fund's Custodian), other banks with assets of $1 billion or more and registered
securities dealers determined by the Adviser (subject to review by the Board of
Trustees) to be creditworthy. The Adviser monitors the creditworthiness of the
banks and securities dealers with which the Fund engages in repurchase
transactions.
SHORT SALES. The Small Cap Quant Fund may sell a security short in anticipation
of a decline in the market value of the security. When the Fund engages in a
short sale, it sells a security which it does not own. To complete the
transaction, the Fund must borrow the security in order to deliver it to the
buyer. The Fund must replace the borrowed security by purchasing it at the
market price at the time of replacement, which may be more or less than the
price at which the Fund sold the security. The Fund 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 Fund replaces the borrowed security.
The Fund will realize a profit if the security declines in price between those
dates.
In connection with its short sales, the Small Cap Quant Fund will be
required to maintain a segregated account with the Custodian of cash or high
grade liquid assets equal to the market value of the securities sold less any
collateral deposited with its broker. The Fund will limit its short sales so
that no more than 10% of its net assets (less all its liabilities other than
obligations under the short sales) will be deposited as collateral and allocated
to the segregated account. However, the segregated account and deposits will not
necessarily limit the Fund's potential loss on a short sale, which is unlimited.
FUTURES AND OPTIONS. The Small Cap Quant Fund may buy and write put and call
options, and may invest in futures contracts, provided the Fund's investment in
each does not exceed 5% of its assets. The Statement of Additional Information
provides information about these securities and the risks involved. BORROWING.
Each Fund may borrow up to one third of the value of its total assets as a
temporary measure for extraordinary or emergency purposes (including to meet
redemption requests). Neither Fund will purchase any securities while borrowings
representing more than 5% of its assets are outstanding.
GENERAL INFORMATION
FUNDAMENTAL POLICIES. The investment limitations set forth in the
Statement of Additional
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<PAGE>
Information as fundamental policies may not be changed without the affirmative
vote of the majority of the outstanding shares of the applicable Fund. The
investment objective of each Fund may be changed without the affirmative vote of
a majority of the outstanding shares of the Fund. Any such change may result in
the Fund having an investment objective different from the objective which the
shareholders considered appropriate at the time of investment in the Fund.
PORTFOLIO TURNOVER. Neither of the Funds intends to purchase or sell
securities for short term trading purposes. However, if the objective of a Fund
would be better served, short-term profits or losses may be realized from time
to time. It is anticipated that the portfolio turnover will not exceed 50%
annually for the Value Fund and 200% annually for the Small Cap Quant Fund. The
brokerage commissions incurred by the Small Cap Quant Fund will generally be
higher than those incurred by a fund with a lower portfolio turnover rate. The
Small Cap Quant Fund's higher turnover rate may result in the realization, for
federal tax purposes, of more net capital gains, and any distributions derived
from such gains may be ordinary income.
SHAREHOLDER RIGHTS. Any Trustee of the Trust may be removed by vote of
the shareholders holding not less than two-thirds of the outstanding shares of
the Trust. The Trust does not hold an annual meeting of shareholders. When
matters are submitted to shareholders for a vote, each shareholder is entitled
to one vote for each whole share he owns and fractional votes for fractional
shares he owns. All shares of a Fund have equal voting rights and liquidation
rights. Prior to the offering made by this Prospectus, ___________ purchased for
investment all of the outstanding shares of each Fund and may be deemed to
control the Funds.
Each Fund acknowledges that it is solely responsible for the
information or any lack of information about it in this joint Prospectus and in
the joint Statement of Additional Information, and no other Fund is responsible
therefor. There is a possibility that one Fund might be deemed liable for
misstatements or omissions regarding another Fund in this Prospectus or in the
joint Statement of Additional Information; however, the Funds deem this
possibility slight.
PERFORMANCE INFORMATION
Each Fund may periodically advertise "average annual total return." The
"average annual total return" of a Fund refers to the average annual compounded
rate of return over the stated period that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment. The calculation of "average annual total return" assumes the
reinvestment of all dividends and distributions.
Each Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of the value of a $10,000 investment (made on the
date of the initial public offering of the Fund's shares) as of the end of a
specified period. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
- 14 -
<PAGE>
Each Fund may also include in advertisements data comparing performance
with other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. In addition, Fund performance may be
compared to well-known indices of market performance including the Standard &
Poor's (S&P) 500 Index and the Dow Jones Industrial Average.
THE ADVERTISED PERFORMANCE DATA OF EACH FUND IS BASED ON HISTORICAL
PERFORMANCE AND IS NOT INTENDED TO INDICATE FUTURE PERFORMANCE. RATES OF TOTAL
RETURN QUOTED BY A FUND MAY BE HIGHER OR LOWER THAN PAST QUOTATIONS, AND THERE
CAN BE NO ASSURANCE THAT ANY RATE OF TOTAL RETURN WILL BE MAINTAINED. THE
PRINCIPAL VALUE OF AN INVESTMENT IN EACH FUND WILL FLUCTUATE SO THAT A
SHAREHOLDER'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THE
SHAREHOLDER'S ORIGINAL INVESTMENT.
INVESTMENT ADVISER INVESTMENT SUB-ADVISER
(TO THE VALUE FUND)
Alpha Analytics Investment Group, LLC Cambiar Investors, Inc.
c/o Corporate Management Group, Inc. 8400 East Prentice Avenue, Suite 460
1901 Avenue of the Stars, Suite 123 Englewood, CO 80111
Los Angeles, CA 90067
LEGAL COUNSEL ADMINISTRATOR
Brown, Cummins & Brown Co., L.P.A. American Data Services, Inc.
3500 Carew Tower, 441 Vine Street 150 Motor Parkway
Cincinnati, OH 45202 Hauppauge, New York 11788-5108
CUSTODIAN DISTRIBUTOR
Star Bank, N.A. ADS Distributors, Inc.
425 Walnut Street, M.L. 6118 150 Motor Parkway
Cincinnati, Ohio 45202 Hauppauge, New York 11788-5108
TRANSFER AGENT (ALL PURCHASES AND INDEPENDENT AUDITORS
ALL REDEMPTION REQUESTS) __________________________
American Data Services, Inc. __________________________
P.O. Box 5536 __________________________
Hauppauge, New York 11788-0132
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by a
Fund. This Prospectus does not constitute an offer by any of the Funds to sell
its shares in any state to any person to whom it is unlawful to make such offer
in such state.
- 15 -
<PAGE>
TABLE OF CONTENTS
PAGE
SUMMARY OF FUND EXPENSES ................................................... 2
Shareholder Transaction Expenses ....................................... 2
THE FUNDS .................................................................. 3
INVESTMENT OBJECTIVE AND STRATEGIES ........................................ 3
HOW TO INVEST IN THE FUNDS ................................................. 4
Initial Purchase ....................................................... 4
Additional Investments ................................................. 5
Tax Sheltered Retirement Plans ......................................... 5
Other Purchase Information ............................................. 6
HOW TO REDEEM SHARES ....................................................... 6
By Mail ................................................................ 6
By Telephone ........................................................... 6
Redemption Fee ......................................................... 7
Additional Information ................................................. 7
SHARE PRICE CALCULATION .................................................... 7
DIVIDENDS AND DISTRIBUTIONS ................................................ 8
TAXES ...................................................................... 8
OPERATION OF THE FUNDS ..................................................... 9
SUB-ADVISER'S HISTORICAL PERFORMANCE ....................................... 10
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS ................. 12
Equity Securities ...................................................... 12
When-Issued and Delayed Delivery Securities ............................ 12
Repurchase Agreements .................................................. 13
Short Sales ............................................................ 13
Futures and Options .................................................... 13
Borrowing .............................................................. 13
GENERAL INFORMATION ........................................................ 13
Fundamental Policies ................................................... 13
Portfolio Turnover ..................................................... 14
Shareholder Rights ................................................ 14
PERFORMANCE INFORMATION .................................................... 14
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<PAGE>
ALPHA ANALYTICS INVESTMENT TRUST
ALPHA ANALYTICS VALUE FUND
ALPHA ANALYTICS SMALL CAP QUANT FUND
STATEMENT OF ADDITIONAL INFORMATION
____________________, 1998
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of Alpha Analytics Value Fund and
Alpha Analytics Small Cap Quant Fund dated ________________, 1998. A copy of the
Prospectus can be obtained by writing the Transfer Agent at P.O. Box ______,
Hauppauge, New York 11788-______, or by calling 1-888-_______.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUST.......................................................1
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS................................................................1
INVESTMENT LIMITATIONS.........................................................5
INVESTMENT ADVISORY ARRANGEMENTS...............................................8
TRUSTEES AND OFFICERS..........................................................8
PORTFOLIO TRANSACTIONS AND BROKERAGE...........................................9
DETERMINATION OF SHARE PRICE..................................................10
INVESTMENT PERFORMANCE........................................................11
CUSTODIAN.....................................................................12
TRANSFER AGENT................................................................12
ACCOUNTANTS...................................................................12
DISTRIBUTOR...................................................................12
<PAGE>
DESCRIPTION OF THE TRUST
Alpha Analytics Value Fund (the "Value Fund") and Alpha Analytics Small
Cap Quant Fund (the "Small Cap Quant Fund") (each a "Fund" or collectively, the
"Funds") were organized as series of Alpha Analytics Investment Trust (the
"Trust"). The Trust is an open-end investment company established under the laws
of Ohio by an Agreement and Declaration of Trust dated August 18, 1998 (the
"Trust Agreement"). The Trust Agreement permits the Trustees to issue an
unlimited number of shares of beneficial interest of separate series without par
value.
Each share of a series represents an equal proportionate interest in
the assets and liabilities belonging to that series with each other share of
that series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
the rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will been titled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by or under the
direction of the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.
For information concerning the purchase and redemption of shares of the
Fund, see "How to Invest in the Fund" and "How to Redeem Shares" in the Funds'
Prospectus. For a description of the methods used to determine the share price
and value of a Fund's assets, see "Share Price Calculation" in the Funds'
Prospectus.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS
This section contains a more detailed discussion of some of the
investments the Funds may make and some of the techniques they may use, as
described in the Prospectus (see "Investment Objectives and Strategies" and
"Investment Policies and Techniques and Risk Considerations").
A. AMERICAN DEPOSITORY RECEIPTS (ADRS). ADRs are subject to risks
similar to those associated with direct investment in foreign securities. For
example, there may be less information publicly available about a foreign
company then about a U.S. company, and foreign companies are not generally
subject to accounting, auditing and financial reporting standards and practices
comparable to those in the U.S. Other risks associated with investments in
foreign securities include changes in restrictions on foreign currency
transactions
-1-
<PAGE>
and rates of exchanges, changes in the administrations or economic and monetary
policies of foreign governments, the imposition of exchange control regulations,
the possibility of expropriation decrees and other adverse foreign governmental
action, the imposition of foreign taxes, less liquid markets, less government
supervision of exchanges, brokers and issuers, difficulty in enforcing
contractual obligations, delays in settlement of securities transactions and
greater price volatility. In addition, investing in foreign securities will
generally result in higher commissions than investing in similar domestic
securities.
B. OPTION TRANSACTIONS. Up to 5% of the Small Cap Quant Fund's net
assets may be invested in option transactions involving individual securities
and market indices. An option involves either (a) the right or the obligation to
buy or sell a specific instrument at a specific price until the expiration date
of the option, or (b) the right to receive payments or the obligation to make
payments representing the difference between the closing price of a market index
and the exercise price of the option expressed in dollars times a specified
multiple until the expiration date of the option. Options are sold (written) on
securities and market indices. The purchaser of an option on a security pays the
seller (the writer) a premium for the right granted but is not obligated to buy
or sell the underlying security. The purchaser of an option on a market index
pays the seller a premium for the right granted, and in return the seller of
such an option is obligated to make the payment. A writer of an option may
terminate the obligation prior to expiration of the option by making an
offsetting purchase of an identical option. Options are traded on organized
exchanges and in the over-the-counter market. Options on securities which the
Fund sells (writes) will be covered or secured, which means that it will own the
underlying security (for a call option); will segregate with the Custodian high
quality liquid debt obligations equal to the option exercise price (for a put
option); or (for an option on a stock index) will hold a portfolio of securities
substantially replicating the movement of the index (or, to the extent it does
not hold such a portfolio, will maintain a segregated account with the Custodian
of high quality liquid debt obligations equal to the market value of the option,
marked to market daily). When the Fund writes options, it may be required to
maintain a margin account, to pledge the underlying securities or U.S.
government obligations or to deposit liquid high quality debt obligations in a
separate account with the Custodian.
The purchase and writing of options involves certain risks; for
example, the possible inability to effect closing transactions at favorable
prices and an appreciation limit on the securities set aside for settlement, as
well as (in the case of options on a stock index) exposure to indeterminate
liability. The purchase of options limits the Fund's potential loss to the
amount of the premium paid and can afford the Fund the opportunity to profit
from favorable movements in the price of an underlying security to a greater
extent than if transactions were effected in the security directly. However, the
purchase of an option could result in the Fund losing a greater percentage of
its investment than if the transaction were effected directly. When the Fund
writes a covered call option, it will receive a premium, but it will give up the
opportunity to profit from a price increase in the underlying security above the
exercise price as long as its obligation as a writer continues, and it will
retain the risk of loss should the price of the security decline. When the Fund
writes a covered put option, it will receive a premium,
-2-
<PAGE>
but it will assume the risk of loss should the price of the underlying security
fall below the exercise price. When the Fund writes a covered put option on a
stock index, it will assume the risk that the price of the index will fall below
the exercise price, in which case the Fund may be required to enter into a
closing transaction at a loss. An analogous risk would apply if the Fund writes
a call option on a stock index and the price of the index rises above the
exercise price.
C. FUTURES CONTRACTS. When the Small Cap Quant Fund purchases a futures
contract, it agrees to purchase a specified underlying instrument at a specified
future date. When the Fund sells a futures contract, it agrees to sell the
underlying instrument at a specified future date. The price at which the
purchase and sale will take place is fixed when the Fund enters into the
contract. Some currently available futures contracts are based on specific
securities, such as U.S. Treasury bonds or notes, and some are based on indices
of securities, such as the Standard & Poor's 500 Composite Stock Price Index
("S&P 500"). Futures can be held until their delivery dates, or can be closed
out before then if a liquid secondary market is available.
The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument. Therefore, purchasing
futures contracts will tend to increase a Funds's exposure to positive and
negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When the Small Cap Quant Fund
sells a futures contract, by contrast, the value of its futures position will
tend to move in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price changes,
much as if the underlying instrument had been sold. Successful use of futures
contracts will depend on the Adviser's ability to predict the future direction
of stock prices or interest rates and incorrect predictions by the Adviser may
have an adverse effect on the Fund. In this regard, it should be noted that the
skills and techniques necessary to arrive at such predictions are different from
those needed to predict price changes in individual stocks.
D. BORROWING. Because the Funds' investments will fluctuate in value,
whereas the interest obligations on borrowed funds may be fixed, during times of
borrowing, the Funds' net asset value may tend to increase more when its
investments increase in value, and decrease more when its investments decrease
in value. In addition, interest costs on borrowings may fluctuate with changing
market interest rates and may partially offset or exceed the return earned on
the borrowed funds. Also, during times of borrowing under adverse market
conditions, the Funds might have to sell portfolio securities to meet interest
or principal payments at a time when fundamental investment considerations would
not favor such sales.
INVESTMENT LIMITATIONS
FUNDAMENTAL. The investment limitations described below have been
adopted by the Trust with respect to each Fund and are fundamental
("Fundamental"), I.E., they may not be changed without the affirmative vote of a
majority of the outstanding shares of each Fund. As
-3-
<PAGE>
used in the Prospectus and the Statement of Additional Information, the term
"majority" of the outstanding shares of the Fund means the lesser of (1) 67% or
more of the outstanding shares of the Fund present at a meeting, if the holders
of more than 50% of the outstanding shares of the Fund are present or
represented at such meeting; or (2) more than 50% of the outstanding shares of
the Fund. Other investment practices which may be changed by the Board of
Trustees without the approval of shareholders to the extent permitted by
applicable law, regulation or regulatory policy are considered non-fundamental
("Non-Fundamental").
1. BORROWING MONEY. The Funds will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. SENIOR SECURITIES. The Funds will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations promulgated
thereunder or interpretations of the Securities and Exchange Commission or its
staff.
3. UNDERWRITING. The Funds will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent that,
in connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. REAL ESTATE. The Funds will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
5. COMMODITIES. The Funds will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. LOANS. The Funds will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the
-4-
<PAGE>
purchase of a portion of an issue of publicly distributed bonds, debentures or
other securities.
7. CONCENTRATION. Neither Fund will invest 25% or more of its total
assets in a particular industry. This limitation is not applicable to
investments in obligations issued or guaranteed by the U.S. government, its
agencies and instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
NON-FUNDAMENTAL. The following limitations have been adopted by the
Trust with respect to the Fund and are Non-Fundamental (see "Investment
Restrictions" above).
1. PLEDGING. The Funds will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
2. BORROWING. Neither Fund will purchase any security while borrowings
representing more than 5% of its total assets are outstanding.
3. MARGIN PURCHASES. Neither Fund will purchase securities or evidences
of interest thereon on "margin." This limitation is not applicable to short term
credit obtained by a Fund for the clearance of purchases and sales or redemption
of securities, or to arrangements with respect to transactions involving
options, futures contracts, short sales and other permitted investments and
techniques.
4. SHORT SALES. The Alpha Analytics Value Fund will not effect short
sales of securities.
-5-
<PAGE>
5. OPTIONS. The Alpha Analytics Value Fund will not purchase or sell
puts, calls, options or straddles.
6. ILLIQUID INVESTMENTS. Neither Fund will invest in securities for
which there are legal or contractual restrictions on resale and other illiquid
securities.
7. LOANS OF PORTFOLIO SECURITIES. Neither Fund will make loans of
portfolio securities.
INVESTMENT ADVISORY ARRANGEMENTS
INVESTMENT ADVISER. The investment adviser to each Fund is Alpha
Analytics Investment Group LLC, 1901 Avenue of the Stars, Suite 123, Los
Angeles, CA 90067 (the "Adviser"). Robert G. Gipson, Trustee and President of
the Trust, is the President of the Adviser.
Under the terms of each Fund's management agreement (each an
"Agreement" or collectively the "Agreements"), the Adviser manages each Fund's
investments subject to approval of the Board of Trustees and pays all of the
expenses of each Fund except brokerage, taxes, interest, fees and expenses of
the non-interested person trustees and extraordinary expenses. As compensation
for its management services and agreement to pay the Fund's expenses, each Fund
is obligated to pay the Adviser a fee computed and accrued daily and paid
monthly at an annual rate of 1.50% of the average daily net assets of the Fund.
The Adviser may waive all or part of its fee, at any time, and at its sole
discretion, but such action shall not obligate the Adviser to waive any fees in
the future.
The Adviser retains the right to use the name "Alpha Analytics" or any
variation thereof in connection with another investment company or business
enterprise with which the Adviser is or may become associated. The Trust's right
to use the name "Alpha Analytics" in connection with each Fund automatically
ceases ninety days after termination of the respective Agreement and may be
withdrawn by the Adviser on ninety days written notice.
The Adviser may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Funds believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Funds believes that there would be no material impact on any Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders
-6-
<PAGE>
availing themselves of the bank services will be lower than to those
shareholders who do not. Each Fund may from time to time purchase securities
issued by banks which provide such services; however, in selecting investments
for the Funds, no preference will be shown for such securities.
SUB-ADVISER. Cambiar Investors, Inc., ("Cambiar") is the Sub-adviser to
the Value Fund. Cambiar is a wholly-owned subsidiary of United Asset Management
Corporation, a holding company. Under the terms of the Sub-Advisory Agreement,
the Sub-adviser receives a fee from the Adviser computed and accrued daily and
paid monthly at an annual rate of 0.50% of the average daily net assets of the
Fund.
[insert information re: Sub-Advisory Agreement]
TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of the Trust are shown
below. Each Trustee who is an "interested person" of the Trust, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
=================================================================================================
NAME, AGE AND ADDRESS POSITION PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- -------------------------------------------------------------------------------------------------
<S> <C>
Robert E. Gipson* President,
Age: __ Treasurer
1901 Avenue of the Stars and Trustee
Suite 123
Los Angeles, CA 90067
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
=================================================================================================
</TABLE>
Trustee fees are Trust expenses and each series of the Trust pays a
portion of the Trustee fees. The following table estimates the Trustees'
compensation for the first full year of the Trust ending ________________, 1999.
================================================================================
TOTAL COMPENSATION
FROM TRUST (THE TRUST
NAME IS
NOT IN A FUND
COMPLEX)
- --------------------------------------------------------------------------------
Robert E. Gipson $0
- --------------------------------------------------------------------------------
$------
- --------------------------------------------------------------------------------
$------
================================================================================
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Adviser is responsible for each Fund's portfolio decisions and the placing
of each Fund's portfolio transactions. In placing portfolio transactions, the
Adviser seeks the best qualitative execution for each Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Adviser generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.
The Adviser is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Funds and/or the other
accounts over which the Adviser exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Adviser determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Adviser's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Funds effect securities
transactions may also be used by the Adviser in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Adviser in connection with its services to the
Funds. Although research services and other information are useful to the Funds
and the Adviser, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Adviser that the review and study of the research and other information will not
reduce the overall cost to the Adviser of performing its duties to the Funds
under the Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is
-7-
<PAGE>
available. Fixed income securities are normally purchased directly from the
issuer, an underwriter or a market maker. Purchases include a concession paid by
the issuer to the underwriter and the purchase price paid to a market maker may
include the spread between the bid and asked prices.
To the extent that the Trust and another of the Adviser's clients seek
to acquire the same security at about the same time, the Trust may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Trust may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. On the other hand, if the same securities
are bought or sold at the same time by more than one client, the resulting
participation in volume transactions could produce better executions for the
Trust. In the event that more than one client wants to purchase or sell the same
security on a given date, the purchases and sales will normally be made by
random client selection.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of each Fund is determined as
of 4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods
used to determine the net asset value (share price), see "Share Price
Calculation" in the Prospectus.
INVESTMENT PERFORMANCE
"Average annual total return," as defined by the Securities and
Exchange Commission, is computed by finding the average annual compounded rates
of return for the period indicated that would equate the initial amount invested
to the ending redeemable value, according to the following formula:
P(1+T)n = ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.
-8-
<PAGE>
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
In addition to providing average annual total return, the Funds may
also provide nonstandardized quotations of total return for differing periods
and may provide the value of a $10,000 investment (made on the date of the
initial public offering of the Funds' shares) as of the end of a specified
period.
Each Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with each Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of any of the
Funds may be compared to indices of broad groups of unmanaged securities
considered to be representative of or similar to the portfolio holdings of the
Funds or considered to be representative of the stock market in general. The
Funds may use the Standard & Poor's 500 Stock Index or the Dow Jones Industrial
Average.
In addition, the performance of any of the Funds may be compared to
other groups of mutual funds tracked by any widely used independent research
firm which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of any of the Funds. Performance rankings and
ratings reported periodically in national financial publications such as
Barron's and Fortune also may be used.
CUSTODIAN
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is
Custodian of the Funds' investments. The Custodian acts as the Funds'
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Funds' request and
maintains records in connection with its duties.
TRANSFER AGENT
American Data Services, Inc. ("ADS"), P.O. Box 5536, Hauppauge, New
York 11788- 0132, acts as the Funds' transfer agent and, in such capacity,
maintains the records of each
-9-
<PAGE>
shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of the Funds' shares, acts as
dividend and distribution disbursing agent and performs other accounting and
shareholder service functions. In addition, ADS, in its capacity as Fund
Administrator, provides the Funds with certain monthly reports, record-keeping
and other management-related services. For a description of the fees paid by the
Adviser on behalf of the Funds for these administrative services, see "Operation
of the Funds" in the Funds' Prospectus.
ACCOUNTANTS
[TO BE SUPPLIED]
DISTRIBUTOR
ADS Distributors, Inc. (the "Distributor"), P.O. Box 5536, Hauppauge,
New York 11788-0132, is the exclusive agent for distribution of shares of the
Funds. The Distributor is obligated to sell the shares of the Funds on a best
efforts basis only against purchase orders for the shares. Shares of the Funds
are offered to the public on a continuous basis. The Distributor is an
affiliated company of ADS, the Funds' transfer agent.
FINANCIAL STATEMENTS
[TO BE SUPPLIED]
<PAGE>
ALPHA ANALYTICS INVESTMENT TRUST
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
- -------- ---------------------------------
(a) Financial Statements
Included in Part A: None
Included in Part B: None
(b) Exhibits
(1) Copy of Registrant's Agreement and Declaration of Trust
is filed herewith.
(2) Copy of Registrant's By-Laws is filed herewith.
(3) Voting Trust Agreements - None.
(4) Specimen of Share Certificates - None.
(5) (a) Copy of Registrant's Proposed Management Agreement
with its Adviser, Alpha Analytics Investment Group LLC,
for the Small Cap Quant Fund is filed herewith.
(b) Copy of Registrant's Proposed Management Agreement
with its Adviser, Alpha Analytics Investment Group LLC,
for the Value Fund is filed herewith.
(6) Copy of Registrant's Underwriting or Distribution
Contracts and Agreements with Principal Underwriters and
Distributors (to be supplied).
(7) Bonus, Profit Sharing, Pension or Similar
Contracts for the benefit of Directors or
Officers - None.
(8) Copy of Registrant's Agreement with the Custodian
(to be supplied).
(9) Other Material Contracts - None.
- 1 -
<PAGE>
(10) Opinion and Consent of Brown, Cummins & Brown Co.,
L.P.A. is filed herewith.
(11) Consent of independent public accountants - None.
(12) Financial Statements Omitted from Item 23 - None.
(13) Copy of Letter of Initial Stockholders (to be
supplied).
(14) Model Plan used in Establishment of any Retirement Plan
- None.
(15) Copy of 12b-1 Distribution Expense Plan - None.
(16) Schedule for Computation of Each Performance Quotation
- None.
(17) Financial Data Schedule - None.
(18) Rule 18f-3 Plan - None.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE REGISTRANT
- -------- -----------------------------------------------------------------
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES (AS OF AUGUST 31, 1998)
- -------- -------------------------------------------------------
TITLE OF CLASS NUMBER OF RECORD HOLDERS
-------------- ------------------------
Alpha Analytics Value Fund 0
Alpha Analytics Small Cap Quant Fund 0
ITEM 27. INDEMNIFICATION
- -------- ---------------
(a) Article VI of the Registrant's Declaration of Trust
provides for indemnification of officers and Trustees as
follows:
SECTION 6.4 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC.
Subject to and except as otherwise provided in the Securities
Act of 1933, as amended, and the 1940 Act, the Trust shall
indemnify each of its Trustees and officers (including
persons who serve at the Trust's request as directors,
officers or trustees of another organization in which the
Trust has any interest as a shareholder, creditor or
otherwise (hereinafter referred to as a "Covered Person")
against all liabilities, including but not limited to amounts
paid in satisfaction of judgments, in compromise or as fines
and penalties, and expenses, including reasonable
accountants' and counsel fees, incurred by any Covered Person
in connection with the
- 2 -
<PAGE>
defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered
Person may be or may have been involved as a party or
otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being
or having been such a Trustee or officer, director or
trustee, and except that no Covered Person shall be
indemnified against any liability to the Trust or its
Shareholders to which such Covered Person would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in
the conduct of such Covered Person's office.
SECTION 6.5 ADVANCES OF EXPENSES. The Trust shall advance
attorneys' fees or other expenses incurred by a Covered
Person in defending a proceeding to the full extent permitted
by the Securities Act of 1933, as amended, the 1940 Act, and
Ohio Revised Code Chapter 1707, as amended. In the event any
of these laws conflict with Ohio Revised Code Section
1701.13(E), as amended, these laws, and not Ohio Revised Code
Section 1701.13(E), shall govern.
SECTION 6.6 INDEMNIFICATION NOT EXCLUSIVE, ETC. The right of
indemnification provided by this Article VI shall not be
exclusive of or affect any other rights to which any such
Covered Person may be entitled. As used in this Article VI,
"Covered Person" shall include such person's heirs, executors
and administrators. Nothing contained in this article shall
affect any rights to indemnification to which personnel of
the Trust, other than Trustees and officers, and other
persons may be entitled by contract or otherwise under law,
nor the power of the Trust to purchase and maintain liability
insurance on behalf of any such person.
The Registrant may not pay for insurance which protects the
Trustees and officers against liabilities rising from action
involving willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of
their offices.
(b) The Registrant may maintain a standard mutual fund and
investment advisory professional and directors and officers
liability policy. The policy, if maintained, would provide
coverage to the Registrant, its Trustees and officers, and
could cover its Advisers, among others. Coverage under the
policy would include losses by reason of any act, error,
omission, misstatement, misleading statement, neglect or
breach of duty.
(c) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to trustees,
officers and controlling persons of the Registrant pursuant
to the provisions of Ohio law and the Agreement and
Declaration of
- 3 -
<PAGE>
the Registrant or the By-Laws of the Registrant, or
otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or
paid by a trustee, officer or controlling person of the Trust
in the successful defense of any action, suit or proceeding)
is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of
such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
- -------- ----------------------------------------------------
A. Alpha Analytics Investment Group LLC ("AAIG"), 1901 Avenue
of the Stars, Suite 123, Los Angeles, CA 90067 is a
registered investment adviser.
(1) AAIG has engaged in no other business during the past two
fiscal years.
(2) [The following list sets forth other substantial business
activities of the officers and directors of AAIG: to be
supplied].
ITEM 29. PRINCIPAL UNDERWRITERS
- -------- ----------------------
(a) ADS Distributors, Inc., the Registrant's distributor, acts as
distributor for Amerindo Technology Fund, The Canandagua
Funds, and America Asia Allocation Growth Fund.
(b) Information with respect to each director and officer
of ADS Distributors, Inc. is incorporated by
reference to Schedule A of Form BD filed by it under
the Securities Exchange Act of 1934 (File No.
8-49995).
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
- -------- --------------------------------
Accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and
the Rules promulgated thereunder will be maintained by the
Registrant at 1901 Avenue of the Stars, Suite 123, Los
Angeles, CA 90067 and/or by the Registrant's Custodian, Star
Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, and/or
by the Registrant's Transfer Agent, American Data Services,
Inc., Hauppauge Corporate Center, 150 Motor Parkway,
Hauppauge, New York 11760.
- 4 -
<PAGE>
ITEM 31. MANAGEMENT SERVICES NOT DISCUSSED IN PARTS A OR B
- -------- -------------------------------------------------
None.
ITEM 32. UNDERTAKINGS
- -------- ------------
(a) Not Applicable.
(b) The Registrant hereby undertakes to furnish each
person to whom a prospectus is delivered with a copy
of the Registrant's latest annual report to
shareholders, upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, State of California on the 24th day of
September, 1998.
Alpha Analytics Investment Trust
By:/s/ ROBERT E. GIPSON
________________________
Robert E. Gipson
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 dates indicated.
By:/s/ ROBERT E. GIPSON
_______________________________
Robert E. Gipson
President, Treasurer and Trustee
September 24, 1998
- 5 -
<PAGE>
EXHIBIT INDEX
PAGE
1. Agreement and Declaration of Trust..................................EX-99.B1
2. By-laws ............................................................EX-99.B2
3. Proposed Management Agreement for the Small Cap Quant Fund........EX-99.B5.1
4. Proposed Management Agreement for the Value Fund..................EX-99.B5.2
5. Opinion and Consent of Brown, Cummins & Brown Co., L.P.A...........EX-99.B10
- 6 -
--------------------------------------------
ALPHA ANALYTICS INVESTMENT TRUST
AGREEMENT AND DECLARATION OF TRUST
AUGUST 6, 1998
-------------------------
<PAGE>
ALPHA ANALYTICS INVESTMENT TRUST
AGREEMENT AND DECLARATION OF TRUST
TABLE OF CONTENTS
ARTICLE I - NAME AND DEFINITIONS ........................................... 1
Section 1.1 Name and Principal Office ................................. 1
Section 1.2 Definitions ............................................... 1
(a) The "Trust" ................................................... 1
(b) "Trustees" .................................................... 1
(c) "Shares" ...................................................... 1
(d) "Series" ...................................................... 1
(e) "Class" ....................................................... 2
(f) "Shareholder" ................................................. 2
(g) The "1940 Act" ................................................ 2
(h) "Commission" .................................................. 2
(i) "Declaration of Trust" ........................................ 2
(j) "By-Laws" ..................................................... 2
ARTICLE II - PURPOSE OF TRUST .............................................. 2
ARTICLE III - THE TRUSTEES ................................................. 2
Section 3.1 Number, Designation, Election, Term, etc .................. 2
(a) Initial Trustees .............................................. 2
(b) Number ........................................................ 2
(c) Term .......................................................... 2
(d) Resignation and Retirement .................................... 3
(e) Removal ....................................................... 3
(f) Vacancies ..................................................... 3
(g) Effect of Death, Resignation, etc ............................. 3
(h) No Accounting ................................................. 3
Section 3.2 Powers of Trustees ........................................ 4
(a) Investments ................................................... 4
(b) Disposition of Assets ......................................... 4
(c) Ownership Powers .............................................. 4
(d) Subscription .................................................. 5
(e) Form of Holding ............................................... 5
<PAGE>
(f) Reorganization, etc ........................................... 5
(g) Voting Trusts, etc ............................................ 5
(h) Compromise .................................................... 5
(i) Partnerships, etc ............................................. 5
(j) Borrowing and Security ........................................ 5
(k) Guarantees, etc ............................................... 5
(l) Insurance ..................................................... 5
(m) Pensions, etc ................................................. 6
Section 3.3 Certain Contracts ......................................... 6
(a) Advisory ...................................................... 6
(b) Administration ................................................ 7
(c) Distribution .................................................. 7
(d) Custodian and Depository ...................................... 7
(e) Transfer and Dividend Disbursing Agency ....................... 7
(f) Shareholder Servicing ......................................... 7
(g) Accounting .................................................... 7
Section 3.4 Payment of Trust Expenses and Compensation of Trustees .... 8
Section 3.5 Ownership of Assets of the Trust ......................... 8
ARTICLE IV - SHARES ........................................................ 8
Section 4.1 Description of Shares ..................................... 8
Section 4.2 Establishment and Designation of Series ................... 10
(a) Assets Belonging to Series .................................... 10
(b) Liabilities Belonging to Series ............................... 10
(c) Dividends ..................................................... 11
(d) Liquidation ................................................... 12
(e) Voting ........................................................ 12
(f) Redemption by Shareholder ..................................... 12
(g) Redemption by Trust ........................................... 12
(h) Net Asset Value ............................................... 13
(i) Transfer ...................................................... 13
(j) Equality ...................................................... 13
(k) Fractions ..................................................... 14
(l) Conversion Rights ............................................. 14
Section 4.3 Ownership of Shares ....................................... 14
Section 4.4 Investments in the Trust .................................. 14
Section 4.5 No Preemptive Rights ...................................... 14
Section 4.6 Status of Shares and Limitation of Personal Liability ..... 14
<PAGE>
ARTICLE V - SHAREHOLDERS' VOTING POWERS AND MEETINGS ....................... 15
Section 5.1 Voting Powers ............................................. 15
Section 5.2 Meetings .................................................. 15
Section 5.3 Record Dates .............................................. 15
Section 5.4 Quorum and Required Vote .................................. 16
Section 5.5 Action by Written Consent ................................. 16
Section 5.6 Inspection of Records ..................................... 16
Section 5.7 Additional Provisions ..................................... 16
ARTICLE VI - LIMITATION OF LIABILITY; INDEMNIFICATION ...................... 16
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable; Notice 16
Section 6.2 Trustee's Good Faith Action; Expert Advice; No Bond or
Surety .................................................... 17
Section 6.3 Indemnification of Shareholders ........................... 17
Section 6.4 Indemnification of Trustees, Officers, etc ................ 18
Section 6.5 Advances of Expenses ...................................... 18
Section 6.6 Indemnification Not Exclusive, etc ........................ 18
Section 6.7 Liability of Third Persons Dealing with Trustees .......... 18
ARTICLE VII - MISCELLANEOUS ................................................ 18
Section 7.1 Duration and Termination of Trust ........................ 18
Section 7.2 Reorganization ........................................... 19
Section 7.3 Amendments ............................................... 19
Section 7.4 Filing of Copies; References; Headings ................... 20
Section 7.5 Applicable Law ........................................... 20
<PAGE>
ALPHA ANALYTICS INVESTMENT TRUST
--------------------------------
AGREEMENT AND DECLARATION OF TRUST
----------------------------------
AGREEMENT AND DECLARATION OF TRUST made this 6th day of August, 1998,
by the Trustees hereunder, and by the holders of Shares of beneficial interest
to be issued hereunder as hereinafter provided.
WITNESSETH:
WHEREAS, this Trust is being formed to carry on the business of an
investment company; and
WHEREAS, the Trustees have agreed to manage all property coming into
their hands as trustees of an Ohio business trust in accordance with the
provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets which they may from time to time acquire in
any manner as Trustees hereunder IN TRUST to manage and dispose of the same upon
the following terms and conditions for the benefit of the holders from time to
time of shares of beneficial interest in this Trust as hereinafter set forth.
ARTICLE I
---------
NAME AND DEFINITIONS
--------------------
SECTION 1.1 NAME AND PRINCIPAL OFFICE. This Trust shall be known as
"Alpha Analytics Investment Trust" and the Trustees shall conduct the business
of the Trust under that name or any other name as they may from time to time
determine. The principal office of the Trust shall be located at Los Angeles,
California or any other place as determined from time to time by the Trustees
and reported to the Secretary of the State of Ohio.
SECTION 1.2 DEFINITIONS. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) The "Trust" refers to the Ohio business trust established by this
Agreement and Declaration of Trust, as amended from time to time;
(b) "Trustees" refers to the Trustees of the Trust named herein or
elected in accordance with Article III;
(c) "Shares" refers to the transferable units of interest into which
the beneficial interest in the Trust, shall be divided from time
to time, including the shares of any and all Series or Classes
which may be established by the Trustees, and includes fractions
of Shares as well as whole Shares;
(d) "Series" refers to Series of Shares established and designated
under or in accordance with the provisions of Article IV; (e)
"Class" refers to a class or sub-series of any Series of Shares
established and designated under and in accordance with the
provisions of Article IV;
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(f) "Shareholder" means a record owner of Shares;
(g) The "1940 Act" refers to the Investment Company Act of 1940 and
the Rules and Regulations thereunder, all as amended from time to
time;
(h) "Commission" shall have the meaning given it in the 1940 Act;
(i) "Declaration of Trust" shall mean this Agreement and Declaration
of Trust as amended or restated from time to time; and
(j) "By-Laws" shall mean the By-Laws of the Trust as amended from
time to time.
ARTICLE II
----------
PURPOSE OF TRUST
----------------
The purpose of the Trust is to operate as an investment company, to
offer Shareholders one or more investment programs primarily in securities and
debt instruments and to engage in any and all lawful acts or activities for
which business trusts may be formed under Chapter 1746 of the Ohio Revised Code.
ARTICLE III
-----------
THE TRUSTEES
------------
SECTION 3.1 NUMBER, DESIGNATION, ELECTION, TERM, ETC.
(a) INITIAL TRUSTEES. Upon his execution of this Declaration of Trust
----------------
or a counterpart hereof or some other writing in which he accepts
such Trusteeship and agrees to the provisions hereof, Robert E.
Gipson shall become Trustee hereof.
(b) NUMBER. The Trustees serving as such, whether named above or
------
hereafter becoming a Trustee, may increase or decrease the number
of Trustees to a number other than the number theretofore
determined. No decrease in the number of Trustees shall have the
effect of removing any Trustee from office prior to the
expiration of his term, but the number of Trustees may be
decreased in conjunction with the removal of a Trustee pursuant
to subsection (e) of this Section 3.1.
(c) TERM. Each Trustee shall serve as a Trustee during the lifetime
----
of the Trust and until its termination as hereinafter provided or
until such Trustee sooner dies, resigns, retires or is removed.
The Trustees may elect their own successors and may, pursuant to
Section 3.1(f) hereof, appoint Trustees to fill vacancies;
provided that, immediately after filling a vacancy, at least
two-thirds of the Trustees then holding office shall have been
elected to such office by the Shareholders at an annual or
special meeting. If at any time less than a majority of the
Trustees then holding office were so elected, the Trustees shall
forthwith cause to be held as promptly as possible, and in any
event within 60 days, a meeting of Shareholders for the purpose
of electing Trustees to fill any existing vacancies.
(d) RESIGNATION AND RETIREMENT. Any Trustee may resign his trust or
--------------------------
retire as a
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Trustee, by written instrument signed by him and delivered to the
other Trustees or to any officer of the Trust, and such
resignation or retirement shall take effect upon such delivery or
upon such later date as is specified in such instrument.
(e) REMOVAL. Any Trustee may be removed with or without cause at any
-------
time: (i) by written instrument, signed by at least two-thirds of
the number of Trustees prior to such removal, specifying the date
upon which such removal shall become effective, (ii) by vote of
the Shareholders holding not less than two-thirds of the Shares
then outstanding, cast in person or by proxy at any meeting
called for the purpose, or (iii) by a declaration in writing
signed by Shareholders holding not less than two-thirds of the
Shares then outstanding and filed with the Trust's Custodian.
(f) VACANCIES. Any vacancy or anticipated vacancy resulting from any
---------
reason, including without limitation the death, resignation,
retirement, removal or incapacity of any of the Trustees, or
resulting from an increase in the number of Trustees by the
Trustees may (but so long as there are at least three remaining
Trustees, need not unless required by the 1940 Act) be filled
either by a majority of the remaining Trustees through the
appointment in writing of such other person as such remaining
Trustees in their discretion shall determine (unless a
shareholder election is required by the 1940 Act) or by the
election by the Shareholders, at a meeting called for the
purpose, of a person to fill such vacancy, and such appointment
or election shall be effective upon the written acceptance of the
person named therein to serve as a Trustee and agreement by such
person to be bound by the provisions of this Declaration of
Trust, except that any such appointment or election in
anticipation of a vacancy to occur by reason of retirement,
resignation, or increase in number of Trustees to be effective at
a later date shall become effective only at or after the
effective date of said retirement, resignation, or increase in
number of Trustees. As soon as any Trustee so appointed or
elected shall have accepted such appointment or election and
shall have agreed in writing to be bound by this Declaration of
Trust and the appointment or election is effective, the Trust
estate shall vest in the new Trustee, together with the
continuing Trustees, without any further act or conveyance.
(g) EFFECT OF DEATH, RESIGNATION, ETC. The death, resignation,
---------------------------------
retirement, removal, or incapacity of the Trustees, or any one of
them, shall not operate to annul or terminate the Trust or to
revoke or terminate any existing agency or contract created or
entered into pursuant to the terms of this Declaration of Trust.
(h) NO ACCOUNTING. Except to the extent required by the 1940 Act or
-------------
under circumstances which would justify his removal for cause, no
person ceasing to be a Trustee as a result of his death,
resignation, retirement, removal or incapacity (nor the estate of
any such person) shall be required to make an accounting to the
Shareholders or remaining Trustees upon such cessation.
SECTION 3.2 POWERS OF TRUSTEES. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purpose of the Trust. Without limiting the
foregoing, the Trustees may adopt By-Laws not inconsistent with this Declaration
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of Trust providing for the conduct of the business and affairs of the Trust and
may amend and repeal them to the extent that such By-Laws do not reserve that
right to the Shareholders; they may as they consider appropriate elect and
remove officers and appoint and terminate agents and consultants and hire and
terminate employees, any one or more of the foregoing of whom may be a Trustee,
and may provide for the compensation of all of the foregoing; they may appoint
from their own number, and terminate, any one or more committees consisting of
two or more Trustees, including without implied limitation an executive
committee, which may, when the Trustees are not in session and subject to the
1940 Act, exercise some or all of the power and authority of the Trustees as the
Trustees may determine; in accordance with Section 3.3 they may employ one or
more Advisers, Administrators, Depositories and Custodians and may authorize any
Depository or Custodian to employ subcustodians or agents and to deposit all or
any part of such assets in a system or systems for the central handling of
securities and debt instruments, retain transfer, dividend, accounting or
Shareholder servicing agents or any of the foregoing, provide for the
distribution of Shares by the Trust through one or more distributors, principal
underwriters or otherwise, set record dates or times for the determination of
Shareholders or certain of them with respect to various matters; they may
compensate or provide for the compensation of the Trustees, officers, advisers,
administrators, custodians, other agents, consultants and employees of the Trust
or the Trustees on such terms as they deem appropriate; and in general they may
delegate to any officer of the Trust, to any committee of the Trustees and to
any employee, adviser, administrator, distributor, principal underwriter,
depository, custodian, transfer and dividend disbursing agent, or any other
agent or consultant of the Trust such authority, powers, functions and duties as
they consider desirable or appropriate for the conduct of the business and
affairs of the Trust, including without implied limitation the power and
authority to act in the name of the Trust and of the Trustees, to sign documents
and to act as attorney-in-fact for the Trustees.
Without limiting the foregoing and to the extent not inconsistent with
the 1940 Act or other applicable law, the Trustees shall have power and
authority:
(a) INVESTMENTS. To invest and reinvest cash and other property, and
-----------
to hold cash or other property uninvested without in any event
being bound or limited by any present or future law or custom in
regard to investments by trustees;
(b) DISPOSITION OF ASSETS. To sell, exchange, lend, pledge, mortgage,
---------------------
hypothecate, write options on and lease any or all of the assets
of the Trust;
(c) OWNERSHIP POWERS. To vote or give assent, or exercise any rights
----------------
of ownership, with respect to stock or other securities, debt
instruments or property; and to execute and deliver proxies or
powers of attorney to such person or persons as the Trustees
shall deem proper, granting to such person or persons such power
and discretion with relation to securities, debt instruments or
property as the Trustees shall deem proper;
(d) SUBSCRIPTION. To exercise powers and rights of subscription or
------------
otherwise which in any manner arise out of ownership of
securities or debt instruments;
(e) FORM OF HOLDING. To hold any security, debt instrument or
---------------
property in a form not indicating any trust, whether in bearer,
unregistered or other negotiable form, or in the name of the
Trustees or of the Trust or in the name of a custodian,
subcustodian or other depository or a nominee or nominees or
otherwise;
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<PAGE>
(f) REORGANIZATION, ETC. To consent to or participate in any plan for
--------------------
the reorganization, consolidation or merger of any corporation or
issuer, any security or debt instrument of which is or was held
in the Trust; to consent to any contract, lease, mortgage,
purchase or sale of property by such corporation or issuer, and
to pay calls or subscriptions with respect to any security or
debt instrument held in the Trust;
(g) VOTING TRUSTS, ETC. To join with other holders of any securities
-------------------
or debt instruments in acting through a committee, depository,
voting trustee or otherwise, and in that connection to deposit
any security or debt instrument with, or transfer any security or
debt instrument to, any such committee, depository or trustee,
and to delegate to them such power and authority with relation to
any security or debt instrument (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to
pay, and to pay, such portion of the expenses and compensation of
such committee, depository or trustee as the Trustees shall deem
proper;
(h) COMPROMISE. To compromise, arbitrate or otherwise adjust claims
----------
in favor of or against the Trust or any matter in controversy,
including but not limited to claims for taxes;
(i) PARTNERSHIPS, ETC. To enter into joint ventures, general or
------------------
limited partnerships and any other combinations or associations;
(j) BORROWING AND SECURITY. To borrow funds and to mortgage and
----------------------
pledge the assets of the Trust or any part thereof to secure
obligations arising in connection with such borrowing;
(k) GUARANTEES, ETC. To endorse or guarantee the payment of any notes
----------------
or other obligations of any person; to make contracts of guaranty
or suretyship, or otherwise assume liability for payment thereof;
and to mortgage and pledge the Trust property or any part thereof
to secure any of or all such obligations;
(l) INSURANCE. To purchase and pay for entirely out of Trust property
----------
such insurance as they may deem necessary or appropriate for the
conduct of the business, including, without limitation, insurance
policies insuring the assets of the Trust and payment of
distributions and principal on its portfolio investments, and
insurance policies insuring the Shareholders, Trustees, officers,
employees, agents, consultants, investment advisers, managers,
administrators, distributors, principal underwriters, or
independent contractors, or any thereof (or any person connected
therewith), of the Trust individually against all claims and
liabilities of every nature arising by reason of holding, being
or having held any such office or position, or by reason of any
action alleged to have been taken or omitted by any such person
in any such capacity, including any action taken or omitted that
may be determined to constitute negligence; provided, however,
that insurance which protects the Trustees and officers against
liabilities rising from action involving willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of their offices may not be purchased;
and
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<PAGE>
(m) PENSIONS, ETC. To pay pensions for faithful service, as deemed
--------------
appropriate by the Trustees, and to adopt, establish and carry
out pension, profit-sharing, share bonus, share purchase,
savings, thrift and other retirement, incentive and benefit
plans, trusts and provisions, including the purchasing of life
insurance and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the Trustees,
officers, employees and agents of the Trust.
Except as otherwise provided by the 1940 Act or other applicable law,
this Declaration of Trust or the By-Laws, any action to be taken by the Trustees
may be taken by a majority of the Trustees present at a meeting of Trustees (a
quorum, consisting of at least a majority of the Trustees then in office, being
present), within or without Ohio, including any meeting held by means of a
conference telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting, or
by written consents of a majority of the Trustees then in office (or such larger
or different number as may be required by the 1940 Act or other applicable law).
SECTION 3.3 CERTAIN CONTRACTS. Subject to compliance with the
provisions of the 1940 Act, but notwithstanding any limitations of present and
future law or custom in regard to delegation of powers by trustees generally,
the Trustees may, at any time and from time to time and without limiting the
generality of their powers and authority otherwise set forth herein, enter into
one or more contracts with any one or more corporations, trusts, associations,
partnerships, limited partnerships, other type of organizations, or individuals
("Contracting Party") to provide for the performance and assumption of some or
all of the following services, duties and responsibilities to, for or of the
Trust and/or the Trustees, and to provide for the performance and assumption of
such other services, duties and responsibilities in addition to those set forth
below as the Trustees may determine appropriate:
(a) ADVISORY. Subject to the general supervision of the Trustees and
--------
in conformity with the stated policy of the Trustees with respect
to the investments of the Trust or of the assets belonging to any
Series of Shares of the Trust (as that phrase is defined in
subsection (a) of Section 4.2), to manage such investments and
assets, make investment decisions with respect thereto, and to
place purchase and sale orders for portfolio transactions
relating to such investments and assets;
(b) ADMINISTRATION. Subject to the general supervision of the
--------------
Trustees and in conformity with any policies of the Trustees with
respect to the operations of the Trust, to supervise all or any
part of the operations of the Trust, and to provide all or any
part of the administrative and clerical personnel, office space
and office equipment and services appropriate for the efficient
administration and operations of the Trust;
(c) DISTRIBUTION. To distribute the Shares of the Trust, to be
------------
principal underwriter of such Shares, and/or to act as agent of
the Trust in the sale of Shares and the acceptance or rejection
of orders for the purchase of Shares;
(d) CUSTODIAN AND DEPOSITORY. To act as depository for and to
------------------------
maintain custody of the property of the Trust and accounting
records in connection therewith;
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(e) TRANSFER AND DIVIDEND DISBURSING AGENCY. To maintain records of
---------------------------------------
the ownership of outstanding Shares, the issuance and redemption
and the transfer thereof, and to disburse any dividends declared
by the Trustees and in accordance with the policies of the
Trustees and/or the instructions of any particular Shareholder to
reinvest any such dividends;
(f) SHAREHOLDER SERVICING. To provide service with respect to the
---------------------
relationship of the Trust and its Shareholders, records with
respect to Shareholders and their Shares, and similar matters;
and
(g) ACCOUNTING. To handle all or any part of the accounting
-----------
responsibilities, whether with respect to the Trust's properties,
Shareholders or otherwise.
The same person may be the Contracting Party for some or all of the
services, duties and responsibilities to, for and of the Trust and/or the
Trustees, and the contracts with respect thereto may contain such terms
interpretive of or in addition to the delineation of the services, duties and
responsibilities provided for, including provisions that are not inconsistent
with the 1940 Act relating to the standard of duty of and the rights to
indemnification of the Contracting Party and others, as the Trustees may
determine. Nothing herein shall preclude, prevent or limit the Trust or a
Contracting Party from entering into subcontractual arrangements relative to any
of the matters referred to in Sections 3.3(a) through (g) hereof.
Subject to the provisions of the 1940 Act, the fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
adviser, principal underwriter or distributor or agent of or for any
Contracting Party, or of or for any parent or affiliate of any
Contracting Party or that the Contracting Party or any parent or
affiliate thereof is a Shareholder or has an interest in the Trust, or
that
(ii) any Contracting Party may have a contract providing for the
rendering of any similar services to one or more other corporations,
trusts, associations, partnerships, limited partnerships or other
organizations, or has other business or interests,
shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust and/or the
Trustees or disqualify any Shareholder, Trustee or officer of the Trust from
voting upon or executing the same or create any liability or accountability to
the Trust or its Shareholders, provided that in the case of any relationship or
interest referred to in the preceding clause (i) on the part of any Trustee or
officer of the Trust either (l) the material facts as to such relationship or
interest have been disclosed to or are known by the Trustees not having any such
relationship or interest and the contract involved is approved in good faith
reasonably justified by such facts by a majority of such Trustees not having any
such relationship or interest (even though such unrelated or disinterested
Trustees are less than a quorum of all of the Trustees), (2) the material facts
as to such relationship or interest and as to the contract have been disclosed
to or are known by the Shareholders not having such relationship or interest and
who are entitled to vote thereon and the contract involved is specifically
approved in good faith by majority vote of such Shareholders, or (3) the
specific contract involved is fair to the Trust as of the time it is authorized,
approved or ratified by the Trustees or by such Shareholders.
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SECTION 3.4 PAYMENT OF TRUST EXPENSES AND COMPENSATION OF TRUSTEES. The
Trustees are authorized to pay or to cause to be paid out of the principal or
income of the Trust, or partly out of principal and partly out of income, and to
charge or allocate the same to, between or among such one or more of the Series
and Classes that may be established and designated pursuant to Article IV, as
the Trustees deem fair, all expenses, fees, charges, taxes and liabilities
incurred or arising in connection with the Trust, or in connection with the
management thereof, including, but not limited to, the Trustees' compensation
and such expenses and charges for the services of the Trust's officers,
employees, investment adviser, administrator, distributor, principal
underwriter, auditor, counsel, depository, custodian, transfer agent, dividend
disbursing agent, accounting agent, Shareholder servicing agent, and such other
agents, consultants, and independent contractors and such other expenses and
charges as the Trustees may deem necessary or proper to incur. Without limiting
the generality of any other provision hereof, the Trustees shall be entitled to
reasonable compensation from the Trust for their services as Trustees and may
fix the amount of such compensation.
SECTION 3.5 OWNERSHIP OF ASSETS OF THE TRUST. Title to all of the
assets of the Trust shall at all times be considered as vested in the Trustees.
ARTICLE IV
----------
SHARES
------
SECTION 4.1 DESCRIPTION OF SHARES. The beneficial interest in the Trust
shall be divided into Shares, all without par value. The Trustees shall have the
authority from time to time to issue or reissue Shares in one or more Series of
Shares (including without limitation the Series specifically established and
designated in Section 4.2), as they deem necessary or desirable, to establish
and designate such Series, and to fix and determine the relative rights and
preferences as between the different Series of Shares as to right of redemption
and the price, terms and manner of redemption, special and relative rights as to
dividends and other distributions and on liquidation, sinking or purchase fund
provisions, conversion rights, and conditions under which the several Series
shall have separate voting rights or no voting rights.
The Shares of each Series may be issued or reissued from time to time
in one or more Classes, as determined by the Board of Trustees pursuant to
resolution. Each Class shall be appropriately designated, prior to the issuance
of any shares thereof, by some distinguishing letter, number or title. All
Shares within a Class shall be alike in every particular. All Shares of each
Series shall be of equal rank and have the same powers, preferences and rights,
and shall be subject to the same qualifications, limitations and restrictions
without distinction between the shares of different Classes thereof, except with
respect to such differences among such Classes, as the Board of Trustees shall
from time to time determine to be necessary or desirable, including without
limitation differences in expenses, in voting rights and in the rate or rates of
dividends or distributions. The Board of Trustees may from time to time increase
the number of Shares allocated to any Class already created by providing that
any unissued Shares of the applicable Series shall constitute part of such
Class, or may decrease the number of Shares allocated to any Class already
created by providing that any unissued Shares previously assigned to such Class
shall no longer constitute part thereof. The Board of Trustees is hereby
empowered to classify or reclassify from time to time any unissued Shares of
each Series by fixing or altering the terms thereof and by assigning such
unissued shares to an existing or newly created Class. Notwithstanding anything
to the contrary in this paragraph the Board of Trustees is hereby empowered (i)
to redesignate any issued Shares of
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any Series by assigning a distinguishing letter, number or title to such shares
and (ii) to reclassify all or any part of the issued Shares of any Series to
make them part of an existing or newly created Class.
The number of authorized Shares and the number of Shares of each Series
and Class that may be issued is unlimited, and the Trustees may issue Shares of
any Series or Class for such consideration and on such terms as they may
determine (or for no consideration if pursuant to a Share dividend or split-up),
all without action or approval of the Shareholders. All Shares when so issued on
the terms determined by the Trustees shall be fully paid and non-assessable (but
may be subject to mandatory contribution back to the Trust as provided in
subsection (h) of Section 4.2). The Trustees may classify or reclassify any
unissued Shares or any Shares previously issued and reacquired of any Series or
Class into one or more Series or Classes that may be established and designated
from time to time. The Trustees may hold as treasury Shares (of the same or some
other Series), reissue for such consideration and on such terms as they may
determine, or cancel, at their discretion from time to time, any Shares of any
Series or Class reacquired by the Trust.
The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of determining the holders of
Shares entitled to be treated as such, to the extent provided or referred to in
Section 5.3.
The establishment and designation of any Series or Class of Shares in
addition to those established and designated in Section 4.2 shall be effective
upon the execution by a majority of the then Trustees of an instrument setting
forth such establishment and designation and the relative rights and preferences
of such Series or Class, or as otherwise provided in such instrument. At any
time that there are no Shares outstanding of any particular Series or Class
previously established and designated the Trustees may by an instrument executed
by a majority of their number abolish that Series or Class and the establishment
and designation thereof. Each instrument referred to in this paragraph shall
have the status of an amendment to this Declaration of Trust.
Any Trustee, officer or other agent of the Trust, and any organization
in which any such person is interested may acquire, own, hold and dispose of
Shares to the same extent as if such person were not a Trustee, officer or other
agent of the Trust; and the Trust may issue and sell or cause to be issued and
sold and may purchase Shares from any such person or any such organization
subject only to the general limitations, restrictions or other provisions
applicable to the sale or purchase of Shares generally.
SECTION 4.2 ESTABLISHMENT AND DESIGNATION OF SERIES OR CLASSES. Without
limiting the authority of the Trustees set forth in Section 4.1 to establish and
designate any further Series, the Trustees hereby establish and designate two
Series of Shares: the "Alpha Analytics Value Fund" and the "Alpha Analytics
Quant Fund". The Shares of these Series and any Shares of any further Series or
Class that may from time to time be established and designated by the Trustees
shall (unless the Trustees otherwise determine with respect to some further
Series or Class at the time of establishing and designating the same) have the
following relative rights and preferences:
(a) ASSETS BELONGING TO SERIES. All consideration received by the
---------------------------
Trust for the issuance or sale of Shares of a particular Series
or Class, together with all assets in which such consideration is
invested or reinvested, all income, earnings,
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profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall irrevocably belong to
that Series or Class for all purposes, subject only to the rights
of creditors, and shall be so recorded upon the books of account
of the Trust. Such consideration, assets, income, earnings,
profits and proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation of such assets, and any funds
or payments derived from any reinvestment of such proceeds, in
whatever form the same may be, together with any General Items
allocated to that Series or Class as provided in the following
sentence, are herein referred to as "assets belonging to" that
Series or Class. In the event that there are any assets, income,
earnings, profits, and proceeds thereof, funds, or payments which
are not readily identifiable as belonging to any particular
Series or Class (collectively "General Items"), the Trustees
shall allocate such General Items to and among any one or more of
the Series or Classes established and designated from time to
time in such manner and on such basis as they, in their sole
discretion, deem fair and equitable; and any General Items so
allocated to a particular Series or Class shall belong to that
Series or Class. Each such allocation by the Trustees shall be
conclusive and binding upon the Shareholders of all Series and
Classes for all purposes.
The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items shall be
treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding upon
the Shareholders.
(b) LIABILITIES BELONGING TO SERIES. The assets belonging to each
--------------------------------
particular Series and Class thereof shall be charged with the
liabilities of the Trust in respect of that Series or Class and
all expenses, costs, charges and reserves attributable to that
Series or Class, and any general liabilities, expenses, costs,
charges or reserves of the Trust which are not readily
identifiable as belonging to any particular Series or Class shall
be allocated and charged by the Trustees to and among any one or
more of the Series and Classes established and designated from
time to time in such manner and on such basis as the Trustees in
their sole discretion deem fair and equitable. The liabilities,
expenses, costs, charges and reserves allocated and so charged to
a Series or Class are herein referred to as "liabilities
belonging to" that Series or Class. Each allocation of
liabilities, expenses, costs, charges and reserves by the
Trustees shall be conclusive and binding upon the Shareholders of
all Series for all purposes.
(c) DIVIDENDS. Dividends and distributions on Shares of a particular
----------
Series may be paid with such frequency as the Trustees may
determine, which may be daily or otherwise pursuant to a standing
resolution or resolutions adopted only once or with such
frequency as the Trustees may determine, to the holders of Shares
of that Series, from such of the estimated income and capital
gains, accrued or realized, from the assets belonging to that
Series, as the Trustees may determine, after providing for actual
and accrued liabilities belonging to that Series. All dividends
and distributions on Shares of a particular Series shall be
distributed pro rata to the holders of that Series in proportion
to the number of Shares of that Series held by such holders at
the date and time of record established for
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the payment of such dividends or distributions, except that in
connection with any dividend or distribution program or procedure
the Trustees may determine that no dividend or distribution shall
be payable on Shares as to which the Shareholder's purchase order
and/or payment have not been received by the time or times
established by the Trustees under such program or procedure, and
except that if Classes have been established for any Series, the
rate of dividends or distributions may vary among such Class
pursuant to resolution, which may be a standing resolution, of
the Board of Trustees. Such dividends and distributions may be
made in cash or Shares or a combination thereof as determined by
the Trustees or pursuant to any program that the Trustees may
have in effect at the time for the election by each Shareholder
of the mode of the making of such dividend or distribution to
that Shareholder. Any such dividend or distribution paid in
Shares will be paid at the net asset value thereof as determined
in accordance with subsection (h) of Section 4.2.
The Trust intends to qualify each Series as a "regulated
investment company" under the Internal Revenue Code of 1954, as
amended, or any successor or comparable statute thereto, and
regulations promulgated thereunder. Inasmuch as the computation
of net income and gains for federal income tax purposes may vary
from the computation thereof on the books of the Trust, the Board
of Trustees shall have the power, in its sole discretion, to
distribute in any fiscal year as dividends, including dividends
designated in whole or in part as capital gains distributions,
amounts sufficient, in the opinion of the Board of Trustees, to
enable each Series to qualify as a regulated investment company
and to avoid liability of the Series for federal income tax in
respect of that year. However, nothing in the foregoing shall
limit the authority of the Board of Trustees to make
distributions greater than or less than the amount necessary to
qualify as a regulated investment company and to avoid liability
of each Series for such tax.
(d) LIQUIDATION. In event of the liquidation or dissolution of the
------------
Trust, the Shareholders of each Series or Class that has been
established and designated shall be entitled to receive, as a
Series or Class, when and as declared by the Trustees, the excess
of the assets belonging to that Series or Class over the
liabilities belonging to that Series or Class. The assets so
distributable to the Shareholders of any particular Series or
Class shall be distributed among such Shareholders in proportion
to the number of Shares of that Series or Class held by them and
recorded on the books of the Trust. The liquidation of any
particular Series or Class may be authorized by vote of a
majority of the Trustees then in office subject to the approval
of a majority of the outstanding voting Shares of that Series or
Class, as defined in the 1940 Act.
(e) VOTING. All Shares shall have "equal voting rights" as such term
------
is defined in the Investment Company Act of 1940 and except as
otherwise provided by that Act or rules, regulations or orders
promulgated thereunder. On each matter submitted to a vote of the
Shareholders, each Series shall vote as a separate series except
(i) as to any matter with respect to which a vote of all Series
voting as a single series is required by the 1940 Act or rules
and regulations promulgated thereunder, or would be required
under the Ohio General Corporation Law if the Trust were an Ohio
corporation; and (ii) as to any matter
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which the Trustees have determined affects only the interests
of one or more Series or Classes, only the holders of Shares
of the one or more affected Series or Classes shall be
entitled to vote thereon.
(f) REDEMPTION BY SHAREHOLDER. Each holder of Shares of a particular
--------------------------
Series or Class shall have the right at such times as may be
permitted by the Trust, but no less frequently than once each
week, to require the Trust to redeem all or any part of his
Shares of that Series or Class at a redemption price equal to the
net asset value per Share of that Series or Class next determined
in accordance with subsection (h) of this Section 4.2 after the
Shares are properly tendered for redemption. Payment of the
redemption price shall be in cash; provided, however, that if the
Trustees determine, which determination shall be conclusive, that
conditions exist which make payment wholly in cash unwise or
undesirable, the Trust may make payment wholly or partly in
securities or other assets belonging to the Series or Class of
which the Shares being redeemed are part at the value of such
securities or assets used in such determination of net asset
value.
Notwithstanding the foregoing, the Trust may postpone payment
of the redemption price and may suspend the right of the
holders of Shares of any Series to require the Trust to redeem
Shares of that Series during any period or at any time when
and to the extent permissible under the 1940 Act, and such
redemption is conditioned upon the Trust having funds or
property legally available therefor.
(g) REDEMPTION BY TRUST. Each Share of each Series or Class that has
--------------------
been established and designated is subject to redemption by the
Trust at the redemption price which would be applicable if such
Share was then being redeemed by the Shareholder pursuant to
subsection (f) of this Section 4.2:(a) at any time, if the
Trustees determine in their sole discretion that failure to so
redeem may have materially adverse consequences to all or any of
the holders of the Shares, or any Series or Class thereof, of the
Trust, or (b) upon such other conditions as may from time to time
be determined by the Trustees and set forth in the then current
Prospectus of the Trust with respect to maintenance of
Shareholder accounts of a minimum amount. Upon such redemption
the holders of the Shares so redeemed shall have no further right
with respect thereto other than to receive payment of such
redemption price.
(h) NET ASSET VALUE. The net asset value per Share of any Series or
---------------
Class shall be the quotient obtained by dividing the value of the
net assets of that Series or Class (being the value of the assets
belonging to that Series or Class less the liabilities belonging
to that Series or Class) by the total number of Shares of that
Series or Class outstanding, all determined in accordance with
the methods and procedures, including without limitation those
with respect to rounding, established by the Trustees from time
to time. Net asset value shall be determined separately for each
Class of a Series.
The Trustees may determine to maintain the net asset value per
Share of any Series or Class at a designated constant dollar
amount and in connection therewith may adopt procedures not
inconsistent with the 1940 Act for the
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<PAGE>
continuing declarations of income attributable to that Series or
Class as dividends payable in additional Shares of that Series or
Class at the designated constant dollar amount and for the
handling of any losses attributable to that Series or Class .
Such procedures may provide that in the event of any loss each
Shareholder shall be deemed to have contributed to the capital of
the Trust attributable to that Series or Class his pro rata
portion of the total number of Shares required to be canceled in
order to permit the net asset value per Share of that Series or
Class to be maintained, after reflecting such loss, at the
designated constant dollar amount. Each Shareholder of the Trust
shall be deemed to have agreed, by his investment in any Series
with respect to which the Trustees shall have adopted any such
procedure, to make the contribution referred to in the preceding
sentence in the event of any such loss.
(i) TRANSFER. All Shares of each particular Series or Class shall be
---------
transferable, but transfers of Shares of a particular Series or
Class will be recorded on the Share transfer records of the Trust
applicable to that Series or Class only at such times as
Shareholders shall have the right to require the Trust to redeem
Shares of that Series or Class and at such other times as may be
permitted by the Trustees.
(j) EQUALITY. All Shares of each particular Series shall represent an
--------
equal proportionate interest in the assets belonging to that
Series (subject to the liabilities belonging to that Series), and
each Share of any particular Series shall be equal to each other
Share of that Series; but the provisions of this sentence shall
not restrict any distinctions permissible under this Section 4.2
that may exist with respect to a Class of the same Series. The
Trustees may from time to time divide or combine the Shares of
any particular Series or Class into a greater or lesser number of
Shares of that Series or Class without thereby changing the
proportionate beneficial interest in the assets belonging to that
Series or Class or in any way affecting the rights of Shares of
any other Series or Class.
(k) FRACTIONS. Any fractional Share of any Series or Class, if any
---------
such fractional Share is outstanding, shall carry proportionately
all the rights and obligations of a whole Share of that Series or
Class, including with respect to voting, receipt of dividends and
distributions, redemption of Shares, and liquidation of the
Trust.
(l) CONVERSION RIGHTS. Subject to compliance with the requirements of
------------------
the 1940 Act, the Trustees shall have the authority to provide
that holders of Shares of any Series or Class shall have the
right to convert said Shares into Shares of one or more other
Series or Classes in accordance with such requirements and
procedures as may be established by the Trustees.
SECTION 4.3 OWNERSHIP OF SHARES. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each Series
and Class that has been established and designated. No certificates certifying
the ownership of Shares need be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the use of facsimile
signatures, the transfer of Shares and similar matters. The record books of the
Trust as kept by the Trust
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<PAGE>
or any transfer or similar agent, as the case may be, shall be conclusive as to
who are the Shareholders and as to the number of Shares of each Series and Class
held from time to time by each such Shareholder.
SECTION 4.4 INVESTMENTS IN THE TRUST. The Trustees may accept
investments in the Trust from such persons and on such terms and for such
consideration, not inconsistent with the provisions of the 1940 Act, as they
from time to time authorize. The Trustees may authorize any distributor,
principal underwriter, custodian, transfer agent or other person to accept
orders for the purchase of Shares that conform to such authorized terms and to
reject any purchase orders for Shares whether or not conforming to such
authorized terms.
SECTION 4.5 NO PREEMPTIVE RIGHTS. Shareholders shall have no preemptive
or other right to subscribe to any additional Shares or other securities issued
by the Trust.
SECTION 4.6 STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death of a Shareholder during the continuance of
the Trust shall not operate to terminate the Trust nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to the
rights of said decedent under this Trust. Ownership of Shares shall not entitle
the Shareholder to any title in or to the whole or any part of the Trust
property or right to call for a partition or division of the same or for an
accounting, nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or agent
of the Trust shall have any power to bind personally any Shareholder, nor except
as specifically provided herein to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay.
ARTICLE V
---------
SHAREHOLDERS' VOTING POWERS AND MEETINGS
----------------------------------------
SECTION 5.1 VOTING POWERS. The Shareholders shall have power to vote
only (i) for the election or removal of Trustees as provided in Section 3.1,
(ii) with respect to any contract with a Contracting Party as provided in
Section 3.3 as to which Shareholder approval is required by the 1940 Act, (iii)
with respect to any termination or reorganization of the Trust or any Series to
the extent and as provided in Sections 7.1 and 7.2, (iv) with respect to any
amendment of this Declaration of Trust to the extent and as provided in Section
7.3, (v) to the same extent as the stockholders of an Ohio business corporation
as to whether or not a court action, proceeding or claim should or should not be
brought or maintained derivatively or as a class action on behalf of the Trust
or the Shareholders, and (vi) with respect to such additional matters relating
to the Trust as may be required by the 1940 Act, this Declaration of Trust, the
By-Laws or any registration of the Trust with the Commission (or any successor
agency) or any state, or as the Trustees may consider necessary or desirable.
There shall be no cumulative voting in the election of any Trustee or Trustees.
Shares may be voted in person or by proxy. A proxy with respect to Shares held
in the name of two or more persons shall be valid if executed by any one of them
unless at or prior to exercise of the proxy the Trust receives a specific
written notice to the contrary from any one of them. A proxy purporting to be
executed by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the
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challenger. Until Shares are then issued and outstanding, the Trustees may
exercise all rights of Shareholders and may take any action required by law,
this Declaration of Trust or the By-Laws to be taken by Shareholders.
SECTION 5.2 MEETINGS. Meetings (including meetings involving only the
holders of Shares of one or more but less than all Series or Classes) of
Shareholders may be called by the Trustees from time to time for the purpose of
taking action upon any matter requiring the vote or authority of the
Shareholders as herein provided or upon any other matter deemed by the Trustees
to be necessary or desirable. Written notice of any meeting of Shareholders
shall be given or caused to be given by the Trustees by mailing such notice at
least seven days before such meeting, postage prepaid, stating the time, place
and purpose of the meeting, to each Shareholder at the Shareholder's address as
it appears on the records of the Trust. If the Trustees shall fail to call or
give notice of any meeting of Shareholders (including a meeting involving only
the holders of Shares of one or more but less than all Series or Classes) for a
period of 30 days after written application by Shareholders holding at least 25%
of the Shares then outstanding requesting a meeting be called for any other
purpose requiring action by the Shareholders as provided herein or in the
By-Laws, then Shareholders holding at least 25% of the Shares then outstanding
may call and give notice of such meeting, and thereupon the meeting shall be
held in the manner provided for herein in case of call thereof by the Trustees.
SECTION 5.3 RECORD DATES. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to participate in any dividend or distribution, or
for the purpose of any other action, the Trustees may from time to time close
the transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date and time not more
than 60 days prior to the date of any meeting of Shareholders or other action as
the date and time of record for the determination of Shareholders entitled to
vote at such meeting or any adjournment thereof or to be treated as Shareholders
of record for purposes of such other action, and any Shareholder who was a
Shareholder at the date and time so fixed shall be entitled to vote at such
meeting or any adjournment thereof or (subject to any provisions permissible
under subsection (c) of Section 4.2 with respect to dividends or distributions
on Shares that have not been ordered and/or paid for by the time or times
established by the Trustees under the applicable dividend or distribution
program or procedure then in effect) to be treated as a Shareholder of record
for purposes of such other action, even though he has since that date and time
disposed of his Shares, and no Shareholder becoming such after that date and
time shall be so entitled to vote at such meeting or any adjournment thereof or
to be treated as a Shareholder of record for purposes of such other action.
SECTION 5.4 QUORUM AND REQUIRED VOTE. A majority of Shares entitled to
vote shall be a quorum for the transaction of business at a Shareholders'
meeting, except that where any provision of law or of this Declaration of Trust
permits or requires that holders of any Series or Class thereof shall vote as a
Series or Class, then a majority of the aggregate number of Shares of that
Series or Class thereof entitled to vote shall be necessary to constitute a
quorum for the transaction of business by that Series or Class. Any lesser
number shall be sufficient for adjournments. Any adjourned session or sessions
may be held, within a reasonable time after the date set for the original
meeting, without the necessity of further notice. Except when a larger vote is
required by any provision of this Declaration of Trust or the By-Laws, a
majority of the Shares voted, at a meeting at which a quorum is present, shall
decide any questions and a plurality shall elect a Trustee, provided that where
any provision of law or of
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<PAGE>
this Declaration of Trust permits or requires that the holders of any Series or
Class shall vote as a Series or Class, then a majority of the Shares of that
Series or Class voted on the matter shall decide that matter insofar as that
Series or Class is concerned.
SECTION 5.5 ACTION BY WRITTEN CONSENT. Subject to the provisions of the
1940 Act and other applicable law, any action taken by Shareholders may be taken
without a meeting if a majority of Shareholders entitled to vote on the matter
(or such other proportion thereof as shall be required by the 1940 Act or by any
express provision of this Declaration of Trust or the By-Laws) consent to the
action in writing and such written consents are filed with the records of the
meetings of Shareholders. Such consent shall be treated for all purposes as a
vote taken at a meeting of Shareholders.
SECTION 5.6 INSPECTION OF RECORDS. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
stockholders of an Ohio corporation under the Ohio General Corporation Law.
SECTION 5.7 ADDITIONAL PROVISIONS. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
ARTICLE VI
----------
LIMITATION OF LIABILITY; INDEMNIFICATION
----------------------------------------
SECTION 6.1 TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE.
All persons extending credit to, contracting with or having any claim against
any Series of the Trust (or the Trust on behalf of any Series) shall look only
to the assets of that Series for payment under such credit, contract or claim;
and neither the Shareholders nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, shall be personally liable
therefor. Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever executed or done by or on behalf of the
Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been executed or done only by or for the Trust or
the Trustees and not personally. Nothing in this Declaration of Trust shall
protect any Trustee or officer against any liability to the Trust or the
Shareholders to which such Trustee or officer would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of the office of Trustee or of such
officer.
Every note, bond, contract, instrument, certificate or undertaking made
or issued by the Trustees or by any officers or officer shall give notice that
this Declaration of Trust is on file with the Secretary of the State of Ohio and
shall recite to the effect that the same was executed or made by or on behalf of
the Trust or by them as Trustees or Trustee or as officers or officer and not
individually and that the obligations of such instrument are not binding upon
any of them or the Shareholders individually but are binding only upon the
assets and property of the Trust, but the omission thereof shall not operate to
bind any Trustees or Trustee or officers or officer or Shareholders or
Shareholder individually.
SECTION 6.2 TRUSTEE'S GOOD FAITH ACTION; EXPERT ADVICE; NO BOND OR
SURETY. The exercise by the Trustees of their powers and discretions hereunder
shall be binding upon everyone interested. A Trustee shall be liable for his own
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee,
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and for nothing else, and shall not be liable for errors of judgment or mistakes
of fact or law. Subject to the foregoing, (a) the Trustees shall not be
responsible or liable in any event for any neglect or wrongdoing of any officer,
agent, employee, consultant, adviser, administrator, distributor or principal
underwriter, custodian or transfer, dividend disbursing, Shareholder servicing
or accounting agent of the Trust, nor shall any Trustee be responsible for the
act or omission of any other Trustee; (b) the Trustees may take advice of
counsel or other experts with respect to the meaning and operation of this
Declaration of Trust and their duties as Trustees, and shall be under no
liability for any act or omission in accordance with such advice or for failing
to follow such advice; and (c) in discharging their duties, the Trustees, when
acting in good faith, shall be entitled to rely upon the books of account of the
Trust and upon written reports made to the Trustees by any officer appointed by
them, any independent public accountant, and (with respect to the subject matter
of the contract involved) any officer, partner or responsible employee of a
Contracting Party appointed by the Trustees pursuant to Section 3.3. The
Trustees as such shall not be required to give any bond or surety or any other
security for the performance of their duties. Nothing stated herein is intended
to detract from the protection accorded to Trustees by Ohio Revised Code
Sections 1746.08 and 1701.59, as amended from time to time.
SECTION 6.3 INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder or
former Shareholder shall be charged or held to be personally liable for any
obligation or liability of the Trust solely by reason of being or having been a
Shareholder and not because of such Shareholder's acts or omissions or for some
other reason, the Trust (upon proper and timely request by the Shareholder)
shall assume the defense against such charge and satisfy any judgment thereon,
and the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or in the case of a corporation or
other entity, its corporate or other general successor) shall be entitled out of
the assets of the Trust estate to be held harmless from and indemnified against
all loss and expense arising from such liability; provided that, in the event
the Trust shall consist of more than one Series, Shareholders of a particular
Series who are faced with claims or liabilities solely by reason of their status
as Shareholders of that Series shall be limited to the assets of that Series for
recovery of such loss and related expenses. The rights accruing to a Shareholder
under this Section 6.3 shall not exclude any other right to which such
Shareholder may be lawfully entitled, nor shall anything herein contained
restrict the right of the Trust to indemnify or reimburse a Shareholder in any
appropriate situation even though not specifically provided herein.
SECTION 6.4 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC. Subject to and
except as otherwise provided in the Securities Act of 1933, as amended, and the
1940 Act, the Trust shall indemnify each of its Trustees and officers (including
persons who serve at the Trust's request as directors, officers or trustees of
another organization in which the Trust has any interest as a shareholder,
creditor or otherwise (hereinafter referred to as a "Covered Person") against
all liabilities, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Trustee or officer, director or trustee, and except that no Covered
Person shall be indemnified against any liability to the Trust or its
Shareholders to which such Covered Person would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of
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the duties involved in the conduct of such Covered Person's office.
SECTION 6.5 ADVANCES OF EXPENSES. The Trust shall advance attorneys'
fees or other expenses incurred by a Covered Person in defending a proceeding to
the full extent permitted by the Securities Act of 1933, as amended, the 1940
Act, and Ohio Revised Code Chapter 1707, as amended. In the event any of these
laws conflict with Ohio Revised Code Section 1701.13(E), as amended, these laws,
and not Ohio Revised Code Section 1701.13(E), shall govern.
SECTION 6.6 INDEMNIFICATION NOT EXCLUSIVE, ETC. The right of
indemnification provided by this Article VI shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article VI, "Covered Person" shall include such person's heirs, executors
and administrators. Nothing contained in this article shall affect any rights to
indemnification to which personnel of the Trust, other than Trustees and
officers, and other persons may be entitled by contract or otherwise under law,
nor the power of the Trust to purchase and maintain liability insurance on
behalf of any such person.
SECTION 6.7 LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
ARTICLE VII
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MISCELLANEOUS
-------------
SECTION 7.1 DURATION AND TERMINATION OF TRUST. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The Trust
may be terminated at any time by a majority of the Trustees then in office
subject to a favorable vote of a majority of the outstanding voting Shares, as
defined in the 1940 Act, of each Series voting separately by Series.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall in accordance with such procedures
as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in conformity with the
provisions of subsection (d) of Section 4.2.
SECTION 7.2 REORGANIZATION. The Trustees may sell, convey and transfer
the assets of the Trust, or the assets belonging to any one or more Series, to
another trust, partnership, association or corporation organized under the laws
of any state of the United States, or to the Trust to be held as assets
belonging to another Series of the Trust, in exchange for cash, shares or other
securities (including, in the case of a transfer to another Series of the Trust,
Shares of such other Series) with such transfer being made subject to, or with
the assumption by the transferee of, the liabilities belonging to each Series
the assets of which are so transferred; provided, however, that if shareholder
approval is required by the 1940 Act, no assets belonging to any particular
Series shall be so transferred unless the terms of such transfer shall have
first been approved at a meeting called for the purpose by the affirmative vote
of the holders of a majority of the outstanding voting Shares, as defined in the
1940 Act, of that Series. Following such transfer, the Trustees shall distribute
such cash, shares or other
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securities (giving due effect to the assets and liabilities belonging to and any
other differences among the various Series the assets belonging to which have so
been transferred) among the Shareholders of the Series the assets belonging to
which have been so transferred; and if all of the assets of the Trust have been
so transferred, the Trust shall be terminated.
SECTION 7.3 AMENDMENTS. All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or Trustee
or repeal the prohibition of assessment upon the Shareholders without the
express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not related
to the rights of Shareholders) may be amended at any time so long as such
amendment does not adversely affect the rights of any Shareholder with respect
to which such amendment is or purports to be applicable and so long as such
amendment is not in contravention of applicable law, including the 1940 Act, by
an instrument in writing signed by a majority of the then Trustees (or by an
officer of the Trust pursuant to the vote of a majority of such Trustees).
Except as provided in the first sentence of this Section 7, any amendment to
this Declaration of Trust that adversely affects the rights of Shareholders may
be adopted at any time by an instrument signed in writing by a majority of the
then Trustees (or by an officer of the Trust pursuant to the vote of a majority
of such Trustees) when authorized to do so by the vote in accordance with
subsection (e) of Section 4.2 of Shareholders holding a majority of the Shares
entitled to vote; (a "Majority Shareholder Vote"); provided, however, than an
amendment that shall affect the Shareholders of one or more Series (or of one or
more Classes), but not the Shareholders of all outstanding Series (or Classes),
shall be authorized by a Majority Shareholder Vote of each Series (or Class, as
the case may be) affected, and no vote of a Series (or Class) not affected shall
be required. Subject to the foregoing, any such amendment shall be effective as
provided in the instrument containing the terms of such amendment or, if there
is no provision therein with respect to effectiveness, upon the execution of
such instrument and of a certificate (which may be a part of such instrument)
executed by a Trustee or officer to the effect that such amendment has been duly
adopted. Copies of the amendment to this Declaration of Trust shall be filed as
specified in Section 7.4. A restated Declaration of Trust, integrating into a
single instrument all of the provisions of the Declaration of Trust which are
then in effect and operative, may be executed from time to time by a majority of
the then Trustees (or by an officer of the Trust pursuant to the vote of a
majority of such Trustees) and shall be effective upon filing as specified in
Section 7.4.
SECTION 7.4 FILING OF COPIES; REFERENCES; HEADINGS. The original or a
copy of this instrument and of each amendment hereto shall be kept at the office
of the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the Trust with the
Secretary of the State of Ohio, as well as any other governmental office where
such filing may from time to time be required, but the failure to make any such
filing shall not impair the effectiveness of this instrument or any such
amendment. Anyone dealing with the Trust may rely on a certificate by an officer
of the Trust as to whether or not any such amendments have been made, as to the
identities of the Trustees and officers, and as to any matters in connection
with the Trust hereunder; and, with the same effect as if it were the original,
may rely on a copy certified by an officer of the Trust to be a copy of this
instrument or of any such amendments. In this instrument and in any such
amendment, references to this instrument, and all expressions like "herein",
"hereof" and "hereunder" shall be deemed to refer to this instrument as a whole
as the same may be amended or affected by any such amendments. The masculine
gender shall include the
<PAGE>
feminine and neuter genders. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or control or affect the
meaning, construction or effect of this instrument. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.
SECTION 7.5 APPLICABLE LAW. This Trust is an Ohio business trust, and
it is created under and is to be governed by and construed and administered
according to the laws of said State, including the Ohio General Corporation Law
as the same may be amended from time to time, but the reference to said
Corporation Law is not intended to give the Trust, the Trustees, the
Shareholders or any other person any right, power, authority or responsibility
available only to or in connection with an entity organized in corporate form.
The Trust shall be of the type referred to in Section 1746.01 of the Ohio
Revised Code, and without limiting the provisions hereof, the Trust may exercise
all powers which are ordinarily exercised by such a trust.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand for
himself and his assigns, as of the day and year first above written.
/S/--------------------
ROBERT E. GIPSON
-20-
<PAGE>
STATE OF CALIFORNIA )
) ss:
COUNTY OF LOS ANGELES )
On August 6, 1998, before me, Virginia Solomen, Notary Public,
personally appeared ROBERT E. GIPSON, personally known to me to be the person
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his authorized capacity and that by his signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
(SEAL)
VIRGINIA SOLOMEN
DOCUMENT: ALPHA ANALYTICS INVESTMENT TRUST - AGREEMENT AND DECLARATION OF TRUST
DATE OF DOCUMENT: 8/6/98
SIGNER(S) OTHER THAN NAMED ABOVE: NONE
-21-
<PAGE>
ACCEPTANCE OF TRUST
As contemplated in Section 3.1 of the Agreement and Declaration of
Trust of Alpha Analytics Investment Trust, the undersigned accepts his
designation as a Trustee of said Trust and agrees to the provisions of said
Agreement and Declaration of Trust.
IN WITNESS WHEREOF, the undersigned has set his hand on the date set
opposite his signature.
Date: August 6, 1998 /S/
------------------
ROBERT E. GIPSON
STATE OF CALIFORNIA )
) ss:
COUNTY OF LOS ANGELES )
On August 6, 1998, before me, Virginia Solomen, Notary Public,
personally appeared ROBERT E. GIPSON, personally known to me to be the person
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his authorized capacity and that by his signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
(SEAL)
VIRGINIA SOLOMEN
-22-
BY-LAWS
OF
ALPHA ANALYTICS INVESTMENT TRUST
--------------------------------
ARTICLE 1
---------
AGREEMENT AND DECLARATION OF TRUST AND OFFICES
----------------------------------------------
1.1 AGREEMENT AND DECLARATION OF TRUST. These By-Laws shall be subject
to the Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of Alpha Analytics Investment Trust, the Ohio business
trust established by the Declaration of Trust (the "Trust").
1.2 OFFICES. The Trust may maintain one or more other offices,
including its principal office, in or outside of Ohio, in such cities as the
Trustees may determine from time to time. Unless the Trustees otherwise
determine, the principal office of the Trust shall be located in Los Angeles,
California.
ARTICLE 2
---------
MEETINGS OF TRUSTEES
--------------------
2.1 REGULAR MEETINGS. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees may from
time to time determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees. A regular
meeting of the Trustees may be held without call or notice immediately after and
at the same place as any meeting of the shareholders.
2.2 SPECIAL MEETINGS. Special meetings of the Trustees may be held at
any time and at any place designated in the call of the meeting when called by
the President or the Treasurer or by two or more Trustees, sufficient notice
thereof being given to each Trustee by the Secretary or an Assistant Secretary
or by the officer or the Trustees calling the meeting.
2.3 NOTICE. It shall be sufficient notice to a Trustee of a special
meeting to send notice by mail at least forty-eight hours or by telegram at
least twenty-four hours before the meeting addressed to the Trustee at his or
her usual or last known business or residence address or to give notice to him
or her in person or by telephone at least twenty-four hours before the meeting.
Notice of a meeting need not be given to any Trustee if a written waiver of
notice, executed by him or her before or after the meeting, is filed with the
records of the meeting, or to any Trustee who attends the meeting without
protesting prior thereto or at its commencement the lack of notice to him or
her. Neither notice of a meeting nor a waiver of a notice need specify the
purposes of the meeting.
2.4 QUORUM. At any meeting of the Trustees a majority of the Trustees
then in office
<PAGE>
shall constitute a quorum. Any meeting may be adjourned from time to time by a
majority of the votes cast upon the question, whether or not a quorum is
present, and the meeting may be held as adjourned without further notice.
2.5 PARTICIPATION BY TELEPHONE. One or more of the Trustees or of any
committee of the Trustees may participate in a meeting thereof by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting except as
otherwise provided by the Investment Company Act of 1940.
2.6 ACTION BY CONSENT. Any action required or permitted to be taken at
any meeting of the Trustees or any committee thereof may be taken without a
meeting, if a written consent of such action is signed by a majority of the
Trustees then in office or a majority of the members of such committee, as the
case may be, and such written consent is filed with the minutes of the
proceedings of the Trustees or such committee.
ARTICLE 3
---------
OFFICERS
--------
3.1 ENUMERATION AND QUALIFICATION. The officers of the Trust shall be a
President, a Treasurer, a Secretary and such other officers, including Vice
Presidents, if any, as the Trustees from time to time may in their discretion
elect. The Trust may also have such agents as the Trustees from time to time may
in their discretion appoint. Any officer may be but none need be a Trustee or
shareholder. Any two or more offices may be held by the same person.
3.2 ELECTION. The President, the Treasurer and the Secretary shall be
elected annually by the Trustees. Other officers, if any, may be elected or
appointed by the Trustees at any time. Vacancies in any office may be filled at
any time.
3.3 TENURE. The President, the Treasurer and the Secretary shall hold
office for one year and until their respective successors are chosen and
qualified, or in each case until he or she sooner dies, resigns, is removed or
becomes disqualified. Each other officer shall hold office and each agent shall
retain authority at the pleasure of the Trustees.
3.4 POWERS. Subject to the other provisions of these By-Laws, each
officer shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as are commonly incident
to the office occupied by him or her as if the Trust were organized as an Ohio
business corporation and such other duties and powers as the Trustees may from
time to time designate.
3.5 PRESIDENT. Unless the Trustees otherwise provide, the President, or
in the absence of the President, any Trustee chosen by the Trustees, shall
preside at all meetings of the shareholders and of the Trustees. The President
shall be the chief executive officer.
3.6 TREASURER. The Treasurer shall be the chief financial and
accounting officer of the Trust, and shall, subject to the provisions of the
Declaration of Trust and to any arrangement
-2-
<PAGE>
made by the Trustees with a custodian, investment adviser or manager, or
transfer, shareholder servicing or similar agent, be in charge of the valuable
papers, books of account and accounting records of the Trust, and shall have
such other duties and powers as may be designated from time to time by the
Trustees or by the President.
3.7 SECRETARY. The Secretary shall record all proceedings of the
shareholders and the Trustees in books to be kept therefor, which books or a
copy thereof shall be kept at the principal office of the Trust. In the absence
of the Secretary from any meeting of the shareholders or Trustees, an assistant
secretary, or if there be none or if he or she is absent, a temporary secretary
chosen at such meeting shall record the proceedings thereof in the aforesaid
books.
3.8 RESIGNATIONS AND REMOVALS. Any Trustee or officer may resign at any
time by written instrument signed by him or her and delivered to the President
or the Secretary or to a meeting of the Trustees. Such resignation shall be
effective upon receipt unless specified to be effective at some other time. The
Trustees may remove any officer elected by them with or without cause. Except to
the extent expressly provided in a written agreement with the Trust, no Trustee
or officer resigning and no officer removed shall have any right to any
compensation for any period following his or her resignation or removal, or any
right to damages on account of such removal.
ARTICLE 4
---------
COMMITTEES
----------
4.1 GENERAL. The Trustees, by vote of a majority of the Trustees then
in office, may elect from their number an Executive Committee or other
committees and may delegate thereto some or all of their powers except those
which by law, by the Declaration of Trust, or by these By-Laws may not be
delegated. Except as the Trustees may otherwise determine, any such committee
may make rules for the conduct of its business, but unless otherwise provided by
the Trustees or in such rules, its business shall be conducted so far as
possible in the same manner as is provided by these By-Laws for the Trustees
themselves. All members of such committees shall hold such offices at the
pleasure of the Trustees. The Trustees may abolish any such committee at any
time. Any committee to which the Trustees delegate any of their powers or duties
shall keep records of its meetings and shall report its action to the Trustees.
The Trustees shall have power to rescind any action of any committee, but no
such rescission shall have retroactive effect.
ARTICLE 5
---------
REPORTS
-------
5.1 GENERAL. The Trustees and officers shall render reports at the time
and in the manner required by the Declaration of Trust or any applicable law.
Officers and Committees shall render such additional reports as they may deem
desirable or as may from time to time be required by the Trustees.
-3-
<PAGE>
ARTICLE 6
---------
FISCAL YEAR
-----------
6.1 GENERAL. The fiscal year of the Trust shall be fixed by, and shall
be subject to change by, the Trustees.
ARTICLE 7
---------
SEAL
----
7.1 GENERAL. If required by applicable law, the seal of the Trust shall
consist of a flat-faced die with the word "Ohio", together with the name of the
Trust and the year of its organization cut or engraved thereon, but, unless
otherwise required by the Trustees, the seal shall not be necessary to be placed
on, and its absence shall not impair the validity of, any document, instrument
or other paper executed and delivered by or on behalf of the Trust.
ARTICLE 8
---------
EXECUTION OF PAPERS
-------------------
8.1 GENERAL. Except as the Trustees may generally or in particular
cases authorize the execution thereof in some other manner, all deeds, leases,
contracts, notes and other obligations made by the Trustees shall be signed by
the President, any Vice President, or by the Treasurer and need not bear the
seal of the Trust, but shall state the substance of or make reference to the
provisions of Section 7.1 of the Declaration of Trust.
ARTICLE 9
---------
ISSUANCE OF SHARE CERTIFICATES
------------------------------
9.1 SHARE CERTIFICATES. In lieu of issuing certificates for shares, the
Trustees or the transfer agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
The Trustees may at any time authorize the issuance of share
certificates. In that event, each shareholder shall be entitled to a certificate
stating the number of shares owned by him, in such form as shall be prescribed
from time to time by the Trustees. Such certificate shall be signed by the
President or a Vice-President and by the Treasurer or Assistant Treasurer. Such
signatures may be facsimiles if the certificate is signed by a transfer agent,
or by a registrar, other than a Trustee, officer or employee of the Trust. In
case any officer who has signed or whose facsimile signature has been placed on
such certificate shall cease to be such officer before such certificate is
issued, it may be issued by the Trust with the same effect as if he were such
officer at the time of its issue.
9.2 LOSS OF CERTIFICATES. In case of the alleged loss or destruction or
the mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe.
-4-
<PAGE>
9.3 ISSUANCE OF NEW CERTIFICATE TO PLEDGEE. In the event certificates
have been issued, a pledgee of shares transferred as collateral security shall
be entitled to a new certificate if the instrument of transfer substantially
describes the debt or duty that is intended to be secured thereby. Such new
certificate shall express on its face that it is held as collateral security,
and the name of the pledgor shall be stated thereon, who alone shall be liable
as a shareholder, and entitled to vote thereon.
9.4 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Trustees may at any
time discontinue the issuance of share certificates and may, by written notice
to each shareholder, require the surrender of share certificates to the Trust
for cancellation. Such surrender and cancellation shall not affect the ownership
of shares in the Trust.
ARTICLE 10
----------
CUSTODIAN
---------
10.1 GENERAL. The Trust shall at all times employ a bank or trust
company having a capital, surplus and undivided profits of at least Five Hundred
Thousand ($500,000) Dollars as Custodian of the capital assets of the Trust. The
Custodian shall be compensated for its services by the Trust and upon such basis
as shall be agreed upon from time to time between the Trust and the Custodian.
ARTICLE 11
----------
DEALINGS WITH TRUSTEES AND OFFICERS
-----------------------------------
11.1 GENERAL. Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of shares of the Trust to the same extent as if he were
not a Trustee, officer or agent; and the Trustees may accept subscriptions to
shares or repurchase shares from any firm or company in which he is interested.
ARTICLE 12
----------
SHAREHOLDERS
------------
12.1 MEETINGS. A meeting of the shareholders of the Trust shall be held
whenever called by the Trustees, whenever election of a Trustee or Trustees by
shareholders is required by the provisions of Section 16(a) of the Investment
Company Act of 1940 for that purpose or whenever otherwise required pursuant to
the Declaration of Trust. Any meeting shall be held on such day and at such time
as the President or the Trustees may fix in the notice of the meeting.
12.2 RECORD DATES. For the purpose of determining the shareholders who
are entitled to vote or act at any meeting or any adjournment thereof, or who
are entitled to receive payment of any dividend or of any other distribution,
the Trustees may from time to time fix a time, which shall be not more than 60
days before the date of any meeting of shareholders or the date for the payment
of any dividend or of any other distribution, as the record date for determining
the shareholders having the right to notice of and to vote at such meeting and
any adjournment thereof or the right to receive such dividend or distribution,
and in such case only shareholders
-5-
<PAGE>
of record on such record date shall have such right, notwithstanding any
transfer of shares on the books of the Trust after the record date; or without
fixing such record date the Trustees may for any such purposes close the
register or transfer books for all or any part of such period.
ARTICLE 13
----------
AMENDMENTS TO THE BY-LAWS
-------------------------
13.1 GENERAL. These By-Laws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.
-6-
MANAGEMENT AGREEMENT
TO: Alpha Analytics Investment Group, LLC
1901 Avenue of the Stars, Suite 123
Los Angeles, CA 90067
Dear Sirs:
Alpha Analytics Investment Trust (the "Trust") herewith confirms our
agreement with you.
The Trust has been organized to engage in the business of an investment
company. The Trust currently offers two series of shares to investors, one of
which is the Alpha Analytics Small Cap Quant Fund (the "Fund").
You have been selected to act as the sole investment adviser of the
Fund and to provide certain other services, as more fully set forth below, and
you are willing to act as such investment adviser and to perform such services
under the terms and conditions hereinafter set forth. Accordingly, the Trust
agrees with you as follows effective upon the date of the execution of this
Agreement.
1. ADVISORY SERVICES
You will regularly provide the Fund with such investment advice as you
in your discretion deem advisable and will furnish a continuous investment
program for the Fund consistent with the Fund's investment objectives and
policies. You will determine the securities to be purchased for the Fund, the
portfolio securities to be held or sold by the Fund and the portion of the
Fund's assets to be held uninvested, subject always to the Fund's investment
objectives, policies and restrictions, as each of the same shall be from time to
time in effect, and subject further to such policies and instructions as the
Board may from time to time establish. You will advise and assist the officers
of the Trust in taking such steps as are necessary or appropriate to carry out
the decisions of the Board and the appropriate committees of the Board regarding
the conduct of the business of the Fund as it relates to your responsibilities
otherwise provided for in this Agreement. You may delegate any or all of the
responsibilities, rights or duties described in this paragraph 1 to one or more
sub-advisers who shall enter into agreements with you and the Trust, which
agreements shall be approved and ratified by the Board.
2. ALLOCATION OF CHARGES AND EXPENSES
You will pay all operating expenses of the Fund, including the
compensation and expenses of any employees of the Fund and of any other persons
rendering any services to the Fund; clerical and shareholder service staff
salaries; office space and other office expenses; fees and expenses incurred by
the Fund in connection with membership in investment company organizations;
legal, auditing and accounting expenses; expenses of registering shares under
federal and state securities laws, including expenses incurred by the Fund in
connection with the organization and initial registration of shares of the Fund;
insurance expenses; fees and expenses of the custodian, transfer agent, dividend
disbursing agent, shareholder service agent, plan agent, administrator,
accounting and pricing services agent and underwriter of the Fund; expenses,
including clerical expenses, of issue, sale, redemption or repurchase of shares
of the Fund; the cost of preparing and distributing reports and notices to
shareholders, the cost of printing or preparing prospectuses and statements of
additional information for delivery to the Fund's current and prospective
shareholders; the cost of printing or
-1-
<PAGE>
preparing stock certificates or any other documents, statements or reports to
shareholders; expenses of shareholders' meetings and proxy solicitations;
advertising, promotion and other expenses incurred directly or indirectly in
connection with the sale or distribution of the Fund's shares; and all other
operating expenses not specifically assumed by the Fund.
The Fund will pay all brokerage fees and commissions, taxes, interest,
fees and expenses of the non-interested person trustees and such extraordinary
or non-recurring expenses as may arise, and litigation to which the Fund may be
a party and indemnification of the Trust's trustees and officers with respect
thereto. You may obtain reimbursement from the Fund, at such time or times as
you may determine in your sole discretion, for any of the expenses advanced by
you, which the Fund is obligated to pay, and such reimbursement shall not be
considered to be part of your compensation pursuant to this Agreement.
3. COMPENSATION OF THE ADVISER
For all of the services to be rendered and payments to be made as
provided in this Agreement, as of the last business day of each month, the Fund
will pay you a fee at the annual rate of 1.50% of the average value of its daily
net assets.
The average value of the daily net assets of the Fund shall be
determined pursuant to the applicable provisions of the Declaration of Trust of
the Trust or a resolution of the Board, if required. If, pursuant to such
provisions, the determination of net asset value of the Fund is suspended for
any particular business day, then for the purposes of this paragraph, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of the net assets as of the close of the business day, or as of such other time
as the value of the Fund's net assets may lawfully be determined, on that day.
If the determination of the net asset value of the Fund has been suspended for a
period including such month, your compensation payable at the end of such month
shall be computed on the basis of the value of the net assets of the Fund as
last determined (whether during or prior to such month).
4. EXECUTION OF PURCHASE AND SALE ORDERS
In connection with purchases or sales of portfolio securities for the
account of the Fund, it is understood that you will arrange for the placing of
all orders for the purchase and sale of portfolio securities for the account
with brokers or dealers selected by you, subject to review of this selection by
the Board from time to time. You will be responsible for the negotiation and the
allocation of principal business and portfolio brokerage. In the selection of
such brokers or dealers and the placing of such orders, you are directed at all
times to seek for the Fund the best qualitative execution, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer.
You should generally seek favorable prices and commission rates that
are reasonable in relation to the benefits received. In seeking best qualitative
execution, you are authorized to select brokers or dealers who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Fund and/or the other accounts over
which you exercise investment discretion. You are authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a Fund portfolio transaction which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
-2-
<PAGE>
transaction if you determine in good faith that the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or your overall responsibilities with
respect to the Fund and to accounts over which you exercise investment
discretion. The Fund and you understand and acknowledge that, although the
information may be useful to the Fund and you, it is not possible to place a
dollar value on such information. The Board shall periodically review the
commissions paid by the Fund to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits to
the Fund.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to seeking best qualitative execution
as described above, you may give consideration to sales of shares of the Fund as
a factor in the selection of brokers and dealers to execute Fund portfolio
transactions.
Subject to the provisions of the Investment Company Act of 1940, as
amended, and other applicable law, you, any of your affiliates or any affiliates
of your affiliates may retain compensation in connection with effecting the
Fund's portfolio transactions, including transactions effected through others.
If any occasion should arise in which you give any advice to clients of yours
concerning the shares of the Fund, you will act solely as investment counsel for
such client and not in any way on behalf of the Fund. Your services to the Fund
pursuant to this Agreement are not to be deemed to be exclusive and it is
understood that you may render investment advice, management and other services
to others, including other registered investment companies.
5. LIMITATION OF LIABILITY OF ADVISER
You may rely on information reasonably believed by you to be accurate
and reliable. Except as may otherwise be required by the Investment Company Act
of 1940 or the rules thereunder, neither you nor your members, officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under, or
payments made pursuant to, this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of your duties
under this Agreement, or by reason of reckless disregard by any of such persons
of your obligations and duties under this Agreement.
Any person, even though also a director, officer, employee, member or
agent of you, who may be or become an officer, director, trustee, employee or
agent of the Trust, shall be deemed, when rendering services to the Trust or
acting on any business of the Trust (other than services or business in
connection with your duties hereunder), to be rendering such services to or
acting solely for the Trust and not as a director, officer, employee, member or
agent of you, or one under your control or direction, even though paid by you.
-3-
<PAGE>
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall take effect on the date of its execution, and
shall remain in force for a period of two (2) years from the date of its
execution, and from year to year thereafter, subject to annual approval by (i)
the Board or (ii) a vote of a majority (as defined in the Investment Company Act
of 1940) of the outstanding voting securities of the Fund, provided that in
either event continuance is also approved by a majority of the trustees who are
not "interested persons," as defined in the Investment Company Act of 1940, of
you or the Trust, by a vote cast in person at a meeting called for the purpose
of voting such approval.
If the shareholders of the Fund fail to approve the Agreement in the
manner set forth above, upon request of the Board, you will continue to serve or
act in such capacity for the Fund for the period of time pending required
approval of the Agreement, of a new agreement with you or a different adviser or
other definitive action; provided that the compensation to be paid by the Fund
to you for your services to and payments on behalf of the Fund will be equal to
the lesser of your actual costs incurred in furnishing such services and
payments or the amount you would have received under this Agreement for
furnishing such services and payments.
This Agreement may, on sixty days written notice, be terminated with
respect to the Fund, at any time without the payment of any penalty, by the
Board, by a vote of a majority of the outstanding voting securities of the Fund,
or by you. This Agreement shall automatically terminate in the event of its
assignment.
7. USE OF NAME
The Trust and you acknowledge that all rights to the name "Alpha
Analytics" or any variation thereof belong to you, and that the Trust is being
granted a limited license to use such words in its Fund name or in any class
name. In the event you cease to be the adviser to the Fund, the Trust's right to
the use of the name "Alpha Analytics" in connection with the Fund shall
automatically cease on the ninetieth day following the termination of this
Agreement. The right to the name may also be withdrawn by you during the term of
this Agreement upon ninety (90) days' written notice by you to the Trust.
Nothing contained herein shall impair or diminish in any respect, your right to
use the name "Alpha Analytics" in the name of, or in connection with, any other
business enterprises with which you are or may become associated. There is no
charge to the Trust for the right to use this name.
8. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived, discharged or
terminated orally, and no amendment of this Agreement shall be effective until
approved by the Board, including a majority of the trustees who are not
interested persons of you or of the Trust, cast in person at a meeting called
for the purpose of voting on such approval, and (if required under
interpretations of the Act by the Securities and Exchange Commission) by vote of
the holders of a majority of the outstanding voting securities of the series to
which the amendment relates.
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9. LIMITATION OF LIABILITY TO TRUST PROPERTY
The term "Alpha Analytic Investment Trust" means and refers to the
Trustees from time to time serving under the Trust's Declaration of Trust as the
same may subsequently thereto have been, or subsequently hereto be, amended. It
is expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust personally, but bind only the trust property of the
Trust, as provided in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees and shareholders
of the Trust and signed by officers of the Trust, acting as such, and neither
such authorization by such trustees and shareholders nor such execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Declaration of
Trust. A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of the State of Ohio.
10. SEVERABILITY
In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
(a) This Agreement shall be governed by the laws of the State of Ohio.
(b) Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Investment Company Act of 1940, as amended (the "Act") shall be resolved
by reference to such term or provision of the Act and to interpretation thereof,
if any, by the United States courts or in the absence of any controlling
decision of any such court, by the Securities and Exchange Commission or its
staff. In addition, where the effect of a requirement of the Act, reflected in
any provision of this Agreement is revised by rule, regulation, order or
interpretation of the Securities and Exchange Commission, such provision shall
be deemed to incorporate the effect of such rule, regulation, order or
interpretation.
12. NOTICES
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Trust is 1901 Avenue of
the Stars, Suite 123, Los Angeles, CA 90067, and your address for this purpose
shall be 1901 Avenue of the Stars, Suite 123, Los Angeles, CA 90067.
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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14. BINDING EFFECT
Each of the undersigned expressly warrants and represents that he has
the full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
15. CAPTIONS
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
upon the date thereof.
Yours very truly,
ATTEST: Alpha Analytic Investment Trust
Name/Title:___________________
Dated: ___________, 1998
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST: Alpha Analytics Investment Group, LLC
By
Name/Title:___________________________
Name/Title:___________________
Dated: _____________, 1998
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MANAGEMENT AGREEMENT
TO: Alpha Analytics Investment Group, LLC
1901 Avenue of the Stars, Suite 123
Los Angeles, CA 90067
Dear Sirs:
Alpha Analytics Investment Trust (the "Trust") herewith confirms our
agreement with you.
The Trust has been organized to engage in the business of an investment
company. The Trust currently offers two series of shares to investors, one of
which is the Alpha Analytics Value Fund (the "Fund").
You have been selected to act as the sole investment adviser of the
Fund and to provide certain other services, as more fully set forth below, and
you are willing to act as such investment adviser and to perform such services
under the terms and conditions hereinafter set forth. Accordingly, the Trust
agrees with you as follows effective upon the date of the execution of this
Agreement.
1. ADVISORY SERVICES
You will regularly provide the Fund with such investment advice as you
in your discretion deem advisable and will furnish a continuous investment
program for the Fund consistent with the Fund's investment objectives and
policies. You will determine the securities to be purchased for the Fund, the
portfolio securities to be held or sold by the Fund and the portion of the
Fund's assets to be held uninvested, subject always to the Fund's investment
objectives, policies and restrictions, as each of the same shall be from time to
time in effect, and subject further to such policies and instructions as the
Board may from time to time establish. You will advise and assist the officers
of the Trust in taking such steps as are necessary or appropriate to carry out
the decisions of the Board and the appropriate committees of the Board regarding
the conduct of the business of the Fund as it relates to your responsibilities
otherwise provided for in this Agreement. You may delegate any or all of the
responsibilities, rights or duties described in this paragraph 1 to one or more
sub-advisers who shall enter into agreements with you and the Trust, which
agreements shall be approved and ratified by the Board.
2. ALLOCATION OF CHARGES AND EXPENSES
You will pay all operating expenses of the Fund, including the
compensation and expenses of any employees of the Fund and of any other persons
rendering any services to the Fund; clerical and shareholder service staff
salaries; office space and other office expenses; fees and expenses incurred by
the Fund in connection with membership in investment company organizations;
legal, auditing and accounting expenses; expenses of registering shares under
federal and state securities laws, including expenses incurred by the Fund in
connection with the organization and initial registration of shares of the Fund;
insurance expenses; fees and expenses of the custodian, transfer agent, dividend
disbursing agent, shareholder service agent, plan agent, administrator,
accounting and pricing services agent and underwriter of the Fund; expenses,
including clerical expenses, of issue, sale, redemption or repurchase of shares
of the Fund; the cost of preparing and distributing reports and notices to
shareholders, the cost of printing or preparing prospectuses and statements of
additional information for delivery to the Fund's current and prospective
shareholders; the cost of printing or
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preparing stock certificates or any other documents, statements or reports to
shareholders; expenses of shareholders' meetings and proxy solicitations;
advertising, promotion and other expenses incurred directly or indirectly in
connection with the sale or distribution of the Fund's shares; and all other
operating expenses not specifically assumed by the Fund.
The Fund will pay all brokerage fees and commissions, taxes, interest,
fees and expenses of the non-interested person trustees and such extraordinary
or non-recurring expenses as may arise, and litigation to which the Fund may be
a party and indemnification of the Trust's trustees and officers with respect
thereto. You may obtain reimbursement from the Fund, at such time or times as
you may determine in your sole discretion, for any of the expenses advanced by
you, which the Fund is obligated to pay, and such reimbursement shall not be
considered to be part of your compensation pursuant to this Agreement.
3. COMPENSATION OF THE ADVISER
For all of the services to be rendered and payments to be made as
provided in this Agreement, as of the last business day of each month, the Fund
will pay you a fee at the annual rate of 1.50% of the average value of its daily
net assets.
The average value of the daily net assets of the Fund shall be
determined pursuant to the applicable provisions of the Declaration of Trust of
the Trust or a resolution of the Board, if required. If, pursuant to such
provisions, the determination of net asset value of the Fund is suspended for
any particular business day, then for the purposes of this paragraph, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of the net assets as of the close of the business day, or as of such other time
as the value of the Fund's net assets may lawfully be determined, on that day.
If the determination of the net asset value of the Fund has been suspended for a
period including such month, your compensation payable at the end of such month
shall be computed on the basis of the value of the net assets of the Fund as
last determined (whether during or prior to such month).
4. EXECUTION OF PURCHASE AND SALE ORDERS
In connection with purchases or sales of portfolio securities for the
account of the Fund, it is understood that you will arrange for the placing of
all orders for the purchase and sale of portfolio securities for the account
with brokers or dealers selected by you, subject to review of this selection by
the Board from time to time. You will be responsible for the negotiation and the
allocation of principal business and portfolio brokerage. In the selection of
such brokers or dealers and the placing of such orders, you are directed at all
times to seek for the Fund the best qualitative execution, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer.
You should generally seek favorable prices and commission rates that
are reasonable in relation to the benefits received. In seeking best qualitative
execution, you are authorized to select brokers or dealers who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Fund and/or the other accounts over
which you exercise investment discretion. You are authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a Fund portfolio transaction which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
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<PAGE>
transaction if you determine in good faith that the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or your overall responsibilities with
respect to the Fund and to accounts over which you exercise investment
discretion. The Fund and you understand and acknowledge that, although the
information may be useful to the Fund and you, it is not possible to place a
dollar value on such information. The Board shall periodically review the
commissions paid by the Fund to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits to
the Fund.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to seeking best qualitative execution
as described above, you may give consideration to sales of shares of the Fund as
a factor in the selection of brokers and dealers to execute Fund portfolio
transactions.
Subject to the provisions of the Investment Company Act of 1940, as
amended, and other applicable law, you, any of your affiliates or any affiliates
of your affiliates may retain compensation in connection with effecting the
Fund's portfolio transactions, including transactions effected through others.
If any occasion should arise in which you give any advice to clients of yours
concerning the shares of the Fund, you will act solely as investment counsel for
such client and not in any way on behalf of the Fund. Your services to the Fund
pursuant to this Agreement are not to be deemed to be exclusive and it is
understood that you may render investment advice, management and other services
to others, including other registered investment companies.
5. LIMITATION OF LIABILITY OF ADVISER
You may rely on information reasonably believed by you to be accurate
and reliable. Except as may otherwise be required by the Investment Company Act
of 1940 or the rules thereunder, neither you nor your members, officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under, or
payments made pursuant to, this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of your duties
under this Agreement, or by reason of reckless disregard by any of such persons
of your obligations and duties under this Agreement.
Any person, even though also a director, officer, employee, member or
agent of you, who may be or become an officer, director, trustee, employee or
agent of the Trust, shall be deemed, when rendering services to the Trust or
acting on any business of the Trust (other than services or business in
connection with your duties hereunder), to be rendering such services to or
acting solely for the Trust and not as a director, officer, employee, member or
agent of you, or one under your control or direction, even though paid by you.
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<PAGE>
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall take effect on the date of its execution, and
shall remain in force for a period of two (2) years from the date of its
execution, and from year to year thereafter, subject to annual approval by (i)
the Board or (ii) a vote of a majority (as defined in the Investment Company Act
of 1940) of the outstanding voting securities of the Fund, provided that in
either event continuance is also approved by a majority of the trustees who are
not "interested persons," as defined in the Investment Company Act of 1940, of
you or the Trust, by a vote cast in person at a meeting called for the purpose
of voting such approval.
If the shareholders of the Fund fail to approve the Agreement in the
manner set forth above, upon request of the Board, you will continue to serve or
act in such capacity for the Fund for the period of time pending required
approval of the Agreement, of a new agreement with you or a different adviser or
other definitive action; provided that the compensation to be paid by the Fund
to you for your services to and payments on behalf of the Fund will be equal to
the lesser of your actual costs incurred in furnishing such services and
payments or the amount you would have received under this Agreement for
furnishing such services and payments.
This Agreement may, on sixty days written notice, be terminated with
respect to the Fund, at any time without the payment of any penalty, by the
Board, by a vote of a majority of the outstanding voting securities of the Fund,
or by you. This Agreement shall automatically terminate in the event of its
assignment.
7. USE OF NAME
The Trust and you acknowledge that all rights to the name "Alpha
Analytics" or any variation thereof belong to you, and that the Trust is being
granted a limited license to use such words in its Fund name or in any class
name. In the event you cease to be the adviser to the Fund, the Trust's right to
the use of the name "Alpha Analytics" in connection with the Fund shall
automatically cease on the ninetieth day following the termination of this
Agreement. The right to the name may also be withdrawn by you during the term of
this Agreement upon ninety (90) days' written notice by you to the Trust.
Nothing contained herein shall impair or diminish in any respect, your right to
use the name "Alpha Analytics" in the name of, or in connection with, any other
business enterprises with which you are or may become associated. There is no
charge to the Trust for the right to use this name.
8. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived, discharged or
terminated orally, and no amendment of this Agreement shall be effective until
approved by the Board, including a majority of the trustees who are not
interested persons of you or of the Trust, cast in person at a meeting called
for the purpose of voting on such approval, and (if required under
interpretations of the Act by the Securities and Exchange Commission) by vote of
the holders of a majority of the outstanding voting securities of the series to
which the amendment relates.
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<PAGE>
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
The term "Alpha Analytic Investment Trust" means and refers to the
Trustees from time to time serving under the Trust's Declaration of Trust as the
same may subsequently thereto have been, or subsequently hereto be, amended. It
is expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust personally, but bind only the trust property of the
Trust, as provided in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees and shareholders
of the Trust and signed by officers of the Trust, acting as such, and neither
such authorization by such trustees and shareholders nor such execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Declaration of
Trust. A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of the State of Ohio.
10. SEVERABILITY
In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
(a) This Agreement shall be governed by the laws of the State of Ohio.
(b) Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Investment Company Act of 1940, as amended (the "Act") shall be resolved
by reference to such term or provision of the Act and to interpretation thereof,
if any, by the United States courts or in the absence of any controlling
decision of any such court, by the Securities and Exchange Commission or its
staff. In addition, where the effect of a requirement of the Act, reflected in
any provision of this Agreement is revised by rule, regulation, order or
interpretation of the Securities and Exchange Commission, such provision shall
be deemed to incorporate the effect of such rule, regulation, order or
interpretation.
12. NOTICES
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Trust is 1901 Avenue of
the Stars, Suite 123, Los Angeles, CA 90067, and your address for this purpose
shall be 1901 Avenue of the Stars, Suite 123, Los Angeles, CA 90067.
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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<PAGE>
14. BINDING EFFECT
Each of the undersigned expressly warrants and represents that he has
the full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
15. CAPTIONS
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
upon the date thereof.
Yours very truly,
ATTEST: Alpha Analytic Investment Trust
Name/Title:___________________
Dated: ___________, 1998
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST: Alpha Analytics Investment Group, LLC
By
Name/Title:_____________________________
Name/Title:___________________
Dated: _____________, 1998
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BROWN, CUMMINS & BROWN CO., L.P.A.
ATTORNEYS AND COUNSELORS AT LAW
3500 CAREW TOWER
J.W. BROWN (1911-1995) 441 VINE STREET
JAMES R. CUMMINS CINCINNATI, OHIO 45202
ROBERT S BROWN TELEPHONE (513) 381-2121
DONALD S. MENDELSOHN TELECOPIER (513) 381-2125 OF COUNSEL
LYNNE SKILKEN GILBERT BETTMAN
AMY G. APPLEGATE
MELANIE S. CORWIN
JOANN M. STRASSER
PAMELA L. KOGUT
October 7, 1998
Alpha Analytics Investment Trust
1901 Avenue of the Stars, Suite 123
Los Angeles, CA 90067
Gentlemen:
This letter is in response to your request for our opinion in
connection with the filing of the Registration Statement of Alpha Analytics
Investment Trust (the "Trust").
We have examined a copy of the Trust's Agreement and Declaration of
Trust, the Trust's ByLaws, the Trust's record of the various actions by the
Trustee thereof, and all such agreements, certificates of public officials,
certificates of officers and representatives of the Trust and others, and such
other documents, papers, statutes and authorities as we deem necessary to form
the basis of the opinion hereinafter expressed. We have assumed the genuineness
of the signatures and the conformity to original documents of the copies of such
documents supplied to us as original or photostat copies.
Based upon the foregoing, we are of the opinion that, after
registration is effective for purposes of federal and applicable state
securities laws, the shares of each series of the Trust, if issued in accordance
with the then current Prospectus and Statement of Additional Information of the
Trust, will be legally issued, fully paid and non-assessable.
We herewith give you our permission to file this opinion with the
Securities and Exchange Commission as an exhibit to the Registration Statement.
Very truly yours,
BROWN, CUMMINS & BROWN CO., L.P.A.
BCB:jlm
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