SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/
Pre-Effective Amendment No. __ / /
Post-Effective Amendment No. __ / /
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No. __ / /
THE RISA INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
225 South 15th Street, Suite 930, Philadelphia, PA 19102
----------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (215) 545-4050
O. Sam Folin, Managing Director Copy to:
RISA Investment Advisers, LLC Brian S. Vargo, Esq.
225 South 15th Street Pepper Hamilton LLP
Suite 930 3000 Two Logan Square
Philadelphia, PA 19102 Eighteenth and Arch Streets
(Name and Address of Agent for Service) Philadelphia, PA 19103
It is proposed that this filing will become effective:
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / 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.
<PAGE>
THE RISA FUND
Institutional Class Shares
PROSPECTUS DATED ___________, 1999
This Prospectus describes Institutional Class Shares of The RISA Fund. The
investment objective of the Fund is to seek maximum total return by investing in
securities of issuers located in the Republic of South Africa ("South Africa").
The Fund will invest primarily in growth stocks of South African companies which
have demonstrated a commitment to the "new" South Africa.
This Prospectus contains important information about the Fund. Please read
it before investing and keep it for future reference.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
Page
----
RISK/RETURN SUMMARY ........................................................ 1
ADDITIONAL INVESTMENT INFORMATION .......................................... 3
HISTORICAL PERFORMANCE OF APPROVED SOUTH AFRICAN STOCKS .................... 3
INVESTMENT RISKS ........................................................... 4
MANAGEMENT OF THE FUND ..................................................... 5
PRICING OF FUND SHARES ..................................................... 6
PURCHASE OF SHARES ......................................................... 7
SHAREHOLDER ACCOUNTS ....................................................... 7
REDEMPTION OF SHARES ....................................................... 8
DIVIDENDS, DISTRIBUTIONS AND TAX INFORMATION ............................... 9
i
<PAGE>
RISK/RETURN SUMMARY
Investment Objective
The Fund seeks maximum total return by investing in securities of South
African issuers.
Principal Investment Strategies
1. Under normal market conditions, the Fund will invest approximately 75% of its
total assets in publicly traded South African stocks with above average
growth prospects that qualify as "New South Africa Companies." "New South
Africa Companies" are companies that:
o create jobs and train workers;
o encourage economic and social empowerment of the majority population;
o encourage employment equity;
o maintain quality workplace conditions;
o protect the environment;
o enforce high health and safety standards; and
o demonstrate open and effective corporate governance.
Approximately 220 stocks, as monitored by the Labor Research Service of
South Africa, currently are identified as New South Africa Companies.
2. The Fund may invest up to 25% of its assets in sovereign debt issued by the
government of South Africa.
3. Additionally, the Fund is permitted to invest up to 20% of its assets in high
quality money market instruments of U.S. and South African issuers. When
adverse market or economic conditions occur, the Fund temporarily may invest
up to 100% of its assets in U.S. money market instruments.
Principal Risks
The Fund's share price will fluctuate with changes in the market value of
the Fund's portfolio securities. Stocks are subject to market, economic and
business risks that cause their prices to fluctuate. Furthermore, investing in a
developing country such as South Africa involves the following risks:
o foreign currency risk, which is the risk that the U.S. dollar value of the
Fund's investments may decline due to changes in foreign currency exchange
rates or imposition of exchange control regulations;
o political and economic instability;
o less liquidity and higher volatility in securities markets, and
o the potential for expropriation, nationalization or confiscatory taxation
and limitations on the use or removal of the Fund's assets.
You can lose money by investing in the Fund.
-1-
<PAGE>
Estimated Fund Expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
The RISA Fund
Shareholder Fees (paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases...................................... None
Maximum Deferred Sales
Charge (Load)............................................. None
Redemption Fee (as a percentage of
amount redeemed, if applicable)........................... 2%
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee................................................. 1.25%
Distribution (12b-1) Fees...................................... None
Other Expenses................................................. 1.25%(1)
Total Annual Fund Operating Expenses .................. 2.50%(2)
- ---------------
(1) "Other Expenses" are based on estimated amounts for the current fiscal
year.
(2) The Investment Adviser has voluntarily agreed to waive its fees and
assume certain Fund expenses so that the Fund's total annual operating
expenses will not exceed 2.00% of the average daily net assets of the Fund.
Example: This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions, your costs would be:
1 year 3 years
$ $
----------- ------------
-2-
<PAGE>
ADDITIONAL INVESTMENT INFORMATION
The Fund's investment objective is to seek maximum total return by
investing in the securities of South African issuers. The investment objective
of the Fund may not be changed without shareholder approval. The Fund will
invest in the following:
o Equity Investments. The Fund normally invests at least 75% of its total
assets in growth stocks of New South Africa Companies. While the Fund
primarily invests in common stocks, the Fund also may invest in other
types of equity securities such as preferred stocks, debt securities
which are convertible into or exchangeable for common stock, and
warrants or rights that are convertible into common stock. The Fund's
portfolio securities generally will be traded on the Johannesburg Stock
Exchange, but also may be listed in established over-the-counter
markets in South Africa. The Fund is permitted to invest up to 15% of
its assets in illiquid securities, including restricted securities and
publicly traded stocks with limited marketability.
o Fixed Income Investments. The Fund may invest up to 25% of its assets,
from time to time, in sovereign debt obligations issued by the
government of South Africa. The sovereign debt obligations in which the
Fund invests will be investment grade.
o Money Market Investments. The Fund is permitted to invest up to 20% of
its assets as reserves to facilitate the Fund's cash flow needs (e.g.,
redemptions, expenses, and purchases of portfolio securities). The
Fund's reserves will be invested in investment grade money market
instruments of U.S. and South African issuers.
o Defensive Investments. Under adverse investment conditions, the Fund
temporarily may invest up to 100% of its total assets in high quality,
short term U.S. money market instruments. When following such a
defensive strategy, the Fund will be less likely to achieve its
investment objective.
HISTORICAL PERFORMANCE OF APPROVED SOUTH AFRICAN STOCKS
The following table shows the past performance of the universe of stocks
("Universe") monitored by the Labor Research Service of South Africa and
approved by UNITY, which represents certain trade organizations in South Africa,
compared to the performance of the Johannesburg Stock Exchange All Shares Index
("JSE") for the seventy-two month period ended December 31, 1998. Each company
approved by Unity is automatically included in the Adviser's list of New South
Africa Companies eligible for investment by the Fund. However, the Fund will not
own the securities of every company in the Universe. The Fund will also invest
in additional companies not yet approved by Unity, but which will be submitted
to Unity for review. If Unity fails to approve a company, the company's stock
will be removed from the Fund's portfolio in an orderly manner. The Universe is
only an approximation of the Fund's portfolio holdings. The performance results
of the Universe presented below are not intended to predict or suggest the
return to be experienced by the Fund or the return that an individual investor
might achieve by investing in the Fund.
Comparison of the Performance of the Universe of Approved Stocks to the JSE
- --------------------------------------------------------------------------------
for the Period January 1, 1993 To December 31, 1998
- -----------------------------------------------------
Performance
Universe JSE-All Share Index
Year 1993 53.75% 54.68% (a)
Year 1994 17.27% 22.66% (b)
-3-
<PAGE>
Year 1995 13.52% 8.80% (c)
Year 1996 9.90% 9.34% (d)
Year 1997 8.35% -4.51% (e)
Year 1998 ____% ____% (f)
Time weighted average over (g)
72 months ____% ____%
a-f Time weighted average per month over the period of 12 months.
g Time weighted average per month over the period 1/1/93 to 31/12/98
[72 months]
Universe Time weighted average per quarter over the period 1/1/93 to 31/12/98
[72 months]
1. Income based on accrual accounting.
2. JSE Index figures sourced from recognized database (MICROPAL).
Verified by PricewaterhouseCoopers, LLP, South Africa
INVESTMENT RISKS
Market Risk. The prices of the securities owned by the Fund will fluctuate
in value. These fluctuations can occur because of general market and economic
conditions, perceptions regarding the industry of the issuer company or the
issuer company's particular circumstances. Changes in the value of the Fund's
portfolio securities will result in changes in the Fund's share price.
Consequently, when you sell Fund shares, they may be worth less than what you
paid for them.
The Fund will own stocks of small companies which are often subject to
wider and more abrupt fluctuations in market price than larger, more established
companies. The reason for this volatility is that these stocks typically are
traded in lower volume, and the issuers typically are more sensitive to changing
economic conditions and subject to greater changes in earnings and business
prospects.
Foreign Risk. Foreign securities markets generally are not as developed or
efficient as those in the United States. Securities of some foreign issuers are
less liquid and more volatile than securities of comparable U.S. issuers.
Because the Fund invests primarily outside of the U. S., it will be subject to
foreign investment risks which include possible political and economic
instability, seizure or nationalization of foreign holdings and adoption of
governmental restrictions which might adversely affect or restrict the payment
of principal and interest on the foreign securities to investors located outside
the country of the issuer.
There may be less publicly available information about South African
companies than about U.S. companies, and South African companies are not subject
to accounting, auditing and financial reporting standards and requirements
comparable to those to which U.S. companies are subject. Brokerage commissions
and other transaction costs on South African securities exchanges may be higher
than in the U.S. There is generally less government supervision and regulation
of exchanges, brokers and issuers in South Africa than there is in the U.S.
South Africa is a developing country, and its economy is less diverse and
mature, and its political system is less stable, than those of developed
countries. The markets of developing countries generally are more volatile than
the markets of more mature economies; however, such markets may provide higher
rates of return to investors. Many developing countries have experienced
substantial, and in some periods extremely high, rates of inflation for many
-4-
<PAGE>
years. Inflation and rapid fluctuations in inflation rates have had and may
continue to have adverse effects on the economies and securities markets of
certain developing countries.
Foreign Currency Risk. The value of the Fund's assets as measured in U.S.
dollars will fluctuate with changes in currency rates. Currency exchange rates
may fluctuate significantly over a short period of time. They generally are
determined by the forces of supply and demand in the foreign exchange markets
and the relative merits of investments in different countries, actual or
perceived changes in interest rates and other complex factors. Currency exchange
rates also can be affected by intervention by U.S. or foreign governments or
central banks, or the failure to intervene, or by currency controls or political
developments in the United States or abroad.
Fixed Income Security Risk. The market value of fixed income securities,
such as South African government debt obligations, will change in response to
interest rate changes and other factors. During periods of falling interest
rates, the value of outstanding fixed income securities generally rises. During
periods of rising interest rates, the value of such securities generally
declines. While securities with longer maturities tend to produce higher yields,
the prices of longer maturity securities are also subject to greater market
fluctuations as a result of changes in interest rates. Changes by recognized
agencies in the credit rating of any fixed income security and in the ability of
an issuer to make payments of interest and principal also affect the value of
these investments. Changes in the value of the Fund's debt securities will
affect the net asset value of the Fund's shares.
Hedging Risk. The Fund is permitted to invest in derivatives which are
financial instruments which derive their performance, at least in part, from the
performance of an underlying assets, index, currency or interest rate. The
derivatives the Fund may use include options and futures. While derivatives can
be used effectively to further the Fund's investment objective, under certain
market conditions, they can increase the volatility of the Fund's net asset
value, decrease the liquidity of the Fund's portfolio and make the accurate
pricing of the Fund's portfolio more difficult.
The primary risks associated with the Fund's use of futures and options are
(i) the failure to predict accurately the direction of stock prices, interest
rates, currency movements and other economic factors; (ii) the failure as
hedging techniques in cases where the price movements of the securities
underlying the options and futures do not follow the price movements of the
portfolio securities subject to the hedge; (iii) the potentially unlimited loss
from investing in futures contracts; and (iv) the likelihood of the Fund being
unable to control losses by closing its position where a liquid secondary market
does not exist. The risk that the Fund will be unable to close out a futures
position or options contract will be minimized by the Fund only entering into
futures contracts or options transactions on national exchanges and for which
there appears to be a liquid secondary market.
Year 2000 Risk. An issue has emerged regarding how the software used by the
Fund's service providers can accommodate the date "2000." Failure to address
this "Year 2000 Problem" could result in major systems failure which could
disrupt the Fund's operations. The Investment Adviser and Sub-Adviser are in the
process of working with the Fund's service providers to prepare for the Year
2000 Problem. Based on information currently available, the Adviser and the
Sub-Adviser do not expect that the Fund will incur significant operating
expenses or be required to incur material costs in order to be Year 2000
compliant. The Fund can not guarantee however, that all Year 2000 issues will be
identified and corrected by January 1, 2000. At this time, however, there can be
no assurance that these steps will be sufficient to avoid any adverse impact on
the Fund.
MANAGEMENT OF THE FUND
Investment Adviser and Sub-Adviser
The Investment Adviser for the Fund is RISA Investment Advisers, LLC,
located at 225 South 15th Street, Suite 930, Philadelphia, PA 19102. The
Investment Adviser supervises the investment and reinvestment of the assets of
the Fund in accordance with the Fund's objective, policies and restrictions.
-5-
<PAGE>
For its services, the Investment Adviser is paid a monthly fee at the
annual rate of 1.25% of the Fund's average daily net assets. This fee is subject
to voluntary reductions by the Investment Adviser which the Adviser may
terminate at any time.
African Harvest Asset Managers (Proprietary) Limited, (the "Sub-Adviser"),
located at African Harvest House, Second Floor, Boundary Terrace, #1 Mariendahl
Lane, Newlands, 7700, South Africa, serves as the Fund's sub-investment advisor
pursuant to a Sub-Advisory Agreement with the Investment Advisor. For its
services, the Sub-Advisor is paid a monthly fee by the Investment Advisor equal
to 0.55% of the Fund's average daily net assets on an annualized basis.
Portfolio Manager
Denzil Newman is principally responsible for the day-to-day management of
the Fund's investments. Since 1998, Mr. Newman has been Chief Investment Officer
and Fund Manager of the Sub-Adviser. From 1993 to 1997, he was Senior Fund
Manager at Syfrets Managed Assets Ltd. in Cape Town, South Africa. Mr. Newman
has a Bachelor of Science degree in Accounting from Southern Adventist
University in Collegedale, Tennessee and has been employed in the securities
investment field in South Africa since 1976.
PRICING OF FUND SHARES
The Fund's accounting agent, PFPC Inc., determines the net asset value per
share of the Fund as of 4:00 p.m. Eastern Time on each day that the New York
Stock Exchange is open for unrestricted trading and on which there is a purchase
or redemption of the Fund's shares. The net asset value is determined by
dividing the value of the Fund's portfolio securities, plus any cash and other
assets, less all liabilities, by the number of shares outstanding. Expenses and
fees of the Fund, including advisory and administration fees, are accrued daily
and taken into account for the purpose of determining the net asset value. Most
of the Fund's portfolio securities are quoted in foreign currency and will be
valued daily in U.S. dollars at the foreign currency exchange rates prevailing
at the time PFPC calculates the daily net asset value per share. Although the
Fund values its assets in U.S. dollars on a daily basis, it does not intend to
convert its holdings of foreign currencies into U.S. dollars on a daily basis.
In valuing the Fund's net assets, all securities for which representative
market quotations are available will be valued at the last quoted sales price on
the security's principal exchange on that day. If there are no sales of the
relevant security on such day, the security will be valued at the mean between
the closing bid and asked price on that day, if any. Securities for which market
quotations are not readily available and all other assets will be valued at
their respective fair market value as determined in good faith by, or under
procedures established by, the Board of Trustees. In determining fair value, the
Trustees may employ an independent pricing service.
Money market securities with less than sixty days remaining to maturity
when acquired by the Fund will be valued on an amortized cost basis by the Fund,
excluding unrealized gains or losses thereon from the valuation. This is
accomplished by valuing the security at cost and then assuming a constant
amortization to maturity of any premium or discount. If the Fund acquires a
money market security with more than sixty days remaining to its maturity, it
will be valued at current market value until the 60th day prior to maturity, and
will then be valued on an amortized cost basis based upon the value on such date
unless the Trustees determine during such 60-day period that this amortized cost
value does not represent fair market value.
The Fund's securities are primarily listed on foreign exchanges that may
trade on days when the Fund does not price its shares. Therefore, the Fund's net
asset value may change on days when shareholders will not be able to purchase or
redeem the Fund's shares.
-6-
<PAGE>
PURCHASE OF SHARES
After you open an account with the Fund, you may purchase shares by (a)
writing to the Fund and enclosing your check as payment or (b) by calling (800)
XXXXXXX to arrange for payment by wire transfer.
To Open an Account. Send a completed application form by regular mail to
__________, c/o PFPC Inc., P.O. Box _____, Wilmington, DE 19899, or by express
mail to __________________, c/o PFPC Inc., 400 Bellevue Parkway, Suite 108,
Wilmington, DE 19809. You may request an application form by calling (800)
_______.
To Purchase by Mail. Your initial purchase may be indicated on your
application. For additional purchases, you may send the Fund a simple letter or
use order forms supplied by the Fund. Please enclose your check drawn on a U.S.
bank payable to "The RISA Fund." Please indicate the amount to be invested in
the Fund and your Fund account number.
To Purchase by Wire Transfer: Please call the Fund at (800) xxxxxxx for
instructions and to make specific arrangements before each wire transfer.
Minimum Initial Investment. The minimum initial investment is $100,000, but
subsequent investments may be made in any amount. From time to time, the
Investment Adviser, in its sole discretion, may accept less than the minimum
initial investment amount to establish certain shareholder accounts.
Purchase Price and Timing. Shares of the Fund are offered at their net
asset value next determined after a purchase order is received and accepted.
Purchase orders received by and accepted before 4:00 p.m. Eastern time, on any
Business Day of the Fund will be priced at the net asset value per share for
that Business Day. Purchase orders received and accepted after this deadline
will be priced as of the deadline on the following Business Day of the Fund. A
"Business Day of the Fund" is any day on which the NYSE and Federal Reserve Bank
are open for business. The Fund and the Distributor each reserves the right to
reject any purchase order and may suspend the offering of shares for a period of
time.
In Kind Purchases. If accepted by the Fund, shares may be purchased in
exchange for securities that are eligible for acquisition by the Fund. Such
securities will be valued in accordance with the procedures for valuing the
Fund's assets as described under "Pricing of Fund Shares." Please contact the
Fund about the availability of this purchase method.
SHAREHOLDER ACCOUNTS
Shareholder Inquiries. Shareholder inquiries may be made by writing the
Fund, c/o PFPC Inc., 400 Bellevue Parkway, Suite 108, Wilmington, DE 19809 or
calling (800) XXXXXXX.
Shareholder Statements. The Fund will mail a statement at least quarterly
showing all purchases, redemptions and balances in the Fund. Shareholdings are
expressed in terms of full and fractional shares of the Fund rounded to the
nearest 1/1000th of a share. In the interest of economy and convenience, the
Trust does not issue share certificates.
Non-Individual Accounts. Corporations, partnerships, fiduciaries and other
non-individual investors may be required to furnish certain additional
documentation to make purchases, exchanges and redemptions.
Minimum Account Size. Due to the relatively high cost of maintaining small
shareholder accounts, the Fund reserves the right to automatically close any
account with a current value of less than $10,000 by involuntarily redeeming all
shares in the account and mailing the proceeds to the shareholder. Shareholders
will be notified if their account value is less than $10,000 and will be allowed
-7-
<PAGE>
60 days in which to increase their account balance to $10,000 or more to prevent
the account from being closed. Reductions in value that result solely from
market activity will not trigger an involuntary redemption.
REDEMPTION OF SHARES
Redemption Fee. The Fund imposes a redemption fee on shares redeemed within
two years of purchase. The redemption fee equals 2% of the amount redeemed and
is paid directly to the Fund. The purpose of this fee, which is not a sale
charge, is to discourage short-term trading in the Fund's shares and to allocate
the transaction costs associated with redemptions to those investors redeeming
Fund shares. Such transaction costs include brokerage commissions and odd lot
premiums, administration costs and custodian fees.
You may redeem shares by mailing instructions to the Fund or calling the
Fund at (800) XXXXXXX. The Fund will promptly mail you a check or wire transfer
funds to your bank, as described below.
To Redeem By Mail: You may send written instructions, with signature
guarantees, by regular mail to: __________________, c/o PFPC Inc., P.O. Box
____, Wilmington, DE 19899-9752, or by express mail to ___________________, c/o
PFPC Inc., 400 Bellevue Parkway, Suite 108, Wilmington, DE 19809. The
instructions should indicate the Fund from which shares are to be redeemed, the
number of shares or dollar amount to be redeemed, the Fund account number and
the name of the person in whose name the account is registered. A signature and
a signature guarantee are required for each person in whose name the account is
registered. A signature may be guaranteed by an eligible institution acceptable
to the Fund, such as a bank, broker, dealer, municipal securities dealer,
government securities dealer, credit union, national securities exchange,
registered securities association, clearing agency, or savings association.
To Redeem By Telephone: If you want to redeem your shares by telephone you
must elect to do so by checking the appropriate box of your initial Application
or by calling the Fund at (800) XXXXXXX to obtain a separate application for
telephone redemptions. In order to redeem by telephone, you must call the Fund
Monday through Friday during normal business hours of 9 a.m. to 4 p.m., Eastern
time, and indicate your name, __________________, the Fund's name, your Fund
account number and the number of shares you wish to redeem. The Fund will employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine and will not be liable for any losses to a shareholder due to
unauthorized or fraudulent telephone transactions. If the Fund, the Manager, the
Transfer Agent or any of their employees fails to abide by their procedures, the
Fund may be liable to a shareholder for losses he/she suffers from any resulting
unauthorized transactions. During times of drastic economic or market changes,
the telephone redemption privilege may be difficult to implement. In the event
that you are unable to reach the Fund by telephone, you may make a redemption
request by mail.
Additional Redemption Information. You may redeem all or any part of the
value of your account on any Business Day. Redemptions are made at the net asset
value next calculated after the Fund has received and accepted your redemption
request. (See "Pricing Of Fund Shares.")
Redemption checks are mailed on the next Business Day of the Fund following
acceptance of redemption instructions but in no event later than 7 days
following such receipt and acceptance. Amounts redeemed by wire from the Fund
are normally wired on the next business day after acceptance of redemption
instructions. In no event are redemption proceeds wired later than 7 days
following such receipt and acceptance. If the shares to be redeemed were
purchased by check, the Fund reserves the right not to make the redemption
proceeds available until it has reasonable grounds to believe that the check has
been collected (which could take up to 10 days).
Redemption proceeds exceeding $1,000 may be wired to your predesignated
bank account in any commercial bank in the United States. The receiving bank may
charge a fee for this service. Alternatively, proceeds may be mailed to your
bank or, for amounts of less than $1,000, mailed to your Fund account address of
record if the address has been established for a minimum of 60 days. In order to
-8-
<PAGE>
authorize the Fund to mail redemption proceeds to your Fund account address of
record, complete the appropriate section of the application for telephone
redemptions or include your Fund account address of record when you submit
written instructions. You may change the account that have designated to receive
amounts redeemed at any time. Any request to change the account designated to
receive redemption proceeds should be accompanied by a guarantee of the
shareholder's signature by an eligible institution. A signature and a signature
guarantee are required for each person in whose name the account is registered.
Further documentation will be required to change the designated account when
shares are held by a corporation, partnership, fiduciary or other non-individual
investor.
For more information on redemption services, call the Fund at (800)
XXXXXXX.
Redemption Policies. Redemption payments in cash will ordinarily be made
within seven days after receipt of the redemption request in good form. However,
the right of redemption may be suspended or the date of payment postponed in
accordance with the 1940 Act. The amount received upon redemption may be more or
less than the amount paid for the shares depending upon the fluctuations in the
market value of the assets owned by the Fund. If the Board of Trustees
determines that it would be detrimental to the best interests of the remaining
shareholders of the Fund to make a particular redemption payment in cash, the
Fund may pay all or part of the redemption price by distributing the Fund's
portfolio securities to the redeeming shareholder. Investors may incur brokerage
charges and other transaction costs selling securities that were received in
payment of redemptions.
DIVIDENDS, DISTRIBUTIONS AND TAX INFORMATION
The Fund will pay a dividend from its net investment income, if any, once a
year. Additionally, the Fund will distribute any net realized securities gains
once a year. Your distributions will be reinvested in additional Fund shares
unless you instruct the Fund otherwise.
The Fund intends to distribute substantially all of its net investment
income and net capital gains. Dividends from net investment income or net
short-term capital gains will be taxable to you as ordinary income, whether
received in cash or in additional shares. For corporate investors, dividends
from net investment income will generally qualify in part for the corporate
dividends-received deduction. However, the portion of the dividends so qualified
depends on the aggregate qualifying dividend income received by the Fund from
domestic (U.S.) sources.
Distributions paid by the Fund from long-term capital gains, whether
received in cash or in additional shares, are taxable to those investors subject
to income tax as long-term capital gains, regardless of the length of time an
investor has owned shares in the Fund. Capital gains distributions may be
expected to vary considerably from year to year. Also, for those investors
subject to tax, if purchases of shares in the Fund are made shortly before the
record date for a dividend or capital gains distribution, a portion of the
investment will be returned as a taxable distribution.
Dividends which are declared in October, November or December to
shareholders of record in such a month but which, for operational reasons, may
not be paid to the shareholder until the following January, will be treated for
tax purposes as if paid by the Fund and received by the shareholder on December
31 of the calendar year in which they are declared.
Any time you sell Fund shares, it is considered a taxable event for you and
may result in a capital gain or loss to you depending on the purchase price and
sale price of the shares you sell. You are responsible for tax liabilities on
your transactions in Fund shares.
Each year, the Fund will mail information to shareholders on the tax status
of the Fund's dividends and distributions. The Fund is required to withhold 31%
of taxable dividends, capital gains distributions, and redemptions paid to
shareholders who have not complied with Internal Revenue Service taxpayer
-9-
<PAGE>
identification regulations. You may avoid this withholding requirement by
certifying on your account registration form your proper taxpayer identification
number and by certifying that you are not subject to backup withholding.
In addition to federal taxes, shareholders may be subject to state and
local taxes on distributions. It is recommended that shareholders consult their
tax advisers regarding specific questions as to federal, state, local or foreign
taxes. The tax discussion set forth above is included for general information
only, prospective investors should consult their own tax advisers concerning the
federal, state, local or foreign tax consequences of an investment in the Fund.
-10-
<PAGE>
[BACK COVER]
THE RISA INVESTMENT TRUST
The Fund's Statement of Additional Information ("SAI"), dated ________,
1999, contains additional information about the Fund which has been incorporated
by reference into this Prospectus. A copy of the SAI is available without charge
upon request by calling 1-800-___________.
Information about the Fund, including the SAI, can be reviewed and copied
at the Securities and Exchange Commission's Public Reference Room in Washington,
D.C. (Call 1-800-SEC-0330 for details). Reports and other information about the
Fund are also available on the Commission's Internet site at http://www.sec.gov
and copies of this information may be obtained, upon payment of a duplicating
fee, by writing to the Public Reference Section of the Commission, Washington,
D.C. 20549-6009.
INVESTMENT ADVISER
RISA Investment Advisers, LLC
225 South 15th Street, Suite 930
Philadelphia, PA 19102
SUB-INVESTMENT ADVISER
African Harvest Asset Managers (Proprietary) Limited
African Harvest House, Second Floor
Boundary Terrace
#1 Mariendahl Lane
Newlands, 7700, South Africa
DISTRIBUTOR
BOE Securities, Inc.
225 South 15th Street, Suite 928
Philadelphia, PA 19102
SHAREHOLDER SERVICES
PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809
CUSTODIAN
Citibank
---------------
---------------
LEGAL COUNSEL
Pepper Hamilton LLP
3000 Two Logan Square
18th & Arch Streets
Philadelphia, PA 19103-2799
AUDITORS
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, PA 19103
<PAGE>
THE RISA FUND
Institutional Class Shares
STATEMENT OF ADDITIONAL INFORMATION DATED _______ , 1999
This Statement of Additional Information ("SAI"), which is not a
prospectus, describes The RISA Fund, which is a series of The RISA Investment
Trust (the "Trust"). The SAI should be read in conjunction with The RISA Fund's
current Prospectus dated _____, 1999. No investment in shares should be made
without first reading the Prospectus. You may obtain a copy of the Prospectus
without charge by contacting the Fund at the address or telephone number listed
below.
400 Bellevue Parkway
Wilmington, DE 19809
(800)___-____
<PAGE>
TABLE OF CONTENTS
FUND HISTORY AND CAPITAL STOCK ............................................ 3
INVESTMENT STRATEGIES AND RISKS ........................................... 3
INVESTMENT RESTRICTIONS ................................................... 10
MANAGEMENT OF THE FUND .................................................... 11
INVESTMENT ADVISORY AND OTHER SERVICES .................................... 12
ALLOCATION OF PORTFOLIO BROKERAGE ......................................... 13
DISTRIBUTION OF FUND SHARES ............................................... 14
PURCHASE OF SHARES ........................................................ 14
REDEMPTIONS ............................................................... 15
TAXATION .................................................................. 15
CALCULATION OF PERFORMANCE DATA ........................................... 16
-2-
<PAGE>
FUND HISTORY AND CAPITAL STOCK
The Trust was organized as a Delaware business trust under an Agreement and
Declaration of Trust dated December 30, 1998. The Agreement and Declaration of
Trust permits the Trustees to issue an unlimited number of shares of beneficial
interest with a $0.001 par value per share. The Board of Trustees has the power
to designate one or more series or classes of shares of beneficial interest and
to classify or reclassify any unissued shares with respect to such series.
Currently, the Trust offers only one series, The RISA Fund.
The shares of the Fund, when issued, will be fully paid and non-assessable
and within each series or class, have no preference as to conversion, exchange,
dividends, retirement or other features. The shares of the Trust which the
Trustees may, from time to time, establish, shall have no preemptive rights. The
shares of the Trust have non-cumulative voting rights, which means that the
holders of more than 50% of the shares voting for the election of trustees can
elect 100% of the trustees if they choose to do so. A shareholder is entitled to
one vote for each full share held (and a fractional vote for each fractional
share held), then standing in his name on the books of the Trust. On any matter
submitted to a vote of shareholders, all shares of the Trust then issued and
outstanding and entitled to vote on a matter shall vote without differentiation
between separate series on a one-vote-per-share basis. Each whole share is
entitled to one vote and each fractional share is entitled to a proportionate
fractional vote. If a matter to be voted on does not affect the interests of all
series of the Trust, then only the shareholders of the affected series shall be
entitled to vote on the matter. The Trust's Agreement and Declaration of Trust
also gives shareholders the right to vote (i) for the election or removal of
trustees; (ii) with respect to additional matters relating to the Trust as
required by the Investment Company Act; and (iii) on such other matters as the
Trustees consider necessary or desirable.
INVESTMENT STRATEGIES AND RISKS
The Fund is a diversified, open-end management investment company. The
Prospectus describes the Fund's investment objective and the principal
strategies to be employed to achieve that objective. This section contains
supplemental information concerning certain types of securities in which the
Fund will invest, the Fund's investment policies and strategies, and certain
risks associated with such investments and strategies.
Illiquid and Restricted Securities
The Fund will not invest more than 15% of its net assets in illiquid
investments, which include securities for which there is no readily available
market, securities subject to contractual restrictions on resale and otherwise
restricted securities. The Board of Trustees will adopt liquidity guidelines and
delegate to the Investment Adviser and Sub-Adviser the daily function of
determining and monitoring liquidity of restricted securities. The Board of
Trustees, however, will retain sufficient oversight and be ultimately
responsible for the determinations.
Securities Lending
The Fund may lend its investment securities to approved borrowers who need
to borrow securities in order to complete certain transactions, such as covering
short sales, avoiding failures to deliver securities or completing arbitrage
operations. By lending its investment securities, the Fund attempts to increase
its income through the receipt of interest on the loan. Any gain or loss in the
market price of the securities loaned that might occur during the term of the
loan would be for the account of the Fund. The Fund may lend its investment
securities to qualified brokers, dealers, domestic and foreign banks or other
financial institutions, so long as the terms, the structure and the aggregate
amount of such loans are not inconsistent with the Investment Company Act of
1940, as amended, (the "Investment Company Act") or the Rules and Regulations or
interpretations of the U.S. Securities and Exchange Commission (the "SEC")
thereunder. At the present time, the staff of the SEC does not object if an
investment company pays reasonable negotiated fees in connection with loaned
securities so long as such fees are set forth in a written contract and approved
-3-
<PAGE>
by the investment company's Board of Trustees. In addition, voting rights may
pass with the loaned securities, but if a material event occurs affecting an
investment on a loan, the loan must be called and the securities voted.
Repurchase Agreements
The Fund may enter into repurchase agreements. Under a repurchase
agreement, the Fund acquires a debt instrument for a relatively short period
(usually not more than one week) subject to the obligation of the seller to
repurchase and the Fund to resell such debt instrument at a fixed price. The
resale price is in excess of the purchase price so that it reflects an agreed
upon market interest rate effective for the period of time during which the
Fund's money is invested. The Fund's risk is limited to the ability of the
seller to pay the agreed upon sum on the delivery date. When the Fund enters
into a repurchase agreement, it obtains collateral having a value at least equal
to the amount of the purchase price. Repurchase agreements can be considered
loans collateralized by the underlying securities. The collateral underlying a
repurchase agreement will be marked to market every business day so that the
value of the collateral is at least equal to the value of the loan, including
accrued interest earned. In evaluating whether to enter into a repurchase
agreement, the Fund's Investment Adviser and Sub-Adviser will carefully consider
the creditworthiness of the seller. If the seller defaults and the value of the
collateral securing the repurchase agreement declines, the Fund may incur a
loss.
When-Issued, Forward Commitments and Delayed Settlement Securities
The Fund may invest in securities whose terms and characteristics are
already known but which have not been issued. These are so-called "when-issued"
or "forward commitments." Delayed settlements occur when the Fund agrees to buy
securities at some time in the future, making no payment until the transaction
is actually completed. The Fund engages in these transactions to buy securities
that fit with its investment objective at attractive prices, not to increase it
investment leverage. Securities purchased on a when-issued basis involve a risk
of loss if they decline in market value prior to their actual delivery to the
Fund. The Fund will establish with its custodian, a segregated account, in which
it will maintain cash or liquid securities equal in value to its obligations for
when-issued securities.
Hedging Strategies
The Fund may engage in various portfolio strategies to hedge against
adverse movements in the equity, debt and currency markets. The Fund may buy or
sell futures contracts, write (i.e., sell) covered call and put options on its
portfolio securities, purchase put and call options on securities and engage in
transactions in related options on such futures. Each of these portfolio
strategies is described below. Although certain risks are involved in options
and futures transactions, the Investment Adviser and Sub-Adviser believe that,
because the Fund will engage in options and futures transactions only for
hedging purposes, these transactions will not subject it to the risks frequently
associated with the speculative use of options and futures transactions. While
the Fund's use of hedging strategies is intended to reduce the volatility of the
net asset value of the Fund's shares, the Fund's net asset value will fluctuate.
There can be no assurance that the Fund's hedging transactions will be
effective. Also, the Fund may not necessarily be engaging in hedging activities
when movements in any equity, debt or currency market occur.
Forward Foreign Currency Exchange Contracts. The U.S. dollar value of the
assets of the Fund may be affected favorably or unfavorably by changes in
foreign currency exchange rates and exchange control regulations, and the Fund
may incur costs in connection with conversions between various currencies. The
Fund will conduct its foreign currency exchange transactions either on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency exchange
market, or through entering into forward contracts to purchase or sell foreign
currencies. A forward foreign currency exchange contract involves an obligation
to purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. These contracts are traded in the
interbank market conducted directly between currency traders (usually large
-4-
<PAGE>
commercial banks) and their customers. A forward contract generally has no
deposit requirement, and no commissions are charged at any stage for such
trades.
The Fund may enter into forward foreign currency exchange contracts in
several circumstances. When the Fund enters into a contract for the purchase or
sale of a security denominated in a foreign currency, or when the Fund
anticipates the receipt in a foreign currency of dividends or interest payments
on a security which it holds, the Fund may desire to "lock-in" the U.S. dollar
price of the security or the U.S. dollar equivalent of such dividend or interest
payment, as the case may be. By entering into a forward contract for a fixed
amount of dollars, for the purchase or sale of the amount of foreign currency
involved in the underlying transactions, the Fund will be able to protect itself
against a possible loss resulting from an adverse change in the relationship
between the U.S. dollar and the subject foreign currency during the period
between the date on which the security is purchased or sold, or on which the
dividend or interest payment is declared, and the date on which such payments
are made or received.
Additionally, when the Fund anticipates that the currency of a particular
foreign country may suffer a substantial decline against the U.S. dollar, it may
enter into a forward contract for a fixed amount of dollars, to sell the amount
of foreign currency approximating the value of some or all of the Fund's
securities denominated in such foreign currency. The precise matching of the
forward contract amounts and the value of the securities involved will not
generally be possible since the future value of securities in foreign currencies
will change as a consequence of market movements in the value of these
securities between the date on which the forward contract is entered into and
the date it matures. The projection of short-term currency market movement is
extremely difficult, and the successful execution of a short-term hedging
strategy is highly uncertain. From time to time, the Fund may enter into forward
contracts to protect the value of portfolio securities and enhance Fund
performance. The Fund will not enter into such forward contracts or maintain a
net exposure to such contracts where the consummation of the contracts would
obligate the Fund to deliver an amount of foreign currency in excess of the
value of the Fund securities or other assets denominated in that currency.
The Fund generally will not enter into a forward contract with a term of
greater than one year. At the maturity of a forward contract, the Fund may
either sell the portfolio security and make delivery of the foreign currency, or
it may retain the security and terminate its contractual obligation to deliver
the foreign currency by purchasing an "offsetting" contract with the same
currency trader obligating it to purchase, on the same maturity date, the same
amount of the foreign currency.
It is impossible to forecast with absolute precision the market value of a
particular portfolio security at the expiration of the contract. Accordingly, it
may be necessary for the Fund to purchase additional foreign currency on the
spot market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency that the Fund is obligated
to deliver and if a decision is made to sell the security and make delivery of
the foreign currency.
If the Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or loss (as described below) to the
extent that there has been movement in forward contract prices. Should forward
prices decline during the period between the Fund entering into a forward
contract for the sale of a foreign currency and the date it enters into an
offsetting contract for the purchase of the foreign currency, the Fund will
realize a gain to the extent that the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should forward
prices increase, the Fund would suffer a loss to the extent that the price of
the currency it has agreed to purchase exceeds the price of the currency it has
agreed to sell.
The Fund's dealings in forward foreign currency exchange contracts will be
limited to the transactions described above. Of course, the Fund is not required
to enter into such transactions with regard to its foreign currency-denominated
securities. It also should be realized that this method of protecting the value
of portfolio securities against a decline in the value of a currency does not
eliminate fluctuations in the underlying prices of the securities. It simply
establishes a rate of exchange which one can achieve at some future point in
time. Additionally, although such contracts tend to minimize the risk of loss
-5-
<PAGE>
due to a decline in the value of the hedged currency, at the same time, they
tend to limit any potential gain which might result should the value of such
currency increase.
Futures Contracts. The Fund may enter into futures contracts for purposes
of hedging, remaining fully invested and reducing transaction costs. Futures
contracts provide for the future sale by one party and purchase by another party
of a specified amount of a specific security at a specified future time and at a
specified price. Futures contracts which are standardized as to maturity date
and underlying financial instrument are traded on national futures exchanges.
Although most futures contracts by their terms call for actual delivery or
acceptance of the underlying securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery. Closing
out an open futures position is done by taking an opposite position ("buying" a
contract which has previously been "sold" or "selling" a contract previously
"purchased") in an identical contract to terminate the position. Brokerage
commissions are incurred when a futures contract is bought or sold.
Futures traders are required to make a good faith initial margin deposit in
cash or acceptable securities with a broker or custodian to initiate and
maintain open positions in futures contracts. An initial margin deposit is
intended to assure completion of the contract (delivery or acceptance of the
underlying security) if it is not terminated prior to the specified delivery
date. Minimal initial margin requirements are established by the futures
exchange and may be changed. Brokers may establish initial deposit requirements
which are higher than the exchange minimums. Futures contracts are customarily
purchased and sold on initial margin that may range upward from less than 5% of
the value of the contract being traded. After a futures contract position is
opened, the value of the contract is marked to market daily. A second type of
deposit called variation margin is used to adjust the futures position account
for the daily marked to market variations. If the marked to market value
declines, additional deposits in cash are required to balance this decline
(variation margin). Conversely, if the marked to market value increases,
deposits in cash may be withdrawn from the account to the extent of the increase
(variation margin). Variation margin payments are made to and from the futures
broker for as long as the contract remains open. The Fund expects to earn
interest income on their initial margin deposits.
Traders in futures contracts may be broadly classified as either "hedgers"
or "speculators." Hedgers use the futures markets primarily to offset
unfavorable changes in the value of securities otherwise held for investment
purposes or expected to be acquired by them. Speculators are less inclined to
own the securities underlying the futures contracts which they trade and use
futures contracts with the expectation of realizing profits from a fluctuation
in interest rates. The Fund intends to use futures contracts only for hedging
purposes.
Although techniques other than the sale and purchase of futures contracts
could be used to control the Fund's exposure to market fluctuations, the use of
futures contracts may be a more effective means of hedging this exposure. While
the Fund will incur commission expenses in both opening and closing out future
positions, these costs are lower than transaction costs incurred in the purchase
and sale of the underlying securities.
The Fund will only sell futures contracts to protect securities it owns
against price declines or purchase contracts to protect against an increase in
the price of securities it intends to purchase. As evidence of this hedging
interest, the Fund expects that approximately 75% of its futures contracts
purchases will be "completed," that is, equivalent amounts of related securities
will have been purchased or are being purchased by the Fund upon sale of open
futures contracts.
Risk Factors in Futures Transactions. Positions in futures contracts may be
closed out only on an exchange which provides a market for such futures.
However, there can be no assurance that a liquid market will exist for any
particular futures contract at any specific time. Thus, it may not be possible
to close a futures position. In the event of adverse price movements, the Fund
would continue to be required to make daily cash payments to maintain its
required margin. In such situations, if the Fund has insufficient cash, it may
have to sell securities to meet daily margin requirements at a time when it may
be disadvantageous to do so. In addition, the Fund may be required to make
-6-
<PAGE>
delivery of the instruments underlying futures contracts it holds. The inability
to close futures positions also could have an adverse impact on the Fund's
ability to effectively hedge.
The Fund will minimize the risk that it will be unable to close out a
futures position by only entering into futures for which there appears to be a
liquid market. There can be no assurance, however, that a liquid market will
exist for a particular futures contract at any given time.
The risk of loss in trading futures contracts in some strategies can be
substantial due both to the low margin deposits required and the extremely high
degree of leverage involved in futures pricing. As a result, a relatively small
price movement in a futures contract may result in immediate and substantial
loss (as well as gain) to the investor. For example, if at the time of purchase,
10% of the value of the futures contract is deposited as margin, a subsequent
10% decrease in the value of the futures contract would result in a total loss
of the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit if the contract were closed out. Thus, a
purchase or sale of a futures contract may result in excess of the amount
invested in the contract. However, because the futures strategies of the Fund
are engaged in only for hedging purposes, the Investment Adviser does not
believe that the Fund is subject to the risks of loss frequently associated with
futures transactions. The Fund would presumably have sustained comparable losses
if, instead of the futures contract, it had invested in the underlying financial
instrument and sold it after the decline.
Utilization of futures transactions by the Fund does involve the risk of
imperfect or no correlation where the securities underlying the futures
contracts have different maturities than the Fund securities being hedged. It is
also possible that the Fund could both lose money on futures contracts and also
experience a decline in value of portfolio securities. There is also the risk of
loss on margin deposits in the event of bankruptcy of a broker with whom the
Fund has an open position in a futures contract or related option.
Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond that limit. The daily limit governs only
price movement during a particular trading day and, therefore, does not limit
potential losses because the limit may prevent the liquidation of unfavorable
positions. Futures contract prices have occasionally moved to the daily limit
for several consecutive trading days with little or no trading thereby
preventing prompt liquidation of futures positions and subjecting some futures
traders to substantial losses.
Options on Futures. Although the Fund is permitted to purchase and sell put
and call options on futures contracts for hedging purposes, it has no present
intention of using this technique. Investments in options involve some of the
same considerations that are involved in connection with investments in futures
contracts (e.g., the existence of a liquid market). In addition, the purchase of
an option also entails the risk that changes in the value of the underlying
security or contract will not be fully reflected in the value of the option
purchased. Depending on the pricing of the option compared to either the futures
contract on which it is based or the price of the securities being hedged, an
option may or may not be less risky than ownership of the futures contract or
such securities. In general, the market prices of options can be expected to be
more volatile than the market prices on the underlying futures contract or
securities.
Writing Covered Call Options. Although the Fund is permitted to write call
options, it has no present intention of doing so. The general reason for writing
call options is to attempt to realize income. By writing covered call options,
the Fund gives up the opportunity, while the option is in effect, to profit from
any price increase in the underlying security above the option exercise price.
In addition, the Fund's ability to sell the underlying security will be limited
while the option is in effect unless the Fund effects a closing purchase
transaction. A closing purchase transaction cancels out the Fund's position as
the writer of an option by means of offsetting purchase of an identical option
prior to the expiration of the option it has written. Covered call options serve
as a partial hedge against the price of the underlying security declining. The
-7-
<PAGE>
Fund writes only covered options, which means that so long as the Fund is
obligated as the writer of the option it will, through its custodian, have
deposited the underlying security of the option or, if there is a commitment to
purchase the security, a segregated reserve of cash or liquid securities
denominated in U.S. dollars or non-U.S. currencies with a securities depository
with a value equal to or greater than the exercise price of the underlying
securities. By writing a put, the Fund will be obligated to purchase the
underlying security at a price that may be higher than the market value of that
security at the time of exercise for as long as the option is outstanding. The
Fund may engage in closing transactions in order to terminate put options that
it has written.
Purchasing Options. While the Fund is permitted to purchase put and call
options, it has no present intention of doing so. A put option may be purchased
to partially limit the risks of the value of an underlying security or the value
of a commitment to purchase that security for forward delivery. The amount of
any appreciation in the value of the underlying security will be partially
offset by the amount of the premium paid for the put option and any related
transaction costs. Prior to its expiration, a put option may be sold in a
closing sale transaction and profit or loss from a sale will depend on whether
the amount received is more or less than the premium paid for the put option
plus the related transaction costs. A closing sale transaction cancels out the
Fund's position as purchaser of an option by means of an offsetting sale of an
identical option prior to the expiration of the option it has purchased. In
certain circumstances, the Fund may purchase call options on securities held in
its investment portfolio on which it has written call options or on securities
which it intends to purchase.
Options on Foreign Currencies. The Fund may purchase and write options on
foreign currencies for hedging purposes in a manner similar to that in which
futures contracts on foreign currencies, or forward contracts, will be utilized.
For example, a decline in the dollar value of a foreign currency in which
portfolio securities are denominated will reduce the dollar value of such
securities, even if their value in the foreign currency remains constant. In
order to protect against such diminution in the value of portfolio securities,
the Fund may purchase put options on the foreign currency. If the value of the
currency does decline, the Fund will have the right to sell such currency for a
fixed amount in dollars and will thereby offset, in whole or in part, the
adverse effect on its portfolio which otherwise would have resulted.
Conversely, where a rise in the dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, the Fund may purchase call options thereon. The
purchase of such options could offset, at least partially, the effects of the
adverse movements in exchange rates. As in the case of other types of options,
however, the benefit to the Fund deriving from purchases of foreign currency
options will be reduced by the amount of the premium and related transaction
costs. In addition, where currency exchange rates do not move in the direction
or to the extent anticipated, the Fund could sustain losses on transactions in
foreign currency options which would require it to forego a portion or all of
the benefits of advantageous changes in such rates.
The Fund may write options on foreign currencies for the same types of
hedging purposes. For example, where the Fund anticipates a decline in the
dollar value of foreign currency denominated securities due to adverse
fluctuations in exchange rates it could, instead of purchasing a put option,
write a call option on the relevant currency. If the anticipated decline occurs,
the option will most likely not be exercised, and the diminution in value of
portfolio securities will be offset by the amount of the premium received.
Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the dollar cost of securities to be acquired, the Fund
could write a put option on the relevant currency which, if rates move in the
manner projected, will expire unexercised and allow the Fund to hedge such
increased cost up to the amount of the premium. As in the case of other types of
options, however, the writing of a foreign currency option will constitute only
a partial hedge up to the amount of the premium, and only if rates move in the
expected direction. If this does not occur, the option may be exercised and the
Fund would be required to purchase or sell the underlying currency at a loss
which may not be offset by the amount of the premium. Through the writing of
options on foreign currencies, the Fund also may be required to forego all or a
portion of the benefits which might otherwise have been obtained from favorable
movements in exchange rates.
-8-
<PAGE>
The Fund may write covered call options on foreign currencies. A call
option written on a foreign currency by the Fund is "covered" if the Fund owns
the underlying foreign currency covered by the call or has an absolute and
immediate right to acquire that foreign currency without additional cash
consideration (or for additional cash consideration held in a segregated account
by the Custodian) upon conversion or exchange of other foreign currency held in
its portfolio. A call option is also covered if the Fund has a call on the same
foreign currency and in the same principal amount as the call written where the
exercise price of the call held (a) is equal to or less than the exercise price
of the call written or (b) is greater than the exercise price of the call
written if the difference is maintained by the Fund in cash or liquid securities
in a segregated account with the Custodian.
The Fund may write call options on foreign currencies that are not covered
for cross-hedging purposes. A call option on a foreign currency is for
cross-hedging purposes if it is not covered, but is designed to provide a hedge
against a decline in the U.S. dollar value of a security which the Fund owns or
has the right to acquire and which is denominated in the currency underlying the
option due to an adverse change in the exchange rate. In such circumstances, the
Fund collateralized the option by maintaining in a segregated account with the
Custodian, cash or liquid securities in an amount not less than the value of the
underlying foreign currency in U.S. dollars marked to market daily.
Risks of Options on Futures Contracts, Forward Contracts and Options on
Foreign Currencies. The Fund's purchase and sale of exchange-traded foreign
currency options in the U.S. is subject to the risks of the availability of a
liquid secondary market, as well as the risks regarding adverse market
movements, margining of options written, the nature of the foreign currency
market, possible intervention by governmental authorities and the effect of
other political and economic events. In addition, exchange-traded options of
foreign currencies involve certain risks not presented by the over-the-counter
market. For example, exercise and settlement of such options in the U.S. must be
made exclusively through the Options Clearing Corporation ("OCC"), which has
established banking relationships in applicable foreign countries for this
purpose. As a result, the OCC may, if it determines that foreign governmental
restrictions or taxes would prevent the orderly settlement of foreign currency
option exercises, or would result in undue burdens on the OCC or its clearing
member, impose special procedures on exercise and settlement, such as technical
changes in the mechanics of delivery of currency, the fixing of dollar
settlement prices or prohibitions, on exercise.
For the most part, the Fund's futures contracts, options on futures
contracts, forward contracts and options of foreign currencies will be traded on
foreign exchanges which would subject the Fund to the following risks. Such
transactions are subject to the risk of governmental actions affecting trading
in or the prices of foreign currencies or securities. The value of such
positions also could be adversely affected by (i) other complex foreign
political and economic factors, (ii) lesser availability than in the United
States of data on which to make trading decisions, (iii) delays in the Fund's
ability to act upon economic events occurring in foreign markets during
nonbusiness hours in the United States, (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States, and (v) lesser trading volume.
Portfolio Turnover
The Fund generally will not engage in trading securities for short-term
gains. However, the Adviser and the Sub-Adviser may effect portfolio
transactions without regard to holding periods if, in their judgement, such
transactions are advisable due to a change in circumstances of a particular
company or industry or in general market or economic conditions.
-9-
<PAGE>
INVESTMENT RESTRICTIONS
The Fund has adopted the investment restrictions set forth below, which are
fundamental policies of the Fund and cannot be changed without the approval of a
majority of the outstanding voting securities. As provided in the Investment
Company Act, a "vote of a majority of the outstanding voting securities" means
the affirmative vote of the lesser of (i) more than 50% of the outstanding
shares, or (ii) 67% or more of the shares present at a meeting if more than 50%
of the outstanding shares are represented at the meeting in person or by proxy.
The Fund may not:
1. As to 75% of its total assets, invest in the securities of any one
issuer if, immediately after and as a result of such investment, the
value of the holdings of the Fund in the securities of such issuer
exceeds 5% of the Fund's total assets, taken at market value, except
that such restriction shall not apply to cash and cash items, or
securities issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities;
2. Invest more than 25% of its total assets (taken at market value at the
time of each investment) in the securities of issuers in any
particular industry, except for temporary defensive purposes;
3. Issue senior securities, except that the Fund may borrow money in
accordance with (7) below, purchase securities on a when-issued,
delayed settlement or forward delivery basis, sell securities short
and enter into reverse repurchase agreements;
4. Purchase or sell real estate or commodities; provided that the Fund
may invest in securities secured by real estate or interests therein
or issued by companies which invest in real estate or interests
therein;
5. Purchase any securities on margin, except that the Fund may obtain
such short-term credit as may be necessary for the clearance of
purchases and sales of portfolio securities, or make short sales of
securities or maintain a short position. The payment by the Fund of
initial or variation margin in connection with futures or related
options transactions shall not be considered the purchase of a
security on margin. Also, engaging in futures transactions and related
options will not be deemed a short sale or maintenance of a short
position in securities;
6. Make loans to other persons; provided that for purposes of this
restriction the acquisition of bonds, debentures, or other corporate
debt securities and investment in government obligations, short-term
commercial paper, certificates of deposit, bankers' acceptances,
repurchase agreements and any fixed-income obligations in which the
Fund may invest consistent with its investment objective and policies
shall not be deemed to be the making of a loan;
7. Borrow amounts in excess of 20% of its total assets, taken at market
value, and then only from banks as a temporary measure for
extraordinary or emergency purposes such as the redemption of Fund
shares. Utilization of borrowings may exaggerate increases or
decreases in an investment company's net asset value. However, the
Fund will not purchase securities while borrowings exceed 5% of its
total assets, except to honor prior commitments and to exercise
subscription rights when outstanding borrowings have been obtained
exclusively for settlements of other securities transactions; or
8. Underwrite securities of other issuers.
-10-
<PAGE>
MANAGEMENT OF THE FUND
Under Delaware law, the Trust's Board of Trustees is responsible for
establishing the Fund's policies and for overseeing the management of the Fund.
The Board also elects the Fund's officers who conduct and supervise the daily
business operations of the Trust. The Trustees and executive officers of the
Trust, their ages and their principal occupations for the past five years are
listed below.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Name and Address Age Position and Office Principal Occupation
with the Trust During the Past Five Years
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Oliver St. C. Franklin* 53 Chairman of the Board of President, RISA Investment Advisers,
Trustees LLC (1998-Present); Consultant
(11/96 - 7/98); Senior Vice President,
Fidelity Institutional Services,
(1/94 - 11/96)
- ------------------------------------------------------------------------------------------------------------------
O. Sam Folin* 50 Trustee, President and Managing Director, RISA Investment
Chief Financial Officer Advisers, LLC (1996-Present);
Senior Vice Pres. & Portfolio Manager
Newbold's Asset Management
(12/88 - 6/95)
- ------------------------------------------------------------------------------------------------------------------
[Disinterested Trustee] Trustee
- ------------------------------------------------------------------------------------------------------------------
[Disinterested Trustee] Trustee
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
*Trustees who are "interested persons" as defined in the Investment Company Act
of 1940.
Compensation of Trustees and Officers
The Fund pays each Trustee, who is not also an officer or affiliated
person, a $____ quarterly retainer. In addition, each unaffiliated Trustee
receives a $____ meeting fee and reimbursement for travel and other expenses
incurred while attending Board meetings. Trustees who are also officers or
affiliated persons receive no remuneration for their service as Trustees. The
Fund's officers and employees are paid by either the Adviser or the
Administrator and receive no compensation from the Fund. The following table
shows aggregate compensation that is expected to be paid to each of the Trustees
by the Fund in the fiscal year ending December 31, 1999.
-11-
<PAGE>
<TABLE>
<CAPTION>
Compensation Table
====================================================================================================================
(1) (2) (3) (4) (5)
Name of Person Aggregate Pension or Estimated Annual Total Compensation
Position Compensation from Retirement Benefits Benefits upon from Registrant and
Registrant Accrued as Part of Retirement Fund Complex Paid
Fund Expenses to Trustees
====================================================================================================================
<S> <C> <C> <C> <C>
Oliver St. C. Franklin -0- -0- -0- -0-
Trustee
O. Sam Folin -0- -0- -0- -0-
Trustee
Trustee $_____ -0- -0- $_____
Trustee $_____ -0- -0- $_____
</TABLE>
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Adviser
The Trust, on behalf of the Fund, has entered into an Investment Advisory
Agreement with RISA Investment Advisers, LLC, for the provision of investment
advisory services, subject to the supervision and direction of the Board of
Trustees. Pursuant to the Investment Advisory Agreement, the Fund is obligated
to pay the Investment Adviser a monthly fee equal to an annual rate of 1.25% of
the Fund's average daily net assets. The Investment Advisor has voluntarily
agreed to waive its advisory fee and/or assume certain Fund expenses monthly so
that the Fund's total operating expenses, on an annual basis, do not exceed
2.00% of the Fund's average daily net assets.
The Investment Advisory Agreement became effective on _______, 1999 and is
effective for an initial two-year period. Such Agreement may be renewed after
its initial term only so long as such renewal and continuance is specifically
approved at least annually by the Board of Trustees or by vote of a majority of
the outstanding voting securities of the Fund, and only if the terms of the
renewal thereof have been approved by the vote of a majority of the Trustees who
are not parties thereto or interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such approval. The Investment
Advisory Agreement will terminate automatically in the event of its assignment.
Sub-Investment Adviser
African Harvest Asset Managers (Proprietary) Limited, (the "Sub-Adviser")
an affiliate of the Investment Adviser, serves as the Fund's sub-investment
adviser. The Sub-Adviser was formed in 1997 and as of December 31, 1998 managed
over $500 million in assets. The Sub-Adviser, subject to the supervision and
approval of the Investment Adviser, provides investment advisory assistance and
the day-to-day management of the Fund's portfolio.
African Harvest Capital, an affiliate of the Sub-Adviser, owns 40% of the
equity interests of RISA Investment Advisers.
-12-
<PAGE>
Administrator, Service Agents, Accounting Agent, Custodian and Auditor
PFPC Inc., ("PFPC") 400 Bellevue Parkway, Wilmington, DE 19809, serves as
Administrator, Transfer Agent, Shareholder Servicing Agent and Dividend Paying
Agent of the Fund and also provides accounting services to the Fund.
As Administrator, PFPC supplies office facilities, non-investment related
statistical and research data, stationery and office supplies, executive and
administrative services, internal auditing and regulatory compliance services.
PFPC also assists in the preparation of reports to shareholders, prepares proxy
statements, updates prospectuses and makes filings with the Securities and
Exchange Commission and state securities authorities. PFPC performs certain
budgeting and financial reporting and compliance monitoring activities. For the
services provided as Administrator, PFPC receives an administration fee from the
Trust payable monthly at the annual rate of $_____ for the Fund.
As Transfer Agent, PFPC receives a fee from the Trust at the annual rate of
______.
As Accounting Agent, PFPC determines the Fund's net asset value per share
and provides accounting services to the Fund pursuant to an Accounting Services
Agreement with the Trust. For the services provided as Accounting Agent, PFPC
receives a fee from the Trust at the annual rate of $_____ for the Fund.
The custodian for the Fund is Citibank. Citibank employs foreign
sub-custodians to maintain the Fund's foreign assets outside the United States
subject to the Board of Trustees' annual review of those foreign custody
arrangements.
The accounts of the Trust are audited each year by PricewaterhouseCoopers
LLP, independent certified public accountants. Shareholders receive unaudited
semi-annual and audited annual reports of the Trust including the annual audited
financial statements and a list of securities owned.
ALLOCATION OF PORTFOLIO BROKERAGE
The Investment Adviser and Sub-Adviser, when effecting the purchases and
sales of portfolio securities for the account of the Fund, will seek execution
of trades either (i) at the most favorable and competitive rate of commission
charged by any broker, dealer or member of an exchange, or (ii) at a higher rate
of commission charges if reasonable in relation to brokerage and research
services provided to the Fund, the Investment Adviser or the Sub-Adviser, by
such member, broker, or dealer when viewed in terms of either a particular
transaction or the Investment Adviser's overall responsibilities to the Trust.
Such services may include, but are not limited to, any one or more of the
following: information as to the availability of securities for purchase or
sale, statistical or factual information, or opinions pertaining to investments.
The Investment Adviser may use research and services provided to it by brokers
and dealers in servicing all its clients; however, not all such services will be
used by the Investment Adviser or the Sub-Adviser in connection with the Fund.
Brokerage may also be allocated to dealers in consideration of the sale of the
Fund's shares, but only when execution and price are comparable to that offered
by other brokers.
The Sub-Adviser is responsible for making the Fund's day-to-day portfolio
decisions. The Board of Trustees, however, imposes limitations on the allocation
of portfolio brokerage.
It is anticipated that the Fund's brokerage transactions involving
securities of South African issuers will be conducted primarily on the principal
stock exchanges of South Africa. Brokerage commissions and other transaction
costs on stock exchange transactions in South Africa are generally higher than
in the U.S., although the Fund will endeavor to achieve the best net results in
effecting their portfolio transactions. There is generally less government
supervision and regulation of foreign stock exchanges and brokers in South
Africa than in the U.S.
-13-
<PAGE>
Foreign equity securities may be held by the Fund in the form of ADRs,
EDRs, GDRs or other securities convertible into foreign equity securities. ADRs,
EDRs and GDRs may be listed on stock exchanges or traded in over-the-counter
markets in the U.S. or Europe, as the case may be. ADRs, like other securities
traded in the U.S., as well as GDRs traded in the U.S., will be subject to
negotiated commission rates.
DISTRIBUTION OF FUND SHARES
BOE Securities, Inc., a registered broker-dealer firm located at 225 South
15th Street, Suite 928, Philadelphia, PA 19102, serves as the Distributor of the
Fund's shares pursuant to a Distribution Agreement with the Trust. Under the
terms of the Distribution Agreement, the Distributor agrees to assist in
securing purchasers for shares of the Fund. The Distributor will receive $_____
for distribution of shares of the Fund, plus reimbursement of out-of-pocket
expenses.
The Distribution Agreement provides that the Distributor, in the absence of
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of its obligations and duties under
the agreement, will not be liable to the Trust or the Fund's shareholders for
losses arising in connection with the sale of Fund shares.
The Distribution Agreement became effective in _______ 1999, and will
remain in effect an initial period of two years. Thereafter, the Distribution
Agreement continues in effect from year to year as long as its continuance is
approved at least annually by a majority of the Trustees, including a majority
of the trustees who are not parties to the Distribution Agreement or interested
persons of any such party (the "Independent Trustees"). The Distribution
Agreement terminates automatically in the event of its assignment. The
Distribution Agreement is also terminable without payment of any penalty with
respect to the Fund (i) by the Fund (by vote of a majority of the Independent
Trustees or by vote of a majority of the outstanding voting securities of the
Fund) on sixty (60) days' written notice to the Distributor, or (ii) by the
Distributor on sixty (60) days' written notice to the Fund.
PURCHASE OF SHARES
In Kind Purchases
At the discretion of the Fund, shares may be purchased in exchange for
securities which are eligible for acquisition by the Fund. All dividends,
interest, subscriptions, or other rights pertaining to such securities shall
become the property of the Fund and must be delivered to the Fund by the
investor upon receipt from the issuer. The Fund will not accept securities in
exchange for its shares unless (1) such securities are, at the time of exchange,
eligible to be included in the Fund's portfolio and current market quotations
are readily available for such securities; and (2) the investor represents and
agrees that the securities exchanged are not subject to any restrictions upon
their sale by the Fund under the laws of the country in which the principal
market for such securities exists.
REDEMPTIONS
Under normal circumstances, you may redeem your shares at any time, subject
to a 2% redemption fee on shares redeemed within two years of purchase. The
redemption price will be based upon the net asset value per share next
determined after receipt of the redemption request, provided it has been
submitted in the manner described in the Prospectus of the Fund. See "How to
Redeem Shares" in the Prospectus. The redemption price may be more or less than
your cost, depending upon the net asset value per share at the time of
redemption.
Payment for shares tendered for redemption is made by check within seven
days after receipt and acceptance of your redemption request by the transfer
agent, except that the Fund reserves the right to suspend the right of
redemption, or to postpone the date of payment upon redemption beyond seven
days, (i) for any period during which the New York Stock Exchange is restricted,
(ii) for any period during which an emergency exists as determined by the SEC as
a result of which disposal of securities owned by the Fund is not reasonably
-14-
<PAGE>
predictable or it is not reasonably practicable for the Fund fairly to determine
the value of its net assets, or (iii) for such other periods as the SEC may by
order permit for the protection of Fund shareholders.
TAXATION
The Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code").
In order to so qualify, the Fund must, among other things (i) derive at
least 90% of its gross income from dividends, interest, payments with respect to
certain securities loans, gains from the sale of securities or foreign
currencies, or other income (including but not limited to gains from options,
futures or forward contracts) derived with respect to its business of investing
in such stock, securities or currencies; (ii) distribute at least 90% of its
dividends, interest and certain other taxable income each year; and (iii) at the
end of each fiscal quarter maintain at least 50% of the value of its total
assets in cash, government securities, securities of other regulated investment
companies, and other securities of issuers which represent, with respect to each
issuer, no more than 5% of the value of the Fund's total assets and 10% of the
outstanding voting securities of such issuer, and with no more than 25% of its
assets invested in the securities (other than those of the government or other
regulated investment companies) of any one issuer or of two or more issuers
which the Fund controls and which are engaged in the same, similar or related
trades and businesses.
To the extent the Fund qualifies for treatment as a regulated investment
company, it will not be subject to federal income tax on income and net capital
gains paid to shareholders in the form of dividends or capital gains
distributions.
An excise tax at the rate of 4% will be imposed on the excess, if any, of
the Fund's "required distributions" over actual distributions in any calendar
year. Generally, the "required distribution" is 98% of the Fund's ordinary
income for the calendar year plus 98% of its capital gain net income recognized
during the one-year period ending on October 31 plus undistributed amounts from
prior years. The Fund intends to make distributions sufficient to avoid
imposition of the excise tax. Distributions declared by the Fund during October,
November or December to shareholders of record during such month and paid by
January 31 of the following year will be taxable to shareholders in the calendar
year in which they are declared, rather than the calendar year in which they are
received.
The Fund will provide an information return to shareholders describing the
federal tax status of the dividends paid by the Fund during the preceding year
within 60 days after the end of each year as required by present tax law.
Individual shareholders will receive Form 1099-DIV and Form 1099-B as required
by present tax law during January of each year. If the Fund makes a distribution
after the close of its fiscal year which is attributable to income or gains
earned in such earlier fiscal year, then the Fund shall send a notice to its
shareholders describing the amount and character of such distribution within 60
days after the close of the year in which the distribution is made. Shareholders
should consult their tax advisors concerning the state or local taxation of such
dividends, and the federal, state and local taxation of capital gains
distributions.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations currently in effect. For the
complete provisions, reference should be made to the pertinent Code sections and
regulations. The Code and regulations are subject to change by legislative or
administrative action at any time, and retroactively.
Dividends and distributions also may be subject to state and local taxes.
-15-
<PAGE>
Federal Tax Treatment of Forward Currency and Futures Contracts
Except for transactions the Fund has identified as hedging transactions,
the Fund is required for federal income tax purposes to recognize as income for
each taxable year its net unrealized gains and losses on forward currency and
futures contracts as of the end of each taxable year as well as those actually
realized during the year. In most cases, any such gain or loss recognized with
respect to a regulated futures contract is considered to be 60% long-term
capital gain or loss and 40% short-term capital gain or loss without regard to
the holding period of the contract. Realized gain or loss attributable to a
foreign currency forward contract is treated as 100% ordinary income.
Furthermore, foreign currency futures contracts which are intended to hedge
against a change in the value of securities held by the Fund may affect the
holding period of such securities and, consequently, the nature of the gain or
loss on such securities upon disposition.
In order for the Fund to continue to qualify for federal income tax
treatment as a regulated investment company under the Code, at least 90% of the
Fund's gross income for a taxable year must be derived from certain qualifying
income, i.e., dividends, interest, income derived from loans of securities and
gains from the sale or other disposition of stock, securities or foreign
currencies, or other related income, including gains from options, futures and
forward contracts, derived with respect to its business investing in stock,
securities or currencies. Any net gain realized from the closing out of futures
contracts will, therefore, generally be qualifying income for purposes of the
90% requirement.
The Fund will distribute to shareholders annually any net capital gains
which have been recognized for federal income tax purposes (including unrealized
gains at the end of the Fund's taxable year) on futures transactions. Such
distribution will be combined with distributions of capital gains realized on
the Fund's other investments, and shareholders will be advised on the nature of
the payment.
Shareholders are urged to consult their tax advisers regarding specific
questions as to federal, state and local taxes.
CALCULATION OF PERFORMANCE DATA
Current yield and total return may be quoted in advertisements, shareholder
reports or other communications to shareholders. Yield is the ratio of income
per share derived from the Fund's investments to a current maximum offering
price expressed in terms of percent. The yield is quoted on the basis of
earnings after expenses have been deducted. Total return is the total of all
income and capital gains paid to shareholders, assuming reinvestment of all
distributions, plus (or minus) the change in the value of the original
investment, expressed as a percentage of the purchase price. Occasionally, the
Fund may include its distribution rate in advertisements. The distribution rate
is the amount of distributions per share made by the Fund over a 12-month period
divided by the current maximum offering price.
The SEC rules require the use of standardized performance quotations or,
alternatively, that every non-standardized performance quotation furnished by
the Fund be accompanied by certain standardized performance information computed
as required by the SEC. Current yield and total return quotations used by the
Fund are based on the standardized methods of computing performance mandated by
the SEC. An explanation of those and other methods used by the Fund to compute
or express performance follows.
As indicated below, current yield is determined by dividing the net
investment income per share earned during the period by the maximum offering
price per share on the last day of the period and annualizing the result.
Expenses accrued for the period include any fees charged to all shareholders
during the 30-day base period. According to the SEC formula:
-16-
<PAGE>
6
Yield = 2 [(a-b +1) - 1]
cd
where
a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the
period.
As the following formula indicates, the average annual total return is
determined by multiplying a hypothetical initial purchase order of $1,000 by the
average annual compound rate of return (including capital
appreciation/depreciation and dividends and distributions paid and reinvested)
for the stated period less any fees charged to all shareholder accounts and
annualizing the result. The calculation assumes the maximum sales load is
deducted from the initial $1,000 purchase order and that all dividends and
distributions are reinvested at the public offering price on the reinvestment
dates during the period. The quotation assumes the account was completely
redeemed at the end of each one, five and ten-year period and assumes the
deduction of all applicable charges and fees. According to the SEC formula:
n
P(1+T) = ERV
where:
P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the 1, 5 or 10-year periods,
determined at the end of the 1, 5 or 10-year periods (or
fractional portion thereof).
Regardless of the method used, past performance is not necessarily
indicative of future results, but is an indication of the return to shareholders
only for the limited historical period used.
Comparisons and Advertisements
To help investors better evaluate how an investment in the Fund might
satisfy their investment objective, advertisements regarding the Fund may
discuss yield or total return for the Fund as reported by various financial
publications. Advertisements may also compare yield or total return to yield or
total return as reported by other investments, indices, and averages. The
following publications, indices, and averages may be used:
JSE All Shares Index
JSE All Bond Index
JSE Industrial Index
-17-
<PAGE>
Lipper Mutual Fund Indices
Lipper Mutual Fund Performance Analysis
Morgan Stanley Capital International Emerging Markets Free Index
Morningstar, Inc.
The Fund may also from time to time along with performance advertisements,
present its investments, as of a current date, in the form of the "Schedule of
Investments" included in the Semi-Annual and Annual Reports to the shareholders
of the Trust.
-18-
<PAGE>
PART C
OTHER INFORMATION
Item 23. EXHIBITS
(a) ARTICLES OF INCORPORATION:
(i) Agreement and Declaration of Trust dated December 30, 1998,
and
(ii) Certificate of Trust dated December 30, 1998 are filed
herewith.
(b) BY-LAWS:
Filed herewith
(c) INSTRUMENTS DEFINING RIGHTS OF SECURITIES HOLDERS:
Not Applicable.
(d) INVESTMENT ADVISORY CONTRACTS:
(i) Form of Investment Advisory Agreement between the Registrant
and RISA Investment Advisers, LLC is filed herewith.
(ii) Form of Sub-Investment Advisory Agreement between RISA
Investment Advisers, LLC and African Harvest Asset Managers
(Proprietary) Limited is filed herewith.
(e) UNDERWRITING CONTRACTS:
(i) To be filed by amendment.
(f) BONUS OR PROFIT SHARING CONTRACTS:
Not Applicable.
(g) CUSTODIAN AGREEMENTS:
To be filed by amendment.
(h) OTHER MATERIAL CONTRACTS:
(i) Form of Transfer Agent Agreement with PFPC Inc.
To be filed by amendment.
(ii) Form of Accounting Services Agreement with PFPC Inc.
To be filed by amendment.
(iii) Form of Administration Agreement with PFPC Inc.
To be filed by amendment.
<PAGE>
(i) LEGAL OPINION:
To be filed by amendment.
(j) OTHER OPINIONS:
To be filed by amendment.
(k) OMITTED FINANCIAL STATEMENTS:
Not applicable.
(l) INITIAL CAPITAL AGREEMENTS:
To be filed by amendment.
(m) PLANS UNDER RULE 12b-1:
Not Applicable.
(n) FINANCIAL DATA SCHEDULE:
Not Applicable.
(o) RULE 18f-3 PLAN:
Not Applicable.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND:
None.
ITEM 25. INDEMNIFICATION
Under the terms of the Delaware Business Trust Act and the Registrant's
Agreement and Declaration of Trust and By-Laws, no officer or trustee of the
Trust shall have any liability to the Trust or its shareholders, except to the
extent such limitation of liability is precluded by Delaware law, the Agreement
and Declaration of Trust, or the By-Laws.
Subject to the standards and restrictions set forth in the Trust's
Agreement and Declaration of Trust, the Delaware Business Trust Act, section
3817, permits a business trust to indemnify and hold harmless any trustee,
beneficial owner, or other person from and against any and all claims and
demands whatsoever. Section 3803 protects a trustee, when acting in such
capacity, from personal liability to any person other than the business trust or
a beneficial owner for any act, omission, or obligation of the business trust or
any trustee thereof, except as otherwise provided in the Agreement and
Declaration of Trust.
-2-
<PAGE>
The Agreement and Declaration of Trust provides that the Trustees shall not
be responsible or liable in any event for any neglect or wrong-doing of any
officer, agent, employee, Manager or Principal Underwriter of the Trust, nor
shall any Trustee be responsible for the act or omission of any other Trustee.
Subject to the provisions of the By-Laws, the Trust, out of its assets, may
indemnify and hold harmless each and every Trustee and officer of the Trust from
and against any and all claims, demands, costs, losses, expenses, and damages
whatsoever arising out of or related to such Trustees' performance of his or her
duties as a Trustee or officer of the Trust; provided that nothing in the
Declaration of Trust shall indemnify, hold harmless or protect any Trustee or
officer from or against any liability to the Trust or any Shareholder to which
he or she would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office.
The By-Laws provide indemnification for each Trustee and officer who was or
is a party or is threatened to be made a party to any proceeding, by reason of
service in such capacity, to the fullest extent, if it is determined that
Trustee or officer acted in good faith and reasonably believed: (a) in the case
of conduct in his official capacity as an agent of the Trust, that his conduct
was in the Trust's best interests; (b) in all other cases, that his conduct was
at least not opposed to the Trust's best interests; and (c) in the case of a
criminal proceeding, that he had no reasonable cause to believe the conduct of
that person was unlawful. However, there shall be no right to indemnification
for any liability arising by reason of willful duties involved in the conduct of
the Trustee's or officer's office with the Trust. Further, no indemnification
shall be made:
(a) In respect of any proceeding as to which any Trustee or officer shall
have been adjudged to be liable on the basis that personal benefit was
improperly received by him, whether or not the benefit resulted from
an action taken in the person's official capacity; or
(b) In respect of any proceeding as to which any Trustee or officer shall
have been adjudged to be liable in the performance of that person's
duty to the Trust, unless and only to the extent that the court in
which that action was brought shall determine upon application that in
view of all the relevant circumstances of the case, that person is
fairly and reasonably entitled to indemnity for the expenses which the
court shall determine; however, in such case, indemnification with
respect to any proceeding by or in the right of the Trust or in which
liability shall have been adjudged by reason of the disabling conduct
set forth in the preceding paragraph shall be limited to expenses; or
(c) Of amounts paid in settling or otherwise disposing of a proceeding,
with or without court approval, or of expenses incurred in defending a
proceeding which is settled or otherwise disposed of without court
approval, unless the required court approval set forth in the By-Laws
is obtained.
In any event, the Trust shall indemnify each officer and Trustee against
expenses actually and reasonably incurred in connection with the successful
defense of any proceeding to which each such officer or Trustee is a party by
reason of service in such capacity, provided that the Board of Trustees,
including a majority who are disinterested, non-party trustees, also determines
that such officer or Trustee was not liable by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of his or her duties of
office. The Trust shall advance to each officer and Trustee who is made a party
to a proceeding by reason of service in such capacity the expenses incurred by
such person in connection therewith, if (a) the officer or Trustee affirms in
writing that his good faith belief that he has met the standard of conduct
necessary for indemnification, and gives a written undertaking to repay the
amount of advance if it is ultimately determined that he has not met those
requirements, and (b) a determination that the facts then known to those making
the determination would not preclude indemnification.
The Trustees and officers of the Trust are entitled and empowered under the
Declaration of Trust and By-Laws, to the fullest extent permitted by law, to
purchase errors and omissions liability insurance with assets
-3-
<PAGE>
of the Trust, whether or not the Trust would have the power to indemnify him
against such liability under the Declaration of Trust or By-Laws.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to Trustees, officers, the underwriter or control
persons of the Registrant pursuant to the foregoing provisions, the Registrant
has been informed that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in that
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 director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
Adviser - RISA Investment Advisers, LLC: Reference is made to Part B
of this Registration Statement under "Management of the
Fund."
Sub-adviser - African Harvest Asset Managers (Proprietary) Limited:
The information required by this Item 26 will be filed by
amendment.
ITEM 27. PRINCIPAL UNDERWRITERS:
(a) Boe Securities, Inc., the distributor for the Registrant's
securities, does not currently act as distributor for any other
investment companies.
(b) Bufus Outlaw is the President and sole stockholder of Boe
Securities, Inc. Mr. Outlaw is not a Trustee or Officer of the
Fund. Additional information about Boe Securities, Inc. is
incorporated by reference to the Form BD with the Commission
pursuant to the Securities Exchange Act of 1934, as amended under
the File Number indicated:
Boe Securities Distributors, Inc. SEC File No.8-50309
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS:
Each account, book or other document required to be maintained by Section
31(a) of the 1940 Act and the Rules (17 CFR 270-31a-1 to 31a-3) promulgated
thereunder, is maintained by the Registrant, except for those maintained by the
Fund's administrator, transfer agent, dividend paying agent and accounting
services agent, PFPC Inc., 400 Bellevue Parkway, Wilmington, DE 19809.
ITEM 29. MANAGEMENT SERVICES:
There are no management related service contracts not discussed in Part A
or Part B.
ITEM 30. UNDERTAKINGS
The registrant hereby undertakes to file an amendment to this registration
statement with certified financial statements showing the initial capital
received before accepting subscriptions from more than 25 persons.
-4-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Philadelphia, and the State of Pennsylvania, on the
21st day of January, 1999.
THE RISA INVESTMENT TRUST
By: O. Sam Folin
-------------------------------
O. Sam Folin, 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.
Signature Title Date
- --------- ----- ----
Oliver St. C. Franklin Chairman of the Board of January 21, 1999
- --------------------------- Trustees
Oliver St.C. Franklin
O. Sam Folin Trustee, President and January 21, 1999
- --------------------------- Chief Financial Officer
O. Sam Folin
-5-
<PAGE>
EXHIBITS TO REGISTRATION STATEMENT ON FORM N-1A
Exhibit No. Description
----------- -----------
23(a)(i) Agreement and Declaration of Trust
23(a)(ii) Certificate of Trust
23(b) By-Laws
23(d)(i) Form of Investment Advisory Agreement
23(d)(ii) Form of Sub-Investment Advisory Agreement
-6-
Exhibit 99.23(a)(i)
Effective as of December 30, 1998
AGREEMENT AND DECLARATION OF TRUST
of
The RISA Investment Trust
a Delaware Business Trust
Principal Place of Business:
The Lewis Tower Building, Suite 930
225 South 15th Street
Philadelphia, PA 19102
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
Name and Definitions ................................................. 1
Section 1.1. Name ................................................. 1
Section 1.2. Definitions .......................................... 1
ARTICLE II
Purpose of Trust ..................................................... 2
ARTICLE III
Shares ............................................................... 2
Section 3.1. Division of Beneficial Interest ...................... 2
Section 3.2. Ownership of Shares .................................. 3
Section 3.3. Investments in the Trust ............................. 3
Section 3.4. Status of Shares and Limitation of Personal Liability. 3
Section 3.5. Power of Board of Trustees to Change Provisions
Relating to Shares ................................ 4
Section 3.6. Establishment and Designation of Shares ............. 4
(a) Assets Held with Respect to a Particular Series... 4
(b) Liabilities Held with Respect to a Particular
Series ........................................ 5
(c) Dividends, Distributions, Redemptions and
Repurchases ................................... 5
(d) Voting ........................................... 6
(e) Equality ......................................... 6
(f) Fractions ........................................ 6
(g) Exchange Privilege ............................... 6
(h) Combination of Series ............................ 6
(i) Elimination of Series ............................ 6
ARTICLE IV
The Board of Trustees ................................................ 6
Section 4.1. Number, Election and Tenure .......................... 6
Section 4.2. Effect of Death, Resignation, etc. of a Trustee ...... 7
Section 4.3. Powers ............................................... 7
Section 4.4. Payment of Expenses by the Trust ..................... 10
Section 4.5. Ownership of Assets of the Trust ..................... 10
Section 4.6. Service Contracts .................................... 11
-i-
<PAGE>
ARTICLE V
Shareholders' Voting Powers and Meetings ............................. 12
Section 5.1. Voting Powers ........................................ 12
Section 5.2. Voting Power and Meetings ............................ 12
Section 5.3. Quorum and Required Vote ............................ 12
Section 5.4. Action by Written Consent ............................ 13
Section 5.5. Record Dates ......................................... 13
ARTICLE VI
Net Asset Value, Distributions, and Redemptions ...................... 13
Section 6.1. Determination of Net Asset Value, Net Income, and
Distributions ..................................... 13
Section 6.2. Redemptions and Repurchases .......................... 13
Section 6.3. Redemptions at the Option of the Trust ............... 14
Section 6.4. Transfer of Shares ................................... 14
ARTICLE VII
Compensation and Limitation of Liability ............................. 14
Section 7.1. Compensation of Trustees ............................. 14
Section 7.2. Indemnification and Limitation of Liability .......... 14
Section 7.3. Trustee's Good Faith Action, Expert Advice,
No Bond or Surety ................................. 15
Section 7.4. Insurance ............................................ 15
ARTICLE VIII
Miscellaneous ........................................................ 15
Section 8.1. Liability of Third Persons Dealing with Trustees ..... 15
Section 8.2. Termination of Trust or Series ...................... 16
Section 8.3. Merger and Consolidation ............................. 16
Section 8.4. Amendments ........................................... 16
Section 8.5. Filing of Copies, References, Headings ............... 16
Section 8.6. Applicable Law ....................................... 17
Section 8.7. Provisions in Conflict with Law or Regulations ....... 17
Section 8.8. Business Trust Only .................................. 17
Section 8.9. Use of the Name "RISA" ............................... 18
-ii-
<PAGE>
AGREEMENT AND DECLARATION OF TRUST
OF
THE RISA INVESTMENT TRUST
WHEREAS, this AGREEMENT AND DECLARATION OF TRUST is made and entered into
as of the date set forth below by the Trustees named hereunder for the purpose
of forming a Delaware business trust in accordance with the provisions
hereinafter set forth.
NOW, THEREFORE, the Trustees hereby direct that a Certificate of Trust be
filed with the Office of the Secretary of State of the State of Delaware and do
hereby declare that the Trustees will hold IN TRUST all cash, securities and
other assets which the Trust now possesses or may hereafter acquire from time to
time in any manner and manage and dispose of the same upon the following terms
and conditions for the pro rata benefit of the holders of Shares in this Trust.
ARTICLE I
Name and Definitions
Section 1.1. Name. This trust shall be known as "The RISA 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.
Section 1.2. Definitions. Whenever used herein, unless otherwise required
by the context or specifically provided:
(a) The "Trust" refers to the Delaware business trust established by
this Agreement and Declaration of Trust, as amended from time to time;
(b) The "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust;
(c) "Trustees" refers to the persons who have signed this Agreement and
Declaration of Trust, so long as they continue in office in accordance with the
terms hereof, and all other persons who may from time to time be duly elected or
appointed to serve on the Board of Trustees in accordance with the provisions
hereof, and reference herein to a Trustee or the Trustees shall refer to such
person or persons in their capacity as trustees hereunder;
(d) "Shares" means the shares of beneficial interest into which the
beneficial interest in the Trust shall be divided from time to time and includes
fractions of Shares as well as whole Shares;
(e) "Shareholder" means a record owner of Outstanding Shares;
<PAGE>
(f) "Person" means and includes individuals, corporations,
partnerships, trusts, foundations, plans, associations, joint ventures, estates
and other entities, whether or not legal entities, and governments and agencies
and political subdivisions thereof, whether domestic or foreign;
(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. References
herein to specific sections of the 1940 Act shall be deemed to include such
Rules and Regulations as are applicable to such sections as determined by the
Trustees or their designees;
(h) The terms "Commission" and "Principal Underwriter" shall have the
respective meanings given them in Section 2(a)(7) and Section (2)(a)(29) of the
1940 Act;
(i) "Declaration of Trust" shall mean this Agreement and Declaration of
Trust, as amended or restated from time to time;
(j) "By-Laws" shall mean the By-Laws of the Trust as amended from time
to time;
(k) The term "Interested Person" has the meaning given it in Section
2(a)(19) of the 1940 Act;
(l) "Investment Manager" or "Manager" means a party furnishing services
to the Trust pursuant to any contract described in Article IV, Section 4.6(a)
hereof;
(m) "Series" refers to each Series of Shares established and designated
under or in accordance with the provisions of Article III.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to conduct, operate and carry on
the business of a management investment company registered under the 1940 Act
through one or more Series investing primarily in securities.
ARTICLE III
Shares
Section 3.11. Division of Beneficial Interest. The beneficial interest in
the Trust shall at all times be divided into an unlimited number of Shares, with
a par value of $0.01 per Share. The Trustees may authorize the division of
Shares into separate Series and the division of series into separate classes of
Shares. The different Series shall be established and designated,
-2-
<PAGE>
and the variations in the relative rights and preferences as between the
different Series shall be fixed and determined, by the Trustees. If only one
Series shall be established, the Shares shall have the rights and preferences
provided for herein and in Article III, Section 3.6 hereof to the extent
relevant and not otherwise provided for herein.
Subject to the provisions of section 3.6 of this Article III, each Share
shall have voting rights as provided in Article V hereof, and holders of the
Shares of any Series shall be entitled to receive dividends, when, if and as
declared with respect thereto in the manner provided in Article VI, Section 4.1
hereof. No Share shall have any priority or preference over any other Share of
the same Series with respect to dividends or distributions of the Trust or
otherwise. All dividends and distributions shall be made ratably among all
Shareholders of a Series (or class) from the assets held with respect to such
Series according to the number of Shares of such Series (or class) held of
record by such Shareholders on the record date for any dividend or distribution
or on the date of termination of the Trust, as the case may be. Shareholders
shall have no preemptive or other right to subscribe to any additional Shares or
other securities issued by the Trust or any Series. The Trustees may from time
to time divide or combine the Shares of a Series into a greater or lesser number
of Shares of such Series without thereby materially changing the proportionate
beneficial interest of such Shares in the assets held with respect to that
Series or materially affecting the rights of Shares of any other Series.
Section 3.2. Ownership of Shares. The ownership of Shares shall be recorded
on the books of the Trust or a transfer or similar agent for the Trust, which
books shall be maintained separately for the Shares of each Series. No
certificates evidencing the ownership of Shares shall be issued except as the
Board of Trustees may otherwise determine from time to time. The Trustees may
make such rules as they consider appropriate for the transfer of Shares of each
Series (or class) and similar matters. The record books of the Trust as kept by
the Trust or any transfer or similar agent, as the case may be, shall be
conclusive as to the identity of the Shareholders of each Series and as to the
number of Shares of each Series held from time to time by each Shareholder.
Section 3.3. Investments in the Trust. Investments may be accepted by the
Trust from such Persons, at such times, on such terms, and for such
consideration as the Trustees from time to time may authorize. Each investment
shall be credited to the Shareholder's account in the form of full and
fractional Shares of the Trust, in such Series (or class) as the purchaser shall
select, at the net asset value per Share next determined for such Series (or
class) after receipt of the investment; provided, however, that the Trustees
may, in their sole discretion, impose a sales charge or reimbursement fee upon
investments in the Trust.
Section 3.4. Status of Shares and Limitation of Personal Liability. Shares
shall be deemed to be personal property giving only the rights provided in this
instrument and the By-Laws of the Trust. Every Shareholder by virtue of having
become a Shareholder shall be held to have expressly assented and agreed to the
terms hereof. The death of a Shareholder during the existence of the Trust shall
not operate to terminate the Trust, nor entitle the representative of any
-3-
<PAGE>
deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but shall entitle such
representative only to the rights of said deceased Shareholder under this
Declaration of Trust. Ownership of Shares shall not entitle a 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 as partners or joint venturers.
Neither the Trust nor the Trustees, nor any officer, employee or agent of the
Trust shall have any power to bind personally any Shareholder, or to call upon
any Shareholder for the payment of any sum of money or assessment whatsoever
other than such as the Shareholder may at any time agree to pay.
Section 3.5. Power of Board of Trustees to Change Provisions Relating to
Shares. Notwithstanding any other provision of this Declaration of Trust to the
contrary, and without limiting the power of the Board of Trustees to amend the
Declaration of Trust as provided elsewhere herein, the Board of Trustees shall
have the power to amend this Declaration of Trust, at any time and from time to
time, in such manner as the Board of Trustees may determine in their sole
discretion, without the need for Shareholder action, so as to add to, delete,
replace or otherwise modify any provisions relating to the Shares contained in
this Declaration of Trust, provided that before adopting any such amendment
without Shareholder approval the Board of Trustees shall determine that it is
consistent with the fair and equitable treatment of all Shareholders and that
Shareholder approval is not required by the 1940 Act or other applicable law. If
Shares have been issued, shareholder approval shall be required to adopt any
amendments to this Declaration of Trust which would adversely affect to a
material degree the rights and preferences of the Shares of any Series (or
class) or to increase or decrease the par value of the Shares of any Series (or
class).
Section 3.6. Establishment and Designation of Shares. The establishment and
designation of any Series (or class) of Shares shall be effective upon the
adoption by a majority of the Trustees, of a resolution which sets forth such
establishment and designation and the relative rights and preferences of such
Series (or class). Each such resolution shall be incorporated herein by
reference upon adoption.
Shares of each Series (or class) established pursuant to this Section 6,
unless otherwise provided in the resolution establishing such Series, shall have
the following relative rights and preferences:
(a) Assets Held with Respect to a Particular Series. All consideration
received by the Trust for the issue or sale of Shares of a Series, including
dividends and distributions paid by, and reinvested in, such Series, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof from whatever source derived,
including, without limitation, any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably be held with respect to that Series for all purposes, subject only
to the rights of creditors, and shall be so recorded upon the
-4-
<PAGE>
books of account of the Trust. Such consideration, assets, income, earnings,
profits and proceeds thereof, from whatever source derived, including, without
limitation, any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, are herein referred to as "assets
held with respect to" that Series. In the event that there are any assets,
income, earnings, profits and proceeds thereof, funds or payments which are not
readily identifiable as assets held with respect to any particular Series
(collectively "General Assets"), the Trustees shall allocate such General Assets
to, between or among any one or more of the Series in such manner and on such
basis as the Trustees, in their sole discretion, deem fair and equitable, and
any General Asset so allocated to a particular Series shall be held with respect
to that Series. Each such allocation by the Trustees shall be conclusive and
binding upon the Shareholders of all Series for all purposes in absence of
manifest error.
(b) Liabilities Held with Respect to a Particular Series. The assets of
the Trust held with respect to each Series shall be charged with the liabilities
of the Trust with respect to such Series and all expenses, costs, charges and
reserves attributable to such Series, and any general liabilities of the Trust
which are not readily identifiable as being held in respect of a Series shall be
allocated and charged by the Trustees to and among any one or more Series 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 so
charged to a Series are herein referred to as "liabilities held with respect to"
that Series. Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon the holders of all
Series for all purposes in absence of manifest error. All Persons who have
extended credit which has been allocated to a particular Series, or who have a
claim or contract which has been allocated to a Series, shall look exclusively
to the assets held with respect to such Series for payment of such credit,
claim, or Contract. In the absence of an express agreement so limiting the
claims of such creditors, claimants and contracting parties, such creditor,
claimant and contracting party shall be deemed nevertheless to have agreed to
such limitation unless an express provision to the contrary has been
incorporated in the written contract or other document establishing the
contractual relationship.
(c) Dividends, Distributions, Redemptions and Repurchases. No dividend
or distribution including, without limitation, any distribution paid upon
termination of the Trust or of any Series (or class) with respect to, or any
redemption or repurchase of, the Shares of any Series (or class) shall be
effected by the Trust other than from the assets held with respect to such
Series, nor shall any Shareholder of any Series otherwise have any right or
claim against the assets held with respect to any other Series except to the
extent that such Shareholder has such a right or claim hereunder as a
Shareholder of such other Series. The Trustees shall have full discretion to
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 in absence of manifest error.
-5-
<PAGE>
(d) Voting. All Shares of the Trust entitled to vote on a matter shall
vote without differentiation between the separate Series on a one-vote-per-Share
basis; provided however, if a matter to be voted on affects only the interests
of not all Series (or class of a Series), then only the Shareholders of such
affected Series (or class) shall be entitled to vote on the matter.
(e) Equality. All the Shares of each Series shall represent an equal
proportionate undivided interest in the assets held with respect to such Series
(subject to the liabilities of such Series and such rights and preferences as
may have been established and designated with respect to classes of Shares
within such Series), and each Share of a Series shall be equal to each other
Share of such Series.
(f) Fractions. Any fractional Share of a Series shall have
proportionately all the rights and obligations of a whole share of such Series,
including rights with respect to voting, receipt of dividends and distributions
and redemption of Shares.
(g) Exchange Privilege. The Trustees shall have the authority to
provide that the holders of Shares of any Series shall have the right to
exchange such Shares for Shares of one or more other series in accordance with
such requirements and procedures as may be established by the Trustees.
(h) Combination of Series. The Trustees shall have the authority,
without the approval of the Shareholders of any Series unless otherwise required
by applicable law, to combine the assets and liabilities held with respect to
any two or more Series into assets and liabilities held with respect to a single
Series.
(i) Elimination of Series. At any time that there are no Shares
outstanding of a Series (or class), the Trustees may abolish such Series (or
class).
ARTICLE IV
The Board of Trustees
Section 4.1. Number, Election and Tenure. The number of Trustees
constituting the Board of Trustees shall be fixed from time to time by a written
instrument signed, or by resolution approved at a duly constituted meeting, by a
majority of the Board of Trustees, provided, however, that the number of
Trustees shall in no event be less than one (1) nor more than fifteen (15).
Subject to the requirements of Section 16(a) of the 1940 Act, the Board of
Trustees, by action of a majority of the then Trustees at a duly constituted
meeting, may fill vacancies in the Board of Trustees and remove Trustees with or
without cause. Each Trustee shall serve during the continued lifetime of the
Trust until he or she dies, resigns, is declared bankrupt or incompetent by a
court of competent jurisdiction, or is removed. Any Trustee may resign at any
time by written instrument signed by him and delivered to any officer of the
Trust or to a meeting of the Trustees. Such resignation shall be effective upon
receipt unless specified
-6-
<PAGE>
to be effective at some other time. Except to the extent expressly provided in a
written agreement with the Trust, no Trustee resigning and no Trustee removed
shall have any right to any compensation for any period following his or her
resignation or removal, or any right to damages or other payment on account of
such removal. Any Trustee may be removed at any meeting of Shareholders by a
vote of two-thirds of the outstanding Shares of the Trust. A meeting of
Shareholders for the purpose of electing or removing one or more Trustees may be
called (i) by the Trustees upon their own vote, or (ii) upon the demand of
Shareholders owning 10% or more of the Shares of the Trust in the aggregate.
Section 4.2. Effect of Death, Resignation, etc. of a Trustee. The death,
declination, resignation, retirement, removal, or incapacity of one or more
Trustees, or all of them, shall not operate to annul the Trust or to revoke any
existing agency created pursuant to the terms of this Declaration of Trust.
Whenever a vacancy in the Board of Trustees shall occur, until such vacancy is
filled as provided in Article IV, Section 4.1, the Trustees in office,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon the Trustees by this Declaration
of Trust.
Section 4.3. Powers. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by the Board of Trustees, and
such Board shall have all powers necessary or convenient to carry out that
responsibility including the power to engage in transactions of all kinds on
behalf of the Trust. Trustees, in all instances, shall act as principals and are
and shall be free from the control of the Shareholders. The Trustees shall have
full power and authority to do any and all acts and to make and execute any and
all contracts, documents and instruments that they may consider desirable,
necessary or appropriate in connection with the administration of the Trust.
Without limiting the foregoing, the Trustees may: adopt, amend and repeal
By-Laws not inconsistent with this Declaration of Trust providing for the
regulation and management of the affairs of the Trust; elect and remove such
officers and appoint and terminate such agents as they consider appropriate;
appoint from their own number and establish and terminate one or more committees
consisting of two or more Trustees who may exercise the powers and authority of
the Board of Trustees to the extent that the Trustees determine; employ one or
more custodians of the assets of the Trust and may authorize such custodians to
employ subcustodians and to deposit all or any part of such assets in a system
or systems for the central handling of securities or with a Federal Reserve
Bank, retain a transfer agent or a shareholder servicing agent, or both; provide
for the issuance and distribution of Shares by the Trust directly or through one
or more Principal Underwriters or otherwise; redeem, repurchase and transfer
Shares pursuant to applicable law; set record dates for the determination of
Shareholders with respect to various matters; declare and pay dividends and
distributions to Shareholders of each Series from the assets of such Series;
establish from time to time, in accordance with the provisions of Article III,
Section 3.6 hereof, any Series of Shares, each such Series to operate as a
separate and distinct investment medium and with separately defined investment
objectives and policies and distinct investment purpose; and in general delegate
such authority as they consider desirable to any officer of the Trust, to any
committee of the Trustees and to any agent or employee of the Trust or to any
such custodian, transfer or shareholder
-7-
<PAGE>
servicing agent, Investment Manager or Principal Underwriter. Any determination
as to what is in the interests of the Trust made by the Trustees in good faith
shall be conclusive. In construing the provisions of this Declaration of Trust,
the presumption shall be in favor of a grant of power to the Trustees and unless
otherwise specified herein or required by the 1940 Act or other applicable law,
any action by the Board of Trustees shall be deemed effective if approved or
taken by a majority of the Trustees then in office or a majority of any duly
constituted committee of Trustees. Any action required or permitted to be taken
at any meeting of the Board of Trustees, or any committee thereof, may be taken
without a meeting if all members of the Board of Trustees or committee (as the
case may be) consent thereto in writing, and the writing or writings are filed
with the minutes of the proceedings of the Board of Trustees, or committee,
except as otherwise provided in the 1940 Act.
Without limiting the foregoing, the Trust shall have power and authority:
(a) To invest and reinvest cash and cash items, to hold cash
uninvested, and to subscribe for, invest in, reinvest in, purchase or otherwise
acquire, own, hold, pledge, sell, assign, transfer, exchange, distribute, write
options on, lend or otherwise deal in or dispose of contracts for the future
acquisition or delivery of all types of securities, futures contracts and
options thereon, and forward currency contracts of every nature and kind,
including, without limitation, all types of bonds, debentures, stocks, preferred
stocks, negotiable or non-negotiable instruments, obligations, evidences of
indebtedness, certificates of deposit or indebtedness, commercial paper,
repurchase agreements, bankers' acceptances, and other securities of any kind,
issued, created, guaranteed, or sponsored by any and all Persons, including,
without limitation, states, territories, and possessions of the United States
and the District of Columbia and any political subdivision, agency, or
instrumentality thereof, any foreign government or any political subdivision of
the U.S. Government or any foreign government, or any international
instrumentality or organization, or by any bank or savings institution, or by
any corporation or organization organized under the laws of the United States or
of any state, territory, or possession thereof, or by any corporation or
organization organized under any foreign law, or in "when issued" contracts for
any such securities, futures contracts and options thereon, and forward currency
contracts, to change the investments of the assets of the Trust; and to exercise
any and all rights, powers, and privileges of ownership or interest in respect
of any and all such investments of every kind and description, including,
without limitation, the right to consent and otherwise act with respect thereto,
with power to designate one or more Persons, to exercise any of said rights,
powers, and privileges in respect of any instruments;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, lease, or
write options with respect to or otherwise deal in any property rights relating
to any or all of the assets of the Trust or any Series;
(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
proxies or powers of
-8-
<PAGE>
attorney to such person or persons as the Trustees shall deem proper, granting
to such person or persons such power and discretion with relation to securities
or property as the Trustees shall deem proper;
(d) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating that it
is trust property, whether in bearer, unregistered or other negotiable form, or
in its own name or in the name of a custodian or subcustodian or a nominee or
nominees or otherwise or to authorize the custodian or a sub-custodian or a
nominee or nominees to deposit the same in a securities depository, subject in
each case to the applicable provisions of the 1940 Act;
(f) To consent to, or participate in, any plan for the reorganization,
consolidation or merger of any corporation or issuer of any security which is
held in the Trust to consent to any contract, lease, mortgage, purchase or sale
of property by such corporation or issuer; and to pay calls or subscriptions
with respect to any security held in the Trust;
(g) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depositary or
trustee, and to delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the Trustees shall deem
proper, and to agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees shall deem
proper;
(h) To litigate, compromise, arbitrate, settle or otherwise adjust
claims in favor of or against the Trust or a Series, or any matter in
controversy, including but not limited to claims for taxes;
(i) To enter into joint ventures, general or limited partnerships and
any other combinations or associations;
(j) To borrow funds or other property in the name of the Trust or
Series exclusively for Trust purposes;
(k) To endorse or guarantee the payment of any notes or other
obligations of any Person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof;
(l) To purchase and pay for entirely out of Trust Property such
insurance as the Trustees may deem necessary, desirable or appropriate for the
conduct of the business, including, without limitation, insurance policies
insuring the assets of the Trust or payment of distributions and principal on
its portfolio investments, and insurance policies
-9-
<PAGE>
insuring the Shareholders, Trustees, officers, employees, agents, Investment
Manager, Principal Underwriters, or independent contractors of the Trust,
individually against all claims and liabilities of every nature arising by
reason of holding Shares, holding, being or having held any such office or
position, or by reason of any action alleged to have been taken or omitted by
any such Person as Trustee, officer, employee, agent, Investment Manager,
Principal Underwriter, or independent contractor, including any action taken or
omitted that may be determined to constitute negligence, whether or not the
Trust would have the power to indemnify such Person against liability; and
(m) 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.
The Trust shall not be limited to investing in obligations maturing before
the possible termination of the Trust or one or more of its Series. The Trust
shall not in any way be bound or limited by any present or future law or custom
in regard to investment by fiduciaries. The Trust shall not be required to
obtain any court order to deal with any assets of the Trust or take any other
action hereunder.
Section 4.4. Payment of Expenses by the Trust. Subject to the provisions of
Article III, Section 3.6(b), the Trustees are authorized to pay or cause to be
paid out of the principal or income of the Trust or Series, or partly out of the
principal and partly out of income, and to charge or allocate the same to,
between or among such one or more of the Series that may be established or
designated pursuant to Article III, Section 3.6, all expenses, fees, charges,
taxes and liabilities incurred or arising in connection with the Trust or
series, 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 Manager, Principal Underwriter,
auditors, counsel, custodian, transfer agent, Shareholder servicing agent, and
such other agents or independent contractors and such other expenses and charges
as the Trustees may deem necessary or proper to incur.
Section 4.5. 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 Trust, except
that the Trustees shall have power to cause legal title to any Trust Property to
be held by or in the name of one or more of the Trustees, or in the name of the
Trust, or in the name of any other Person as nominee, on such terms as the
Trustees may determine. Upon the resignation, incompetency, bankruptcy, removal,
or death of a Trustee, he or she shall automatically cease to have any such
title in any of the Trust Property, and the title of such Trustee in the Trust
Property shall vest automatically in the remaining trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered. The Trustees may determine that the Trust or the
Trustees, acting for and on behalf of the Trust, shall be deemed to hold
beneficial
-10-
<PAGE>
ownership of any income earned on the securities owned by the Trust, whether
domestic or foreign.
Section 4.4. Service Contracts.
(a) The Trustees may, at any time and from time to time, contract for
exclusive or nonexclusive advisory, management and/or administrative services
for the Trust or for any Series with any Person; and any such contract may
contain such other terms as the Trustees may determine, including without
limitation, authority for the Investment Manager to determine from time to time
without prior consultation with the Trustees what investments shall be
purchased, held, sold or exchanged and what portion, if any, of the assets of
the Trust shall be held uninvested and to make changes in the Trust's
investments, and such other responsibilities as may specifically be delegated to
such Person.
(b) The Trustees may also, at any time and from time to time, contract
with any Persons, appointing such Persons exclusive or nonexclusive distributor
or Principal Underwriter for the Shares of one or more of the Series or other
securities to be issued by the Trust. Every such contract may contain such other
terms as the Trustees may determine.
(c) The Trustees are also empowered, at any time and from time to time,
to contract with any Persons, appointing such Person(s) to serve as custodians,
transfer agent and/or shareholder servicing agent for the Trust or one or more
of its Series. Every such contract shall comply with such terms as may be
required by the Trustees.
(d) The Trustees are further empowered, at any time and from time to
time, to contract with any Persons to provide such other services to the Trust
or one or more of the Series, as the Trustees determine to be in the best
interests of the Trust and the applicable Series.
(e) 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, distributor, or affiliate or
agent of or for any Person with which an advisory, management or
administration contract, or Principal Underwriter's or distributor's
contract, or transfer, shareholder servicing or other type of service
contract may be made, or that
(ii) any Person with which an advisory, management or
administration contract or Principal Underwriter's or distributor's
contract, or transfer, shareholder servicing or other type of service
contract may be made also has an advisory, management or
administration contract, or
-11-
<PAGE>
principal underwriter's or distributor's contract, or transfer,
shareholder servicing or other service contract, or has other business
or interests with any other Person,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same, or create any liability or accountability to the Trust or its
Shareholders, provided approval of each such contract is made pursuant to the
applicable requirements of the 1940 Act.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 5.1. Voting Powers. Subject to the provisions of Article III,
Sections 3.5 and 3.6(d), the Shareholders shall have the right to vote only (i)
for the election or removal of Trustees as provided in Article IV, Section 4.1,
and (ii) with respect to such additional matters relating to the Trust as may be
required by the applicable provisions of the 1940 Act, including Section 16(a)
thereof, and (iii) on such other matters as the Trustees may consider necessary
or desirable. Each whole Share shall be entitled to one vote as to any matter on
which it is entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy. A proxy
purporting to be executed by or on behalf of a Shareholder shall be deemed valid
unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger.
Section 5.2. Voting Power and Meetings. Meetings of the Shareholders may be
called by the Trustees for the purposes described in Section 5.1 of this Article
V. A meeting of Shareholders may be held at any place designated by the
Trustees. Written notice of any meeting of Shareholders shall be given or caused
to be given by the Trustees by delivering personally or mailing such notice not
more than ninety (90), nor less than ten (10) days before such meeting, postage
prepaid, stating the time and place of the meeting, to each Shareholder at the
Shareholder's address as it appears on the records of the Trust. Whenever notice
of a meeting is required to be given to a Shareholder under this Declaration of
Trust, a written waiver thereof, executed before or after the meeting by such
Shareholder or his or her attorney thereunto authorized and filed with the
records of the meeting, or actual attendance at the meeting of Shareholders in
person or by proxy, shall be deemed equivalent to such notice.
Section 5.3. Quorum and Required Vote. Except when a larger quorum is
required by the applicable provisions of the 1940 Act, the presence in person or
by proxy of a majority of the Shares entitled to vote on a matter shall
constitute a quorum at a Shareholders' meeting. Any meeting of Shareholders may
be adjourned from time to time by a majority of the votes properly cast upon the
question of adjourning a meeting to another date and time, whether or not a
quorum is present, and the meeting may be held as adjourned within a reasonable
time after the date set for the original meeting without further notice. Subject
to the provisions of
-12-
<PAGE>
Article III, Section 3.6(d) and the applicable provisions of the 1940 Act, when
a quorum is present at any meeting, a majority of the Shares voted shall decide
any questions, except only a plurality vote shall be necessary to elect
Trustees.
Section 5.4. Action by Written Consent. Any action taken by Shareholders
may be taken without a meeting if all the holders of Shares entitled to vote on
the matter are provided with not less than 7 days written notice thereof and
written consent to the action is filed with the records of the meetings of
Shareholders by the holders of the number of shares that would be required to
approve the matter as provided in Article V, Section 5.3. Such consent shall be
treated for all purposes as a vote taken at a meeting of Shareholders.
Section 5.5. Record Dates. For the purpose of determining the Shareholders
who are entitled to vote or act at any meeting or any adjournment thereof, the
Trustees may fix a time, which shall be not more than ninety (90) nor less than
ten (10) days before the date of any meeting of Shareholders, as the record date
for determining the Shareholders having the right to notice of and to vote at
such meeting and any adjournment thereof, and in such case only Shareholders 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. For the purpose of
determining the Shareholders who are entitled to receive payment of any dividend
or of any other distribution, the Trustees may fix a date, which shall be before
the date for the payment of such dividend or distribution, as the record date
for determining the Shareholders having the right to receive such dividend or
distribution. Nothing in this Section shall be construed as precluding the
Trustees from setting different record dates for different Series.
ARTICLE VI
Net Asset Value, Distributions, and Redemptions
Section 6.1. Determination of Net Asset Value, Net Income, and
Distributions. Subject to Article III, Section 3.6 hereof, the Trustees, in
their absolute discretion, may prescribe and shall set forth in the By-laws or
in a duly adopted resolution of the Trustees such bases and time for determining
the per Share net asset value of the Shares of any Series and the declaration
and payment of dividends and distributions on the Shares of any Series, as they
may deem necessary or desirable.
Section 6.6. Redemptions and Repurchases. The Trust shall purchase such
Shares as are offered by any Shareholder for redemption, upon receipt by the
Trust or a Person designated by the Trust of a request that the Trust redeem
such Shares or in accordance with such procedures for redemption as the Trustees
may from time to time authorize; and the Trust will pay therefor the net asset
value thereof, in accordance with the By-Laws and the applicable provisions of
the 1940 Act. Payment for said Shares shall be made by the Trust to the
Shareholder within seven days after the date on which the request for redemption
is received in proper form. The obligation set forth in this Section 2 is
subject to the provision that in the event that any time the New York Stock
Exchange (the "Exchange") is closed for other than weekends
-13-
<PAGE>
or holidays, or if permitted by the Rules of the Commission during periods when
trading on the Exchange is restricted or during any emergency which makes it
impracticable for the Trust to dispose of the investments of the applicable
Series or to determine fairly the value of the net assets held with respect to
such Series or during any other period permitted by order of the Commission for
the protection of investors, such obligations may be suspended or postponed by
the Trustees.
The redemption price may in any case or cases be paid in cash or wholly or
partly in kind in accordance with Rule 18f-1 under the 1940 Act if the Trustees
determine that such payment is advisable in the interest of the remaining
Shareholders of the Series of which the Shares are being redeemed. Subject to
the foregoing, the selection and quantity of securities or other property so
paid or delivered as all or part of the redemption price shall be determined by
or under authority of the Trustees. In no case shall the Trust be liable for any
delay of any corporation or other Person in transferring securities selected for
delivery as all or part of any payment in kind.
Section 6.3. Redemptions at the Option of the Trust. The Trust shall have
the right, at its option, upon 60 days notice to the affected Shareholder at any
time to redeem Shares of any Shareholder at the net asset value thereof as
described in Section 6.1 of this Article VI (i) if at such time such Shareholder
owns Shares of any Series having an aggregate net asset value of less than a
minimum value determined from time to time by the Trustees; or (ii) to the
extent that such Shareholder owns Shares of a Series equal to or in excess of a
maximum percentage of the outstanding Shares of such Series determined from time
to time by the Trustees; or (iii) to the extent that such Shareholder owns
Shares equal to or in excess of a maximum percentage, determined from time to
time by the Trustees, of the outstanding Shares of the Trust.
Section 6.4. Transfer of Shares. The Trust shall transfer shares held of
record by any Person to any other Person upon receipt by the Trust or a Person
designated by the Trust of a written request therefore in such form and pursuant
to such procedures as may be approved by the Trustees.
ARTICLE VII
Compensation and Limitation of Liability
Section 7.1. Compensation of Trustees. The Trustees as such shall be
entitled to reasonable compensation from the Trust, and they may fix the amount
of such compensation from time to time. Nothing herein shall in any way prevent
the employment of any Trustee to provide advisory, management, legal,
accounting, investment banking or other services to the Trust and to be
specially compensated for such services by the Trust.
Section 7.2. Indemnification and Limitation of Liability. The Trustees
shall not be responsible or liable in any event for any neglect or wrong-doing
of any officer, agent, employee, Manager or Principal Underwriter of the Trust,
nor shall any Trustee be responsible
-14-
<PAGE>
for the act or omission of any other Trustee, and, subject to the provisions of
the Bylaws, the Trust, out of its assets, may indemnify and hold harmless each
and every Trustee and officer of the Trust from and against any and all claims,
demands, costs, losses, expenses, and damages whatsoever arising out of or
related to such Trustee's performance of his or her duties as a Trustee or
officer of the Trust; provided that nothing herein contained shall indemnify,
hold harmless or protect any Trustee or officer from or against any liability to
the Trust or any Shareholder to which he or she would otherwise be subject by
reason of wilful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office.
Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever issued, 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 issued, executed or done only in or with
respect to their or his or her capacity as Trustees or Trustee, and such
Trustees or Trustee shall not be personally liable thereon.
Section 7.3. Trustee's Good Faith Action, Expert Advice, No Bond or Surety.
The exercise by the Trustees of their powers hereunder shall be binding upon
everyone interested in or dealing with the Trust. A Trustee shall be liable to
the Trust and to any Shareholder solely for his or her own wilful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee, and shall not be liable for errors of judgment
or mistakes of fact or law. The Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Declaration of Trust,
and shall be under no liability for any act or omission in accordance with such
advice nor for failing to follow such advice. The Trustees shall not be required
to give any bond as such, nor any surety if a bond is required.
Section 7.4. Insurance. The Trustees shall be entitled and empowered to the
fullest extent permitted by law to purchase with Trust assets insurance for
liability and for all expenses reasonably incurred or paid or expected to be
paid by a Trustee or officer in connection with any claim, action, suit or
proceeding in which he or she becomes involved by virtue of his or her capacity
or former capacity with the Trust, whether or not the Trust would have the power
to indemnify him or her against such liability under the provisions of this
Article.
ARTICLE VIII
Miscellaneous
Section 8.1. Liability of Third Persons Dealing with Trustees. No Person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
-15-
<PAGE>
Section 8.2. Termination of Trust or Series. Unless terminated as provided
herein, the Trust shall continue without limitation of time. The Trust may be
terminated at any time by the Trustees upon 60 days prior written notice to the
Shareholders. Any Series may be terminated at any time by the Trustees upon 60
days prior written notice to the Shareholders of that Series.
Upon termination of the Trust (or any Series, as the case may be), after
paying or otherwise providing for all charges, taxes, expenses and liabilities
held, severally, with respect to each Series (or the applicable Series, as the
case may be), 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 held, severally, with respect
to each Series (or the applicable Series, as the case may be), to distributable
form in cash or shares or other securities, and any combination thereof, and
distribute the proceeds held with respect to each Series (or the applicable
Series, as the case may be), to the Shareholders of that Series, as a Series,
ratably according to the number of Shares of that Series held by the several
Shareholders on the date of termination.
Section 8.3. Merger and Consolidation. The Trustees may cause (i) the Trust
or one or more of its Series to the extent consistent with applicable law to be
merged into or consolidated with another Trust, series or Person, (ii) the
Shares of the Trust or any series to be converted into beneficial interests in
another business trust (or series thereof), (iii) the Shares to be exchanged for
assets or property under or pursuant to any state or federal statute to the
extent permitted by law or (iv) a sale of assets of the Trust or one or more of
its Series. Such merger or consolidation, Share conversion, Share exchange or
sale of assets must be authorized by vote as provided in Article V, Section 5.3
herein; provided that in all respects not governed by statute or applicable law,
the Trustees shall have power to prescribe the procedure necessary or
appropriate to accomplish a sale of assets, Share exchange, merger or
consolidation including the power to create one or more separate business trusts
to which all or any part of the assets, liabilities, profits or losses of the
Trust may be transferred and to provide for the conversion of Shares of the
Trust or any Series into beneficial interests in such separate business trust or
trusts (or series thereof).
Section 8.4. Amendments. This Declaration of Trust may be restated and/or
amended at any time by an instrument in writing signed by a majority of the
Trustees then holding office. Any such restatement and/or amendment hereto shall
be effective immediately upon execution and approval. The Certificate of Trust
of the Trust may be restated and/or amended by a similar procedure, and any such
restatement and/or amendment shall be effective immediately upon filing with the
office of the Secretary of State of the State of Delaware or upon such future
date as may be stated therein.
Section 8.5. Filing of Copies, References, Headings. The original or a copy
of this instrument and of each restatement and/or amendment hereto shall be kept
at the office of the Trust where it may be inspected by any Shareholder. Anyone
dealing with the Trust may rely on a certificate by an officer of the Trust as
to whether or not any such restatements and/or
-16-
<PAGE>
amendments have been made and as to any matters in connection with the Trust
hereunder; and, with the same effect as if it were the original, may rely on a
copy certified by an officer of the Trust to be a copy of this instrument or of
any such restatements and/or amendments. In this instrument and in any such
restatements and/or amendment, references to this instrument, and all
expressions like "herein," "hereof" and "hereunder," shall be deemed to refer to
this instrument as amended or affected by any such restatements and/or
amendments. Headings are placed herein for convenience of reference only and
shall not be taken as a part hereof or control or affect the meaning,
construction or effect of this instrument. Whenever the singular number is used
herein, the same shall include the plural; and the neuter, masculine and
feminine genders shall include each other, as applicable. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.
Section 8.6. Applicable Law. This Agreement and Declaration of Trust is
created under and is to be governed by and construed and administered according
to the laws of the State of Delaware and the Delaware Business Trust Act, as
amended from time to time (the "Act"). The Trust shall be a Delaware business
trust pursuant to such Act, and without limiting the provisions hereof, the
Trust may exercise all powers which are ordinarily exercised by such a business
trust.
Section 8.7. Provisions in Conflict with Law or Regulations.
(a) The provisions of the Declaration of Trust are severable, and if
the Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, the regulated investment company
provisions of the Internal Revenue Code or with other applicable laws and
regulations, the conflicting provision shall be deemed never to have constituted
a part of the Declaration of Trust; provided, however, that such determination
shall not affect any of the remaining provisions of the Declaration of Trust or
render invalid or improper any action taken or omitted prior to such
determination.
(b) If any provision of the Declaration of Trust shall be held invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of the
Declaration of Trust in any jurisdiction.
Section 8.8. Business Trust Only. It is the intention of the Trustees to
create a business trust pursuant to the Act, and thereby to create only the
relationship of trustee and beneficial owners within the meaning of such Act
between the Trustees and each Shareholder. It is not the intention of the
Trustees to create a general partnership, limited partnership, joint stock
association, corporation, bailment, joint venture, or any form of legal
relationship other than a business trust pursuant to such Act. Nothing in this
Declaration of Trust shall be construed to make the Shareholders, either by
themselves or with the Trustees, partners or members of a joint stock
association.
-17-
<PAGE>
Section 8.9. Use of the Name "RISA". The name "RISA" and all rights to the
use of the name "RISA" belong to RISA Investment Advisers, LLC ("Adviser"), the
Investment Manager of the Trust. The Adviser has consented to the use by the
Trust of the identifying word "RISA" and has granted to the Trust a
non-exclusive license to use the name "RISA" as part of the name of the Trust
and the name of any Series of Shares. In the event the Adviser or its affiliates
are not appointed as Investment Manager or cease to be the Investment Manager of
the Trust or of any Series using such names, the non-exclusive license granted
herein may be revoked by the Adviser. Upon receipt of such a written revocation
from the Adviser or any successor to its interests in such name, the Trustees
agree to execute such amendment to the Trust's Certificate of Trust and this
Declaration of Trust as may be required to effect a change in the name of the
Trust or any Series of Shares of the Trust, and the Trust promptly shall cease
using the name "RISA" as part of its name or the name of any Series of Shares.
This Agreement and Declaration of Trust may be executed in one
or more counterparts which, taken together, shall constitute one and the same
document.
IN WITNESS WHEREOF, the Trustees named below do hereby make and enter into
this Agreement and Declaration of Trust as of the 30th day of December, 1998.
O. Sam Folin
-----------------------------------
O. Sam Folin
Oliver St. C. Franklin
-----------------------------------
Oliver St. C. Franklin
THE PRINCIPAL PLACE OF BUSINESS OF THE TRUST IS:
The Lewis Tower Building, Suite 930
225 South 15th Street
Philadelphia, PA 19102
-18-
Exhibit 99.23(a)(ii)
CERTIFICATE OF TRUST
OF
THE RISA INVESTMENT TRUST
a Delaware Business Trust
THIS Certificate of Trust of The RISA Investment Trust (the "Trust"), dated
as of this 30th day of December, 1998, is being duly executed and filed, in
order to form a business trust pursuant to the Delaware Business Trust Act (the
"Act"), Del. Code Ann. tit. 12, ss.ss.3801-3819.
1. NAME. The name of the business trust formed hereby is "The RISA
Investment Trust."
2. REGISTERED OFFICE AND REGISTERED AGENT. The Trust will become, prior to
the issuance of shares of beneficial interest, a registered investment company
under the Investment Company Act of 1940, as amended. Therefore, in accordance
with section 3807(b) of the Act, the Trust has and shall maintain in the State
of Delaware a registered office and a registered agent for service of process.
(a) REGISTERED OFFICE. The registered office of the Trust in Delaware
is c/o PHS Corporate Services, Inc., 1201 Market Street, Suite 1600,
Wilmington, Delaware 19801.
(b) REGISTERED AGENT. The registered agent for service of process on
the Trust in Delaware is PHS Corporate Services, Inc., 1201 Market Street,
Suite 1600, Wilmington, Delaware 19801.
3. LIMITATION OF LIABILITY. Pursuant to section 3804(a) of the Act, the
debts, liabilities, obligations and expenses incurred, contracted for or
otherwise existing with respect to a particular series of the Trust, established
pursuant to the terms of the Agreement and Declaration of Trust of the Trust,
shall be enforceable against the assets of such series only, and not against the
assets of the Trust generally.
<PAGE>
IN WITNESS WHEREOF, the Trustees named below do hereby execute this
Certificate of Trust as of the date first-above written.
O. Sam Folin
------------------------------
O. Sam Folin
Oliver St. C. Franklin
------------------------------
Oliver St. C. Franklin
Exhibit 99.23(b)
BY-LAWS
OF
THE RISA INVESTMENT TRUST
ARTICLE I
Fiscal Year and Offices
Section 1. Fiscal Year. Unless otherwise provided by resolution of the
Board of Trustees, the fiscal year of The RISA Investment Trust (the "Trust")
shall begin on the first day of January and end on the last day of December.
Section 2. Delaware Office. The Board of Trustees shall establish a
registered office in the State of Delaware and shall appoint as the Trust's
registered agent for service of process in the State of Delaware an individual
resident of the State of Delaware or a Delaware corporation or a foreign
corporation authorized to transact business in the State of Delaware; in each
case the business office of such registered agent for service of process shall
be identical with the registered Delaware office of the Trust.
Section 3. Other Offices. The Board of Trustees may at any time establish
branch or subordinate offices at any place or places where the Trust intends to
do business.
ARTICLE II
Meetings of Shareholders
Section 1. Place of Meeting. Meetings of the shareholders for the election
of trustees shall be held in such place as shall be fixed by resolution of the
Board of Trustees and stated in the notice of the meeting.
Section 2. Annual Meetings. An Annual Meeting of shareholders will not be
held unless the Investment Company Act of 1940 requires the election of trustees
to be acted upon.
Section 3. Special Meetings. Special Meetings of the shareholders may be
called at any time by the President, or by a majority of the Board of Trustees,
and shall be called by the secretary upon written request of the holders of
shares entitled to cast not less than ten percent of all the votes entitled to
be cast at such meeting provided that (a) such request shall state the purposes
of such meeting and the matters proposed to be acted on and (b) the shareholders
requesting such meeting shall have paid to the Trust the reasonable estimated
cost of preparing and mailing the notice thereof, which the Secretary shall
determine and specify to such shareholders. No special meeting need be called
upon the request of shareholders entitled to cast
<PAGE>
less than a majority of all votes entitled to be cast at such meeting to
consider any matter which is substantially the same as a matter voted on at any
meeting of the shareholders held during the preceding twelve months. The
foregoing provisions of this Section 3 notwithstanding a special meeting of
shareholders shall be called upon the request of the holders of at least ten
percent of the shares entitled to vote, for the purpose of considering the
removal of a trustee from office as provided in section 16(c) of the Investment
Company Act of 1940.
Section 4. Notice. Not less than ten, nor more than ninety days before the
date of every Annual or Special Meeting, the Secretary shall cause to be mailed
to each shareholder entitled to vote at such meeting at his (her) address (as it
appears on the records of the Trust at the time of mailing) written notice
stating the time and place of the meeting and, in the case of a Special Meeting
of Shareholders, shall be limited to the purposes stated in the notice. Notice
of adjournment of a meeting to another time or place need not be given, if such
time and place are announced at the meeting.
Section 5. Record Date for Meetings. Subject to the provisions of the
Declaration of Trust, the Board of Trustees may fix in advance a date, not more
than ninety nor less than ten days prior to the date of any annual or special
meeting of the shareholders, as a record date for the determination of the
shareholders entitled to receive notice of, and to vote at any meeting and any
adjournment thereof; and in such case such shareholders and only such
shareholders which are shareholders of record on the date so fixed shall be
entitled to receive notice of and to vote at such meeting and any adjournment
thereof as the case may be, notwithstanding any transfer of stock on the books
of the Trust after any such record date fixed as aforesaid.
Section 6. Quorum. At any meeting of shareholders, the presence in person
or by proxy of the holders of record of a majority of the shares issued and
outstanding and entitled to vote thereon shall constitute a quorum for the
transaction of any business at the meeting, except as otherwise provided by the
Investment Company Act of 1940 or in the Trust's Declaration of Trust. If,
however, such quorum shall not be present or represented at any meeting of the
shareholders, the holders of a majority of the shares present in person or by
Proxy shall have the power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented to a date not more than 120 days after the original record date.
At such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified.
Section 7. Voting. Each shareholder shall have one vote for each full share
and a fractional vote for each fractional share of stock having voting power
held by such shareholder on the record date set pursuant to Section 5 on each
matter submitted to a vote at a meeting of shareholders. Such vote may be made
in person or by proxy. At all meetings of the shareholders, a quorum being
present, all matters shall be decided by majority vote of the shares of
beneficial interest entitled to vote held by shareholders present in person or
by proxy, unless the question is one for which by express provision of the laws
of the State of Delaware, the
-2-
<PAGE>
Investment Company Act of 1940, as from time to time amended, or the Declaration
of Trust, a different vote is required, in which case such express provision
shall control the decision of such question. At all meetings of shareholders,
unless the voting is conducted by inspectors, all questions relating to the
qualification of voters and the validity of proxies and the acceptance or
rejection of votes shall be decided by the Chairman of the meeting.
Section 8. Inspectors. At any election of trustees, the Board of Trustees
prior thereto may, or, if they have not so acted, the Chairman of the meeting
may appoint one or more inspectors of election who shall first subscribe an oath
of affirmation to execute faithfully the duties of inspectors at such election
with strict impartiality and according to the best of their ability, and shall
after the election make a certificate of the result of the vote taken.
Section 9. Stock Ledger and List of Shareholders. It shall be the duty of
the Secretary or Assistant Secretary of the Trust to cause an original or
duplicate share ledger to be maintained at the office of the Trust's transfer
agent. Such share ledger may be in written form or any other form capable of
being converted into written form within a reasonable time for visual
inspection.
Section 10. Action Without Meeting. Any action to be taken by shareholders
may be taken without a meeting if (a) all shareholders entitled to vote on the
matter consent to the action in writing, and (b) all shareholders entitled to
notice of the meeting but not entitled to vote at it sign a written waiver of
any right to dissent, and (c) the written consents are filed with the records of
the meetings of shareholders. Such consent shall be treated for all purposes as
a vote at a meeting.
ARTICLE III
Trustees
Section 1. General Powers. The business of the Trust shall be managed under
the direction of its Board of Trustees, which may exercise all powers of the
Trust, except such as are by statute, the Declaration of Trust, or by these
Bylaws conferred upon or reserved to the shareholders.
Section 2. Number and Term of Office. The number of trustees which shall
constitute the whole Board shall be determined from time to time by the Board of
Trustees, but shall not be fewer than the minimum number permitted by applicable
laws, nor more than fifteen. Each trustee elected shall hold office until his
successor is duly elected and qualified. Trustees need not be shareholders.
Section 3. Elections. Provided a quorum is present, the trustees shall be
elected by the vote of a plurality of the shares present in person or by proxy,
except that any vacancy on the Board of Trustees may be filled by a majority
vote of the Board of Trustees, although less
-3-
<PAGE>
than a quorum, subject to the requirements of Section 16(a) of the Investment
Company Act of 1940.
Section 4. Place of Meeting. Meetings of the Board of Trustees, regular or
special, may be held at any place as the Board may from time to time determine.
Section 5. Quorum. At all meetings of the Board of Trustees, one-third of
the entire Board of Trustees shall constitute a quorum for the transaction of
business, provided that in no case may a quorum be less than two persons. The
action of a majority of the trustees present at any meeting at which a quorum is
present shall be the action of the Board of Trustees unless the concurrence of a
greater proportion is required for such action by the Investment Company Act of
1940, these Bylaws or the Declaration of Trust. If a quorum shall not be present
at any meeting of trustees, the trustees present thereat may by a majority vote
adjourn the meeting from time to time without notice other than announcement at
the meeting, until a quorum shall be present.
Section 6. Regular Meetings. Regular meetings of the Board of Trustees may
be held without additional notice at such time and place as shall from time to
time be determined by the Board of Trustees provided that notice of any change
in the time or place of such meetings shall be sent promptly to each trustee not
present at the meeting at which such change was made in the manner provided for
notice of special meetings.
Section 7. Special Meetings. Special meetings of the Board of Trustees may
be called by the President on one day's notice to each trustee; Special meetings
shall be called by the President or Secretary in like manner and on like notice
on the written request of two trustees.
Section 8. Telephone Meeting. Members of the Board of Trustees or a
committee of the Board of Trustees may participate in a meeting by means of a
telephone conference call or similar communications equipment if all persons
participating in the meeting can hear each other at the same time.
Section 9. Informal Actions. Any action required or permitted to be taken
at any meeting of the Board of Trustees or of any committee thereof may be taken
without a meeting, if a written consent to such action is signed by all members
of the Board or of such committee, as the case may be, and such written consent
is filed with the minutes of proceedings of the Board or committee.
Section 10. Committees. The Board of Trustees may by resolution passed by a
majority of the entire Board appoint from among its members an Executive
Committee and other committees composed of two or more trustees, and may
delegate to such committees, in the intervals between meetings of the Board of
Trustees, any or all of the powers of the Board of Trustees in the management of
the business and affairs of the Trust.
-4-
<PAGE>
Section 11. Action of Committees. In the absence of an appropriate
resolution of the Board of Trustees, each committee may adopt such rules and
regulations governing its proceedings, quorum and manner of acting as it shall
deem proper and desirable, provided that the quorum shall not be less than two
trustees. The committees shall keep minutes of their proceedings and shall
report the same to the Board of Trustees at the meeting next succeeding, and any
action by the committee shall be subject to revision and alteration by the Board
of Trustees, provided that no rights of third persons, shall be affected by any
such revision or alteration. In the absence of any member of such committee, the
members thereof present at any meeting, whether or not they constitute a quorum,
may appoint a member of the Board of Trustees to act in the place of such absent
member.
Section 12. Compensation. Any trustee, whether or not he is a salaried
officer or employee of the Trust, may be compensated for his services as trustee
or as a member of a committee of trustees, or as Chairman of the Board or
chairman of a committee by fixed periodic payments or by fees for attendance at
meetings or by both, and in addition may be reimbursed for transportation and
other expenses, all in such manner and amounts as the Board of Trustees may from
time to time determine.
ARTICLE IV
Notices
Section 1. Form. Notices to shareholders shall be in writing and delivered
personally or mailed to the shareholders at their addresses appearing on the
books of the Trust. Notices to trustees shall be oral or by telephone or
telegram or in writing delivered personally or mailed to the trustees at their
addresses appearing on the books of the Trust. Notice by mail shall be deemed to
be given at the time when the same shall be mailed. Subject to the provisions of
the Investment Company Act of 1940, notice to trustees need not state the
purpose of a regular or special meeting.
Section 2. Waiver. Whenever any notice of the time, place or purpose of any
meeting of shareholders, trustees or a committee is required to be given under
the provisions of the Declaration of Trust or these Bylaws, a waiver thereof in
writing, signed by the person or persons entitled to such notice and filed with
the records of the meeting, whether before or after the holding thereof, or
actual attendance at the meeting of shareholders in person or by proxy, or at
the meeting of Trustees or a committee in person, shall be deemed equivalent to
the giving of such notice to such persons.
-5-
<PAGE>
ARTICLE V
Officers
Section 1. Executive Officers. The officers of the Trust shall be chosen by
the Board of Trustees and shall include a President, a Secretary and a
Treasurer. The Board of Trustees may, from time to time, elect or appoint a
Controller, one or more Vice Presidents, Assistant Secretaries and Assistant
Treasurers. The Board of Trustees, at its discretion, may also appoint a trustee
as Chairman of the Board who shall perform and execute such executive and
administrative duties and powers as the Board of Trustees shall from time to
time prescribe. The same person may hold two or more offices, except that no
person shall be both President and Vice-President, and no officer shall execute,
acknowledge or verify any instrument in more than one capacity, if such
instrument is required by law, the Declaration of Trust or these Bylaws to be
executed, acknowledged or verified by two or more officers.
Section 2. Election. The Board of Trustees shall choose a President, a
Secretary and a Treasurer.
Section 3. Other Officers. The Board of Trustees from time to time may
appoint such other officers and agents as it shall deem advisable, who shall
hold their offices for such terms and shall exercise powers and perform such
duties as shall be determined from time to time by the Board. The Board of
Trustees from time to time may delegate to one or more officers or agents the
power to appoint any such subordinate officers or agents and to prescribe their
respective rights, terms of office, authorities and duties.
Section 4. Compensation. The salaries or other compensation of all officers
and agents of the Trust shall be fixed by the Board of Trustees, except that the
Board of Trustees may delegate to any person or group of persons the power to
fix the salary or other compensation of any subordinate officers or agents
appointed pursuant to Section 3 of this Article V.
Section 5. Tenure. The officers of the Trust shall serve at the pleasure of
the Board of Trustees. Any, officer or agent may be removed by the affirmative
vote of a majority of the Board of Trustees whenever, in its judgment, the best
interests of the Trust will be served thereby. In addition, any officer or agent
appointed pursuant to Section 3 may be removed, either with or without cause, by
any officer upon whom such power of removal shall have been conferred by the
Board of Trustees. Any vacancy occurring in any office of the Trust by death,
resignation, removal or otherwise shall be filled by the Board of Trustees,
unless pursuant to Section 3 the power of appointment has been conferred by the
Board of Trustees on any other officer.
Section 6. President. The President shall be the Chief Executive Officer of
the Trust and shall see that all orders and resolutions of the Board are carried
into effect. The
-6-
<PAGE>
President shall also be the Chief Administrative Officer of the Trust and shall
perform such other duties and have such other powers as the Board of Trustees
may from time to time prescribe.
Section 7. Chairman of the Board. The Chairman of the Board, if one shall
be chosen, shall perform and execute such executive duties and administrative
powers as the Board of Trustees shall from time to time prescribe.
Section 8. Vice-President. The Vice-Presidents, in order of their
seniority, shall, in the absence or disability of the President, perform the
duties and exercise the powers of the President and shall perform such other
duties as the Board of Trustees or the President may from time to time
prescribe.
Section 9. Secretary. The Secretary shall attend all meetings of the Board
of Trustees and all meetings of the shareholders and record all the proceedings
thereof and shall perform like duties for any committee when required. He shall
give, or cause to be given, notice of meetings of the shareholders and of the
Board of Trustees, shall have charge of the records of the Trust, including the
stock books, and shall perform such other duties as may be prescribed by the
Board of Trustees or Chief Executive Officer, under whose supervision he shall
be. He shall keep in safe custody the seal of the Trust and, when authorized by
the Board of Trustees, shall affix and attest the same to any instrument
requiring it. The Board of Trustees may give general authority to any other
officer to affix the seal of the Trust and to attest the affixing by his
signature.
Section 10. Assistant Secretaries. The Assistant Secretaries in order of
their seniority, shall, in the absence or disability of the Secretary, perform
the duties and exercise the powers of the Secretary and shall perform such other
duties as the Board of Trustees shall prescribe.
Section 11. Treasurer. The Treasurer, unless another officer has been so
designated, shall be the Chief Financial Officer of the Trust. He shall have
general charge of the finances and books of account of the Trust. Except as
otherwise provided by the Board of Trustees, he shall have general supervision
of the funds and property of the Trust and of the performance by the custodian
of its duties with respect thereto. He shall render to the Board of Trustees,
whenever directed by the Board, an account of the financial condition of the
Trust and of all his transactions as Treasurer. He shall cause to be prepared
annually a full and correct statement of the affairs of the Trust, including a
balance sheet and a statement of operations for the preceding fiscal year. He
shall perform all the acts incidental to the office of Treasurer, subject to the
control of the Board of Trustees.
Section 12. Assistant Treasurer. The Assistant Treasurer shall in the
absence or disability of the Treasurer, perform the duties and exercise the
powers of the Treasurer and shall perform such other duties as the Board of
Trustees may from time to time prescribe.
-7-
<PAGE>
ARTICLE VI
Indemnification and Insurance
Section 1. Agents, Proceedings and Expenses. For the purpose of this
Article, "agent" means any person who is or was a Trustee or officer of this
Trust and any person who, while a trustee or officer of this Trust, is or was
serving at the request of this Trust as a Trustee, director, officer, partner,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust or other enterprise; "Trust" includes any domestic or
foreign predecessor entity of this Trust in a merger, consolidation, or other
transaction in which the predecessor's existence ceased upon consummation of the
transaction; "proceeding" means any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative, or investigative;
and "expenses" includes without limitation attorneys' fees and any expenses of
establishing a right to indemnification under this Article.
Section 2. Actions Other Than by Trust. This Trust shall indemnify any
person who was or is a party or is threatened to be made a party to any
proceeding (other than an action by or in the right of this Trust) by reason of
the fact that such person is or was an agent of this Trust, against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with such proceeding, if it is determined that person acted in
good faith and reasonably believed: (a) in the case of conduct in his official
capacity as an agent of the Trust, that his conduct was in the Trust's best
interests and (b) in all other cases, that his conduct was at least not opposed
to the Trust's best interests and (c) in the case of a criminal proceeding, that
he had no reasonable cause to believe the conduct of that person was unlawful.
The termination of any proceeding by judgment, order or settlement shall not of
itself create a presumption that the person did not meet the requisite standard
of conduct set forth in this Section. The termination of any proceeding by
conviction, or a plea of nolo contenders or its equivalent, or an entry of an
order of probation prior to judgment, creates a rebuttable presumption that the
person did not meet the requisite standard of conduct set forth in this Section.
Section 3. Actions by the Trust. This Trust shall indemnify any person who
was or is a party or is threatened to be made a party to any proceeding by or in
the right of this Trust to procure a judgment in its favor by reason of the fact
that such person is or was an agent of this Trust, against expenses actually and
reasonably incurred by that person in connection with the defense or settlement
of that action if that person acted in good faith, in a manner that person
believed to be in the best interests of this Trust and with such care, including
reasonable inquiry, as an ordinarily prudent person in a like position would use
under similar circumstances.
Section 4. Exclusion of Indemnification. Notwithstanding any provision to
the contrary contained herein, there shall be no right to indemnification for
any liability arising by reason of willful misfeasance, bad faith, gross
negligence, or the reckless disregard of the duties involved in the conduct of
the agent's office with this Trust.
-8-
<PAGE>
No indemnification shall be made under Sections 2 or 3 of this Article:
(a) In respect of any proceeding as to which that person shall have
been adjudged to be liable on the basis that personal benefit was
improperly received by him, whether or not the benefit resulted
from an action taken in the person's official capacity; or
(b) In respect of any proceeding as to which that person shall have
been adjudged to be liable in the performance of that person's
duty to this Trust, unless and only to the extent that the court
in which that action was brought shall determine upon application
that in view of all the relevant circumstances of the case, that
person is fairly and reasonably entitled to indemnity for the
expenses which the court shall determine; however, in such case,
indemnification with respect to any proceeding by or in the right
of the Trust or in which liability shall have been adjudged by
reason of the disabling conduct set forth in the preceding
paragraph shall be limited to expenses; or
(c) Of amounts paid in settling or otherwise disposing of a
proceeding, with or without court approval, or of expenses
incurred in defending a proceeding which is settled or otherwise
disposed of without court approval, unless the required approval
set forth in Section 6 of this Article is obtained.
Section 5. Successful Defense by Agent. To the extent that an agent of this
Trust has been successful, on the merits or otherwise, in the defense of any
proceeding referred to in Sections 2 or 3 of this Article before the court or
other body before whom the proceeding was brought, the agent shall be
indemnified against expenses actually and reasonably incurred by the agent in
connection therewith, provided that the Board of Trustees, including a majority
who are disinterested, non-party Trustees, also determines that based upon a
review of the facts, the agent was not liable by reason of the disabling conduct
referred to in Section 4 of this Article.
Section 6. Required Approval. Except as provided in Section 5 of this
Article, any indemnification under this Article shall be made by this Trust only
if authorized in the specific case on a determination that indemnification of
the agent is proper in the circumstances because the agent has met the
applicable standard of conduct set forth in Sections 2 or 3 of this Article and
is not prohibited from indemnification because of the disabling conduct set
forth in Section 4 of this Article, by:
-9-
<PAGE>
(a) A majority vote of a quorum consisting of Trustees who are not
parties to the proceeding and are not interested persons of the Trust (as
defined in the Investment Company Act of 1940);
(b) A written opinion by an independent legal counsel; or
(c) The shareholders; however, shares held by agents who are parties to
the proceeding may not be voted on the subject matter under this sub-section.
Section 7. Advance of Expenses. Expenses incurred in defending any
proceeding may be advanced by this Trust before the final disposition of the
proceeding if (a) receipt of a written affirmation by the agent of his good
faith belief that he has met the standard of conduct necessary for
indemnification under this Article and a written undertaking by or on behalf of
the agent, such undertaking being an unlimited general obligation to repay the
amount of the advance if it is ultimately determined that he has not met those
requirements, and (b) a determination that the facts then known to those making
the determination would not preclude indemnification under this Article.
Determinations and authorizations of payments under this Section must be made in
the manner specified in Section 6 of this Article for determining that the
indemnification is permissible.
Section 8. Other Contractual Rights. Nothing contained in this Article
shall affect any right to indemnification to which persons other than Trustees
and officers of this Trust or any subsidiary hereof may be entitled by contract
or otherwise.
Section 9. Limitations. No indemnification or advance shall be made under
this Article, except as provided in Sections 5 or 6 in any circumstances where
it appears:
(a) That it would be inconsistent with a provision of the Agreement
and Declaration of Trust of the Trust, a resolution of the
shareholders, or an agreement in effect at the time of accrual of
the alleged cause of action asserted in the proceeding in which
the expenses were incurred or other amounts were paid which
prohibits or otherwise limits indemnification; or
(b) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
Section 10. Insurance. Upon and in the event of a determination by the
Board of Trustees of this Trust to purchase such insurance, this Trust shall
purchase and maintain insurance on behalf of any agent or employee of this Trust
against any liability asserted against or incurred by the agent or employee in
such capacity or arising out of the agent's or employee's status as such to the
fullest extent permitted by law.
-10-
<PAGE>
Section 11. Fiduciaries of Employee Benefit Plan. This Article does not
apply to any proceeding against any Trustee, investment manager or other
fiduciary of an employee benefit plan in that person's capacity as such, even
though that person may also be an agent of this Trust as defined in Section 1 of
this Article. Nothing contained in this Article shall limit any right to
indemnification to which such a Trustee, investment manager, or other fiduciary
may be entitled by contract or otherwise which shall be enforceable to the
extent permitted by applicable law other than this Article.
ARTICLE VII
Shares of Beneficial Interest
Section 1. Certificates. A certificate or certificates representing and
certifying the series and class and the full, but not fractional, number of
shares of beneficial interest owned by each shareholder in the Trust shall not
be issued except as the Board of Trustees may otherwise determine from time to
time. Any such certificate issued shall be signed by facsimile signature or
otherwise by the President or a Vice-President and counter-signed by the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer.
Section 2. Signature. In case any officer who has signed any certificate
ceases to be an officer of the Trust before the certificate is issued, the
certificate may nevertheless be issued by the Trust with the same effect as if
the officer had not ceased to be such officer as of the date of its issue.
Section 3. Recording and Transfer Without Certificates. The Trust shall
have the full power to participate in any program approved by the Board of
Trustees providing for the recording and transfer of ownership of the Trust's
shares by electronic or other means without the issuance of certificates.
Section 4. Lost Certificates. The Board of Trustees may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Trust alleged to have been stolen, lost
or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to have been stolen, lost or destroyed, or
upon other satisfactory evidence of such theft, loss or destruction and may in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such stolen, lost or destroyed certificate or certificates, or his
legal representative, to give the Trust a bond with sufficient surety, to the
Trust to indemnify it against any loss or claim that may be made by reason of
the issuance of a new certificate.
Section 5. Transfer of Shares. Transfers of shares of beneficial interest
of the Trust shall be made on the books of the Trust by the holder of record
thereof (in person or by his attorney thereunto duly authorized by a power of
attorney duly executed in writing and filed with
-11-
<PAGE>
the Secretary of the Trust) (i) if a certificate or certificates have been
issued, upon the surrender of the certificate or certificates, properly endorsed
or accompanied by proper instruments of transfer, representing such shares, or
(ii) as otherwise prescribed by the Board of Trustees. Every certificate
exchanged, surrendered for redemption or otherwise returned to the Trust shall
be marked "Canceled" with the date of cancellation.
Section 6. Registered Shareholders. The Trust shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
applicable law or the Declaration of Trust.
Section 7. Transfer Agents and Registrars. The Board of Trustees may, from
time to time, appoint or remove transfer agents and or registrars of the Trust,
and they may appoint the same person as both transfer agent and registrar. Upon
any such appointment being made, all certificates representing shares of
beneficial interest thereafter issued shall be countersigned by such transfer
agent and shall not be valid unless so countersigned.
Section 8. Stock Ledger. The Trust shall maintain an original stock ledger
containing the names and addresses of all shareholders and the number and class
of shares held by each shareholder. Such stock ledger may be in written form or
any other form capable of being converted into written form within reasonable
time for visual inspection.
ARTICLE VIII
General Provisions
Section 1. Custodianship. Except as otherwise provided by resolution of the
Board of Trustees, the Trust shall place and at all times maintain in the
custody of a custodian (including any sub-custodian for the custodian) all
funds, securities and similar investments owned by the Trust. Subject to the
approval of the Board of Trustees, the custodian may enter into arrangements
with securities depositories, provided such arrangements comply with the
provisions of the Investment Company Act of 1940 and the rules and regulations
promulgated thereunder.
Section 2. Execution of Instruments. All deeds, documents, transfers,
contracts, agreements and other instruments requiring execution by the Trust
shall be signed by the President or a Vice President.
-12-
<PAGE>
Section 3. Net Asset Value. The net asset value per share shall be
determined separately as to each class of the Trust's shares, by dividing the
sum of the total market value of the class' investments and other assets, less
any liabilities, by the total outstanding shares of such class, subject to the
Investment Company Act of 1940 and any other applicable Federal securities law
or rule or regulation currently in effect.
ARTICLE IX
Amendments
The Board of Trustees shall have the power to make, alter and repeal the
Bylaws of the Trust.
Effective as of December 30, 1998
-13-
Exhibit 99.23(d)(i)
INVESTMENT ADVISORY AGREEMENT
THE RISA INVESTMENT TRUST
AGREEMENT made this __th day of __________, 1999, by and between RISA
Investment Advisers, LLC (the "Adviser") and The RISA Investment Trust (the
"Trust").
WHEREAS, the Trust is an open-end, management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), which is authorized to issue one or more series of shares, each having
its own investment policies; and
WHEREAS, the Trust desires to retain the Adviser to render investment
management services on behalf of The RISA Fund series, and such other series as
the Trust and the Adviser may agree upon (the "Portfolios"), and the Adviser is
willing to render such services:
NOW, THEREFORE, in consideration of mutual covenants herein contained, the
parties hereto agree as follows:
1. DUTIES OF THE ADVISER. The Trust employs the Adviser to manage the
investment and reinvestment of the assets, to hire (subject to the
approval of the Trust's Board of Trustees and, except as otherwise
permitted under the terms of any exemptive relief obtained by the Adviser
from the Securities and Exchange Commission, or by rule or regulation, a
majority of the outstanding voting securities of any affected
Portfolio(s)) and thereafter supervise the investment activities of one or
more sub-advisers deemed necessary to carry out the investment program of
any Portfolios of the Trust, and to continuously review, supervise and
(where appropriate) administer the investment program of the Portfolios,
to determine in its discretion (where appropriate) the securities to be
purchased or sold, to provide the Fund's administrator (the
"Administrator") and the Trust with records concerning the Adviser's
activities which the Trust is required to maintain, and to render regular
reports to the Administrator and to the Trust's officers and Trustees
concerning the Adviser's discharge of the foregoing responsibilities. The
retention of a sub-adviser by the Adviser shall not relieve the Adviser of
its responsibilities under this Agreement.
The Adviser shall discharge the foregoing responsibilities subject to the
control of the Board of Trustees of the Trust and in compliance with such
policies as the Trustees may from time to time establish, and in
compliance with the objectives, policies, and limitations for each such
Portfolio set forth in the Trust's prospectus and statement of additional
information, as amended from time to time (referred to collectively as the
"Prospectus"), and applicable laws and regulations. The Trust will furnish
the Adviser from time to time with copies of all amendments or supplements
<PAGE>
to the Prospectus, if any. The Adviser accepts such employment and agrees,
at its own expense, to render the services and to provide the office
space, furnishings and equipment and the personnel (including any
sub-advisers) required by it to perform the services on the terms and for
the compensation provided herein. The Adviser will not, however, pay for
the cost of securities, commodities, and other investments (including
brokerage commissions and other transaction charges, if any) purchased or
sold for the Trust.
2. DELIVERY OF DOCUMENTS. The Trust has furnished the Adviser with copies
properly certified or authenticated of each of the following:
(a) The Trust's Agreement and Declaration of Trust, as filed with the
Secretary of State of the State of Delaware (such Agreement and
Declaration of Trust, as presently in effect and as it shall from
time to time be amended, is herein called the "Declaration of
Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the
"By-Laws");
(c) Prospectus(es) of the Portfolio(s).
3. OTHER COVENANTS. The Adviser agrees that it:
(a) will comply with all applicable Rules and Regulations of the
Securities and Exchange Commission and will in addition conduct its
activities under this Agreement in accordance with other applicable
laws;
(b) will place orders pursuant to its investment determinations for the
Portfolios either directly with the issuer or with any broker or
dealer. In executing Portfolio transactions and selecting brokers or
dealers, the Adviser will use its best efforts to seek on behalf of
the Portfolio the best overall terms available. In assessing the
best overall terms available for any transaction, the Adviser shall
consider all factors that it deems relevant, including the breadth
of the market in the security, the price of the security, the
financial condition and execution capability of the broker or
dealer, and the reasonableness of the commission, if any, both for
the specific transaction and on a continuing basis. In evaluating
the best overall terms available, and in selecting the broker-dealer
to execute a particular transaction the Adviser may also consider
the brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) provided to
the Portfolio and/or other accounts over which the Adviser or an
affiliate of the Adviser may exercise investment discretion. The
Adviser is authorized, subject to the prior approval of the Trust's
Board of Trustees, to pay to a broker or dealer who provides such
brokerage and research services a commission for executing a
portfolio transaction for any of the Portfolios which is in excess
<PAGE>
of the amount of commission another broker or dealer would have
charged for effecting that transaction if, but only if, the Adviser
determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services
provided by such broker or dealer - - viewed in terms of that
particular transaction or terms of the overall responsibilities of
the Adviser to the Portfolio. In addition, the Adviser is authorized
to allocate purchase and sale orders for portfolio securities to
brokers or dealers (including brokers and dealers that are
affiliated with the Adviser or the Trust's principal underwriter) to
take into account the sale of shares of the Trust if the Adviser
believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified firms. In no
instance, however, will any Portfolio's securities be purchased from
or sold to the Adviser, any sub-adviser engaged with respect to that
Portfolio, the Trust's principal underwriter, or any affiliated
person of either the Trust, the Adviser, and sub-adviser or the
principal underwriter, acting as principal in the transaction,
except to the extent permitted by the Securities and Exchange
Commission and the 1940 Act.
4. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser as provided in Sections 1 and 3 of this Agreement, the Trust shall
pay to the Adviser compensation at the rate(s) specified in Schedule A
which is attached hereto and made a part of this Agreement. Such
compensation shall be paid to the Adviser at the end of each month, and
calculated by applying a daily rate, based on the annual percentage rates
as specified in the attached Schedule(s), to the assets of the Portfolio.
The fee shall be based on the average daily net assets for the month
involved. The Adviser may, in its discretion and from time to time, waive
a portion of its fee. All rights of compensation under this Agreement for
services performed as of the termination date shall survive the
termination of this Agreement.
5. REPORTS. The Trust and the Adviser agree to furnish to each other, if
applicable, current prospectuses, proxy statements, reports to
shareholders, certified copies of their financial statements, and such
other information with regard to their affairs as each may reasonably
request. The Adviser further agrees to furnish to the Trust, if
applicable, the same such documents and information pertaining to any
sub-adviser as the Trust may reasonably request.
6. STATUS OF THE ADVISER. The services of the Adviser to the Trust are not to
be deemed exclusive, and the Adviser shall be free to render similar
services to others so long as its services to the Trust are not impaired
thereby. The Adviser shall be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Trust in any way or otherwise be
deemed an agent of the Trust. To the extent that the purchase or sale of
securities or other investments of any issuer may be deemed by the Adviser
to be suitable for two or more accounts managed by the Adviser, the
available securities or investments may be
<PAGE>
allocated in a manner believed by the Adviser to be equitable to each
account. It is recognized that in some cases this may adversely affect
the price paid or received by the Trust or the size or position
obtainable for or disposed by the Trust or any Portfolio.
7. CERTAIN RECORDS. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated under
the 1940 Act which are prepared or maintained by the Adviser (or any
sub-adviser) on behalf of the Trust are the property of the Trust and will
be surrendered promptly to the Trust on request. The Adviser further
agrees to preserve for the periods prescribed in Rule 31a-2 under the 1940
Act the records required to be maintained under Rule 31a-1 under the 1940
Act.
8. LIMITATION OF LIABILITY OF THE ADVISER. The duties of the Adviser shall be
confined to those expressly set forth herein, and no implied duties are
assumed by or may be asserted against the Adviser hereunder. The Adviser
shall not be liable for any error of judgment or mistake of law or for any
loss arising out of any investment or for any act or omission in carrying
out its duties hereunder, except a loss resulting from willful
misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of reckless disregard of its obligations and duties
hereunder, except as may otherwise be provided under provisions of
applicable state law which cannot be waived or modified hereby. (As used
in this Section 8, the term "Adviser" shall include members, officers,
managers, employees and other corporate agents of the Adviser as well as
that corporation itself).
9. PERMISSIBLE INTERESTS. Trustees, agents, and shareholders of the Trust are
or may be interested in the Adviser (or any successor thereof) as members,
officers, managers or partners, or otherwise; members, officers, managers
or partners of the Adviser are or may be interested in the Trust as
Trustees, officers, shareholders or otherwise; and the Adviser (or any
successor) is or may be interested in the Trust as a shareholder or
otherwise subject to the provisions of applicable law. All such interests
shall be fully disclosed between the parties on an ongoing basis and in
the Trust's Prospectus as required by law. In addition, brokerage
transactions for the Trust may be effected through affiliates of the
Adviser or any sub-adviser if approved by the Board of Trustees, subject
to the rules and regulations of the Securities and Exchange Commission.
10. DURATION AND TERMINATION. This Agreement, unless sooner terminated as
provided herein, shall remain in effect until two years from date of
execution, and thereafter, for periods of one year so long as such
continuance thereafter is specifically approved at least annually (a) by
the vote of a majority of those Trustees of the Trust who are not parties
to this Agreement or interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such approval, and (b) by
the Trustees of the Trust or by vote of a majority of the outstanding
voting securities of each Portfolio; provided, however, that if the
shareholders of any Portfolio fail to approve the Agreement as provided
<PAGE>
herein, the Adviser may continue to serve hereunder in the manner and to
the extent permitted by the 1940 Act and rules and regulations thereunder.
The foregoing requirement that continuance of this Agreement be
"specifically approved at least annually" shall be construed in a manner
consistent with the 1940 Act and the rules and regulations thereunder.
This Agreement may be terminated as to any Portfolio at any time, without
the payment of any penalty by vote of a majority of the Trustees of the
Trust or by vote of a majority of the outstanding voting securities of the
Portfolio on not less than 30 days nor more than 60 days written notice to
the Adviser, or by the Adviser at any time without the payment of any
penalty, on 90 days written notice to the Trust. This Agreement will
automatically and immediately terminate in the event of its assignment. As
used in this Section 10, the terms "assignment", "interested persons", and
a "vote of a majority of the outstanding voting securities" shall have the
respective meanings set forth in the 1940 Act and the rules and
regulations thereunder, subject to such exemptions as may be granted by
the Securities and Exchange Commission.
11. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the State of Delaware, without regard to conflict of law principles;
provided, however that nothing herein shall be construed as being
inconsistent with the 1940 Act.
12. NOTICE. Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other
party:
To the Adviser at: RISA Investment Advisers, LLC
Lewis Tower
225 South 15th Street
Suite 930
Philadelphia, PA 19102
Attn: O. Sam Folin
To the Trust at: RISA Investment Advisers, LLC
Lewis Tower
225 South 15th Street
Suite 930
Philadelphia, PA 19102
Attn: O. Sam Folin
13. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
<PAGE>
14. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject matter.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument. A copy of the Declaration of
Trust of the Trust is on file with the Secretary of State of the State of
Delaware, and notice is hereby given that this instrument is executed on
behalf of the Trustees of the Trust as Trustees, and is not binding upon
any of the Trustees, officers, or shareholders of the Trust individually
but binding only upon the assets and property of the Trust. No Portfolio
of the Trust shall be liable for the obligations of any other Portfolio of
the Trust. Without limiting the generality of the foregoing, the Adviser
shall look only to the assets of a particular Portfolio for payment of
fees for services rendered to that Portfolio.
Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order of
the Commission, whether of special or general application, such provision
shall be deemed to incorporate the effect of such rule, regulation or
order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.
The RISA Investment Trust RISA Investment Advisers, LLC
By: By:
--------------------------- ---------------------------
Name: Name:
Title: Title:
<PAGE>
Schedule A
to the
Investment Advisory Agreement
between
THE RISA INVESTMENT TRUST
and
KEARSARGE CONSULTING, LLC
Pursuant to Article 4, the Trust shall pay the Adviser compensation at an annual
rate as follows:
The RISA Fund 1.25%
Exhibit 99.23(d)(ii)
INVESTMENT SUB-ADVISORY AGREEMENT
THE RISA INVESTMENT TRUST
AGREEMENT made this __th day of _________, 1999, between RISA Investment
Advisers, LLC (the "Adviser") and African Harvest Asset Managers (Proprietary)
Limited (the "Sub-Adviser").
WHEREAS, THE RISA INVESTMENT TRUST, a Delaware business trust (the
"Trust"), is registered as an open-end, management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"); and WHEREAS, the
Adviser has entered into an Investment Advisory Agreement dated ______________,
1999 (the "Advisory Agreement") with the Trust, pursuant to which the Adviser
will act as investment adviser to The RISA Fund (the "Portfolio"), which is a
series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain
the Sub-Adviser to provide investment advisory services to the Adviser in
connection with the management of the Portfolio, and the Sub-Adviser is willing
to render such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES OF THE SUB-ADVISER. Subject to supervision by the Adviser and the
Trust's Board securities and other assets of the Portfolio of the
entrusted to it hereunder (the "Assets"), including the purchase,
retention and disposition of the Assets, in accordance with the
Portfolio's investment objectives, policies and restrictions as stated in
the Portfolio's prospectus and statement of additional information, as
currently in effect and as amended or supplemented from time to time
(referred to collectively as the "Prospectus"), and subject to the
following:
(a) The Sub-Adviser shall, in consultation with and subject to the
direction of the Adviser, determine from time to time what Assets
will be purchased retained or sold by the Portfolio, and what
portion of the Asset invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this
Agreement, the Sub-Adviser shall act in conformity with the Trust's
Declaration of Trust (as defined herein) and the Prospectus and with
the written instructions and directions of the Adviser and of the
Board of Trustees of the Trust (provided, however, that the
Sub-Adviser shall not be obliged to do or omit to do anything, in
compliance with such written instructions, that would constitute a
<PAGE>
breach of any applicable South African statute, rule or regulation)
and will conform to and comply with the requirements of the 1940
Act, the Internal Revenue Code of 1986, and all other applicable
federal and state laws and regulations, as each is amended from time
to time.
(c) The Sub-Adviser shall determine the Assets to be purchased or sold
by the Portfolio as provided in subparagraph (a) and will place
orders with or through such persons, brokers or dealers to carry out
the policy with respect to brokerage set forth in the Portfolio's
Registration Statement (as defined herein) and Prospectus or as the
Board of Trustees or the Adviser may direct from time to time, in
conformity with federal securities laws. In executing Portfolio
transactions and selecting brokers or dealers, the Sub-Adviser will
use its best efforts to seek on behalf of the Portfolio the best
overall terms available. In assessing the best overall terms
available for any transaction, the Sub-Adviser shall consider all
factors that it deems relevant, including the breadth of the market
in the security, the price of the security, the financial condition
and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. In evaluating the best
overall terms available, and in selecting the broker-dealer to
execute a particular transaction, the Sub-Advisor may also consider
the brokerage and research services provided (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934).
Consistent with any guidelines established by the Board of Trustees
of the Trust, the Sub-Adviser is authorized to pay to a broker or
dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Portfolio
which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if, but
only if, the Sub-Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer - viewed in
terms of that particular transaction or terms of the overall
responsibilities of the Sub-Adviser to the Portfolio. In addition,
the Sub-Adviser is authorized to allocate purchase and sale orders
for securities to brokers or dealers (including brokers and dealers
that are affiliated with the Adviser, Sub-Adviser or the Trust's
principal underwriter) to take into account the sale of shares of
the Trust if the Sub-Adviser believes that the quality of the
transaction and the commission are comparable to what they would be
with other qualified firms. In no instance, however, will the
Portfolio's Assets be purchased from or sold to the Adviser,
Sub-Adviser, the Trust's principal underwriter, or any affiliated
person of either the Trust, Adviser, the Sub-Adviser or the
principal underwriter, acting as principal in the transaction,
except to the extent permitted by the Securities and Exchange
-2-
<PAGE>
Commission ("SEC") and the 1940 Act. It is understood that the
Sub-Adviser may, to the extent permitted by applicable U.S. laws and
regulations, aggregate securities to be sold or purchased for the
Portfolio and for other clients in order to obtain the most
favorable price and efficient execution. In that event, allocation
of the securities purchased or sold, as well as expenses incurred in
the transaction, will be made by the Sub-Adviser in the manner it
considers to be the most equitable and consistent with its fiduciary
obligations to the Portfolio and to its other clients. The
Sub-Adviser will promptly communicate to the officers and trustees
of the Trust such information relating to transactions for the
Portfolio as they may reasonable request. With respect to securities
transactions entered into in countries other than the United States,
the Sub-Adviser shall enter into securities transactions only in
those jurisdictions in which the Trust's custodian, or a
sub-custodian appointed by the Trust, may hold the Assets.
(d) The Sub-Adviser shall maintain all books and records with respect to
transactions involving the Assets required by subparagraphs (b)(5),
(6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under
the 1940 Act. The Sub-Adviser shall provide to the Adviser or the
Board of Trustees such periodic and special reports, balance sheets
or financial information, and such other information with regard to
its affairs as the Adviser or Board of Trustees may reasonably
request.
The Sub-Adviser shall keep the books and records relating to the
Assets required to be maintained by the Sub-Adviser under this
Agreement and shall timely furnish to the Adviser all information
relating to the Sub-Adviser's services under this Agreement needed
by the Adviser to keep the other books and records of the Portfolio
required by Rule 31a-1 under the 1940 Act. The Sub-Adviser shall
also furnish to the Adviser any other information relating to the
Assets that is required to be filed by the Adviser or the Trust with
the SEC or sent to shareholders under the 1940 Act (including the
rules adopted thereunder) or any exemptive or other relief that the
Adviser or the Trust obtains from the SEC. The Sub-Adviser agrees
that all records that it maintains on behalf of the Portfolio are
property of the Portfolio and the Sub-Adviser will surrender
promptly to the Portfolio any of such records upon the Portfolio's
request; provided, however, that the Sub-Adviser may retain a copy
of such records. In addition, for the duration of this Agreement,
the Sub-Adviser shall preserve for the periods prescribed by Rule
31a-2 under the 1940 Act any such records as are required to be
maintained by it pursuant to this Agreement, and shall transfer said
-3-
<PAGE>
records to any successor sub-adviser upon the termination of this
Agreement (or, if there is no successor sub-adviser, to the
Adviser).
(e) The Sub-Adviser shall provide the Portfolio's custodian on each
business day with information relating to all transactions
concerning the Portfolio's Assets and shall provide the Adviser with
such information upon request of the Adviser.
(f) The investment management services provided by the Sub-Adviser under
this Agreement are not to be deemed exclusive and the Sub-Adviser
shall be free to render similar services to others, as long as such
services do not impair the services rendered to the Adviser or the
Trust.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's ability to
fulfill its commitment under this Agreement.
(h) The Sub-Adviser shall review all proxy solicitation materials and be
responsible for voting and handling all proxies in relation to the
securities held in the Portfolio. The Adviser shall instruct the
custodian and other parties providing services to the Portfolio to
promptly forward misdirected proxies to the Sub-Adviser. Services to
be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's partners,
officers or employees.
(i) The Sub-Adviser shall promptly notify the Adviser if the Sub-Adviser
determines that an instruction received from the Adviser or the
Board of Trustees would, if carried out, result in the Sub-Adviser
committing a violation of a South African statute, rule or
regulation.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to the Portfolio pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of
its duties under this Agreement; provided, however, that in connection
with its management of the Assets, nothing herein shall be construed to
relieve the Sub-Adviser of responsibility for compliance with the Trust's
Declaration of Trust (as defined herein), the Prospectus, the instructions
and directions of the Board of Trustees of the Trust, the requirements of
the 1940 Act, the Internal Revenue Code of 1986, and all other applicable
federal and state laws and regulations, as each is amended from time to
time.
-4-
<PAGE>
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following
documents:
(a) The Trust's Agreement and Declaration of Trust, as filed with the
Secretary of State of the State of Delaware (such Agreement and
Declaration of Trust, as in effect on the date of this Agreement and
as amended from time to time, herein called the "Declaration of
Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the
"By-Laws");
(c) Prospectus(es) of the Portfolio.
4. COMPENSATION TO THE SUB-ADVISER. For the services to be provided by the
Sub-Adviser pursuant to this Agreement, the Adviser will pay the
Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation
therefor, a sub-advisory fee at the rate specified in the Schedule(s)
which is attached hereto and made part of this Agreement. The fee will be
calculated based on the average daily market value of the Assets under the
Sub-Adviser's management and will be paid to the Sub-Adviser monthly. The
Sub-Adviser will waive its fee to the same extent as the Adviser, provided
that the Sub-Adviser's annual fee shall not be less than 0.20% of the
value of the Portfolio's average daily net assets.
5. INDEMNIFICATION. The Sub-Adviser shall indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities or
damages (including reasonable attorney's fees and other related expenses)
howsoever arising from or in connection with the performance of the
Sub-Adviser's obligations under this Agreement; provided, however, that
the Sub-Adviser's obligation under this Section 5 shall be reduced to the
extent that the claim against, or the loss, liability or damage
experienced by the Adviser, is caused by or is otherwise directly related
to the Adviser's own willful misfeasance, bad faith or negligence, or to
the reckless disregard of its duties under this agreement.
6. DURATION AND TERMINATION. This Agreement shall become effective on the
date first written above and shall continue in effect for a period of two
years from such date, and thereafter only if such continuance is
specifically approved at least annually by the Trustees in conformance
with the 1940 Act; provided, however, that this Agreement may be
terminated with respect to the Portfolio (a) by the Portfolio at any time,
without the payment of any penalty, by the vote of a majority of Trustees
of the Trust or by the vote of a majority of the outstanding voting
securities of the Portfolio, (b) by the Adviser at any time,
-5-
<PAGE>
without the payment of any penalty, on not more than 60 days' nor less
than 30 days' written notice to the Sub-Adviser, or (c) by the Sub-Adviser
at any time, without the payment of any penalty, on 90 days' written
notice to the Adviser. This Agreement shall terminate automatically and
immediately in the event of its assignment, or in the event of a
termination of the Adviser's agreement with the Trust. As used in this
Section 6, the terms "assignment" and "vote of a majority of the
outstanding voting securities" shall have the respective meanings set
forth in the 1940 Act and the rules and regulations thereunder, subject to
such exceptions as may be granted by the SEC under the 1940 Act.
7. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the State of Delaware, without regard to conflict of law principles;
provided, however, that nothing herein shall be construed as being
inconsistent with the 1940 Act.
8. SEVERABILITY. Should any part of this Agreement be held invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors.
9. NOTICE: Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other
party:
To the Adviser at RISA Investment Advisers, LLC
The Lewis Tower Building
225 South 15th Street
Suite 930
Philadelphia, PA 19102
Attention: O. Sam Folin
To the Sub-Adviser at: African Harvest Asset Managers
(Proprietary) Limited
African Harvest House, Second Floor
Boundary Terrace
#1 Mariendahl Lane
Newlands, 7700 South Africa
Attention: Leon Campher
10. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject matter.
-6-
<PAGE>
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order of the
SEC, whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first written
above.
RISA Investment Advisers, LLC African Harvest Asset Managers
(Proprietary) Limited
By: By:
---------------------------- -----------------------------
Name: O. Sam Folin Name: Leon Campher
Title: Managing Director Title: Chief Operating Officer
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
RISA INVESTMENT ADVISERS, LLC
AND
AFRICAN HARVEST ASSET MANAGERS (PROPRIETARY) LIMITED
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
0.55% of the average daily net assets of the RISA Fund
