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As filed with the Securities and Exchange Commission on December 21, 1998
File No. 333-____
File No. 811-____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ____ [ ]
Post-Effective Amendment No. [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [ ]
KELMOORE STRATEGIC TRUST
(Exact Name of Registrant as Specified on Charter)
2471 E. Bayshore Road, Suite 501
Palo Alto, California 94303
(Address of Principal Executive Offices)
(800) 486-3717
(Registrant's Telephone Number)
Matthew Kelmon, President
Kelmoore Strategic Trust
2471 E. Bayshore Road, Suite 501
Palo Alto, California 94303
(Name and Address of Agent for Service)
Copies to:
Andre W. Brewster, Esq. Ms. Sandra L. Adams
Howard Rice Nemerovski Canady Falk & Rabkin First Data Investor Services Group
Three Embarcadero Center, 7th Floor 3200 Horizon Drive
San Francisco, CA 94111-4065 King of Prussia, PA 19406-0903
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
Title of Securities Being Registered: Shares of Beneficial Interest of the
Kelmoore Strategic Trust.
Registrant will file a notice pursuant to Rule 24f-2 under the Investment
Company Act of 1940, as amended, within ninety days after its fiscal year end.
Registrant hereby amends this Registration Statement under the Securities Act of
1933 on such date or dates as may be necessary to delay its effective date until
Registrant shall file a further amendment which specifically states that such
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, as amended, or until such
Registration Statement shall become effective on such date as the Securities and
Exchange Commission, acting pursuant to said Section 8(a), may determine.
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[OUTSIDE FRONT COVER]
PROSPECTUS
________________ , 1999
KELMOORE STRATEGIC INCOME FUND
2471 E. Bayshore Road, Suite 501
Palo Alto, CA 94303
(800) __________________
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
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CONTENTS
SUMMARY
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Important information about the Fund
What is the Fund? 4
What is the Fund's Goal? 4
What are the Fund's Main Strategies? 4
In what type of securities does the Fund Invest? 4
What are the Fund's Main Risks? 5
Who may want to invest in the Fund? 5
Risk/Return Bar Chart and Table 5
FEES AND EXPENSES OF THE FUND
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What are the Fees and Expenses of the Fund?
Shareholder Fees 6
Annual Fund Operating Expenses 6
Example 6
MAIN STRATEGIES 6
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MAIN RISKS 7
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MANAGEMENT OF THE FUND
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Information on Kelmoore Investment Company, Inc., the Fund's investment adviser.
Investment Adviser 8
Portfolio Manager 8
Distribution Plan 8
YOUR INVESTMENT
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Information for managing your fund account
How to Buy Shares 9
How to Sell Shares 10
Transaction Policies 11
SHAREHOLDER SERVICES 12
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DISTRIBUTIONS AND TAXES 13
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FOR MORE INFORMATION
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Shareholder Reports Back Cover
Statement of Additional Information Back Cover
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KELMOORE STRATEGIC INCOME FUND
SUMMARY
WHAT IS THE FUND?
Kelmoore Strategic Income Fund (the "Fund") is a diversified series of Kelmoore
Strategic Trust, an open-end management investment company, commonly known as a
mutual fund.
WHAT IS THE FUND'S GOAL?
The Fund's goal is to provide a high level of current income. The cash flow
generated is available to you either as a distribution or for reinvestment. As
with any mutual fund, there is no guarantee that the Fund will achieve its goal.
WHAT ARE THE FUND'S MAIN STRATEGIES?
The Fund attempts to achieve its goal by purchasing a limited number of large
company stocks and selling or "writing" the related call options against such
stocks. The call options are considered "covered" because the Fund owns the
stock against which the options are written. This strategy attempts to generate
income from the premiums paid for the covered call options written by the Fund.
The Fund may also generate premium income by writing secured put options to
acquire portfolio securities.
IN WHAT TYPES OF SECURITIES DOES THE FUND INVEST?
The Fund will typically hold no more than forty stocks, though this number may
fluctuate at the discretion of Kelmoore Investment Company (the "Adviser"). The
issuers of stocks selected for investment by the Fund will tend to have most of
the following characteristics:
- - Considered to be industry leaders
- - Have strong financial fundamentals
- - Are widely-held and have a high daily trading volume
- - Are multi-national corporations
The stocks selected will also usually fall into one of the following industry
sectors:
SECTOR EXAMPLES
- ---------------------------- -----------------------------------------
- - Advanced Manufacturing Boeing, General Motors, Kodak
- - Consumer Goods Gillette, Home Depot, Merck
- - Finance Allstate, American Express, Merrill-Lynch
- - Resources Amoco, Exxon, Mobil
- - Technology Hewlett-Packard, IBM, Intel, Microsoft,
WHAT ARE THE FUND'S MAIN RISKS?
As with any mutual fund, the value of the Fund's investments, and therefore the
value of the Fund's shares, will fluctuate. If the net asset value of your
shares declines below the price you paid and you sell your shares, you will lose
money. The principal risks associated with an investment in the Fund include:
Risks of investing in stocks:
- - stock market risk, or the risk that the price of the securities owned by
the Fund will rise or fall due to changing economic, political or market
conditions
- - selection risk, or the risk that the stocks selected by the Fund will
underperform the stock market as a whole or certain sectors of the stock
market
Risks of covered call options:
- - risk of limiting gains on stocks in a rising market
- - risk of unanticipated exercise of the option
Risks of secured put options:
- - risk of loss if the value of the underlying stock declines
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- - the gain on a put option is limited to interest earned on its liquid
assets secured in a segregated account plus the premium received for
selling the put option
WHO MAY WANT TO INVEST IN THE FUND?
The Fund may be appropriate for you if you:
- - are seeking current income and are willing to assume more risk to increase
the level of income
- - can accept the risks of investing in a portfolio of common stocks and
their related options
- - are seeking a disciplined and continual reinvestment of income generated
from writing options
- - can tolerate performance which can vary substantially from year to year
- - are prepared to receive taxable distributions of income
- - have a longer-term investment horizon and do not seek short term capital
gains
YOU SHOULD NOT INVEST IN THIS FUND IF YOU ARE SEEKING CAPITAL APPRECIATION OR
PREDICTABLE LEVELS OF INCOME OR ARE INVESTING FOR A SHORT PERIOD OF TIME.
RISK/RETURN BAR CHART AND TABLE
Although past performance of a fund is no guarantee of how it will perform in
the future, historical performance may give you some indication of the risks of
investing in a mutual fund. Performance demonstrates how a mutual fund's returns
have varied over time. The Fund is recently organized and therefore has no
performance history. Once the Fund has performance for at least one calendar
year, a Bar Chart and Performance Table will be included in the prospectus. The
Fund's annual returns will also be compared to the returns of a benchmark index.
FEES AND EXPENSES OF THE FUND
THE TABLES BELOW DESCRIBE THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND
HOLD SHARES OF THE FUND.
SHAREHOLDER FEES
(fees paid directly from your investment):
Maximum Sales Charge (Load) imposed on Purchases .........................None
Maximum Deferred Sales Charge (Load)......................................None
Maximum Sales Charge (Load) imposed on Reinvested Dividends ..............None
Redemption Fees (as a percentage of amount redeemed)......................0.50%*
* If you wish to redeem your shares at any time during the month except the five
business days immediately following the third Friday of the month, a redemption
fee of 0.50% will be deducted from your redemption proceeds. See "Transaction
Policies - Redemption Fee."
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
Management Fees .........................................................1.25%
Distribution (12b-1) Fees................................................0.30
Other Expenses...........................................................0.53*
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Total Annual Fund Operating Expenses.....................................2.08%**
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* "Other Expenses" are based on estimated amounts for the Fund's current fiscal
year.
** The Adviser has voluntarily undertaken to waive all or a portion of its fees
and to reimburse certain expenses of the Fund so that the total operating
expenses for the first year of operations will not exceed 2.00%. The Adviser
reserves the right to terminate this undertaking at any time, in its sole
discretion. Any waiver or reimbursement by the Adviser is
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subject to reimbursement by the Fund within the following three years, to the
extent such reimbursement by the Fund would not cause total operating expenses
to exceed any current expense limitation.
EXAMPLE
THIS EXAMPLE IS DESIGNED SO THAT YOU MAY 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;
- - YOU REDEEM ALL OF YOUR SHARES AT THE END OF THE TIME PERIODS;
- - YOUR INVESTMENT HAS A HYPOTHETICAL 5% RETURN EACH YEAR;
- - ALL DISTRIBUTIONS ARE REINVESTED; AND
- - 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 (IF YOU REDEEM YOUR SHARES OTHER THAN DURING THE FIVE
BUSINESS DAYS IMMEDIATELY FOLLOWING THE THIRD FRIDAY OF ANY CALENDAR MONTH):
1 YEAR 3 YEARS
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$255 $682
YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES (OR IF
YOU REDEEM YOUR SHARES DURING THE FIVE BUSINESS DAYS IMMEDIATELY FOLLOWING THE
THIRD FRIDAY OF ANY CALENDAR MONTH), YOUR COSTS WOULD BE:
1 YEAR 3 YEARS
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$203 $627
MAIN STRATEGIES
The Fund attempts to achieve its goal of earning a high level of current income
by investing in approximately forty large company stocks and selling covered
call options against these stocks.
COVERED CALL OPTIONS
The fundamentals of selling covered call options are as follows:
The Fund Sells the Option
Selling a call option is selling the right to an option buyer to purchase a
specified number of shares (100 shares equals one option contract) from the
Fund, at a specified price (the "exercise price") on or before a specified date.
The call option is covered because the Fund owns the stock on which the option
is based. This eliminates the risk associated with selling uncovered options.
The Fund Collects a Premium
For the right to purchase the underlying stock, the buyer of a call option pays
a fee or "premium" to the Fund. The premium is paid at the time the option is
purchased, and is not refundable to the buyer, regardless of what happens to the
stock price.
If the Option is Exercised
The buyer of the option may elect to purchase the stock (exercise, or "call",
the option) at the exercise price at any time before the option expires. The
Fund is then obligated to deliver the shares at that price. Options are normally
exercised on the expiration date if the market price of the stock exceeds the
exercise price. If the exercise price is higher than the price the Fund
originally paid to purchase the stock, the Fund will realize a gain on the sale
of the stock; if the exercise price is lower, the Fund will realize a loss. By
selling a covered call option, the Fund foregoes the opportunity to benefit from
an increase in price of the underlying stock above the exercise price.
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If the Option Expires Unexercised
If the market price of the stock does not exceed the exercise price, the call
option will likely expire without being exercised. The Fund keeps the premium
and the stock. The Fund can then sell new call options against those same shares
of stock. Often, new call options are sold repeatedly until: a) an option is
exercised, b) the Fund believes the stock no longer meets the investment
criteria of the Fund and sells the stock, or c) the Fund liquidates the stock
for cash.
Other Features
The Fund may sell covered call options without limitation and will not sell
uncovered call options. The call options written by the Fund are listed for
trading on one or more domestic securities exchanges and are issued by the
Options Clearing Corporation. If a dividend is declared on stock underlying a
call option written by the Fund while the stock is owned by the Fund, the
dividend is paid to the Fund.
SECURED PUT OPTIONS
The Fund may also generate premium income by writing secured put options on
stocks it seeks to obtain. Secured put option writing entails the Fund's sale of
a put option to a third party for a premium and the Fund's concurrent deposit of
liquid assets into a segregated account equal to the option's exercise price. A
put option gives the buyer the right to put (sell) the stock underlying the
option to the Fund at the exercise price at any time during a specified time
period.
The Fund may sell secured put options without limitation and will not sell
unsecured put options. The Fund will only write secured put options in
circumstances where it has made an investment decision that it desires to
acquire the security underlying the option at the exercise price specified in
the option. The Fund may acquire its initial portfolio of stocks largely through
the sale of secured put options. Thereafter, the use of secured put options by
the Fund should decline. Put options written by the Fund are listed for trading
on one or more domestic securities exchanges and are issued by the Options
Clearing Corporation.
TEMPORARY DEFENSIVE POSITION
The Fund may, from time to time, take a temporary defensive position that is
inconsistent with the Fund's principal investment strategies in attempting to
respond to adverse market, economic, political or other conditions. When the
Fund takes a temporary defensive position, it may not achieve its stated
investment objective. A principal defensive investment position would be the
purchase of cash equivalents.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
The Fund may invest in the securities of other investment companies, including
money market mutual funds. In making such investments, the Fund seeks to acquire
interests in portfolios of securities that are more diversified or with more
specialized characteristics than in those that could be efficiently acquired
directly by the Fund. By investing in shares of other investment companies, the
Fund indirectly pays a portion of the operating expenses and brokerage costs of
such companies as well as its own operating expenses.
MAIN RISKS
INVESTING IN CORPORATE SECURITIES
Investing in corporate securities includes the risks inherent in investing in
stocks and the stock market generally. The value of securities in which the Fund
invests, and therefore the Fund's net asset value, will fluctuate due to
economic, political and market conditions. As with any mutual fund which invests
in corporate securities, there is also the risk that the securities selected by
the Fund will underperform the stock market or certain sectors of the market.
WRITING COVERED CALL OPTIONS
When the Fund writes covered call options, it forgoes the opportunity to benefit
from an increase in the value of the underlying stock above the exercise price,
but continues to bear the risk of a decline in the value of the underlying
stock. While the Fund receives a premium for writing the call option, the price
the Fund realizes from the sale of the stock upon exercise of the option could
be substantially below its prevailing market price. The purchaser of the call
option may exercise the call at any time during the exercise period.
Alternatively, if the value of the stock underlying the call option is below the
exercise price, the call is not likely to be exercised, and the Fund could have
an unrealized loss on the stock, offset by the amount of the premium received by
the Fund when it wrote the option.
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WRITING SECURED PUT OPTIONS
When the Fund writes secured put options, it bears the risk of loss if the value
of the underlying stock declines below the exercise price. If the option is
exercised, the Fund could be required to purchase the stock underlying the put
option at a price significantly greater than the current market price of the
stock. While the Fund's gain on a put option is limited to the interest earned
on the liquid assets securing the put option plus the premium received from the
purchaser of the put option, the Fund risks the entire loss in value of the
stock, potentially to zero.
BROKERAGE COMMISSIONS
It is anticipated that the Fund will place substantially all of its
transactions, both in stocks and options, with the Adviser in its capacity as a
broker-dealer. As the level of option writing increases, the level of
commissions paid by the Fund to the Adviser increases. Because the Adviser
receives compensation based on the amount of transactions completed, there is an
incentive on the part of the Adviser to effect as many transactions as possible.
While the Fund does not intend to trade the stocks in its portfolio actively, it
is in the interest of the Fund to write as many options as possible, thereby
maximizing the premiums it receives. In practice, the number of options written
at any time will be limited to the value of the stocks and other assets in the
Fund's portfolio used to cover or secure those options. Brokerage commissions
are often greater in relation to options premiums than in relation to the price
of the underlying stocks.
TAX CONSEQUENCES
The Fund expects to generate a high level of premium income. This income will
usually be taxable as ordinary income to the investor. In addition, because the
Fund will have no control over the exercise of options, if may be forced to
realize short or long term capital gains at inopportune times.
LACK OF OPERATING HISTORY
The Fund has no operating history. In addition, the Adviser has not previously
acted as an investment adviser for a mutual fund, although it has managed assets
for individuals, trusts, corporations, institutions and private investment funds
since 1992 using the same investment strategy as that used by the Fund.
YEAR 2000 ISSUES
Like all mutual funds, the Fund's operations depend heavily on the functioning
of computer systems, including those used by its advisor, custodian, fund
accounting agent, and transfer agent. The failure of these computer systems to
properly process data containing dates occurring after December 31, 1999 (the
"Year 2000 problem") could adversely affect the Fund. While the Fund's adviser
and other service providers have advised the Fund that they are taking steps
they believe are reasonably designed to address the Year 2000 problem, there is
no assurance that the steps will be sufficient. In addition, there is no
assurance that the Year 2000 problem will not have an adverse effect on the
companies whose securities are held by the Fund.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER
Kelmoore Investment Company, Inc. serves as the investment adviser to the Fund
and is responsible for the selection and on-going monitoring of the securities
in the Fund's investment portfolio and for the management of the Fund's business
affairs. The Adviser is a registered investment adviser and broker-dealer that
was established in 1992 by Ralph M. Kelmon, who is the principal shareholder.
The Adviser offers investment advisory and brokerage services to individual
clients, trusts, corporations, institutions and private investment funds using
the same investment strategy that the Fund employs. The Adviser has not
previously advised or managed a mutual fund. The Adviser's principal address is
2471 E. Bayshore Road, Suite 501, Palo Alto, California 94303.
Under the terms of the investment advisory agreement between the Adviser and the
Fund, the Adviser is responsible for formulating the Fund's investment program,
subject to the Fund's investment policies and limitations. The Fund pays the
Adviser a monthly fee at the annual rate of 1.25% of the Fund's average daily
net assets. This fee is higher than the management fees paid by many other
mutual funds.
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PORTFOLIO MANAGER
The primary portfolio manager for the Fund is Matthew Kelmon. Mr. Kelmon has
been Vice President of Trading for the Adviser from 1994 to present. Mr. Kelmon
manages the day-to-day trading activities of the investment adviser and is
responsible for designing and implementing the in-house software system used in
the day-to-day investment process. Mr. Kelmon also heads up the equity selection
committee of the Adviser. Previously, Mr. Kelmon was a bond trader with M.L.
Stern & Co., Inc., located in San Diego, California, from 1993 to 1994.
DISTRIBUTION PLAN
The Fund has adopted a plan under rule 12b-1 under the Investment Company Act of
1940 that allows the Fund to pay distribution fees for the sale and distribution
of its shares. Because these fees are paid out of the Fund's assets on an
on-going basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges. The distribution
plan permits the Fund to pay the Adviser, as principal distributor, a monthly
fee at the annual rate of 0.30% of the Fund's average daily net assets.
YOUR INVESTMENT
HOW TO BUY SHARES
You can purchase shares of the Fund through broker-dealers or directly through
the Adviser. Shares of the Fund are offered only to residents of states in which
the shares are registered or qualified. No share certificates will be issued in
connection with the purchase of Fund shares.
PURCHASE AMOUNTS
MINIMUM INITIAL INVESTMENT: $25,000
MINIMUM ADDITIONAL INVESTMENTS: $ 5,000
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<CAPTION>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
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BY MAIL BY MAIL
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<S> <C>
Complete the application. Fill out an investment slip from a previous
confirmation and write your account number on your
Mail the application and your check to: check. Mail the slip and your check to:
First Data Investor Services Group
3200 Horizon Drive First Data Investor Services Group
P.O. Box 61503 P.O. Box 412797
King of Prussia, PA 19406-0903 Kansas City, Missouri 64141-2797
Please make check payable to "Kelmoore Strategic Income Please make check payable to "Kelmoore Strategic
Fund." Income Fund."
PLEASE MAKE SURE YOUR CHECK IS FOR AT LEAST $25,000. PLEASE MAKE SURE YOUR ADDITIONAL INVESTMENT IS FOR AT
LEAST $5,000.
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BY WIRE BY WIRE
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To make a same-day wire investment, call (800) Call (800) ________. The wire must be received by
________ by 4:00 p.m. Eastern time. An account 4:00 p.m. Eastern time for same day processing.
number will be assigned to you.
Follow the instructions under TO OPEN AN ACCOUNT - By
Call your bank with instructions to transmit funds to: Wire.
UMB Bank, NA, ABA #10-10-00695
For: First Data Investor Services Group Your bank may charge a wire fee.
Account #98-7037-071-9 (PLEASE MAKE SURE YOUR WIRE IS FOR AT LEAST $5,000.)
Fund - Kelmoore Strategic Income Fund
Name(s) of account registration
Your bank may charge a wire fee.
(PLEASE MAKE SURE YOUR WIRE IS FOR AT LEAST $25,000.)
Mail your completed application to First Data Investor
Services Group at the address above.
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PURCHASE PRICE
You pay no sales charge to invest in the Fund. Shares of the Fund are sold at
the net asset value per share (NAV) next determined after receipt of the request
in good order by First Data Investor Services Group ("Investor Services Group").
The NAV multiplied by the number of Fund shares you own equals the value of your
investment.
RIGHTS RESERVED BY THE FUND
The Fund reserves the right to:
- - reject any purchase order
- - suspend the offering of shares
- - vary the initial and subsequent investment minimums
- - waive the minimum investment requirement for any investor
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HOW TO SELL SHARES
GENERAL
You may "redeem", that is, sell your shares on any day the New York Stock
Exchange is open, either directly through the Adviser or through your
broker-dealer. The price you receive will be the NAV next calculated after
receipt of the request in good order by Investor Services Group. A redemption
fee of 0.50% will be deducted from your redemption proceeds if you redeem your
shares at any time other than the five business days immediately following the
third Friday of every month. See "Transaction Policies - Redemption Fee."
BY MAIL
Write a letter of instruction that includes:
- - The Fund name, your account number, the name(s) in which the account is
registered and the dollar value or number of shares you wish to sell.
- - Include all signatures and any additional documents that may be required.
- - Mail your request to:
First Data Investor Services Group
P.O. Box 61503
King of Prussia, PA 19406-0903
- - A check will be mailed to the name(s) and address in which the account is
registered within seven days.
BY TELEPHONE
Call (800) _________ . Telephone redemptions will not be available for amounts
less than $_______. The proceeds will be paid to the registered owner: (1) by
mail at the address on the account, or (2) by wire to the bank account
designated on the form. To use the telephone redemption privilege, you must have
selected this service on your original account application or submitted a
subsequent request in writing to add this service to your account. The Fund and
Investor Services Group reserve the right to refuse any telephone transaction
when they are unable to confirm to their satisfaction that a caller is the
account owner or a person preauthorized by the account owner. Investor Services
Group has established security procedures to prevent unauthorized account
access. The telephone transaction privilege may be suspended, limited, modified
or terminated at any time without prior notice by the Fund or Investor Services
Group. Neither the Fund nor any of its service contractors will be liable for
any loss or expense in acting upon telephone instructions that are reasonably
believed to be genuine.
BY WIRE
In the case of redemption proceeds that are wired to a bank, the Fund will
transmit the payment only on days that commercial banks are open for business
and only to the bank and account previously authorized on your application or
your signature-guaranteed letter of instruction. The Fund and Investor Services
Group will not be responsible for any delays in wired redemption proceeds due to
heavy wire traffic over the Federal Reserve System. The Fund reserves the right
to refuse a wire redemption if it is believed advisable to do so.
SELLING RECENTLY PURCHASED SHARES
If you wish to sell shares that were recently purchased by check, the Fund may
delay mailing your redemption check for up to 15 business days after your
redemption request to allow the purchase check to clear.
TRANSACTION POLICIES
TIMING OF PURCHASE OR SALE REQUESTS
All requests received in good order by Investor Services Group before the close
of the New York Stock Exchange, typically 4:00 p.m. Eastern Time, will be
executed the same day, at that day's NAV. Orders received after the close of the
New York Stock Exchange will be executed the following day, at that day's NAV.
All investments must be in U.S. dollars. Purchase and redemption orders are
executed only on days when the New York Stock Exchange is open for
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trading. If the New York Stock Exchange closes early, the deadlines for purchase
and redemption orders will be accelerated to the earlier closing time.
STOCK EXCHANGE CLOSINGS
The New York Stock Exchange is typically closed for trading on New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
DETERMINATION OF NAV
The NAV for the Fund is calculated at the close of regular trading hours of the
New York Stock Exchange, which is normally 4:00 p.m. Eastern time. The Fund
calculates NAV by adding up the total value of the Fund's investments and other
assets, subtracting liabilities, and then dividing that figure by the number of
the Fund's outstanding shares. The Fund's investments are valued based on market
value, or where market quotations are not readily available on fair value as
determined in good faith by the Fund's Trustees.
INVESTMENTS THROUGH NOMINEES
If you invest through a nominee, such as a broker-dealer or financial advisor
(rather than directly), the policies and fees may be different than those
described here. Nominees may charge transaction fees and set different minimum
investments or limitations on buying or selling shares. It is the responsibility
of the nominee to promptly forward purchase or redemption orders and payments to
the Fund. You will not be charged fees if you purchase or redeem shares of the
Fund through the Fund's principal distributor.
REDEMPTION FEE
A redemption fee of 0.50% will be deducted from your redemption proceeds if you
redeem your shares at any time other than the five business days immediately
following the third Friday of the month. The Fund will process your redemption
requests without imposing a 0.50% redemption fee if you redeem your shares
during these five business days. The expiration of options occurs on the third
Friday of every month. The redemption fee of 0.50% is used to offset any losses
incurred by the Fund for closing out options before the expiration date in order
to process redemptions.
REDEMPTION POLICIES
Payment for redemptions of Fund shares is usually made within one business day,
but not later than seven calendar days after receipt of your redemption request,
unless the check used to purchase the shares has not yet cleared. The Fund may
suspend the right of redemption or postpone the date of payment for more than
seven days during any period when (1) trading on the NYSE is restricted or the
NYSE is closed for other than customary weekends and holidays, (2) the SEC has
by order permitted such suspension for the protection of the Fund's
shareholders, or (3) an emergency exists making disposal of portfolio securities
or valuation of net assets of the Fund not reasonably practicable. The Fund will
automatically redeem shares if a purchase check is returned for insufficient
funds. The Fund reserves the right to reject any third party check. The Fund
reserves the right to make a "redemption in kind" payment in portfolio
securities rather than cash if the amount you are redeeming is large enough to
affect fund operations. Large redemptions are considered to exceed $250,000 or
1% of the Fund's assets.
ACCOUNT MINIMUM
You must keep at least $10,000 worth of shares in your account to keep the
account open. If, after giving you thirty days prior written notice, your
account value is still below $10,000 we may redeem your shares and send you a
check for the redemption proceeds.
SIGNATURE GUARANTEES
The Fund may require additional documentation, or signature guarantees on any
redemption over $10,000 in value or for the redemption of corporate, partnership
or fiduciary accounts, or for certain types of transfer requests or account
registration changes. A signature guarantee helps protect against fraud. You can
obtain one from most banks or securities dealers, but not from a notary public.
Please call (800) ________ for information on obtaining a signature guarantee.
OTHER DOCUMENTS
Additional documents may be required for purchases and redemptions when shares
are registered in the name of a corporation, partnership, association, agent,
fiduciary, trust, estate or other organization. For further information, please
call Investor Services Group toll-free at (800) ___________.
12
<PAGE> 13
SHAREHOLDER SERVICES
TELEPHONE INFORMATION
- - Your Account: If you have questions about your account, including
purchases, redemptions and distributions, call Investor
Services Group from Monday through Friday, 9:00 a.m. to
7:00 p.m., Eastern time. Call toll-free (800)
____________.
- - The Fund: If you have questions about the Fund, call the Fund's
telephone representatives Monday through Friday, 9:00
a.m. to 5:00 p.m., Eastern time. Call toll-free (800)
_____________.
ACCOUNT STATEMENTS
The Fund provides you with these helpful services and information about your
account:
X a statement after every transaction;
X an annual account statement reflecting all transactions for the year;
X tax information which will be mailed by January 31 of each year, a copy of
which will also be filed with the Internal Revenue Service, if necessary;
and
X financial statements with a summary of portfolio composition and
performance will be mailed at least twice a year.
The Fund provides the above shareholder services without charge, but may charge
for special services such as requests for historical transcripts of accounts.
Investor Services Group currently charges $10 for duplication of each year of
historical account activity records, with a maximum fee of $100.
INTEGRATED VOICE RESPONSE SYSTEM
You may obtain access to account information by calling (800) ________. The
system provides share price and price change information for the Fund and gives
account balances and information on the most recent transactions and allows
sales of shares.
SYSTEMATIC WITHDRAWAL PLAN
Once you have established an account with $25,000 or more, you may automatically
receive funds from your account on a monthly, quarterly or semi-annual basis
(minimum withdrawal of $100). Call 800 ___________ to request a form to start
the Systematic Withdrawal Plan.
RETIREMENT PLANS
Shares of the Fund are available for purchase through individual retirement
accounts ("IRAs") and other retirement plans. An IRA application and further
details about the procedures to be followed by IRAs and other retirement plans
are available by calling (800) _____________.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS
The Fund passes along to your account your share of investment earnings in the
form of dividends and distributions. The Fund's distributions may consist of
premiums from put and call options written by the Fund, interest on debt
instruments, dividends from stock, net gains from closing purchase and sale
transactions in options, and net gains from sales of portfolio securities. The
Fund will distribute at least annually any net capital gains obtained through
Fund investment transactions. Premiums, interest and dividend payments will
normally be distributed as income dividends on a quarterly basis.
13
<PAGE> 14
Unless you elect otherwise, all dividends and distributions paid by the Fund
will be reinvested in additional shares of the Fund. They will be credited to
your account in the Fund at the same NAV per share as would apply to cash
purchases on the applicable dividend payment date. All distributions the Fund
pays to you will be taxable when paid, regardless of whether they are taken in
cash or reinvested in shares of the Fund. To change your dividend election, you
must notify Investor Services Group in writing at least fifteen days prior to
the applicable dividend record date.
TAXES
The Fund intends to qualify as a regulated investment company. This status
exempts the Fund from paying federal income tax on the income or capital gains
it distributes to its shareholders.
Your investment in the Fund will be subject to the following tax consequences:
- - Dividends from net investment income and distributions from short-term
capital gains are taxable as ordinary income
- - Distributions from capital gains are taxable as capital gain, which may be
taxed at different rates depending on the length of time the Fund held
those assets
- - Dividends and distributions may also be subject to state and local taxes
- - Certain dividends paid to you in January will be taxable as if they had
been paid the previous December
If you purchase shares shortly before a record date for a dividend or
distribution, a portion of your investment will be returned as a taxable
distribution.
Due to the nature of the Fund's principal investment strategy, the Fund
anticipates that a majority of its distributions will be in the form of ordinary
income.
The Fund will realize a gain (or loss) on a closing purchase transaction with
respect to a call or put previously written by the Fund if the premium, plus
commission costs, paid to purchase the call or put is less (or greater) than the
premium, less commission costs, received on the sale of the call or put. A gain
also will be realized if a call or put which the Fund has written lapses
unexercised, because the Fund would retain the premium.
You must provide the Fund with your correct taxpayer identification number and
certify that you are not subject to backup withholding. If you do not, the Fund
by law may withhold 31% of your taxable distributions and redemptions.
After the end of each calendar year, you will receive a statement (Form 1099) of
the federal income tax status of the Fund's dividends and other distributions
paid during the year. You should keep all of your Fund statements for accurate
tax-accounting purposes.
You should consult your tax advisor concerning state or local taxation of such
dividends, and the federal, state and local taxation of capital gains
distributions.
14
<PAGE> 15
[OUTSIDE BACK COVER]
ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTING AGENT
First Data Investor Services Group, Inc.
3200 Horizon Drive
King of Prussia, PA 19406
(800) _______
CUSTODIAN
The Bank of New York
48 Wall Street
New York, NY 10286
COUNSEL
Howard Rice Nemerovski Canady Falk & Rabkin, A Professional Corporation
Three Embarcadero Center
Seventh Floor
San Francisco, CA 94111-4065
INDEPENDENT ACCOUNTANTS
ADDITIONAL INFORMATION
Shareholder Reports:
Additional information about the Fund's investments will be available in the
Fund's annual and semi-annual reports to shareholders. In the Fund's annual
report, a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year will
be included.
Statement of Additional Information (SAI):
The SAI contains additional information about the Fund. It is incorporated by
reference into this prospectus.
To request a free copy of the current annual report, semi-annual report or SAI,
or to request other information about the Fund, please write or call:
Kelmoore Investment Company, Inc.
2471 E. Bayshore Road, Suite 501
Palo Alto, CA 94303
(800) _________
Information about the Fund (including the SAI) may be obtained in person at the
SEC's Public Reference Room in Washington, DC. Call (800) SEC-0330 for
information on the operation of the Public Reference Room. You may also request
copies by mail by sending your request, along with a duplicating fee, to the
SEC's Public Reference Room, Washington, DC 20549-6009. You may also visit the
SEC's Internet site (www.sec.gov) to view reports and other information about
the Fund.
SEC file #811-________
15
<PAGE> 16
STATEMENT OF ADDITIONAL INFORMATION
KELMOORE STRATEGIC TRUST
KELMOORE STRATEGIC INCOME FUND
____________, 1999
Distributor:
Kelmoore Investment Company, Inc.
2471 East Bayshore Road
Suite 501
Palo Alto, CA 94303
(800) ____________________
This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the Fund's Prospectus dated __________, 1999. The
information in this Statement of Additional Information expands on information
contained in the Prospectus. The Prospectus can be obtained without charge by
contacting either the dealer through whom you purchased shares or the
Distributor at the phone number or address above.
1
<PAGE> 17
TABLE OF CONTENTS
PAGE
Kelmoore Strategic Income Fund.............................................. 1
Investment Strategies and Related Risks .................................... 1
Investment Restrictions .................................................... 4
Portfolio Turnover.......................................................... 5
Management of the Fund...................................................... 5
Board of Trustees..................................................... 5
Investment Adviser.................................................... 6
Other Services.............................................................. 6
Purchases and Redemptions .................................................. 8
Valuation .................................................................. 9
Taxes....................................................................... 9
Brokerage .................................................................. 11
Shares of Beneficial Interest............................................... 12
Calculation of Performance ................................................. 12
Financial Statements ....................................................... 14
2
<PAGE> 18
KELMOORE STRATEGIC INCOME FUND
Kelmoore Strategic Income Fund (the "Fund") is a diversified series of Kelmoore
Strategic Trust (the "Trust"), a Delaware business trust organized on December
1, 1998 as an open-end management investment company.
INVESTMENT STRATEGIES AND RELATED RISKS
The following describes certain attributes of particular types of securities in
which the Fund invests and supplements and should be read in conjunction with
sections of the Prospectus entitled "The Fund", "Main Strategies" and "Main
Risks."
Common Stock. Common stock represents an equity (ownership) interest in a
company or other entity. This ownership interest often gives the Fund the right
to vote on measures affecting the company's organization and operations.
Although common stocks generally have had a history of long-term growth in
value, their prices are often volatile in the short-term and can be influenced
by not only general market risk but specific corporate risks as well.
Options on Securities. The writing and purchase of options is a highly
specialized activity which involves investment techniques and risks different
from those associated with ordinary portfolio securities transactions. The
successful use of options depends in part on the ability of Kelmoore Investment
Company, Inc. (the "Adviser") to predict future price fluctuations.
The Fund may write (sell) call and put options on any securities in which it may
invest. These options will be listed on securities exchanges. Exchange-traded
options in the United States are issued by the Options Clearing Corporation, a
clearing organization affiliated with the exchanges on which options are listed.
The Options Clearing Corporation, in effect, gives its guarantee to every
exchange-traded option transaction.
By writing covered call options, the Fund will receive a premium which the Fund
considers income. The Fund may also write secured put options either to earn
additional income in the form of option premiums (anticipating that the price of
the underlying security will remain stable or rise during the option period and
the option will therefore not be exercised) or to acquire the underlying
security at a net cost below the current value. The premium the Fund receives
for writing an option will reflect, among other things, the current market price
of the underlying security, the relationship of the exercise price to the market
price, the historical price volatility of the underlying security, the option
period, supply and demand and interest rates.
All call and put options written by the Fund are covered. A written call option
is typically covered by maintaining the securities subject to the option in a
segregated account. A written call option may also be covered by (i) maintaining
cash or liquid securities in a segregated account with a value at least equal to
the Fund's obligation under the option, (ii) entering into an offsetting forward
commitment and/or (iii) purchasing an offsetting option or any other option
which, by virtue of its exercise price or otherwise, reduces the Fund's net
exposure on its written option position.
Put options written by the Fund will typically be secured by maintaining liquid
assets in an amount equal to not less than the exercise price of the put option
in a segregated account. Written put options may also be secured by (i)
maintaining cash or liquid securities in a segregated account with a value at
least equal to the Fund's obligation under the option, (ii) entering into an
offsetting forward commitment and/or (iii) purchasing an offsetting option or
any other option which, by virtue of its exercise price or otherwise, reduces
the Fund's net exposure on its written option position.
The obligation of a covered put option writer is terminated either upon the
exercise of the option, the option's expiration or by effecting a closing
purchase transaction.
Additional Risks Associated with Options Transactions. There is no assurance a
liquid secondary market will exist for any particular exchange-traded option or
at any particular time. If the Fund is unable to effect a closing purchase
transaction with respect to options it has written, the Fund will not be able to
sell the underlying securities or dispose of assets held in a segregated account
until the options expire or are exercised.
3
<PAGE> 19
Reasons for the absence of a liquid secondary market include the following: (i)
there may be insufficient trading interest in certain options; (ii) restrictions
may be imposed by an exchange on opening transactions or closing transactions or
both; (iii) trading halts, suspensions or other restrictions may be imposed with
respect to particular classes or series of options; (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v) the facilities
of an exchange or the Options Clearing Corporation may not at all times be
adequate to handle current trading volume; or (vi) one or more exchanges could,
for economic or other reasons, decide or be compelled at some future date to
discontinue the trading of options (or a particular class or series of options).
If trading were discontinued, the secondary market on that exchange (or in that
class or series of options) would cease to exist. However, outstanding options
on that exchange that had been issued by the Options Clearing Corporation as a
result of trades on that exchange would normally continue to be exercisable or
expire in accordance with their terms.
There can be no assurance that higher trading activity or order flow or other
unforeseen events might not, at times, render certain of the facilities of the
Options Clearing Corporation or various exchanges inadequate. Such events have,
in the past, resulted in the institution by an exchange of special procedures,
such as trading rotations, restrictions on certain types of orders, or trading
halts or suspensions, with respect to one or more options, or may otherwise
interfere with the timely execution of customers' orders.
The writer of an option lacks the ability to control when an option will be
exercised. Although the Fund will generally only write options whose expiration
dates are between one and nine months from the date the option is written, it is
still difficult for the Fund to adequately time the receipt of exercise notices.
This prevents the Fund from receiving income on a scheduled basis and may
inhibit the Fund from fully utilizing other investment opportunities.
Written options have predetermined exercise prices set below, equal to or above
the current market price of the underlying stock. The Fund's overall return
will, in part, depend on the ability of the Adviser to accurately predict price
fluctuations in underlying securities in addition to the effectiveness of the
Adviser's strategy in terms of stock selection.
The size of the premiums the Fund receives for writing options may be adversely
affected as new or existing institutions, including other investment companies,
engage in or increase their option writing activities.
Each securities exchange on which options trade has established limitations
governing the maximum number of puts and calls in each class (whether or not
covered) which may be written by a single investor, or group of investors,
acting in concert (regardless of whether the options are written on the same or
different exchanges or are held or written in one or more accounts or through
one or more brokers). It is possible that the Fund and other clients advised by
the Adviser may constitute such a group. These position limits may limit the
number of options the Fund may write on a particular security. An exchange may
also order the liquidation of positions found to be above such limits or impose
other sanctions.
Repurchase Agreements. The Fund may enter into repurchase agreements with
approved banks and broker-dealers. In a repurchase agreement, the Fund purchases
securities with the understanding they will be repurchased by the seller at a
set price on a set date. This allows the Fund to keep its assets at work but
retain flexibility to pursue longer term investments upon repurchase.
Repurchase agreements involve risks. For example, if a seller defaults, the Fund
will suffer a loss if the proceeds from the sale of the collateral is below the
repurchase price. If the seller becomes bankrupt, the Fund may be delayed or
incur additional costs in selling the collateral. To help minimize risk,
collateral must be held with the Fund's custodian at least equal to the market
value of the securities subject to the repurchase agreement plus any accrued
interest.
Temporary Investments. To maintain cash for redemptions and distributions and
for temporary defensive purposes, the Fund may invest in money market mutual
funds and in investment grade short-term fixed income securities, including
short-term U.S. government securities, negotiable certificates of deposit,
commercial paper, banker's acceptances, and repurchase agreements.
Other Investments. Subject to prior disclosure to shareholders, the Trustees
may, in the future, authorize the Fund to invest in securities other than those
listed here and in the Prospectus, provided that such investment would be
consistent
4
<PAGE> 20
with the Fund's investment objective and that it would not violate any
fundamental investment policies or restrictions applicable to the Fund.
INVESTMENT RESTRICTIONS
Fundamental Investment Restrictions The following investment restrictions are
considered fundamental, which means they may be changed only by approval of the
holders of a majority of the Fund's outstanding shares, defined in the 1940 Act
as the lesser of: (1) 67% or more of the Fund's outstanding shares present at a
meeting, if the holders of more than 50% of the Fund's outstanding shares are
present in person or represented by proxy, or (2) more than 50% of such Fund's
outstanding shares.
1. The Fund may not purchase securities that would cause more than 25% of the
value of the Fund's total assets at the time of such purchase to be
invested in the securities of one or more issuers conducting their
principal activities in the same industry. For purposes of this
limitation, U.S. government securities are not considered members of any
industry.
2. The Fund may not borrow money or issue senior securities, except to the
extent provided by the 1940 Act.
3. The Fund may not make loans to other persons, except loans of securities
not exceeding one-third of the Fund's total assets. For purposes of this
limitation, investments in debt obligations and transactions in repurchase
agreements shall not be treated as loans.
4. The Fund may not purchase, sell or invest in real estate, real estate
investment trust securities, real estate limited partnership interests, or
oil, gas or other mineral leases or exploration or development programs,
but the Fund may purchase and sell securities that are secured by real
estate and may purchase and sell securities issued by companies that
invest or deal in real estate.
5. The Fund may not invest in commodities or commodity futures contracts.
6. The Fund may not underwrite securities of other issuers, except insofar as
the Fund may be deemed an underwriter under the Securities Act of 1933
when selling portfolio securities.
7. The Fund, with respect to 75% of its total assets, will not invest more
than 5% of its total assets in the securities of any single issuer, or own
more than 10% of the outstanding voting securities of any one issuer, in
each case other than (1) securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities or (2) securities of other
investment companies.
Non-Fundamental Investment Restrictions The following restrictions are imposed
by management of the Fund and may be modified by the Trustees without
shareholder approval.
1. The Fund may not invest more than 15% of its net assets in illiquid
securities. A security is illiquid if it cannot be disposed of in seven
days at a price approximately equal to the price at which the Fund is
valuing the security. Repurchase agreements with deemed maturities in
excess of seven days are subject to this 15% limit.
2. The Fund may not invest in a company for the purpose of exercising control
or management of the company.
3. The Fund may not purchase securities on margin, except that the Fund may
obtain such short-term credits as are necessary for the clearance of
transactions and provided that margin payments in connection with options
will not constitute purchasing securities on margin.
4. The Fund may not invest its assets in securities of any other investment
company, except as permitted by the 1940 Act. Under the 1940 Act, the Fund
may acquire securities of other investment companies if, immediately after
such acquisition, the Fund does not own in the aggregate (1) more than 3%
of the total outstanding voting stock of such
5
<PAGE> 21
other investment company, (2) more than 5% of the value of the Fund's
total assets of any one investment company, or (3) securities issued by
such other investment company and all other investment companies having an
aggregate value in excess of 10% of the value of the Fund's total assets.
Shareholders should understand that all investments involve risks and there can
be no guarantee against loss resulting from an investment in the Fund. Unless
otherwise indicated, all percentage limitations governing the investments of the
Fund apply only at the time of the investment.
PORTFOLIO TURNOVER
The Fund's portfolio turnover rate is calculated by dividing the lesser of the
purchases or sales of portfolio investments for the reporting period by the
monthly average value of the portfolio investments owned during the reporting
period. The calculation excludes all options written by the Fund whose durations
are less than one year.
Under certain market conditions, the Fund's portfolio turnover rate may be
higher than that of other mutual funds. This would be the case, for example, if
the Fund writes a substantial number of call options and the market prices of
the underlying securities appreciates, causing the options to be exercised. The
Fund may also engage in short-term trading (purchase and sale of security in a
relatively brief period of time) in response to stock market conditions or
changes in economic trends and developments. Although the Fund's annual turnover
rate cannot be accurately predicted, it is estimated this rate will not exceed
approximately 100% for the current fiscal year assuming normal market
conditions. A 100% annual turnover rate would occur if all of the Fund's
securities were replaced one time during a one-year period.
High rates of portfolio turnover (100% or more) entail certain costs, including
increased taxable income for the Fund's shareholders. Also, the higher the
turnover, the higher the overall brokerage commissions, dealer mark-ups and
mark-downs, and other transaction costs incurred. The Adviser takes these costs
into account, since they affect the Fund's overall investment performance and
reduce shareholders' return.
MANAGEMENT OF THE FUND
Trustees and Officers. The operations of the Fund are conducted under the
direction of the Trustees. The Trustees establish the Fund's policies and
oversee the management of the Fund. The Trustees meet regularly to review the
activities of the officers, who are responsible for day-to-day operations of the
Fund.
The Trustees and officers of the Fund and their principal occupations during the
past five years are set forth below.
<TABLE>
<CAPTION>
POSITION WITH
NAME, ADDRESS AND AGE THE FUND PRINCIPAL OCCUPATION DURING THE PAST 5 YEARS
<S> <C> <C>
William H. Barnes, Age ___ Director President, Barnes, Stork & Associates, a registered
932-A Santa Cruz Avenue investment advisor from 19__ to present. Formerly
Menlo Park, CA 94025 President of National Transceiver Company from 19__
to 19__; Director of Data Processing for Pacific
Telephone Company from 19__ to 19__; Consultant with
Deloitte, Haskins & Sells, Certified Public Accountants
from 19_ to 19__; and Director of Financial Planning,
Fields, Grant & Company from 19__ to 19__. Mr. Barnes
is past President, Board of Trustees, Menlo Park City
School District where he currently serves on the
foundation investment committee. Mr. Barnes serves on
the Board of Trustees
</TABLE>
6
<PAGE> 22
<TABLE>
<S> <C> <C>
of the Church of the Pioneers Foundation where he heads
the Investment Committee, and he is an Elder of the Menlo
Park Presbyterian Church. He is past president and a
member of the Financial Planning Forum. He is the President
and Board Chairman of the Trinity Guardian Foundation. He
is also a board member of the Carmel Public Library
Foundation. Mr. Barnes received his undergraduate degree
from Northwestern University and his MBA from Stanford
University Graduate School of Business.
Wayne E. Edgerton, Age 56 Director Retired; Executive Vice President/Partner of Mid-Continent
13682 Lakeshore Drive Bottlers, Inc., a manufacturer and distributor of national
Clive, Iowa 50325 brand soft drinks, from 1975 through 1997. Mr. Edgerton
held Various positions throughout his career with
Mid-Continent including Director of Information Services
for all 7-Up Company bottling plants throughout the United
States and Canada. He then became Vice President of
Administration/Partner in 1986 until 1995 when he assumed
the position of Executive Vice President/Partner. Mr.
Edgerton attended Fort Dodge Area College and graduate from
the Electronic Computer Programming Institute.
Richard D. Stanley, Age 66 Director* Consultant for Kelmoore Investment Company, Inc. from
2471 E. Bayshore Road, Suite 501 1994 to present; President of Naranja, Inc., Santa Clara,
Palo Alto, California 94303 California, from 1994 to present. Previously, he was a Broker
Associate for Gibson Properties, Better Homes & Gardens,
Santa Jose, California, from 1989 to 1994 and President of
Sierra Chaparral Corporation, San Jose, California, from
1988 to 1989. Mr. Stanley received his undergraduate
degree from the University of California, Santa Barbara,
California and his MBA from Pepperdine University, Malibu,
California.
Matthew Kelmon, Age 30 Director* and Vice President of Trading for Kelmoore Investment Company
2471 E. Bayshore Road, Suite 501 President from 1994 to the present. Previously, Mr. Kelmon was an
Palo Alto, California 94303 Account Executive with M.L. Stearn & Co., Inc., a bond
dealer located in San Diego, California, from 1993 to 1994.
Mr. Kelmon received his undergraduate degree from the
University of Arizona, Tuscon, Arizona.
</TABLE>
An asterisk indicates a Trustee who may be deemed to be an "interested person"
of the Fund (as that term is defined in the 1940 Act.)
Members of the Audit Committee of the Trustees are indicated with a "1" next to
their name. The Audit Committee members make recommendations to the Trustees
regarding the selection of auditors and confer with the auditors regarding the
scope and results of the audit.
Members of the Nominating Committee of the Trustees are indicated with a "2"
next to their name. The Nominating Committee of the Trustees is responsible for
the selection and nomination of disinterested Trustees.
7
<PAGE> 23
Each Trustee of the Fund who is not an "interested person" of the Fund, as
defined in the 1940 Act, receives an annual retainer of ____ per year plus an
attendance fee of $____ for each meeting of the Trustees or standing committee
thereof attended and reimbursement for expenses. The following table sets forth
the compensation expected to be paid by the Trust to the Trustees during the
Fund's fiscal year ending December 31, 1999.
AGGREGATE COMPENSATION TOTAL COMPENSATION FROM THE
NAME OF TRUSTEE FROM THE TRUST TRUST PAID TO TRUSTEE
[TO BE ADDED BY AMENDMENT]
The Trustees and officers affiliated with the Adviser are not compensated by the
Trust for their services. The Fund does not have any retirement plan for its
Trustees.
Investment Adviser. The Fund has employed Kelmoore Investment Company, Inc. as
its investment adviser. As of September 30, 1998, the Adviser managed
approximately $85 million of assets. Through his ownership of more than 25% of
the outstanding shares of the Adviser, Ralph M. Kelmon, Jr. is considered to
control the Adviser.
In addition to managing the Fund's investments consistent with its investment
objectives and limitations, the Adviser makes recommendations with respect to
other aspects and affairs of the Fund. The Adviser also furnishes the Fund with
certain administrative services, office space and equipment. All other expenses
incurred in the operation of the Fund are borne by the Fund. Under the
Investment Advisory Agreement, the Adviser will not be liable for any error of
judgement or mistake of fact or law or for any loss by the Fund in connection
with the performance of the Investment Advisory Agreement, except a loss from a
breach of a fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard of its obligations or duties under the Investment Advisory Agreement.
For providing investment advisory services and assuming certain Fund expenses,
the Fund pays the Adviser a monthly fee at the annual rate of 1.25% of the value
of the Fund's average daily net assets. For the Fund's initial fiscal year
ending December 31, 1999, the Adviser has voluntarily agreed to waive its fees
and reimburse expenses so that the Fund's annual operating expenses will not
exceed 2.00%. The Adviser may terminate this waiver at any time.
The Investment Advisory Agreement was approved by the Trustees, including a
majority of the Trustees who are not "interested persons" of the Fund on
________ 1999 and by the initial shareholder of the Fund on ________, 1999. The
Investment Advisory Agreement is for an initial term of two years and continues
in effect from year to year thereafter if such continuance is approved annually
by either the Trustees or by a vote of a majority of the outstanding voting
securities of the Fund, and, in either case, by the vote of a majority of the
Trustees who are not parties to the Investment Advisory Agreement or "interested
persons" of any party to the Investment Advisory Agreement, voting in person at
a meeting called for the purpose of voting on such approval. The Investment
Advisory Agreement may be terminated at any time without penalty by the
Trustees, by votes of the shareholders or by the Adviser, upon sixty days'
written notice. The Investment Advisory Agreement terminates automatically if
assigned.
Expenses. The Fund pays all expenses not assumed by the Adviser, including, but
not limited to: Trustees' expenses, audit fees, legal fees, interest expenses,
brokerage commissions, registration and notification of shares for sale with the
SEC and various state securities commissions, taxes, cost of insurance, fees of
the Fund's administrator, transfer agent or other service providers, costs of
obtaining quotations of portfolio securities and the pricing of Fund shares.
OTHER SERVICES
The Distributor. Kelmoore Investment Company, Inc., 2471 East Bayshore Road,
Suite 501, Palo Alto, CA 94303, (the "Distributor") is the primary and exclusive
distributor of the Fund's shares, which are offered on a continuous basis. The
Distributor serves on a best efforts basis pursuant to a Distribution Agreement
with the Fund. The Distribution
8
<PAGE> 24
Agreement is renewable annually provided its renewal is approved by a majority
of the Trustees who are not interested persons of the Fund, parties to the
Distribution Agreement or interested persons of parties to the Distribution
Agreement. The Distributor does not receive any fee or other compensation under
the Distribution Agreement other than fees it receives in accordance with the
Rule 12b-1 Plan, described below.
Shares of the Fund may also be sold by selected broker-dealers which have
entered into selling agency agreements with the Distributor. The Distributor
accepts orders for the purchase of the shares of the Fund which are continually
offered at net asset value next determined. The Distributor may pay extra
compensation to financial services firms selling large amounts of fund shares.
This compensation is calculated as a percentage of Fund shares sold by the firm.
Distribution Plan. The Trust has adopted a distribution plan in accordance with
Rule 12b-1 under the 1940 Act for the Fund (the "Plan"). The Plan permits the
Fund to pay the Distributor for its services related to sales and distribution
of shares and provision of ongoing services to Fund shareholders. Under the
Plan, the fees may not exceed an annual rate of 0.30% of the Fund's average
daily net assets. The principal activities for which such compensation may be
used includes, but is not limited to: compensation to persons who engage in or
support distribution and redemption of Fund shares; printing of prospectuses or
reports for prospective shareholders; advertising; preparation, printing and
distribution of sales literature; allowances to other broker-dealers; overhead,
travel and telephone expenses. A report of the amounts expended under the Plan
is submitted for review and approval by the Trustees each quarter.
The Plan is subject to annual approval by the Trustees. The Plan is terminable
at any time by vote of the Trustees or by vote of a majority of the shares of
the Fund. Pursuant to the Plan, a new Trustee who is not an interested person
(as defined in the 1940 Act) must be nominated by existing Trustees who are not
interested persons. Any change in the Plan that would materially increase the
distribution cost to the Fund requires shareholder approval; otherwise, the Plan
may be amended by the Trustees.
Although there is no obligation for the Fund to pay expenses incurred by the
Distributor in excess of payments made to the Distributor under the Plan, if the
Plan is terminated, the Board will consider how to treat such expenses. Any
expenses incurred by the Distributor but not yet recovered through distribution
fees could be recovered through future distribution fees. If the Distributor's
actual distribution expenditures in a given year are less than the Rule 12b-1
payments it receives from the Fund for that year, and no effect is given to
previously accumulated distribution expenditures in excess of the Rule 12b-1
payments borne by the Distributor out of its own resources in other years, the
difference is "profit" to the Distributor for that year.
Because amounts paid pursuant to the Plan are paid to the Distributor, the
Distributor and its officers, directors and employees may be deemed to have a
financial interest in the operation of the Plan. None of the non-interested
Trustees has a financial interest in the operation of the Plan.
The Plan was adopted because of its anticipated benefit to the Fund. These
anticipated benefits include: increased promotion and distribution of the Fund's
shares, an enhancement in the Fund's ability to maintain accounts and improve
asset retention, increased stability of net assets for the Fund, increased
stability in the Fund's positions, and greater flexibility in achieving
investment objectives.
Transfer Agent. First Data Investor Services Group, Inc. ("Investor Services
Group"), a wholly-owned subsidiary of First Data Corporation, which has its
principal business address at 4400 Computer Drive, Westborough, MA 01581,
provides transfer agency and dividend disbursing agent services for the Fund. As
part of these services, Investor Services Group maintains records pertaining to
the sale, redemption, and transfer of Fund shares and will distribute the Fund's
cash dividends to shareholders.
Administrative Services. Investor Services Group also serves as the
administrator for the Fund. The services include the day-to-day administration
of matters necessary to the Fund's operations, maintenance of its records and
the books of the Fund, preparation of reports, and compliance monitoring of its
activities. For providing administrative services to the Fund, Investor Services
Group receives from the Fund a fee, computed daily and paid monthly, at the
annual rate of 0.15% of the first $50 million of average daily net assets of the
Fund, 0.10% of the next $50 million of average daily net assets, and 0.05% of
average daily net assets over $100 million (with a minimum annual fee of
$55,000).
Accounting Services. Investor Services Group also serves as the accounting agent
for the Fund and maintains the
9
<PAGE> 25
accounting books and records of the Fund, calculates the Fund's net asset value
in accordance with the provisions of the Fund's current Prospectus and prepares
for Fund approval and use various government reports, tax returns, and proxy
materials.
Custodian. The Bank of New York, 48 Wall Street, New York, New York 10286, is
custodian of the Fund's assets pursuant to a custodian agreement. Under the
custodian agreement, The Bank of New York (i) maintains a separate account or
accounts in the name of the Fund (ii) holds and transfers portfolio securities
on account of the Fund, (iii) accepts receipts and make disbursements of money
on behalf of the Fund, (iv) collects and receives all income and other payments
and distributions on account of the Fund's securities and (v) makes periodic
reports to the Trustees concerning the Fund's operations.
Independent Accountants. The accounting firm of ______________________________
____________ has been designated as independent accountants for the Fund.
_____________________________ performs annual audits of the Fund and is
periodically called upon to provide accounting and tax advice.
Legal Counsel. Howard Rice Nemerovski Canady Falk & Rabkin, A Professional
Corporation, Three Embarcadero Center, Seventh Floor, San Francisco, CA
94111-4065 serves as the legal counsel for the Trust.
PURCHASES AND REDEMPTIONS
Redemptions in Kind. In accordance with its election pursuant to Rule 18f-1
under the 1940 Act, the Fund may limit redemptions in cash with respect to each
shareholder during any ninety-day period to the lesser of (i) $250,000 or (ii)
1% of the net asset value of the Fund at the beginning of such period. In the
case of requests for redemptions in excess of such amount, the Trustees reserve
the right to make payments in whole or in part in securities or other assets in
case of an emergency, or any time a cash distribution would impair the liquidity
of the Fund to the detriment of existing shareholders. If the recipient sold
such securities, a brokerage charge might be incurred.
Telephone Instructions Neither the Fund nor Investor Services Group will be
liable for any loss or expense in acting upon telephone instructions that are
reasonably believed to be genuine. In attempting to confirm that telephone
instructions are genuine, Investor Services Group will use procedures that are
considered reasonable. Shareholders assume the risk to the full extent of their
accounts that telephone requests may be unauthorized. All telephone
conversations with Investor Services Group will be recorded.
Systematic Withdrawal Plan. Shareholders who own $25,000 or more of Fund shares,
valued at the Fund's current net asset value, and who wish to receive periodic
payments from their account(s) may establish a Systematic Withdrawal Plan by
completing an application provided for this purpose. Participants in this plan
will receive monthly, quarterly or annual checks in the amount designated. The
minimum withdrawal amount is $100. This amount may be changed at any time.
Dividends and capital gains distributions on the Fund's shares in the Systematic
Withdrawal Plan are automatically reinvested in additional shares at net asset
value. Payments are made from proceeds derived from the redemption of Fund
shares owned by the planholder. The redemption of shares will result in a gain
or loss that is reportable by the planholder on its income tax return, if the
planholder is a taxable entity.
Redemptions required for payments may reduce or use up the planholder's
investment, depending upon the size and frequency of withdrawal payments and
market fluctuations. Accordingly, Systematic Withdrawal Plan payments cannot be
considered as yield or income on the investment.
Investor Services Group, as agent for the planholder, may charge for services
rendered to planholders. No such charge is currently assessed, but such a charge
may be instituted by Investor Services Group upon written notice to planholders.
The plan may be terminated at any time without penalty upon written notice by
the planholders, the Fund, or Investor Services Group.
VALUATION
The Fund's securities are valued based on market value or, where market
quotations are not readily available, based on fair value as determined in good
faith by the Trustees. Equity securities traded on an exchange or on the NASDAQ
10
<PAGE> 26
National Market system, will be valued at the closing price. Equity securities
which are traded in the over-the-counter market only, but which are not included
in the NASDAQ National Market System, will be valued at the mean between the
last preceding bid and asked prices. Valuations may also be obtained from
independent pricing services approved by the Trustees when such prices are
believed to reflect fair market value.
When the Fund writes a put or call option, it records the premium received as an
asset and equivalent liability, and thereafter adjusts the liability to the
market value of the option determined in accordance with the preceding
paragraph.
TAXES
Below is a discussion of certain U.S. federal income tax issues concerning the
Fund and the purchase, ownership, and disposition of Fund shares. This
discussion does not purport to deal with all aspects of federal income taxation
relevant to shareholders in light of their particular circumstances. This
discussion is based upon the Internal Revenue Code of 1986, as amended (the
"Code"), the regulations promulgated thereunder, and judicial and administrative
ruling authorities, all of which are subject to change, which change may be
retroactive. Prospective investors should consult their own tax advisers with
regard to the federal tax consequences of the purchase, ownership, or
disposition of Fund shares, as well as the tax consequences arising under the
laws of any state, foreign country, or other taxing jurisdiction.
Tax Status of the Fund. The Fund intends to be taxed as a regulated investment
company under Subchapter M of the Code. Accordingly, the Fund must, among other
things, (a) derive in each taxable year at least 90% of its gross income from
dividends, interest, payments with respect to certain securities loans, and
gains from the sale or other disposition of stock, securities or foreign
currencies, or other income derived with respect to its business of investing in
such stock, securities or currencies; and (b) diversify its holdings so that, at
the end of each fiscal quarter, (i) at least 50% of the value of the Fund's
total assets is represented by cash and cash items, U.S. Government securities,
the securities of other regulated investment companies and other securities,
with such other securities limited, in respect of any one issuer, to an amount
not greater than 5% of the value of the Fund's total assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its total assets is invested in the securities of any one issuer (other
than U.S. Government securities and the securities of other regulated investment
companies). If the Fund fails to qualify as a regulated investment company, the
Fund will be subject to U.S. federal income tax.
As a regulated investment company, the Fund generally is not subject to U.S.
federal income tax on income and gains that it distributes to shareholders, if
at least 90% of the Fund's investment company taxable income (which includes,
among other items, dividends, interest and the excess of any net short-term
capital gains over net long-term capital losses) for the taxable year is
distributed to shareholders. The Fund intends to distribute substantially all of
such income.
Amounts not distributed in accordance with certain requirement are subject to a
nondeductible 4% excise tax at the Fund level. To avoid the tax, the Fund must
distribute during each calendar year an amount equal to the sum of (1) at least
98% of its ordinary income (not taking into account any capital gains or losses)
for the calendar year, (2) at least 98% of its capital gains in excess of its
capital losses (adjusted for certain ordinary losses) for a one-year period
generally ending on October 31 of the calendar year, and (3) all ordinary income
and capital gains for previous years that were not distributed during such
years. The Fund intends to avoid application of the excise tax.
A distribution will be treated as paid on December 31 of a calendar year if it
is declared by the Fund in October, November or December of that year with a
record date in such a month and paid by the Fund during January of the following
year. Such distributions will be taxable to shareholders in the calendar year in
which the distributions are declared, rather than the calendar year in which the
distributions are received.
Options. Premiums from expired options written by the Fund and net gains, if
any, from closing purchase transactions are treated as short-term capital gains
for federal income tax purposes.
When the Fund writes an option, an amount equal to the premium received is
recorded by the Fund as an asset and an equivalent liability. The liability is
thereafter valued to reflect the current value of the option. If the option is
not exercised and expires, or if the Fund effects a closing purchase
transaction, the Fund will realize a gain (or a loss in the case of a closing
purchase transaction where the cost exceeds the original premium received) and
the liability related
11
<PAGE> 27
to the option will be extinguished. Any such gain or loss is a short-term
capital gain or loss for federal income tax purposes, except that a short-term
loss realized when the Fund closes certain covered call options whose underlying
security is trading above the exercise price of the option will be converted to
a long-term capital loss if the hypothetical sale of the underlying security on
the date of such transaction would have given rise to a long-term capital gain.
If a call option which the Fund has written on any equity security is exercised,
the Fund realizes a capital gain or loss (long-term or short-term, depending on
the holding period of the underlying security) from the sale of the underlying
security and the proceeds from such sale are increased by the premium originally
received. If a put option which the Fund has written on an equity security is
exercised, the amount of the premium originally received will reduce the cost of
the security which the Fund purchases upon exercise of the option.
Sixty percent of any net gain or loss recognized on such deemed closings, as
well as 60% of the gain or loss with respect to such options on any actual
closing transactions or exercises will be treated as long-term capital gain or
loss, and the remainder will be treated as short-term capital gain or loss.
Also, 60% of the gain on the expiration of any such option on its stipulated
expiration date will be treated as long-term capital gain, and the balance as
short-term capital gain.
Constructive Sales. Under certain circumstances, the Fund may recognize gain
from a constructive sale of an "appreciated financial position" it holds if it
enters into a short sale, forward contract or other transaction that
substantially reduces the risk of loss with respect to the appreciated position.
In that event, the Fund would be treated as if it had sold and immediately
repurchased the property and would be taxed on any gain (but not loss) from the
constructive sale. The character of gain from a constructive sale would depend
upon the Fund's holding period in the property. Loss from a constructive sale
would be recognized when the property was subsequently disposed of, and its
character would depend on the Fund's holding period and the application of
various loss deferral provisions of the Code. Constructive sale treatment does
not apply to transactions closed in the 90-day period ending with the 30th day
after the close of the taxable year, if certain conditions are met.
Distributions. Distributions of investment company taxable income are taxable to
a U.S. shareholder as ordinary income, whether paid in cash or shares. Dividends
paid by the Fund to a corporate shareholder, to the extent such dividends are
attributable to dividends received by the Fund from U.S. corporations, may,
subject to limitation, be eligible for the dividends received deduction.
However, the alternative minimum tax applicable to corporations may reduce the
value of the dividends received deduction.
The excess of net long-term capital gains over the short-term capital losses
realized and distributed by the Fund, whether paid in cash or reinvested in Fund
shares, will generally be taxable to shareholders as long-term gain, regardless
of how long a shareholder has held Fund shares. Net capital gains from assets
held for one year or less will be taxed as ordinary income.
Shareholders will be notified annually as to the U.S. federal tax status of
distributions, and shareholders receiving distributions in the form of newly
issued shares will receive a report as to the net asset value of the shares
received.
If the net asset value of shares is reduced below a shareholder's cost as a
result of a distribution by the Fund, such distribution generally will be
taxable even though it represents a return of invested capital. Investors should
be careful to consider the tax implications of buying shares of the Fund just
prior to a distribution. The price of shares purchased at this time will include
the amount of the forthcoming distribution, but the distribution will generally
be taxable to the shareholder.
Dispositions. Upon a redemption or sale of shares of the Fund, a shareholder
will realize a taxable gain or loss depending upon his or her basis in the
shares. A gain or loss will be treated as capital gain or loss if the shares are
capital assets in the shareholder's hands, and the rate of tax will depend upon
the shareholder's holding period for the shares. Any loss realized on a
redemption, sale or exchange will be disallowed to the extent the shares
disposed of are replaced (including through reinvestment of dividends) within a
period of 61 days, beginning 30 days before and ending 30 days after the shares
are disposed of. In such a case the basis of the shares acquired will be
adjusted to reflect the disallowed loss. If a shareholder holds Fund shares for
six months or less and during that period receives a distribution taxable to the
shareholder as long-term capital gain, any loss realized on the sale of such
shares during such six-month period would be a long-term loss to the extent of
such distribution.
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<PAGE> 28
Backup Withholding. The Fund generally will be required to withhold federal
income tax at a rate of 31% ("backup withholding") from dividends paid, capital
gain distributions, and redemption proceeds to shareholders if (1) the
shareholder fails to furnish the Fund with the shareholder's correct taxpayer
identification number or social security number, (2) the IRS notifies the
shareholder or the Fund that the shareholder has failed to report properly
certain interest and dividend income to the IRS and to respond to notices to
that effect, or (3) when required to do so, the shareholder fails to certify
that he or she is not subject to backup withholding. Any amounts withheld may be
credited against the shareholder's federal income tax liability.
Other Taxation. Distributions may be subject to additional state, local and
foreign taxes, depending on each shareholder's particular situation. Non-U.S.
shareholders may be subject to U.S. tax rules that differ significantly from
those summarized above, including the likelihood that ordinary income dividends
to them would be subject to withholding of U.S. tax at a rate of 30% (or a lower
treaty rate, if applicable).
BROKERAGE
The Fund intends to place substantially all its securities transactions,
including transactions involving options, through the Adviser in accordance with
procedures set forth in Rule 17e-1 under the 1940 Act. These procedures, which
have been adopted by the Trustees, including a majority of the non-interested
Trustees, are reasonably designed to provide that any commissions, fees or other
compensation paid to the Adviser (or any affiliate), even though such fees and
commissions may actually be higher, are fair and reasonable when compared to
commissions, fees and other compensation received from other firms who engage in
comparable transactions. The Fund will not deal with the Adviser (or any
affiliate) in any transaction in which the Adviser (or any affiliate) acts as
principal, except in accordance with rules promulgated by the Securities and
Exchange Commission.
The Adviser may utilize non-affiliated brokers, dealers or members of a
securities exchange to execute portfolio transactions on behalf of the Fund and,
like the Adviser, such firms may receive commissions for executing the Fund's
securities transactions. In effecting the purchase or sale of portfolio
securities from non-affiliated brokers, dealers or members of an exchange, the
Adviser will seek execution of trades either (1) at the most favorable and
competitive rate of commission charged by any broker, dealer or member of an
exchange, or (2) at a higher rate of commission charged, if reasonable in
relation to brokerage and research services provided to the Trust or the Adviser
by such member, broker or dealer. Such services may include, but are not limited
to, information as to the availability of securities for purchase or sale and
statistical or factual information or opinions pertaining to investments. The
Adviser may use brokerage and research services provided to it by brokers and
dealers in servicing all its clients.
The Adviser currently manages separate accounts that employ investment
strategies similar to those used by the Fund. At times, investment decisions may
be made to purchase or sell the same security for the Fund and one or more of
the other clients advised by the Adviser. When two or more of such clients are
simultaneously engaged in the purchase or sale of the same security, the
transactions will be allocated as to amount and price in a manner considered
equitable to each so that each receives, to the extent practicable, the average
price for such transaction. There may be circumstances in which such
simultaneous transactions would be disadvantageous to the Fund with respect to
price and availability of securities. In other cases, however, it is believed
that transactions would be advantageous to the Fund.
SHARES OF BENEFICIAL INTEREST
There are no conversion or preemptive rights in connection with any shares of
the Fund, nor are there cumulative voting rights. The Fund's shares have equal
voting rights. As a shareholder, you receive one vote for each share of the Fund
you own and each fractional share you own shall be entitled to a proportionate
fractional vote. Each issued and outstanding share of the Fund is entitled to
participate equally in dividends and distributions declared and in the net
assets of the Fund upon liquidation or dissolution remaining after satisfaction
of outstanding liabilities. Under Delaware law, shareholders will be liable for
the obligations of the Fund only to the extent of their investment in the Fund.
All issued and outstanding shares of the Fund will be fully paid and
non-assessable and will be redeemable at net asset value per share. The
interests of shareholders in the Fund will not be evidenced by a certificate or
certificates
13
<PAGE> 29
representing shares of the Fund.
The authorized capitalization of the Fund consists of an unlimited number of
shares having a par value of $0.001 per share. The Trustees have authorized one
series with one class of shares issued currently. The Trustees have authority,
without necessity of a shareholder vote, to create any number of new series or
classes of shares.
Unless otherwise required by the 1940 Act, ordinarily it will not be necessary
for the Trust to hold annual meetings of shareholders. As a result, shareholders
may not consider each year the election of Trustees or the appointment of
auditors. However, the holders of at least 10% of the shares outstanding and
entitled to vote may require the Fund to hold a special meeting of shareholders
for purposes of removing a Trustee. Shareholders may remove a Trustee by the
affirmative vote of a majority of the Fund's outstanding voting shares. In
addition, the Trustees will call a meeting of shareholders for the purpose of
electing Trustees if, at any time, less than a majority of the Trustees then
holding office have been elected by shareholders. Special shareholder meetings
may also be called for certain purposes such as electing Trustees, changing
fundamental policies, or approving a management contract.
CALCULATION OF PERFORMANCE
Total Percentage Increase. Total percentage increase is calculated for the
specified periods of time by assuming a hypothetical investment of $1,000 in the
Fund's shares. Each dividend or other distribution is treated as having been
reinvested at net asset value on the payment date. The percentage increases
stated are the percent that an original investment would have increased during
the applicable period.
Average Annual Total Return. The Fund computes its average annual total return
by determining the average annual compounded rates of return during specified
periods that equate the initial amount invested to the ending redeemable value
of such investment. This is done by dividing the ending redeemable value of a
hypothetical $1,000 initial payment by $1,000 and raising the quotient to a
power equal to one divided by the number of years (or fractional portion
thereof) covered by the computation and subtracting one from the result. This
calculation can be expressed as follows:
[ERV] 1/n
Average Annual Total Return = --------- - 1
[P]
Where: ERV = ending redeemable value at the end of the period covered by
the computation of a hypothetical $1,000 payment made at the
beginning of the period.
P = hypothetical initial payment of $1,000.
n = period covered by the computation, expressed in terms of
years.
The Funds that compute their aggregate total returns over a specified period do
so by determining the aggregate compounded rate of return during such specified
period that likewise equates over a specified period the initial amount invested
to the ending redeemable value of such investment. The formula for calculating
aggregate total return is as follows:
[ERV - P]
Aggregate Total Return = ---------
P
Where: ERV = ending redeemable value at the end of the period covered by
the computation of a hypothetical $1,000 payment made at the
beginning of the period.
P = hypothetical initial payment of $1,000.
The calculations of average annual total return and aggregate total return
assume the reinvestment of all dividends and capital gain distributions on the
payment dates during the period. The ending redeemable value (variable "ERV" in
each
14
<PAGE> 30
formula) is determined by assuming complete redemption of the hypothetical
investment and the deduction of all nonrecurring charges at the end of the
period covered by the computations. Such calculations are not indicative of
future results and do not take into account Federal, state and local taxes, if
any, that shareholders must pay on a current basis. Since performance will
fluctuate, performance data for the Fund should not be used to compare an
investment in a Fund's shares with bank deposits, savings accounts and similar
investment alternatives which often provide an agreed or guaranteed fixed yield
for a stated period of time. Shareholders should remember that performance is
generally a function of the kind and quality of the instruments held in a
portfolio, portfolio maturity, operating expenses and market conditions.
Comparing Performance. Performance information for the Fund may be compared, in
reports and promotional literature, to indices including, but not limited to:
(i) the Standard & Poor's 500 Composite Stock Price Index, the Dow Jones
Industrial Average, or other appropriate unmanaged domestic or foreign indices
of performance of various types of investments so that investors may compare the
Fund's results with those of indices widely regarded by investors as
representative of the securities markets in general; (ii) Lehman Brothers
Corporate Bond Index; (iii) other groups of mutual funds tracked by Lipper
Analytical Services, Inc., a widely-used independent research firm which ranks
mutual funds by overall performance, investment objectives and assets, or
tracked by other services, companies, publications, or persons who rank mutual
Fund on overall performance or other criteria; (iv) the Consumer Price Index (a
measure of inflation) to assess the real rate of return from an investment in
the Fund; and (v) products managed by a universe of money managers with similar
performance objectives. Unmanaged indices may assume the reinvestment of
dividends but generally do not reflect deductions or administrative and
management costs and expenses.
FINANCIAL STATEMENTS
Reports to Shareholders. Shareholders will receive unaudited semi-annual reports
describing the Fund's investment operations and annual financial statements
audited by independent certified public accountants.
15
<PAGE> 31
KELMOORE STRATEGIC TRUST
PART C - OTHER INFORMATION
Item 23. Exhibits:
(a) Agreement and Declaration of Trust -- filed herewith.
(a)(1) Certificate of Trust -- filed herewith.
(b) By-Laws -- filed herewith.
(c) Instruments Defining Rights of Security Holders -- Not
applicable.
(d) Investment Advisory Contract -- to be filed by Amendment.
(e) Distribution Agreement -- to be filed by Amendment.
(f) Bonus or Profit Sharing Contracts -- None.
(g) Custodian Agreement -- to be filed by Amendment.
(h) Other Material Contracts
a. Services Agreement to provide for Transfer Agency
Services, Administration Services, Accounting Services
and Custody Administration -- to be filed by Amendment.
(i) Legal Opinion -- to be filed by Amendment.
(j) Consent of Independent Accountants -- to be filed by
Amendment.
(k) Omitted Financial Statements -- None.
(l) Initial Capital Agreements -- to be filed by Amendment.
(m) Rule 12b-1 Plan -- to be filed by Amendment.
(n) Financial Data Schedule -- to be filed by Amendment.
(o) Rule 18f-3 Plan -- None.
Item 24. Persons Controlled by or under Common Control with Registrant.
None
Item 25. Indemnification.
The Agreement and Declaration of Trust (Article IV, Section 3)
limits the liabilities of a Trustee to that of gross
negligence and in the event a Trustee is sued for his or her
activities concerning the Trust, the Trust will indemnify that
Trustee to the fullest extent permitted by Section 3817 of
Chapter 38 of Title 12 of the Delaware Code, except if a
Trustee engages in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his or her office.
The Registrant intends to purchase Errors and Omissions
insurance with Directors and Officers liability coverage.
Item 26. Business and Other Connections of the Investment Adviser.
Kelmoore Investment Company, Inc. (the "Adviser"), is a
registered investment adviser and broker-
1
<PAGE> 32
dealer incorporated on November 6, 1978. The Adviser is
primarily engaged in the investment advisory business. The
Fund is the only registered investment company to which the
Adviser serves as investment adviser. Information as to the
officers and directors of the Adviser is included in its Form
ADV filed February 20, 1998 with the Securities and Exchange
Commission (Registration Number 801-53123) and is incorporated
herein by reference.
Item 27. Principal Underwriters.
(a) The Adviser also serves as distributor of the shares of
the Fund. The Adviser currently acts as principal underwriter
for Kelmoore Covered Writing Fund, K2 LP, a California Limited
Partnership. Ralph M. Kelmon, Jr. is considered to have a
controlling interest of Kelmoore Investment Company, Inc. by
virtue of his 25% ownership interest.
(b) The following table sets forth information concerning each
director and officer of the Registrant's principal
underwriter, Kelmoore Investment Company, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
Ralph M. Kelmon, Jr.* Chairman of the Board, None
Chief Executive Officer,
and Treasurer
Michael Romanchak* Director and President None
David R. Moore* Director None
A. Duncan King* Director None
Norman H. Moore, Jr.* Secretary None
Cece G. Montgomery* Chief Financial Officer None
Matthew Kelmon* Vice President of Trading President
</TABLE>
* All addresses are 2471 East Bayshore Road, Suite 501, Palo
Alto, CA 94303 unless otherwise indicated.
(c) Kelmoore Investment Company, Inc. is an affiliated person
of the Registrant.
Item 28. Location of Accounts and Records.
The accounts, books, or other documents 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, are maintained
by the Adviser at 2471 East Bayshore Road, Suite 501, Palo
Alto, California 94303. Certain records, including records
relating to Registrant's shareholders are maintained at the
Trust's Administrator, Transfer Agent, and Fund Accounting
Agent, First Data Investor Services Group, 3200 Horizon Drive,
P.O. Box 61503, King of Prussia, PA 19406-0903. Records
relating to the physical possession of securities are
maintained by the Trust's Custodian, The Bank of New York, 48
Wall Street, New York, New York 10286.
Item 29. Management Services. Not Applicable.
Item 30. Undertakings. Not Applicable.
2
<PAGE> 33
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant has duly caused this
Registration Statement on Form N-1A to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Palo Alto and the State
of California on this 21st day of December, 1998.
KELMOORE STRATEGIC TRUST
(Registrant)
By: Matthew Kelmon, President*
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
Ralph M. Kelmon* Initial Trustee December 21, 1998
Matthew Kelmon* President and Principal December 21, 1998
Executive Officer
Matthew Kelmon* Principal Financial and December 21, 1998
Accounting Officer
By: Sandra L. Adams,
as Attorney-in-Fact
December 21, 1998
3
<PAGE> 34
KELMOORE STRATEGIC TRUST
EXHIBIT INDEX TO PART "C"
OF
REGISTRATION STATEMENT
Item No. Description
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99(a) Agreement and Declaration of Trust
99(a)(1) Certificate of Trust
99(b) By-Laws
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EXHIBIT 99(a)
KELMOORE STRATEGIC TRUST
AGREEMENT AND
DECLARATION OF TRUST
November 30, 1998
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TABLE OF CONTENTS
Page
ARTICLE I NAME AND DEFINITIONS 1
Section 1. Name 1
Section 2. Definitions 1
ARTICLE II THE TRUSTEES 3
Section 1. Management of the Trust 3
Section 2. Powers 3
Section 3. Certain Transactions 7
Section 4. Initial Trustees; Election and Number of Trustees 7
Section 5. Term of Office of Trustees 8
Section 6. Vacancies; Appointment of Trustees 8
Section 7. Temporary Vacancy or Absence 8
Section 8. Chairman 8
Section 9. Action by the Trustees 9
Section 10. Ownership of Trust Property 9
Section 11. Effect of Trustees Not Serving 9
Section 12. Trustees, etc. as Shareholders 10
Section 13. Series Trustees 10
ARTICLE III CONTRACTS WITH SERVICE PROVIDERS 10
Section 1. Underwriting Contracts 10
Section 2. Advisory or Management Contract 10
Section 3. Administration Agreement 11
Section 4. Service Agreement 11
Section 5. Transfer Agent 11
Section 6. Custodian 11
Section 7. Affiliations of Trustees or Officers, Etc. 12
ARTICLE IV COMPENSATION, LIMITATION OF LIABILITY
AND INDEMNIFICATION 12
Section 1. Compensation 12
Section 2. Limitation of Liability 12
Section 3. Indemnification 13
Section 4. Indemnification of Shareholders 14
Section 5. No Bond Required of Trustees 14
Section 6. No Duty of Investigation; Notice in
Trust Instruments, Etc. 14
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Section 7. Reliance on Experts, Etc. 15
ARTICLE V SERIES; CLASSES; SHARES 16
Section 1. Establishment of Series or Class 16
Section 2. Shares 16
Section 3. Investment in the Trust 17
Section 4. Assets and Liabilities of Series 17
Section 5. Ownership and Transfer of Shares 18
Section 6. Status of Shares; Limitation of Shareholder Liability 19
ARTICLE VI DISTRIBUTION AND REDEMPTIONS 19
Section 1. Distributions 19
Section 2. Redemptions 20
Section 3. Determination of Net Asset Value 21
Section 4. Suspension of Right of Redemption 21
Section 5. Repurchase by Agreement 21
ARTICLE VII SHAREHOLDERS' VOTING POWERS AND MEETINGS 22
Section 1. Voting Powers 22
Section 2. Quorum; Required Vote 22
Section 3. Record Dates 23
Section 4. Additional Provisions 23
ARTICLE VIII EXPENSES OF THE TRUST AND SERIES 24
Section 1. Payment of Expenses by the Trust 24
Section 2. Payment of Expenses by Shareholders 24
ARTICLE IX MISCELLANEOUS 25
Section 1. Trust Not a Partnership 25
Section 2. Trustee Action 25
Section 3. Termination of the Trust 25
Section 4. Reorganization 26
Section 5. Declaration of Trust 26
Section 6. Applicable Law 26
Section 7. Amendments 27
Section 8. Derivative Actions 28
Section 9. Fiscal Year 28
Section 10. Severability 28
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KELMOORE STRATEGIC TRUST
AGREEMENT AND
DECLARATION OF TRUST
This AGREEMENT AND DECLARATION OF TRUST is made on November 30, 1998 by
the undersigned Trustee (together with all other persons from time to time duly
elected, qualified and serving as Trustees in accordance with the provisions of
Article II hereof, the "Trustees");
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the Trust shall be held and managed in trust pursuant to this
Agreement and Declaration of Trust.
ARTICLE I
NAME AND DEFINITIONS
Section 1. Name. The name of the Trust created by this Agreement and Declaration
of Trust is "Kelmoore Strategic Trust".
Section 2. Definitions. Unless otherwise provided or required by the context:
(a) "Administrator" means the party, other than the Trust, to the contract
described in Article III, Section 3 hereof.
(b) "By-laws" means the By-laws of the Trust adopted by the Trustees, as
amended from time to time, which By-laws are expressly herein incorporated
by reference as part of the "governing instrument" within the meaning of
the Delaware Act.
(c) "Class" means the class of Shares of a Series established pursuant to
Article V.
(d) "Commission," "Eligible Foreign Custodian," "Qualified Foreign Bank,"
"Interested Person" and "Principal Underwriter" have the meanings provided
in the 1940 Act. Except as such term may be otherwise defined by the
Trustees in conjunction with the establishment of any Series of Shares,
the term "Majority Shareholder Vote" shall have the same meaning as is
assigned to the term "vote of a majority of the outstanding voting
securities" in the 1940 Act.
(e) "Covered Person" means a person so defined in Article IV, Section 2.
(f) "Custodian" means any Person other than the Trust who has custody of any
Trust Property as required by Section 17(f) of the 1940 Act, but does not
include a system for the central handling of securities described in said
Section 17(f).
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(g) "Declaration" shall mean this Agreement and Declaration of Trust, as
amended or restated from time to time. Reference in this Declaration of
Trust to "Declaration," "hereof," "herein," and "hereunder" shall be
deemed to refer to this Declaration rather than exclusively to the article
or section in which such words appear.
(h) "Delaware Act" means Chapter 38 of Title 12 of the Delaware Code entitled
"Treatment of Delaware Business Trusts," as amended from time to time.
(i) "Fund Complex" has the meaning provided in the Securities Exchange Act of
1934, as amended.
(j) "Distributor" means the party, other than the Trust, to the contract
described in Article III, Section 1 hereof.
(k) "His" shall include the feminine and neuter, as well as the masculine,
genders.
(l) "Investment Adviser" means the party, other than the Trust, to the
contract described in Article III, Section 2 hereof.
(m) "Net Asset Value" means the net asset value of each Series of the Trust,
determined as provided in Article VI, Section 3.
(n) "Person" means and includes individuals, corporations, partnerships,
trusts, associations, limited liability companies, joint ventures, estates
and other entities, and governments and agencies and political
subdivisions thereof, whether domestic or foreign.
(o) "Series" means a series of Shares established pursuant to Article V.
(p) "Shareholder" means a record owner of Outstanding Shares;
(q) "Shares" means the equal proportionate transferable units of interest into
which the beneficial interest of each Series or Class is divided from time
to time (including whole Shares and fractions of Shares). "Outstanding
Shares" means Shares shown in the books of the Trust or its transfer agent
as then issued and outstanding, but does not include Shares which have
been repurchased or redeemed by the Trust and which are held in the
treasury of the Trust.
(r) "Transfer Agent" means any Person other than the Trust who maintains the
Shareholder records of the Trust, such as the list of Shareholders, the
number of Shares credited to each account, and the like.
(s) "Trust" means Kelmoore Strategic Trust established hereby, and reference
to the Trust, when applicable to one or more Series, refers to that
Series.
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(t) "Trustees" means the persons who have signed this Declaration of Trust, so
long as they shall continue in office in accordance with the terms hereof,
and all other persons who may from time to time be duly qualified and
serving as Trustees in accordance with Article II, in all cases in their
capacities as Trustees hereunder.
(u) "Trust Property" means any and all property, real or personal, tangible or
intangible, which is owned or held by or for the Trust or any Series or
the Trustees on behalf of the Trust or any Series.
(v) The "1940 Act" means the Investment Company Act of 1940, as amended from
time to time.
ARTICLE II
THE TRUSTEES
Section 1. Management of the Trust. The business and affairs of the Trust shall
be managed by or under the direction of the Trustees, and they shall have all
powers necessary or desirable to carry out that responsibility. The Trustees may
execute all instruments and take all action they deem necessary or desirable to
promote the interests of the Trust. Any determination made by the Trustees in
good faith as to what is in the interests of the Trust shall be conclusive. In
construing the provisions of this Declaration, the presumption shall be in favor
of a grant of power to the Trustees.
Section 2. Powers. The Trustees in all instances shall act as principals, free
of the control of the Shareholders. The Trustees shall have full power and
authority to take or refrain from taking any action and to execute any contracts
and instruments that they may consider necessary or desirable in the management
of the Trust. The Trustees shall not in any way be bound or limited by current
or future laws or customs applicable to trust investments, but shall have full
power and authority to make any investments which they, in their sole
discretion, deem proper to accomplish the purposes of the Trust. The Trustees
may exercise all of their powers without recourse to any court or other
authority. Subject to any applicable limitation herein or in the By-laws or
resolutions of the Trust, the Trustees shall have power and authority, without
limitation:
(a) To operate as and carry on the business of an investment company, and
exercise all the powers necessary and appropriate to the conduct of such
operations.
(b) To invest in, hold for investment, or reinvest in, cash; securities,
including common, preferred and preference stocks; warrants; subscription
rights; profit-sharing interests or participations and all other contracts
for or evidence of equity interests; bonds, debentures, bills, time notes
and all other evidences of indebtedness; negotiable or non-negotiable
instruments; government securities, including securities of any state,
municipality or other political subdivision thereof, or any governmental
or quasi-governmental agency or
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instrumentality; and money market instruments including bank certificates
of deposit, finance paper, commercial paper, bankers' acceptances and all
kinds of repurchase agreements, of any corporation, company, trust,
association, firm or other business organization however established, and
of any country, state, municipality or other political subdivision, or any
governmental or quasi-governmental agency or instrumentality; or any other
security, property or instrument in which the Trust or any of its Series
shall be authorized to invest.
(c) To acquire (by purchase, subscription or otherwise), to hold, to trade in
and deal in, to acquire any rights or options to purchase or sell, to sell
or otherwise dispose of, to lend and to pledge any such securities, to
enter into repurchase agreements, reverse repurchase agreements, firm
commitment agreements and forward foreign currency exchange contracts, to
purchase and sell options on securities, securities indices, currency and
other financial assets, futures contracts, options on futures contracts,
swaps, collars, caps, floors and swaptions of all descriptions and to
engage in all types of hedging and risk-management transactions.
(d) To exercise all rights, powers and privileges of ownership or interest in
all securities and repurchase agreements included in the Trust Property,
including the right to vote thereon and otherwise act with respect thereto
and to do all acts for the preservation, protection, improvement and
enhancement in value of all such securities and repurchase agreements.
(e) To acquire (by purchase, lease or otherwise) and to hold, use, maintain,
develop and dispose of (by sale or otherwise) any property, real or
personal, including cash or foreign currency, and any interest therein.
(f) To borrow money or other property in the name of the Trust exclusively for
Trust purposes and in this connection issue notes or other evidence of
indebtedness; to secure borrowings by mortgaging, pledging or otherwise
subjecting as security the Trust Property; and to endorse, guarantee, or
undertake the performance of any obligation or engagement of any other
Person and to lend Trust Property.
(g) To aid by further investment any corporation, company, trust, association
or firm, any obligation of or interest in which is included in the Trust
Property or in the affairs of which the Trustees have any direct or
indirect interest; to do all acts and things designed to protect,
preserve, improve or enhance the value of such obligation or interest; and
to guarantee or become surety on any or all of the contracts, stocks,
bonds, notes, debentures and other obligations of any such corporation,
company, trust, association or firm.
(h) To adopt By-laws not inconsistent with this Declaration providing for the
conduct of the business of the Trust and to amend and repeal them to the
extent such right is not reserved to the Shareholders.
(i) To elect and remove such officers and appoint and terminate such agents as
they deem appropriate.
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(j) To employ as custodian of any assets of the Trust, subject to any
provisions herein or in the By-laws, one or more banks, trust companies or
companies that are members of a national securities exchange, or other
entities permitted by the Commission to serve as such.
(k) To retain one or more transfer agents and shareholder servicing agents, or
both.
(l) To provide for the distribution of Shares either through a Principal
Underwriter as provided herein or by the Trust itself, or both, or
pursuant to a distribution plan of any kind.
(m) To set record dates in the manner provided for herein or in the By-laws.
(n) To delegate such authority as they consider desirable to any officers of
the Trust and to any agent, independent contractor, manager, investment
adviser, custodian or underwriter.
(o) To hold any security or other property (i) in a form not indicating any
trust, whether in bearer, book entry, unregistered or other negotiable
form, or (ii) either in the Trust's or Trustees' own name or in the name
of a custodian or a nominee or nominees, subject to safeguards according
to the usual practice of business trusts or investment companies.
(p) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes, and
with separate Shares representing beneficial interests in such Series, and
to establish separate Classes, all in accordance with the provisions of
Article V.
(q) To the full extent permitted by Section 3804 of the Delaware Act, to
allocate assets, liabilities and expenses of the Trust to a particular
Series and assets, liabilities and expenses to a particular Class or to
apportion the same between or among two or more Series or Classes,
provided that any liabilities or expenses incurred by a particular Series
or Class shall be payable solely out of the assets belonging to that
Series or Class as provided for in Article V, Section 4.
(r) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern whose securities are
held by the Trust; to consent to any contract, lease, mortgage, purchase,
or sale of property by such corporation or concern; and to pay calls or
subscriptions with respect to any security held in the Trust.
(s) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited
to, claims for taxes.
(t) To make distributions of income, capital gains, returns of capital (if
any) and redemption proceeds to Shareholders in the manner hereinafter
provided for.
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(u) To establish committees for such purposes, with such membership, and with
such responsibilities as the Trustees may consider proper, including a
committee consisting of fewer than all of the Trustees then in office,
which may act for and bind the Trustees and the Trust with respect to the
institution, prosecution, dismissal, settlement, review or investigation
of any legal action, suit or proceeding, pending or threatened.
(v) To issue, sell, repurchase, redeem, cancel, retire, acquire, hold, resell,
reissue, dispose of and otherwise deal in Shares; to establish terms and
conditions regarding the issuance, sale, repurchase, redemption,
cancellation, retirement, acquisition, holding, resale, reissuance,
disposition of or dealing in Shares; and, subject to Articles V and VI, to
apply to any such repurchase, redemption, retirement, cancellation or
acquisition of Shares any funds or property of the Trust or of the
particular Series with respect to which such Shares are issued.
(w) To invest part or all of the Trust Property (or part or all of the assets
of any Series), or to dispose of part or all of the Trust Property (or
part or all of the assets of any Series) and invest the proceeds of such
disposition, in securities issued by one or more other investment
companies registered under the 1940 Act all without any requirement of
approval by Shareholders. Any such other investment company may (but need
not) be a trust (formed under the laws of the State of Delaware or of any
other state) which is classified as a partnership for federal income tax
purposes.
(x) To carry on any other business in connection with or incidental to any of
the foregoing powers, to do everything necessary or desirable to
accomplish any purpose or to further any of the foregoing powers, and to
take every other action incidental to the foregoing business or purposes,
objects or powers.
(y) To sell or exchange any or all of the assets of the Trust, subject to
Article IX, Section 4.
(z) To enter into joint ventures, partnerships and other combinations and
associations.
(aa) 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;
(bb) To purchase and pay for entirely out of Trust Property such insurance as
the Trustees may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the
assets of the Trust or payment of distributions and principal on its
portfolio investments, and, subject to applicable law and any restrictions
set forth in the By-laws, insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, investment advisers, Principal
Underwriters, or
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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 adviser, 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;
(cc) To adopt, establish and carry out pension, profit-sharing, share bonus,
share purchase, savings, thrift and other retirement, incentive and
benefit plans and trusts, including the purchasing of life insurance and
annuity contracts as a means of providing such retirement and other
benefits, for any or all of the Trustees, officers, employees and agents
of the Trust;
(dd) To enter into contracts of any kind and description;
(ee) To interpret the investment policies, practices or limitations of any
Series or Class; and
(ff) To guarantee indebtedness and contractual obligations of others.
The clauses above shall be construed as objects and powers, and the enumeration
of specific powers shall not limit in any way the general powers of the
Trustees. Any action by one or more of the Trustees in their capacity as such
hereunder shall be deemed an action on behalf of the Trust or the applicable
Series, and not an action in an individual capacity. No one dealing with the
Trustees shall be under any obligation to make any inquiry concerning the
authority of the Trustees, or to see to the application of any payments made or
property transferred to the Trustees or upon their order. In construing this
Declaration, the presumption shall be in favor of a grant of power to the
Trustees.
Section 3. Certain Transactions. Except as prohibited by applicable law, the
Trustees may, on behalf of the Trust, buy any securities from or sell any
securities to, or lend any assets of the Trust to, any Trustee or officer of the
Trust or any firm of which any such Trustee or officer is a member acting as
principal, or have any such dealings with any investment adviser, administrator,
distributor or transfer agent for the Trust or with any Interested Person of
such person. The Trust may employ any such person or entity in which such person
is an Interested Person, as broker, legal counsel, registrar, investment
adviser, administrator, distributor, transfer agent, dividend disbursing agent,
custodian or in any other capacity upon customary terms.
Section 4. Initial Trustees; Election and Number of Trustees. The initial
Trustees shall be the persons signing this Declaration. The number of Trustees
shall be fixed from time to time by a majority of the Trustees; provided, that
there shall be at least one (1) Trustee. The Shareholders shall elect the
Trustees (other than the initial Trustee) on such dates as the Trustees may fix
from time to time.
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Section 5. Term of Office of Trustees. Each Trustee shall hold office for life
or until his successor is elected or the Trust terminates; except that (a) any
Trustee may resign by delivering to the other Trustees or to any Trust officer a
written resignation effective upon such delivery or a later date specified
therein; (b) any Trustee may be removed with or without cause at any time by a
written instrument signed by at least a majority of the then Trustees,
specifying the effective date of removal; (c) any Trustee who requests to be
retired, who has reached any mandatory retirement age established by the
Trustees, or who is declared bankrupt or has become physically or mentally
incapacitated or is otherwise unable to serve, may be retired by a written
instrument signed by a majority of the other Trustees, specifying the effective
date of retirement; and (d) any Trustee may be removed at any meeting of the
Shareholders by a vote of at least two-thirds of the Outstanding Shares.
Section 6. Vacancies; Appointment of Trustees. Whenever a vacancy shall exist in
the Board of Trustees, regardless of the reason for such vacancy, the remaining
Trustees shall appoint any person as they determine in their sole discretion to
fill that vacancy, consistent with the limitations under the 1940 Act. Such
appointment shall be made by a written instrument signed by a majority of the
Trustees or by a resolution of the Trustees, duly adopted and recorded in the
records of the Trust, specifying the effective date of the appointment. The
Trustees may appoint a new Trustee as provided above in anticipation of a
vacancy expected to occur because of the retirement, resignation or removal of a
Trustee, or an increase in the number of Trustees, provided that such
appointment shall become effective only at or after the expected vacancy occurs
and provided further that any new Trustee shall have reached the age of majority
in the state in which he resides. As soon as any such Trustee has accepted his
appointment, the trust estate shall vest in the new Trustee, together with the
continuing Trustees, without any further act or conveyance, and he shall be
deemed a Trustee hereunder. Whenever a vacancy in the number of Trustees shall
occur, until such vacancy is filled as provided in this Article II, 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 the
Declaration.
Section 7. Temporary Vacancy or Absence. Whenever a vacancy in the Board of
Trustees shall occur, until such vacancy is filled, or while any Trustee is
absent from his domicile (unless that Trustee has made arrangements to be
informed about, and to participate in, the affairs of the Trust during such
absence), or is physically or mentally incapacitated, the remaining Trustees
shall have all the powers hereunder and their certificate as to such vacancy,
absence, or incapacity shall be conclusive. Any Trustee may, by power of
attorney, delegate his powers as Trustee for a period not exceeding six (6)
months at any one time to any other Trustee or Trustees.
Section 8. Chairman. The Trustees may appoint one of their number to be Chairman
of the Board of Trustees. The Chairman shall preside at all meetings of the
Trustees, shall be responsible for the execution of policies established by the
Trustees and the administration of the Trust, and may be the chief executive,
financial and/or accounting officer of the Trust.
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Section 9. Action by the Trustees. The Trustees shall act by majority vote at a
meeting duly called at which a quorum is present, including a meeting held by
conference telephone, teleconference or other electronic media or communication
equipment by means of which all persons participating in the meeting can
communicate with each other; or by written consent of a majority of Trustees (or
such greater number as may be required by applicable law) without a meeting. A
majority of the Trustees shall constitute a quorum at any meeting. Meetings of
the Trustees may be called orally or in writing by the Chairman, the President
or by any one of the Trustees. Notice of the time, date and place of all
Trustees' meetings shall be given to each Trustee as set forth in the By-laws;
provided, however, that no notice is required if the Trustees provide for
regular or stated meetings. Notice need not be given to any Trustee who attends
the meeting without objecting to the lack of notice or who signs a waiver of
notice either before or after the meeting. The Trustees by majority vote may
delegate to any Trustee or Trustees or committee authority to approve particular
matters or take particular actions on behalf of the Trust. Any written consent
or waiver may be provided and delivered to the Trust by facsimile or other
similar electronic mechanism.
Section 10. Ownership of Trust Property. The Trust Property of the Trust and of
each Series shall be held separate and apart from any assets now or hereafter
held in any capacity other than as Trustee hereunder by the Trustees or any
successor Trustees. Legal title in and beneficial ownership of all of the assets
of the Trust shall at all times be considered as vested in the Trust, except
that the Trustees may cause legal title in and beneficial ownership of any Trust
Property to be held by, or in the name of one or more of the Trustees acting for
and on behalf of the Trust, or in the name of any person as nominee acting for
and on behalf of the Trust. No Shareholder shall be deemed to have a severable
ownership in any individual asset of the Trust or of any Series or any right of
partition or possession thereof, but each Shareholder shall have, as provided in
Article V, a proportionate undivided beneficial interest in the Trust or Series
or Class thereof represented by Shares. The Shares shall be personal property
giving only the rights specifically set forth in this Trust Instrument. The
Trust, or at the determination of the Trustees one or more of the Trustees or a
nominee acting for and on behalf of the Trust, shall be deemed to hold legal
title and beneficial ownership of any income earned on securities of the Trust
issued by any business entities formed, organized, or existing under the laws of
any jurisdiction, including the laws of any foreign country. Upon the
resignation or removal of a Trustee, or his otherwise ceasing to be a Trustee,
he shall execute and deliver such documents as the remaining Trustees shall
require for the purpose of conveying to the Trust or the remaining Trustees any
Trust Property held in the name of the resigning or removed Trustee. Upon the
incapacity or death of any Trustee, his legal representative shall execute and
deliver on his behalf such documents as the remaining Trustees shall require as
provided in the preceding sentence.
Section 11. Effect of Trustees Not Serving. The death, resignation, retirement,
removal, incapacity or inability or refusal to serve of the Trustees, or any one
of them, shall not operate to annul the Trust or to revoke any existing agency
created pursuant to the terms of this Declaration.
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Section 12. Trustees, etc. as Shareholders. Subject to any restrictions in the
By-laws, any Trustee, officer, agent or independent contractor of the Trust may
acquire, own and dispose of Shares to the same extent as any other Shareholder;
the Trustees may issue and sell Shares to and buy Shares from any such person or
any firm or company in which such person is interested, subject only to any
general limitations herein.
Section 13. Series Trustees. In connection with the establishment of one or more
Series or Classes, the Trustees establishing such Series or Class may appoint,
to the extent permitted by the Delaware Act, separate Trustees with respect to
such Series or Classes (the "Series Trustees"). Series Trustees may, but are not
required to, serve as Trustees of the Trust or any other Series or Class of the
Trust. The Series Trustees shall have, to the exclusion of any other Trustee of
the Trust, all the powers and authorities of Trustees hereunder with respect to
such Series or Class, but shall have no power or authority with respect to any
other Series or Class. Any provision of this Declaration relating to election of
Trustees by Shareholders shall entitle only the Shareholders of a Series or
Class for which Series Trustees have been appointed to vote with respect to the
election of such Series Trustees and the Shareholders of any other Series or
Class shall not be entitled to participate in such vote. In the event that
Series Trustees are appointed, the Trustees initially appointing such Series
Trustees shall, without the approval of any Outstanding Shares, amend either the
Declaration or the By-laws to provide for the respective responsibilities of the
Trustees and the Series Trustees in circumstances where an action of the
Trustees or Series Trustees affects all Series of the Trust or two or more
Series represented by different Trustees.
ARTICLE III
CONTRACTS WITH SERVICE PROVIDERS
Section 1. Underwriting Contract. The Trustees may in their discretion from time
to time enter into an exclusive or non-exclusive underwriting contract or
contracts providing for the sale of the Shares whereby the Trustees may either
agree to sell the Shares to the other party to the contract or appoint such
other party as their sales agent for the Shares, and in either case on such
terms and conditions, if any, as may be prescribed in the By-laws, and such
further terms and conditions as the Trustees may in their discretion determine
not inconsistent with the provisions of this Article III or of the By-laws; and
such contract may also provide for the repurchase of the Shares by such other
party as agent of the Trustees.
Section 2. Advisory or Management Contract. The Trustees may in their discretion
from time to time enter into one or more investment advisory or management
contracts or, if the Trustees establish multiple Series, separate investment
advisory or management contracts with respect to one or more Series whereby the
other party or parties to any such contracts shall undertake to furnish the
Trust or such Series management, investment advisory, administration,
accounting, legal, statistical and research facilities and services, promotional
or marketing activities, and such other facilities and services, if any, as the
Trustees shall from time to time consider desirable and all upon such terms and
conditions as the Trustees may in their discretion
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determine. Notwithstanding any provisions of the Declaration, the Trustees may
authorize the Investment Advisers or persons to whom the Investment Advisers
delegate certain or all of their duties, or any of them, under any such
contracts (subject to such general or specific instructions as the Trustees may
from time to time adopt) to effect purchases, sales, loans or exchanges of
portfolio securities and other investments of the Trust on behalf of the
Trustees or may authorize any officer, employee or Trustee to effect such
purchases, sales, loans or exchanges pursuant to recommendations of such
Investment Advisers, or any of them (and all without further action by the
Trustees). Any such purchases, sales, loans and exchanges shall be deemed to
have been authorized by all of the Trustees.
Section 3. Administration Agreement. The Trustees may in their discretion from
time to time enter into an administration agreement or, if the Trustees
establish multiple Series or Classes, separate administration agreements with
respect to each Series or Class, whereby the other party to such agreement shall
undertake to manage the business affairs of the Trust or of a Series or Class
thereof and furnish the Trust or a Series or a Class thereof with office
facilities, and shall be responsible for the ordinary clerical, bookkeeping and
recordkeeping services at such office facilities, and other facilities and
services, if any, and all upon such terms and conditions as the Trustees may in
their discretion determine.
Section 4. Service Agreement. The Trustees may in their discretion from time to
time enter into service agreements with respect to one or more Series or Classes
of Shares whereby the other parties to such Service Agreements will provide
administration and/or support services pursuant to administration plans and
service plans, and all upon such terms and conditions as the Trustees in their
discretion may determine.
Section 5. Transfer Agent. The Trustees may in their discretion from time to
time enter into a transfer agency and shareholder services contract whereby the
other party to such contract shall undertake to furnish transfer agency and
shareholder services to the Trust. The contract shall have such terms and
conditions as the Trustees may in their discretion determine. Such services may
be provided by one or more Persons.
Section 6. Custodian. The Trustees may appoint or otherwise engage one or more
banks or trust companies, each having aggregate capital, surplus and undivided
profits (as shown in its last published report) of at least two million dollars
($2,000,000), or any other entity satisfying the requirements of the 1940 Act,
to serve as Custodian with authority as its agent, but subject to such
restrictions, limitations and other requirements, if any, as may be contained in
the By-laws of the Trust. The Trustees may also authorize the Custodian to
employ one or more sub-custodians as meet the requirements of applicable
provisions of the 1940 Act, and upon such terms and conditions as may be agreed
upon between the Custodian and such sub-custodian, to hold securities and other
assets of the Trust and to perform the acts and services of the Custodian,
subject to applicable provisions of law and resolutions adopted by the Trustees.
The Trustees may delegate to the Trust's officers, Investment Adviser, Custodian
or a Qualified Foreign Bank the responsibility to select Eligible Foreign
Custodians in accordance with the provisions of the 1940 Act or any rule,
regulation or order of the Commission thereunder.
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Section 7. Affiliations of Trustees or Officers, Etc. The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust or any
Series thereof is a shareholder, director, officer, partner,
trustee, employee, manager, adviser or distributor of or for any
partnership, corporation, trust, association or other organization
or of or for any parent or affiliate of any organization, with which
a contract of the character described in this Article III or for
services as Custodian, Transfer Agent or disbursing agent or for
related services may have been or may hereafter be made, or that any
such organization, or any parent or affiliate thereof, is a
Shareholder of or has an interest in the Trust, or that
(ii) any partnership, corporation, trust, association or other
organization with which a contract of the character described in
Sections 1, 2, 3 or 4 of this Article III or for services as
Custodian, Transfer Agent or disbursing agent or for related
services may have been or may hereafter be made also has any one or
more of such contracts with one or more other partnerships,
corporations, trusts, associations or other organizations, or has
other business or interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its Shareholders.
ARTICLE IV
COMPENSATION, LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 1. Compensation. The Trustees as such shall be entitled to reasonable
compensation from the Trust, and they may fix the amount of such compensation.
Nothing herein shall in any way prevent the employment of any Trustee for
advisory, management, legal, accounting, investment banking or other services
and payment for the same by the Trust.
Section 2. Limitation of Liability. All persons contracting with or having any
claim against the Trust or a particular Series shall look only to the assets of
all Series or such particular Series for payment under such contract or claim;
and neither the Trustees nor, when acting in such capacity, any of the Trust's
officers, employees or agents, whether past, present or future, shall be
personally liable therefor. Every written instrument or obligation on behalf of
the Trust or any Series shall contain a statement to the foregoing effect, but
the absence of such statement shall not operate to make any Trustee or officer
of the Trust liable thereunder. Provided they have exercised reasonable care and
have acted under the reasonable belief that their actions are in the best
interest of the Trust, the Trustees and officers of the Trust shall not be
responsible or liable for any act or omission or for neglect or wrongdoing of
them or any officer, agent, employee, Investment Adviser or independent
contractor of the Trust, but nothing contained in this Declaration or in the
Delaware Act shall protect any Trustee or
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officer of the Trust against liability to the Trust or to Shareholders to which
he 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
office.
Section 3. Indemnification. (a) Subject to the exceptions and limitations
contained in subsection (b) below:
(i) every person who is, or has been, a Trustee or an officer, employee
or agent of the Trust (including any individual who serves at its
request as director, officer, partner, trustee or the like of
another organization in which it has any interest as a shareholder,
creditor or otherwise) ("Covered Person") shall be indemnified by
the Trust or the appropriate Series to the fullest extent permitted
by law against liability and against all expenses reasonably
incurred or paid by him in connection with any claim, action, suit
or proceeding in which he becomes involved as a party or otherwise
by virtue of his being or having been a Covered Person and against
amounts paid or incurred by him in the settlement thereof; and
(ii) as used herein, the words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened, and the
words "liability" and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement,
fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before which the
proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his office, or (B) not to have acted in good faith in the
reasonable belief that his action was in the best interest of the
Trust; or
(ii) in the event of a settlement, unless there has been a determination
that such Covered Person did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved
in the conduct of his office; (A) by the court or other body
approving the settlement; (B) by at least a majority of those
Trustees who are neither Interested Persons of the Trust nor are
parties to the matter based upon a review of readily available facts
(as opposed to a full trial-type inquiry); (C) by written opinion of
independent legal counsel based upon a review of readily available
facts (as opposed to a full trial-type inquiry) or (D) by a vote of
a majority of the Outstanding Shares entitled to vote (excluding any
Outstanding Shares owned of record or beneficially by such
individual).
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(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may
now or hereafter be entitled, and shall inure to the benefit of the heirs,
executors and administrators of a Covered Person.
(d) To the maximum extent permitted by applicable law, expenses in connection
with the preparation and presentation of a defense to any claim, action,
suit or proceeding of the character described in subsection (a) of this
Section may be paid by the Trust or applicable Series from time to time
prior to final disposition thereof upon receipt of an undertaking by or on
behalf of such Covered Person that such amount will be paid over by him to
the Trust or applicable Series if it is ultimately determined that he is
not entitled to indemnification under this Section; provided, however,
that either (i) such Covered Person shall have provided appropriate
security for such undertaking, (ii) the Trust is insured against losses
arising out of any such advance payments or (iii) either a majority of the
Trustees who are neither Interested Persons of the Trust nor parties to
the matter, or independent legal counsel in a written opinion, shall have
determined, based upon a review of readily available facts (as opposed to
a full trial-type inquiry) that there is reason to believe that such
Covered Person will not be disqualified from indemnification under this
Section.
(e) Any repeal or modification of this Article IV by the Shareholders, or
adoption or modification of any other provision of the Declaration or
By-laws that would be inconsistent with this Article, shall be prospective
only, to the extent that such repeal, or modification would, if applied
retrospectively, adversely affect any limitation on the liability of any
Covered Person or indemnification available to any Covered Person with
respect to any act or omission which occurred prior to such repeal,
modification or adoption.
Section 4. Indemnification of Shareholders. If any Shareholder or former
Shareholder of any Series shall be held personally liable solely by reason of
his being or having been a Shareholder and not because of his acts or omissions
or for some other reason, the Shareholder or former Shareholder (or his heirs,
executors, administrators or other legal representatives or in the case of any
entity, its general successor) shall be entitled out of the assets belonging to
the applicable Series to be held harmless from and indemnified against all loss
and expense arising from such liability. The Trust, on behalf of the affected
Series, shall, upon request by such Shareholder, assume the defense of any claim
made against such Shareholder for any act or obligation of the Series and
satisfy any judgment thereon from the assets of the Series.
Section 5. No Bond Required of Trustees. No Trustee shall be obligated to give
any bond or other security for the performance of any of his duties hereunder.
Section 6. No Duty of Investigation; Notice in Trust Instruments, Etc. No
purchaser, lender, transfer agent or other Person dealing with the Trustees or
any officer, employee or agent of the Trust or a Series thereof shall be bound
to make any inquiry concerning the validity of any transaction purporting to be
made by the Trustees or by said officer, employee or agent or be
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liable for the application of money or property paid, loaned, or delivered to or
on the order of the Trustees or of said officer, employee or agent. Every
obligation, contract, instrument, certificate, Share, other security of the
Trust or a Series thereof or undertaking, and every other act or thing
whatsoever executed in connection with the Trust shall be conclusively presumed
to have been executed or done by the executors thereof only in their capacity as
Trustees under this Declaration or in their capacity as officers, employees or
agents of the Trust or a Series thereof. Every written obligation, contract,
instrument, certificate, Share, other security of the Trust or a Series thereof
or undertaking made or issued by the Trustees may recite that the same is
executed or made by them not individually, but as Trustees under the
Declaration, and that the obligations of the Trust or a Series thereof under any
such instrument are not binding upon any of the Trustees or Shareholders
individually, but bind only the Trust Property or the Trust Property of the
applicable Series, and may contain any further recital which they may deem
appropriate, but the omission of such recital shall not operate to bind the
Trustees individually. The Trustees shall at all times maintain insurance for
the protection of the Trust Property or the Trust Property of the applicable
Series, its Shareholders, Trustees, officers, employees and agents in such
amount as the Trustees shall deem adequate to cover possible tort liability, and
such other insurance as the Trustees in their sole judgment shall deem
advisable.
Section 7. Reliance on Experts, Etc. Each Trustee, officer or employee of the
Trust or a Series thereof shall, in the performance of his duties, powers and
discretion hereunder be fully and completely justified and protected with regard
to any act or any failure to act resulting from reliance in good faith upon the
books of account or other records of the Trust or a Series thereof, upon an
opinion of counsel, or upon reports made to the Trust or a Series thereof by any
of its officers or employees or by the Investment Adviser, the Administrator,
the Distributor, Transfer Agent, selected dealers, accountants, appraisers or
other experts or consultants selected with reasonable care by the Trustees,
officers or employees of the Trust, regardless of whether such counsel or expert
may also be a Trustee.
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ARTICLE V
SERIES; CLASSES; SHARES
Section 1. Establishment of Series or Class. The Trust shall consist of one or
more Series. Without limiting the authority of the Trustees to establish and
designate any further Series, the Trustees hereby establish one Series which
shall be designated as Kelmoore Strategic Income Fund. The preferences, voting
powers, rights and privileges of such Series and any classes thereof shall be as
set forth in the Trust's registration statement or statements filed with the
Commission, as from time to time in effect. Each additional Series shall be
established and is effective upon the adoption of a resolution of a majority of
the Trustees or any alternative date specified in such resolution. The Trustees
shall designate the relative rights and preferences of the Shares of each
Series. The Trustees may divide the Shares of any Series into Classes. Without
limiting the authority of the Trustees to establish and designate any further
Classes, the Trustees hereby establish, with respect to Kelmoore Strategic
Income Fund, a single Class of Shares which shall have no designation. The
Classes of Shares of the Series herein established and designated and any Shares
of any further Series and Classes that may from time to time be established and
designated by the Trustees shall be established and designated, and the
variations in the relative rights and preferences as between the different
Series or Classes shall be fixed and determined, by the Trustees; provided, that
all Shares shall be identical except for such variations as shall be fixed and
determined between different Series or Classes by the Trustees in establishing
and designating such Series or Class. Such designation may be directly set forth
by resolution or may be made by a resolution referring to, or authorizing or
approving of, another document that sets forth such relative rights and
preferences of such Series (or Class) including, without limitation, any
registration statement of the Trust, or as otherwise provided in such
resolution.
All references to Shares in this Declaration shall be deemed to be Shares of any
or all Series or Classes as the context may require. The Trust shall maintain
separate and distinct records for each Series and hold and account for the
assets thereof separately from the other assets of the Trust or of any other
Series. A Series may issue any number of Shares of any Class thereof and need
not issue Shares. Each Share of a Series shall represent an equal beneficial
interest in the net assets of such Series. Each holder of Shares of a Series or
a Class thereof shall be entitled to receive his pro rata share of all
distributions made with respect to such Series or Class. Upon redemption of his
Shares, such Shareholder shall be paid solely out of the funds and property of
such Series. The Trustees may adopt and change the name of any Series or Class.
Section 2. Shares. The beneficial interest in the Trust shall be divided into
transferable Shares of one or more separate and distinct Series or Classes
established by the Trustees. The number of Shares of each Series and Class is
unlimited and each Share shall have a par value of $0.001 per Share or such
other amount as the Trustees may establish. All Shares issued hereunder shall be
fully paid and nonassessable. Shareholders shall have no preemptive or other
right to subscribe to any additional Shares or other securities issued by the
Trust. The Trustees shall have full power and authority, in their sole
discretion and without obtaining Shareholder
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approval, to issue original or additional Shares at such times and on such terms
and conditions as they deem appropriate; to issue fractional Shares and Shares
held in the treasury; to establish and to change in any manner Shares of any
Series or Classes with such preferences, terms of conversion, voting powers,
rights and privileges as the Trustees may determine (but the Trustees may not
change Outstanding Shares in a manner materially adverse to the Shareholders of
such Shares); to divide or combine the Shares of any Series or Classes into a
greater or lesser number; to classify or reclassify any unissued Shares of any
Series or Classes into one or more Series or Classes of Shares; to abolish any
one or more Series or Classes of Shares; to issue Shares to acquire other assets
(including assets subject to, and in connection with, the assumption of
liabilities) and businesses; and to take such other action with respect to the
Shares as the Trustees may deem desirable. Shares held in the treasury shall not
confer any voting rights on the Trustees and shall not be entitled to any
dividends or other distributions declared with respect to the Shares.
Section 3. Investment in the Trust. The Trustees shall accept investments in any
Series or Class from such persons and on such terms as they may from time to
time authorize. At the Trustees' discretion, such investments, subject to
applicable law, may be in the form of cash or securities in which that Series is
authorized to invest, valued as provided in Article VI, Section 3. Investments
in a Series shall be credited to each Shareholder's account in the form of full
Shares at the Net Asset Value per Share next determined after the investment is
received or accepted as may be determined by the Trustees; provided, however,
that the Trustees may, in their sole discretion, (a) impose a sales charge upon
investments in any Series or Class, (b) issue fractional Shares, (c) determine
the Net Asset Value per Share of the initial capital contribution or (d)
authorize the issuance of Shares at a price other than Net Asset Value to the
extent permitted by the 1940 Act or any rule, order or interpretation of the
Commission thereunder. The Trustees shall have the right to refuse to accept
investments in any Series at any time without any cause or reason therefor
whatsoever.
Section 4. Assets and Liabilities of Series. All consideration received by the
Trust for the issue or sale of Shares of a particular Series, together with all
assets in which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof (including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be), shall
be held and accounted for separately from the assets of every other Series and
are referred to as "assets belonging to" that Series. The assets belonging to a
Series shall belong only to that Series for all purposes, subject only to the
rights of creditors of that Series, and to no other Series. Any assets, income,
earnings, profits, and proceeds thereof, funds, or payments which are not
readily identifiable as belonging to any particular Series shall be allocated by
the Trustees between and among one or more Series as the Trustees deem fair and
equitable. Each such allocation shall be conclusive and binding upon the
Shareholders of all Series for all purposes, and such assets, earnings, income,
profits or funds, or payments and proceeds thereof shall be referred to as
assets belonging to that Series. The assets belonging to a Series shall be so
recorded upon the books of the Trust, and shall be held by the Trustees in trust
for the benefit of the Shareholders of that Series. The assets belonging to a
Series shall be charged with the liabilities of that Series and all expenses,
costs, charges and reserves
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attributable to that Series, except that liabilities and expenses allocated
solely to a particular Class shall be borne by that Class. Any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular Series or Class shall be
allocated and charged by the Trustees between or among any one or more of the
Series or Classes in such manner as the Trustees deem fair and equitable. Each
such allocation shall be conclusive and binding upon the Shareholders of all
Series or Classes for all purposes.
Without limiting the foregoing, but subject to the right of the Trustees to
allocate general liabilities, expenses, costs, charges or reserves as herein
provided, and subject to the statutory provision of Section 3804 of the Delaware
Act referred to below, the debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to a particular
Series shall be enforceable against the assets of such Series only, and not
against the assets of the Trust generally or any other Series, and none of the
debts, liabilities, obligations and expenses incurred, contracted for or
otherwise existing with respect to the Trust generally or any other Series shall
be enforceable against the assets of such Series. Notice of this contractual
limitation on liabilities among Series may, in the Trustees' discretion, be set
forth in the certificate of trust of the Trust (whether originally or by
amendment) as filed or to be filed in the Office of the Secretary of State of
the State of Delaware pursuant to the Delaware Act, and upon the giving of such
notice in the certificate of trust, the statutory provisions of Section 3804 of
the Delaware Act relating to limitations on liabilities among Series (and the
statutory effect under Section 3804 of setting forth such notice in the
certificate of trust) shall become applicable to the Trust and each Series. Any
person extending credit to, contracting with or having any claim against any
Series may look only to the assets of that Series to satisfy or enforce any debt
with respect to that Series. No Shareholder or former Shareholder of any Series
shall have a claim on or any right to any assets allocated or belonging to any
other Series.
Section 5. Ownership and Transfer of Shares. The Trust or a transfer or similar
agent for the Trust shall maintain a register containing the names and addresses
of the Shareholders of each Series and Class thereof, the number of Shares of
each Series and Class held by such Shareholders, and a record of all Share
transfers. The register shall be conclusive as to the identity of Shareholders
of record and the number of Shares held by them from time to time. The Trustees
may authorize the issuance of certificates representing Shares and adopt rules
governing their use. The Trustees may make rules governing the transfer of
Shares, whether or not represented by certificates. Except as otherwise provided
by the Trustees, Shares shall be transferable on the books of the Trust only by
the record holder thereof or by his duly authorized agent upon delivery to the
Trustees or the Trust's transfer agent of a duly executed instrument of
transfer, together with a Share certificate if one is outstanding, and such
evidence of the genuineness of each such execution and authorization and of such
other matters as may be required by the Trustees. Upon such delivery, and
subject to any further requirements specified by the Trustees or contained
in the By-laws, the transfer shall be recorded on the books of the Trust. Until
a transfer is so recorded, the Shareholder of record of Shares shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor the Trust, nor any transfer agent or registrar or any officer,
employee or agent of the Trust, shall be affected by any notice of a proposed
transfer. Without
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limitation of the foregoing, the Trust or its agent may issue certificates
representing Shares and transfer such certificates to a governmental unit,
agency, authority, or authorized depository without prior notice to a
Shareholder and without liability to such Shareholder, to the extent such action
is taken (1) in the response to a notice of levy, lien or similar action from
the Internal Revenue Service or a state tax authority, (2) in compliance with
state laws governing escheat or abandonment of property, or (3) otherwise in
compliance with any applicable legal obligation.
Section 6. Status of Shares; Limitation of Shareholder Liability . Shares shall
be deemed to be personal property giving Shareholders only the rights provided
in this Declaration. Every Shareholder, by virtue of having acquired a Share,
shall be held expressly to have assented to and agreed to be bound by the terms
of this Declaration and to have become a party hereto. No Shareholder shall be
personally liable for the debts, liabilities, obligations and expenses incurred
by, contracted for, or otherwise existing with respect to, the Trust or any
Series. The death, incapacity, dissolution, termination or bankruptcy of a
Shareholder during the existence of the Trust shall not operate to terminate the
Trust, nor entitle the representative of any such Shareholder to an accounting
or to take any action in court or elsewhere against the Trust or the Trustees,
but entitles such representative only to the rights of such Shareholder under
this Trust. Ownership of Shares shall not entitle the Shareholder to any title
in or to the whole or any part of the Trust Property or right to call for a
partition or division of the same or for an accounting, nor shall the ownership
of Shares constitute the Shareholders as partners. Neither the Trust nor the
Trustees shall have any power to bind any Shareholder personally or to demand
payment from any Shareholder for anything, other than as agreed by the
Shareholder. Shareholders shall have the same limitation of personal liability
as is extended to shareholders of a private corporation for profit incorporated
in the State of Delaware. Every written obligation of the Trust or any Series
shall contain a statement to the effect that such obligation may only be
enforced against the assets of the appropriate Series or all Series; however,
the omission of such statement shall not operate to bind or create personal
liability for any Shareholder or Trustee.
ARTICLE VI
DISTRIBUTIONS AND REDEMPTIONS
Section 1. Distributions. The Trustees or a committee of one or more Trustees or
one or more Trustees and one or more officers may declare and pay dividends and
other distributions, including dividends on Shares of a particular Series and
other distributions from the assets belonging to that Series. No dividend or
distribution, including, without limitation, any distribution paid upon
termination of the Trust or of any Series (or Class) with respect to, nor any
redemption or repurchase of, the Shares of any Series (or Class) shall be
effected by the Trust other than from the assets held with respect to such
Series, nor shall any Shareholder of any particular 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
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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. The amount and payment of dividends or distributions and their
form, whether they are in cash, Shares or other Trust Property, shall be
determined by the Trustees. Dividends and other distributions may be paid
pursuant to a standing resolution adopted once or more often as the Trustees
determine. All dividends and other distributions on Shares of a particular
Series shall be distributed pro rata to the Shareholders of that Series in
proportion to the number of Shares of that Series they held on the record date
established for such payment, except that such dividends and distributions shall
appropriately reflect expenses allocated to a particular Class of such Series
and shall be reduced by any required backup, nonresident alien, or other
withholding taxes, which shall be deposited by the Trust in accordance with
applicable law. The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans or similar plans as the Trustees
deem appropriate.
Section 2. Redemptions. Each Shareholder of a Series shall have the right at
such times as may be permitted by the Trustees to require the Series to redeem
all or any part of his Shares at a redemption price per Share equal to the Net
Asset Value per Share at such time as the Trustees shall have prescribed by
resolution, or, to the extent permitted by the 1940 Act, at such other
redemption price and at such times as the Trustees shall prescribe by
resolution. In the absence of such resolution, the redemption price per Share
shall be the Net Asset Value next determined after receipt by the Series of a
request for redemption in proper form less (1) such charges as are determined by
the Trustees and described in the Trust's Registration Statement for that Series
under the Securities Act of 1933 and (2) any required withholding taxes, which
shall be deposited by the Trust in accordance with applicable law. The Trustees
may specify conditions, prices, and places of redemption, may specify binding
requirements for the proper form or forms of requests for redemption and may
specify the amount of any deferred sales charge or redemption fee to be withheld
from redemption proceeds. Payment of the redemption price may be wholly or
partly in securities or other assets at the value of such securities or assets
used in such determination of Net Asset Value, or may be in cash. Upon
redemption, Shares may be reissued from time to time. The Trustees may require
Shareholders to redeem Shares for any reason under terms set by the Trustees,
including, but not limited to, the failure of a Shareholder to supply a taxpayer
identification number or other information or certification required by federal
or state tax laws, or to have the minimum investment required, or to pay when
due for the purchase of Shares issued to him. To the extent permitted by law,
the Trustees may retain the proceeds of any redemption of Shares required by
them for payment of amounts due and owing by a Shareholder to the Trust or any
Series or Class or any governmental authority. Without limitation of the
foregoing, the Trust may mandatorily redeem shares and the Trust or its agent
may transfer the proceeds of such a redemption to a governmental unit, agency,
authority, or authorized depository without prior notice to a Shareholder and
without liability to such shareholder, to the extent such action is taken (1) in
response to a notice of levy, lien, or similar action from the Internal Revenue
Service or a state tax authority, (2) in compliance with state laws governing
escheat or abandonment of property, (3) in satisfaction of withholding tax
requirements (including any applicable interest and penalties) applicable to any
prior distribution or distributions (including a redemption or redemptions) to
the Shareholder that were not satisfied at the time of such
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distribution or distributions or (4) otherwise in compliance with any applicable
legal obligation. Notwithstanding the foregoing, the Trustees may postpone
payment of the redemption price and may suspend the right of the Shareholders to
require any Series or Class to redeem Shares during any period of time when and
to the extent permissible under the 1940 Act.
Section 3. Determination of Net Asset Value. The Trustees shall cause the Net
Asset Value of Shares of each Series or Class to be determined from time to time
in a manner consistent with applicable laws and regulations. The Trustees may
delegate the power and duty to determine Net Asset Value per Share to one or
more Trustees or officers of the Trust or to a custodian, depository or other
agent appointed for such purpose. The Net Asset Value of Shares shall be
determined separately for each Series or Class at such times as may be
prescribed by the Trustees or, in the absence of action by the Trustees, as of
the close of regular trading on the New York Stock Exchange on each day for all
or part of which such Exchange is open for trading.
Section 4. Suspension of Right of Redemption. If, as referred to in Section 2 of
this Article, the Trustees postpone payment of the redemption price and suspend
the right of Shareholders to redeem their Shares, such suspension shall take
effect at the time the Trustees shall specify, but not later than the close of
business on the business day next following the declaration of suspension.
Thereafter Shareholders shall have no right of redemption or payment until the
Trustees declare the end of the suspension. If the right of redemption is
suspended, a Shareholder may either withdraw his request for redemption or
receive payment based on the Net Asset Value per Share next determined after the
suspension terminates.
Section 5. Repurchase by Agreement. The Trust may repurchase Shares directly, or
through the Distributor or another agent designated for the purpose, by
agreement with the owner thereof at a price not exceeding the Net Asset Value
per Share determined as of the time when the purchase or contract of purchase is
made or the Net Asset Value as of any time which may be later determined,
provided payment is not made for the Shares prior to the time as of which such
Net Asset Value is determined.
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ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 1. Voting Powers. The Shareholders shall have power to vote only with
respect to (a) the election of Trustees as provided in Article II, Section 4;
(b) the removal of Trustees as provided in Article II, Section 5(d); (c) any
investment advisory or management contract entered into pursuant to Article III,
Section 2, unless a shareholder vote is not required pursuant to the provisions
of the 1940 Act or any rule, regulation or order of the Commission thereunder;
(d) any termination of the Trust to the extent and as provided in Article IX,
Section 3; (e) the amendment of this Declaration to the extent and as provided
in Article IX, Section 7; and (f) such additional matters relating to the Trust
as may be required or authorized by law, this Declaration, or the By-laws or any
registration of the Trust with the Commission or as the Trustees may consider
desirable.
On any matter submitted to a vote of the Shareholders, all Shares shall be voted
by individual Series or Class, except (a) when required by the 1940 Act, Shares
shall be voted in the aggregate and not by individual Series or Class, and (b)
when the Trustees have determined that the matter affects the interests of more
than one Series or Class, then the Shareholders of all such Series or Classes
shall be entitled to vote together thereon. As determined by the Trustees
without the vote or consent of Shareholders, on any matter submitted to a vote
of Shareholders either (i) 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 or (ii) each dollar of net asset
value (number of Shares owned times net asset value per Share of such Series or
Class, as applicable) shall be entitled to one vote on any matter on which such
Shares are entitled to vote and each fractional dollar amount 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 or in any manner
provided for in the By-laws. The By-laws may provide that proxies may be given
by any electronic or telecommunications device or in any other manner, but if a
proposal by anyone other than the officers or Trustees is submitted to a vote of
the Shareholders of any Series or Class, or if there is a proxy contest or proxy
solicitation or proposal in opposition to any proposal by the officers or
Trustees, Shares may be voted only in person or by written proxy. Until Shares
of a Series are issued, as to that Series the Trustees may exercise all rights
of Shareholders and may take any action required or permitted to be taken by
Shareholders by law, this Declaration or the By-laws. Meetings of Shareholders
shall be called and notice thereof and record dates therefor shall be given and
set as provided in the By-laws.
Section 2. Quorum; Required Vote. One-third of the Outstanding Shares of each
affected Series or Class, or one-third (33 1/3%) of the Outstanding Shares of
the Trust, entitled to vote in person or by proxy shall be a quorum for the
transaction of business at a Shareholders' meeting with respect to such Series
or Class, or with respect to the entire Trust, respectively. Any lesser number
shall be sufficient for adjournments. Any adjourned session of a Shareholders'
meeting may be held within a reasonable time without further notice. Except when
a larger vote is required by law, this Declaration or the By-laws, a majority of
the
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<PAGE> 26
Outstanding Shares voting at a Shareholders' meeting in person or by proxy shall
decide any matters to be voted upon with respect to the entire Trust and a
plurality of such Outstanding Shares shall elect a Trustee; provided, that if
this Declaration or applicable law permits or requires that Shares be voted on
any matter by individual Series or Classes, then a majority of the Outstanding
Shares of that Series or Class voting at a Shareholders' meeting in person or by
proxy on the matter shall decide that matter insofar as that Series or Class is
concerned. Shareholders may act as to the Trust or any Series or Class by the
written consent of a majority (or such other amount as may be required by
applicable law) of the Outstanding Shares of the Trust or of such Series or
Class, as the case may be.
Section 3. Record Dates.
(a) For the purpose of determining the Shareholders of any Series or Class who
are entitled to receive payment of any dividend or of any other
distribution, the Trustees may from time to time fix a date, which shall
be before the date for the payment of such dividend or such other payment,
as the record date for determining the Shareholders of such Series or
Class having the right to receive such dividend or distribution. Without
fixing a record date, the Trustees may for distribution purposes close the
register or transfer books for one or more Series or Classes any time
prior to the payment of a distribution. Nothing in this Section shall be
construed as precluding the Trustees from setting different record dates
for different Series or Classes.
(b) The Trustees may fix in advance a date up to one hundred twenty (120) days
before the date of any Shareholders' meeting, or the date for the
allotment of rights, or the date when any change or conversion or exchange
of Shares shall go into effect as a record date for the determination of
the Shareholders entitled to notice of, and to vote at, any such meeting,
or to receive any such allotment of rights, or to exercise such rights in
respect of any such change, conversion or exchange of Shares.
Section 4. Additional Provisions. The By-laws may include further provisions for
Shareholders' votes and meetings and related matters.
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<PAGE> 27
ARTICLE VIII
EXPENSES OF THE TRUST AND SERIES
Section 1. Payment of Expenses by the Trust. Subject to Article V, Section 4,
the Trust or a particular Series shall pay, or shall reimburse the Trustees from
the assets belonging to all Series or the particular Series, for their expenses
(or the expenses of a Class of such Series) and disbursements, including, but
not limited to, interest charges, taxes, brokerage fees and commissions;
expenses of issue, repurchase and redemption of Shares; certain insurance
premiums; applicable fees, interest charges and expenses of third parties,
including the Trust's investment advisers, managers, administrators,
distributors, custodians, transfer agents, fund accountants; fees of pricing,
interest, dividend, credit and other reporting services; costs of membership in
trade associations; telecommunications expenses; funds transmission expenses;
auditing, legal and compliance expenses; costs of forming the Trust and its
Series and maintaining its existence; costs of preparing and printing the
prospectuses of the Trust and each Series, statements of additional information
and Shareholder reports and delivering them to Shareholders; expenses of
meetings of Shareholders and proxy solicitations therefor; costs of maintaining
books and accounts; costs of reproduction, stationery and supplies; fees and
expenses of the Trustees; compensation of the Trust's officers and employees and
costs of other personnel performing services for the Trust or any Series; costs
of Trustee meetings; Commission registration fees and related expenses; state or
foreign securities laws registration and notice fees and related expenses; and
for such non-recurring items as may arise, including litigation to which the
Trust or a Series (or a Trustee or officer of the Trust acting as such) is a
party, and for all losses and liabilities by them incurred in administering the
Trust. The Trustees shall have a lien on the assets belonging to the appropriate
Series, or in the case of an expense allocable to more than one Series, on the
assets of each such Series, prior to any rights or interests of the Shareholders
thereto, for the reimbursement to them of such expenses, disbursements, losses
and liabilities.
Section 2. Payment of Expenses by Shareholders. The Trustees shall have the
power, as frequently as they may determine, to cause each Shareholder, or each
Shareholder of any particular Series, to pay directly, in advance or arrears,
for charges of the Trust's custodian or transfer, shareholder servicing or
similar agent, an amount fixed from time to time by the Trustees, by setting off
such charges due from such Shareholder from declared but unpaid dividends owed
such Shareholder and/or by reducing the number of Shares in the account of such
Shareholder by that number of full and/or fractional Shares which represents the
outstanding amount of such charges due from such Shareholder.
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<PAGE> 28
ARTICLE IX
MISCELLANEOUS
Section 1. Trust Not a Partnership. This Declaration creates a trust and not a
partnership. No Trustee shall have any power to bind personally either the
Trust's officers or any Shareholder.
Section 2. Trustee Action. The exercise by the Trustees of their powers and
discretion hereunder in good faith and with reasonable care under the
circumstances then prevailing shall be binding upon everyone interested. Subject
to the provisions of Article IV, the Trustees shall not be liable for errors of
judgment or mistakes of fact or law.
Section 3. Termination of the Trust. (a) This Trust shall have perpetual
existence. Subject to the vote of a majority of the Outstanding Shares of the
Trust or of each Series to be affected, voting at a Shareholders' meeting in
person or by proxy the Trustees may
(i) sell and convey all or substantially all of the assets of all Series
or any affected Series to another Series or to another entity which
is an open-end investment company as defined in the 1940 Act, or is
a series thereof, for adequate consideration, which may include the
assumption of all outstanding obligations, taxes and other
liabilities, accrued or contingent, of the Trust or any affected
Series, and which may include shares of or interests in such Series,
entity, or series thereof; or
(ii) at any time sell and convert into money all or substantially all of
the assets of all Series or any affected Series.
Upon making reasonable provision for the payment of all known liabilities of all
Series or any affected Series in either (i) or (ii), by such assumption or
otherwise, the Trustees shall distribute the remaining proceeds or assets (as
the case may be) ratably among the Shareholders of all Series or any affected
Series; however, the payment to any particular Class of such Series may be
reduced by any fees, expenses or charges allocated to that Class.
(b) The Trustees may take any of the actions specified in subsection (a) (i)
and (ii) above without obtaining the vote of a majority of the Outstanding
Shares of the Trust or any Series voting at a Shareholders' meeting in
person or by proxy if a majority of the Trustees determines that the
continuation of the Trust or Series is not in the best interests of the
Trust, such Series, or their respective Shareholders as a result of
factors or events adversely affecting the ability of the Trust or such
Series to conduct its business and operations in an economically viable
manner. Such factors and events may include the inability of the Trust or
a Series to maintain its assets at an appropriate size, changes in laws or
regulations governing the Trust or the Series or affecting assets of the
type in which the Trust or Series invests, or economic developments or
trends having a significant adverse impact on the business or operations
of the Trust or such Series.
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<PAGE> 29
(c) Upon completion of the distribution of the remaining proceeds or assets
pursuant to subsection (a) the Trustees and the Trust or affected Series
shall be discharged of any and all further liabilities and duties
hereunder with respect thereto and the right, title and interest of all
parties therein shall be canceled and discharged and any such Series shall
terminate. Following completion of winding up of its business, the
Trustees shall cause a certificate of cancellation of the Trust's
certificate of trust to be filed in accordance with the Delaware Act,
which certificate of cancellation may be signed by any one Trustee, and
upon filing of such certificate of cancellation, the Trust shall
terminate.
Section 4. Reorganization. (a) Notwithstanding anything else herein, to change
the Trust's form or place of organization, the Trustees may, without Shareholder
approval (unless such approval is required by applicable law), (i) cause the
Trust to merge or consolidate with or into one or more entities, if the
surviving or resulting entity is the Trust or another open-end management
investment company under the 1940 Act, or a series thereof, that will succeed to
or assume the Trust's registration under the 1940 Act, (ii) cause the Shares to
be exchanged under or pursuant to any state or federal statute to the extent
permitted by law, or (iii) cause the Trust to incorporate under the laws of
Delaware or any other U.S. jurisdiction. Any agreement of merger or
consolidation or certificate of merger may be signed by a majority of Trustees
and facsimile signatures conveyed by electronic or telecommunication means shall
be valid.
(b) Pursuant to and in accordance with the provisions of Section 3815(f) of
the Delaware Act, an agreement of merger or consolidation approved by the
Trustees in accordance with this Section 4 may effect any amendment to the
Declaration or effect the adoption of a new trust instrument of the Trust
if it is the surviving or resulting trust in the merger or consolidation.
(c) The Trustees may create one or more business trusts to which all or any
part of the assets, liabilities, profits or losses of the Trust or any
Series or Class thereof may be transferred and may provide for the
conversion of Shares in the Trust or any Series or Class thereof into
beneficial interests in any such newly created trust or trusts or any
series or classes thereof.
Section 5. Declaration of Trust. The original or a copy of this Declaration of
Trust and of each amendment hereto or Declaration of Trust supplemental 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 a Trustee or an
officer of the Trust as to the authenticity of the Declaration of Trust or any
such amendments or supplements and as to any matters in connection with the
Trust. The masculine gender herein shall include the feminine and neuter
genders. Headings herein are for convenience only and shall not affect the
construction of this Declaration of Trust. This Declaration of Trust may be
executed in any number of counterparts, each of which shall be deemed an
original.
Section 6. Applicable Law. This Declaration and the Trust created hereunder are
governed by and construed and administered according to the Delaware Act and the
applicable laws of the
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<PAGE> 30
State of Delaware; provided, however, that there shall not be applicable to the
Trust, the Trustees or this Declaration of Trust (a) the provisions of Section
3540 of Title 12 of the Delaware Code, or (b) any provisions of the laws
(statutory or common) of the State of Delaware (other than the Delaware Act)
pertaining to trusts which relate to or regulate (i) the filing with any court
or governmental body or agency of trustee accounts or schedules of trustee fees
and charges, (ii) affirmative requirements to post bonds for trustees, officers,
agents or employees of a trust, (iii) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding or disposition of real
or personal property, (iv) fees or other sums payable to trustees, officers,
agents or employees of a trust, (v) the allocation of receipts and expenditures
to income or principal, (vi) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding of trust assets, or (vii) the
establishment of fiduciary or other standards of responsibilities or limitations
on the acts or powers of trustees, which are inconsistent with the limitations
or liabilities or authorities and powers of the Trustees set forth or referenced
in this Declaration. The Trust shall be of the type commonly called a Delaware
business trust, and, without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust under
Delaware law. The Trust specifically reserves the right to exercise any of the
powers or privileges afforded to trusts or actions that may be engaged in by
trusts under the Delaware Act, and the absence of a specific reference herein to
any such power, privilege or action shall not imply that the Trust may not
exercise such power or privilege or take such actions.
Section 7. Amendments. The Trustees may, without any Shareholder vote, amend or
otherwise supplement this Declaration by making an amendment, a Declaration of
Trust supplemental hereto or an amended and restated trust instrument; provided,
that Shareholders shall have the right to vote on any amendment (a) which would
affect the voting rights of Shareholders granted in Article VII, Section 1, (b)
to this Section 7, (c) required to be approved by Shareholders by law or by the
Trust's registration statement(s) filed with the Commission, and (d) submitted
to them by the Trustees in their discretion. Any amendment submitted to
Shareholders which the Trustees determine would affect the Shareholders of any
Series shall be authorized by vote of the Shareholders of such Series and no
vote shall be required of Shareholders of a Series not affected. Notwithstanding
anything else herein, (i) any amendment to Article IV which would have the
effect of reducing the indemnification or other rights provided thereby to
Trustees, officers, employees, and agents of the Trust or to Shareholders or
former Shareholders, and any repeal or amendment of this sentence shall each
require the affirmative vote of the holders of two-thirds of the Outstanding
Shares of the Trust entitled to vote thereon and (ii) no amendment to Article IV
that would have the effect of reducing the indemnification or other rights
provided thereby to Trustees, officers, employees, and agents of the Trust or to
Shareholders or former Shareholders shall be effective with respect to any acts
or omissions of any such Persons occurring or otherwise relating to any time
period prior to the adoption of such amendment or shall otherwise have any
retroactive effect.
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<PAGE> 31
Section 8. Derivative Actions. In addition to the requirements set forth in
Section 3816 of the Delaware Act, a Shareholder may bring a derivative action on
behalf of the Trust only if the following conditions are met:
(a) Shareholders eligible to bring such derivative action under the Delaware
Act who hold at least 10% of the Outstanding Shares of the Trust, or 10%
of the Outstanding Shares of the Series or Class to which such action
relates, shall join in the request for the Trustees to commence such
action;
(b) the Trustees must be afforded a reasonable amount of time to consider such
shareholder request and to investigate the basis of such claim. The
Trustees shall be entitled to retain counsel or other advisers in
considering the merits of the request and shall require an undertaking by
the Shareholders making such request to reimburse the Trust for the
expense of any such advisers in the event that the Trustees determine not
to bring such action; and
(c) Shareholders are not relieved of the conditions in Sections 8(a) and (b)
if a Trustee who is not an Interested Person of the Trust or any Series
serves as a trustee of any other investment company in the Fund Complex.
(d) Shareholders of an unaffected Series or Class may not bring a derivative
action on behalf of another Series or Class.
Section 9. Fiscal Year. The fiscal year of the Trust shall end on a specified
date as adopted by resolution of the Trustees. The taxable year of each Series
of the Trust shall be as determined by the Trustees from time to time.
Section 10. Severability. The provisions of this Declaration are severable. If
the Trustees determine, with the advice of counsel, that any provision hereof
conflicts 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 this
Declaration; provided, however, that such determination shall not affect any of
the remaining provisions of this Declaration or render invalid or improper any
action taken or omitted prior to such determination. If any provision hereof
shall be held invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision only in such jurisdiction
and shall not affect any other provision of this Declaration.
IN WITNESS WHEREOF, the undersigned being the sole Trustee of the Trust
executed this instrument as of the date first written above.
- -------------------------------
Ralph M. Kelmon 2471 E. Bayshore Rd., Suite 501
as Trustee and not individually Palo Alto, CA 94303
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<PAGE> 1
EXHIBIT 99(a)(1)
CERTIFICATE OF TRUST
THIS Certificate of Trust of Kelmoore Strategic Trust (the "Trust"), dated
November 30, 1998, is being duly executed and filed by the undersigned trustee,
to form a business trust under the Delaware Business Trust Act (12 Del. C.
Section 3801, et seq.).
1. Name. The name of the business trust formed hereby is Kelmoore
Strategic Trust.
2. Registered Office and Agent. The business address of the registered
office of the Trust in the State of Delaware is Corporation Trust Center, 1209
Orange Street in the City of Wilmington, County of New Castle, 19801. The name
of the Trust's registered agent at such address is The Corporation Trust
Company.
3. Effective Date. This Certificate of Trust shall be effective upon the
date and time of filing.
4. Series Trust. Notice is hereby given that pursuant to Section 3804 of
the Delaware Business Trust Act, the debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to a
particular series of the Trust shall be enforceable against the assets of such
series only and not against the assets of the Trust generally. The Trust will
become, prior to or within 180 days following the first issuance of beneficial
interests, a registered investment company under the Investment Company Act of
1940, as amended.
IN WITNESS WHEREOF, the undersigned being the Trustee of the Trust, has
executed this Certificate of Trust as of the date first above-written.
/s/ Ralph M. Kelmon
Ralph M. Kelmon, Initial Trustee
<PAGE> 1
EXHIBIT 99(b)
BY-LAWS
OF
KELMOORE STRATEGIC TRUST
NOVEMBER 30, 1998
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS..................................................1
ARTICLE II OFFICES......................................................1
Section 1. Principal Office.............................................1
Section 2. Other Offices................................................1
Section 3. Registered Office and Registered Agent.......................1
ARTICLE III SHAREHOLDERS.................................................1
Section 1. Meetings.....................................................1
Section 2. Notice of Meetings...........................................2
Section 3. Record Date for Meetings and Other Purposes..................2
Section 4. Proxies......................................................2
Section 5. Abstentions and Broker Non-Votes.............................3
Section 6. Inspection of Records........................................3
Section 7. Action Without Meeting.......................................3
ARTICLE IV TRUSTEES.....................................................3
Section 1. Meetings of the Trustees and Action by Written Consent.......3
Section 2. Quorum and Manner of Acting at Meetings......................4
ARTICLE V COMMITTEES...................................................4
Section 1. Executive and Other Committees...............................4
Section 2. Meetings, Quorum and Manner of Acting........................4
ARTICLE VI OFFICERS.....................................................5
Section 1. General Provisions...........................................5
Section 2. Term of Office and Qualifications............................5
Section 3. Removal......................................................5
Section 4. Powers and Duties of the Chairman............................5
Section 5. Powers and Duties of the President...........................5
Section 6. Powers and Duties of Vice Presidents.........................5
Section 7. Powers and Duties of the Treasurer...........................6
Section 8. Powers and Duties of the Secretary...........................6
Section 9. Powers and Duties of Assistant Officers......................6
Section 10. Powers and Duties of Assistant Secretaries...................6
Section 11. Compensation of Officers and Trustees and
Members of the Advisory Board................................6
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<PAGE> 3
Page
ARTICLE VII FISCAL YEAR..................................................6
ARTICLE VIII SEAL.........................................................7
ARTICLE IX SUFFICIENCY AND WAIVERS OF NOTICE............................7
ARTICLE X AMENDMENTS...................................................7
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<PAGE> 4
BY-LAWS
OF
KELMOORE STRATEGIC TRUST
ARTICLE I
DEFINITIONS
All capitalized terms have the respective meanings given them in the
Agreement and Declaration of Kelmoore Strategic Trust dated November 30, 1998,
as amended or restated from time to time.
ARTICLE II
OFFICES
Section 1. Principal Office. Until changed by the Trustees, the principal
office of the Trust shall be as designated by the Trustees as designated by
resolution.
Section 2. Other Offices. The Trust may have offices in such other places
without as well as within the State of Delaware as the Trustees may from time to
time determine.
Section 3. Registered Office and Registered Agent. 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
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.
ARTICLE III
SHAREHOLDERS
Section 1. Meetings. Meetings of the Shareholders of the Trust or a Series
or Class thereof shall be held as provided in the Declaration of Trust at such
place within or without the State of Delaware as the Trustees shall designate.
One-third of the Outstanding Shares of each Series or Class, or one-third of the
Outstanding Shares of the Trust, entitled to vote in person or by proxy shall be
a quorum for the transaction of business at a Shareholders' meeting with respect
to such Series or Class, or with respect to the entire Trust, respectively. Any
lesser number shall be sufficient for adjournments.
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<PAGE> 5
Section 2. Notice of Meetings. Notice of all meetings of the Shareholders,
stating the time, place and purposes of the meeting, shall be given by the
Trustees by mail or telegraphic or electronic means to each Shareholder at his
address as recorded on the register of the Trust mailed at least (10) days and
not more than ninety (90) days before the meeting, provided, however, that
notice of a meeting need not be given to a Shareholder to whom such notice need
not be given under the proxy rules of the Commission under the 1940 Act and the
Securities Exchange Act of 1934, as amended. Only the business stated in the
notice of the meeting shall be considered at such meeting. Any adjourned meeting
may be held as adjourned without further notice. No notice need be given to any
Shareholder who shall have failed to inform the Trust of his current address or
if a written waiver of notice, executed before or after the meeting by the
Shareholder or his attorney thereunto authorized, is filed with the records of
the meeting.
Section 3. Record Date for Meetings and Other Purposes. For the purpose of
determining the Shareholders who are entitled to notice of and to vote at any
meeting, or to participate in any distribution, or for the purpose of any other
action, the Trustees may from time to time close the transfer books for such
period, not exceeding thirty (30) days, as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date not more than one
hundred twenty (120) days prior to the date of any meeting of Shareholders or
distribution or other action as a record date for the determination of the
persons to be treated as Shareholders of record for such purposes, except for
dividend payments which shall be governed by the Declaration of Trust.
Section 4. Proxies. At any meeting of Shareholders, any holder of Shares
entitled to vote thereat may vote by proxy, provided that no proxy shall be
voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent of the Trust as the Secretary may
direct, for verification prior to the time at which such vote shall be taken. A
proxy shall be deemed signed if the shareholder's name is placed on the proxy
(whether by manual signature, typewriting, telegraphic transmission, facsimile,
other electronic means or otherwise) by the Shareholder or the Shareholder's
attorney-in-fact. Proxies may be given by any electronic (including
computerized) or telecommunication device except as otherwise provided in the
Declaration of Trust. The placing of a shareholder's name on a proxy pursuant to
telephonic or electronically (including by computer) transmitted instructions
pursuant to procedures reasonably designed, as determined by the Trustees, to
verify that such instructions have been authorized by the shareholder shall
constitute execution of the proxy by or on behalf of the shareholder. Proxies
may be solicited in the name of one or more Trustees or one or more of the
officers of the Trust. Only Shareholders of record shall be entitled to vote. As
set forth by the Trustees in the Declaration of Trust, on any matter submitted
to a vote of Shareholders either (i) 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 or (ii) each dollar of net
asset value (number of Shares owned times net asset value per Share of such
Series or Class, as applicable) shall be entitled to one vote on any matter on
which such Shares are entitled to vote and each fractional dollar amount shall
be entitled to a proportionate fractional vote. Without limiting their power to
designate otherwise in accordance with the preceding sentence, the Trustees
shall by resolution establish the means of voting on each proposal at any time a
meeting of Shareholders is called to cover such proposals. When any Share is
held jointly by several persons, any one of them may vote at any meeting in
person or by proxy in respect of such Share, but if more than one of them shall
be present at such meeting in person or
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<PAGE> 6
by proxy, and such joint owners or their proxies so present disagree as to any
vote to be cast, such vote shall not be received in respect of such Share. 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. If the holder of any such share is a
minor or a person of unsound mind, and subject to guardianship or the legal
control of any other person as regards the charge or management of such Share,
he may vote by his guardian or such other person appointed or having such
control, and such vote may be given in person or by proxy.
Section 5. Abstentions and Broker Non-Votes. Outstanding Shares
represented in person or by proxy (including Shares which abstain or do not vote
with respect to one or more of any proposals presented for Shareholder approval)
will be counted for purposes of determining whether a quorum is present at a
meeting. Abstentions will be treated as Shares that are present and entitled to
vote for purposes of determining the number of Shares that are present and
entitled to vote with respect to any particular proposal, but will not be
counted as a vote in favor of such proposal. If a broker or nominee holding
Shares in "street name" indicates on the proxy that it does not have
discretionary authority to vote as to a particular proposal, those Shares will
not be considered as present and entitled to vote with respect to such proposal.
Section 6. Inspection of Records. The records of the Trust shall be open
to inspection by Shareholders to the same extent as is permitted shareholders of
a Delaware business corporation.
Section 7. Action Without Meeting. Any action which may be taken by
Shareholders may be taken without a meeting if a majority of Outstanding Shares
entitled to vote on the matter (or such larger proportion thereof as shall be
required by law) consent to the action in writing and the written consents are
filed with the records of the meetings of Shareholders. Such consents shall be
treated for all purposes as a vote taken at a meeting of Shareholders.
ARTICLE IV
TRUSTEES
Section 1. Meetings of the Trustees and Action by Written Consent. The
Trustees may in their discretion provide for regular or stated meetings of the
Trustees. Notice of regular or stated meetings need not be given. Meetings of
the Trustees other than regular or stated meetings shall be held whenever called
by the President, the Chairman or by any one of the Trustees, at the time being
in office. Notice of the time and place of each meeting other than regular or
stated meetings shall be given by the Secretary or an Assistant Secretary or by
the officer or Trustee calling the meeting and shall be mailed to each Trustee
at least two days before the meeting, or shall be given by telephone, cable,
wireless, facsimile or other electronic mechanism to each Trustee at his
business address, or personally delivered to him at least one day before the
meeting. Such notice may, however, be waived by any Trustee. Notice of a meeting
need not be given to any Trustee if a written waiver of notice, executed by him
before or after the meeting, is filed with the records of the meeting, or to any
Trustee who attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him. A notice or waiver of notice need not
specify the purpose of any meeting. The Trustees may meet by conference
telephone, teleconference or other electronic
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<PAGE> 7
media or communication equipment by means of which all persons participating in
the meeting can communicate with each other and participation by such means
shall be deemed to have been held at a place designated by the Trustees at the
meeting. Participation in a telephone conference meeting shall constitute
presence in person at such meeting. Any action required or permitted to be taken
at any meeting of the Trustees may be taken by the Trustees without a meeting if
a majority of the Trustees consent to the action in writing and the written
consents are filed with the records of the Trustees' meetings. Such consents
shall be treated as a vote for all purposes.
Section 2. Quorum and Manner of Acting at Meetings. A majority of the
Trustees shall be present in person at any regular or special meeting of the
Trustees in order to constitute a quorum for the transaction of business at such
meeting and (except as otherwise required by law, the Declaration of Trust or
these By-laws) the act of a majority of the Trustees present at any such
meeting, at which a quorum is present, shall be the act of the Trustees. In the
absence of a quorum, a majority of the Trustees present may adjourn the meeting
from time to time until a quorum shall be present. Notice of an adjourned
meeting need not be given.
ARTICLE V
COMMITTEES
Section 1. Executive and Other Committees. The Trustees by vote of a
majority of all the Trustees may elect from their own number an Executive
Committee to consist of not less than two (2) members to hold office at the
pleasure of the Trustees, which shall have the power to conduct the current and
ordinary business of the Trust while the Trustees are not in session and such
other powers of the Trustees as the Trustees may delegate to them, from time to
time, except those powers which by law, the Declaration of Trust or these
By-laws they are prohibited from delegating. The Trustees may also elect from
their own number other Committees from time to time; the number composing such
Committees, the powers conferred upon the same (subject to the same limitations
as with respect to the Executive Committee) and the term of membership on such
Committees to be determined by the Trustees. The Trustees may designate a
chairman of any such Committee. In the absence of such designation the Committee
may elect its own chairman.
Section 2. Meetings, Quorum and Manner of Acting. The Trustees may (1)
provide for stated meetings of any Committee, (2) specify the manner of calling
and notice required for special meetings of any Committee, (3) specify the
number of members of a Committee required to constitute a quorum and the number
of members of a Committee required to exercise specified powers delegated to
such Committee, (4) authorize the making of decisions to exercise specified
powers by written assent of the requisite number of members of a Committee
without a meeting, and (5) authorize the members of a Committee to meet by means
of a telephone conference circuit.
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ARTICLE VI
OFFICERS
Section 1. General Provisions. The officers of the Trust shall be a
President, a Treasurer and a Secretary, who shall be elected by the Trustees.
The Trustees may elect or appoint such other officers or agents as the business
of the Trust may require, including one or more Vice Presidents, one or more
Assistant Secretaries, and one or more Assistant Treasurers. The Trustees may
delegate to any officer or committee the power to appoint any subordinate
officers or agents.
Section 2. Term of Office and Qualifications. Except as otherwise provided
by law, the Declaration of Trust or these By-laws, the President, the Treasurer,
the Secretary and any other officer shall each hold office at the pleasure of
the Board of Trustees or until his successor shall have been duly elected and
qualified. Any two or more offices may be held by the same person. Any officer
may be but none need be a Trustee or Shareholder.
Section 3. Removal. The Trustees, at any regular or special meeting of the
Trustees, may remove any officer with or without cause, by a vote of a majority
of the Trustees then in office. Any officer or agent appointed by an officer or
committee may be removed with or without cause by such appointing officer or
committee.
Section 4. Powers and Duties of the Chairman. The Trustees may, but need
not, appoint from among their number a Chairman. When present he shall preside
at the meetings of the Shareholders and of the Trustees. He may call meetings of
the Trustees and of any committee thereof whenever he deems it necessary. He
shall be an executive officer of the Trust and shall have, with the President,
general supervision over the business and policies of the Trust, subject to the
limitations imposed upon the President, as provided in Section 5 of this Article
VI.
Section 5. Powers and Duties of the President. The President shall be the
Chief Executive Officer of the Trust. The President may call meetings of the
Trustees and of any Committee thereof when he deems it necessary and shall
preside at all meetings of the Shareholders. Subject to the control of the
Trustees and to the control of any Committees of the Trustees, within their
respective spheres, as provided by the Trustees, he shall at all times exercise
a general supervision and direction over the affairs of the Trust. He shall have
the power to employ attorneys and counsel for the Trust or any Series or Class
thereof and to employ such subordinate officers, agents, clerks and employees as
he may find necessary to transact the business of the Trust or any Series or
Class thereof. He shall also have the power to grant, issue, execute or sign
such powers of attorney, proxies or other documents as may be deemed advisable
or necessary in furtherance of the interests of the Trust or any Series thereof.
The President shall have such other powers and duties, as from time to time may
be conferred upon or assigned to him by the Trustees.
Section 6. Powers and Duties of Vice Presidents. In the absence or
disability of the President, the Vice President or, if there be more than one
Vice President, any Vice President designated by the Trustees, shall perform all
the duties and may exercise any of the powers of the
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President, subject to the control of the Trustees. Each Vice President shall
perform such other duties as may be assigned to him from time to time by the
Trustees and the President.
Section 7. Powers and Duties of the Treasurer. The Treasurer shall be the
principal financial and accounting officer of the Trust. He shall deliver all
funds of the Trust or any Series or Class thereof which may come into his hands
to such Custodian as the Trustees may employ. He shall render a statement of
condition of the finances of the Trust or any Series or Class thereof to the
Trustees as often as they shall require the same and he shall in general perform
all the duties incident to the office of a Treasurer and such other duties as
from time to time may be assigned to him by the Trustees. The Treasurer shall
give a bond for the faithful discharge of his duties, if required so to do by
the Trustees, in such sum and with such surety or sureties as the Trustees shall
require.
Section 8. Powers and Duties of the Secretary. The Secretary shall keep
the minutes of all meetings of the Trustees and of the Shareholders in proper
books provided for that purpose; he shall have custody of the seal of the Trust;
he shall have charge of the Share transfer books, lists and records unless the
same are in the charge of a transfer agent. He shall attend to the giving and
serving of all notices by the Trust in accordance with the provisions of these
By-laws and as required by law; and subject to these By-laws, he shall in
general perform all duties incident to the office of Secretary and such other
duties as from time to time may be assigned to him by the Trustees.
Section 9. Powers and Duties of Assistant Officers. In the absence or
disability of the Treasurer, any officer designated by the Trustees shall
perform all the duties, and may exercise any of the powers, of the Treasurer.
Each officer shall perform such other duties as from time to time may be
assigned to him by the Trustees. Each officer performing the duties and
exercising the powers of the Treasurer, if any, and any Assistant Treasurer,
shall give a bond for the faithful discharge of his duties, if required so to do
by the Trustees, in such sum and with such surety or sureties as the Trustees
shall require.
Section 10. Powers and Duties of Assistant Secretaries. In the absence or
disability of the Secretary, any Assistant Secretary designated by the Trustees
shall perform all the duties, and may exercise any of the powers, of the
Secretary. Each Assistant Secretary shall perform such other duties as from time
to time may be assigned to him by the Trustees and the President.
Section 11. Compensation of Officers and Trustees and Members of the
Advisory Board. Subject to any applicable provisions of the Declaration of
Trust, the compensation of the officers and Trustees and members of an advisory
board shall be fixed from time to time by the Trustees or, in the case of
officers, by any Committee or officer upon whom such power may be conferred by
the Trustees. No officer shall be prevented from receiving such compensation as
such officer by reason of the fact that he is also a Trustee.
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ARTICLE VII
FISCAL YEAR
The fiscal year of the Trust shall end on a specified date as adopted by
resolution of the Trustees. The taxable year of each Series of the Trust shall
be as determined by the Trustees from time to time.
ARTICLE VIII
SEAL
The Trustees may adopt a seal which shall be in such form and shall have
such inscription thereon as the Trustees may from time to time prescribe.
ARTICLE IX
SUFFICIENCY AND WAIVERS OF NOTICE
Whenever any notice whatever is required to be given by law, the
Declaration of Trust or these By-laws, a waiver thereof in writing, signed by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. A notice shall be deemed to
have been sent by mail, telegraph, cable, wireless, facsimile or other
electronic means for the purposes of these By-laws when it has been delivered to
a representative of any company holding itself out as capable of sending notice
by such means with instructions that it be so sent.
ARTICLE X
AMENDMENTS
These By-laws, or any of them, may be altered, amended or repealed, or new
By-laws may be adopted by (a) vote of a majority of the Outstanding Shares
voting in person or by proxy at a meeting of Shareholders and entitled to vote
or (b) by the Trustees; provided, however, that no By-law may be amended,
adopted or repealed by the Trustees if such amendment, adoption or repeal
requires, pursuant to law, the Declaration of Trust or these By-laws, a vote of
the Shareholders.
END OF BY-LAWS
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