<PAGE>
As filed with the Securities and Exchange Commission on June 11, 1999
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. [ ]
HAMBRECHT & QUIST FUND TRUST
(Exact Name of Registrant as Specified on Charter)
One Bush Street
San Francisco, California 94104
(Address of Principal Executive Offices)
(415) 439-3000
(Registrant's Telephone Number)
David R. Krimm
President
Hambrecht & Quist Fund Management, LLC
One Bush Street
San Francisco, California 94104
(Name and Address for Agent of Service)
Copies to:
Andre W. Brewster, Esq.
Howard Rice Nemerovski Canady Falk & Rabkin
Three Embarcadero Center, 7th Floor
San Francisco, CA 94111-4065
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
Hambrecht & Quist Fund 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 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.
<PAGE>
HAMBRECHT & QUIST IPO DISCOVERY FUND
Prospectus _______________, 1999
Adviser Classes
As with all mutual funds, the Securities and
Exchange Commission (SEC) has not approved these
securities or passed on whether the information
in this prospectus is adequate and accurate.
Anyone who indicates otherwise is committing a
federal crime.
ABOUT THE FUND
The Hambrecht & Quist IPO Discovery Fund (Fund) is designed to offer individual
investors the benefits of investing in a diversified portfolio of common stocks
issued as part of or after a company's initial public offering (IPO).
The Fund uses a quantitative strategy to make buy and sell decisions. The
strategy employs a range of proprietary techniques, developed through an
analysis of historical IPO performance.
Since 1993, IPOs have generally performed well relative to market indices,
such as the Russell 2000-Registered Trademark- Index, S&P 500-Registered
Trademark- Index and Hambrecht & Quist Growth Index. However, many individual
investors have not been able to purchase shares of IPOs at the offering
price, due to the strong demand for these securities. Even those investors
who are able to purchase IPO shares at the offering price may have difficulty
from time to time in diversifying their IPO investments. The Fund offers
investors the opportunity to benefit from the return potential inherent in
IPO investing, as well as from diversification across a portfolio of such
investments.
CONTENTS
Goal...............................
Main Strategy......................
Main Risks.........................
Fund Fees and Expenses.............
Fund Management....................
Investing in the Fund..............
Buying Shares.................
Selling Shares................
Transaction Policies...............
Distributions and Taxes............
To Learn More......................
-1-
<PAGE>
GOAL
The Fund's goal is capital appreciation.
MAIN STRATEGY
The Fund seeks to achieve its goal by investing, under normal market conditions,
at least 65% of its assets in a diversified portfolio of IPOs. For this purpose,
an IPO is generally common stock issued as part of, or within 18 months after, a
company's initial public offering and traded on the New York Stock Exchange,
American Stock Exchange or NASDAQ National Market.
The Fund's sub-adviser, Symphony Asset Management, LLC, has developed a
quantitative model which tracks historical IPO performance. At the time of the
initial public offering, the sub-adviser will purchase IPO shares that meet
certain minimum quantitative criteria for offering size, issuer market
capitalization and lead underwriter, among other factors. The sub-adviser will
attempt to purchase these shares directly from the underwriters, at the offering
price. If shares cannot be obtained at the offering price, they will be
purchased in the secondary market. For a period of up to 18 months after the
initial public offering, the sub-adviser will also purchase IPO shares based
upon the above criteria and certain aftermarket criteria, such as analyst
ratings, price, performance, valuation relative to the industry and insider
activity. IPO shares held by the Fund will be sold based upon similar
aftermarket criteria. The Fund normally expects to sell most of its IPO holdings
within a year of purchase.
When the sub-adviser believes that the number or quality of IPOs available
for Fund investment is inadequate, the sub-adviser intends to invest in
futures contracts or participations based on equity indexes, such as the S&P
500-Registered Trademark- Index or Russell 2000-Registered Trademark- Index.
The sub-adviser may also purchase non-IPO equity securities issued primarily
by companies which have capitalizations of $1 billion or less at the time of
investment. Pending investment and to provide liquidity for redemptions, the
Fund may also hold its assets in cash and cash equivalent instruments, such
as money market mutual funds, Treasury bills, commercial paper and repurchase
agreements. The Fund will consider closing to new purchasers when the Fund's
assets exceed $300 million.
MAIN RISKS
STOCK MARKETS RISE AND FALL DAILY. As with any investment whose performance is
tied to stock markets, the value of your investment in the Fund will fluctuate,
which means that you could lose money.
MANY FACTORS CAN AFFECT STOCK MARKET PERFORMANCE. Political and economic news
can influence market-wide trends; the outcome may be positive or negative,
short-term or long-term. Other factors may be ignored by the market as a whole
but may cause movements in the price of one company's stock or the stock of
companies in one or more industries.
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<PAGE>
THE MARKET FOR IPOS CAN BE INACTIVE FOR EXTENDED PERIODS OF TIME. When the
market is inactive, the Fund may be required to invest in futures contracts,
index participations and non-IPO securities or hold cash.
THE IPO MARKET TENDS TO FAVOR CERTAIN INDUSTRY SECTORS FROM TIME TO TIME. As a
result, the companies in which the Fund invests at any given time may represent
a limited number of industry sectors. In these circumstances, the Fund's share
price may be subject to greater volatility.
THE FUND MAY BE UNABLE TO PURCHASE IPOS AT THE OFFERING PRICE. The price of IPO
shares in the aftermarket may greatly exceed the offering price, making it more
difficult for the Fund to realize a profit.
THE INVESTMENT ADVISER MAY APPEAR TO HAVE A CONFLICT OF INTEREST WHEN THE FUND
PURCHASES IPOS FROM UNDERWRITING SYNDICATES OF WHICH HAMBRECHT & QUIST LLC, THE
FUND'S DISTRIBUTOR AND AN AFFILIATE OF THE FUND'S INVESTMENT ADVISER, ACTS AS A
MEMBER OR MANAGER. The Fund will not purchase IPOs directly from Hambrecht &
Quist LLC and the Fund otherwise intends to conduct these purchases in
compliance with applicable SEC rules.
THE FUND NORMALLY EXPECTS TO SELL MOST OF ITS IPO HOLDINGS WITHIN A YEAR. This
turnover of the Fund's portfolio will tend to increase the Fund's transaction
costs. Any gains from such sales will also be treated as short-term capital
gains, taxable as ordinary income to the Fund's shareholders.
THE FUND MAY HAVE TO SELL STOCKS AT A LOSS IN ORDER TO FUND SHAREHOLDER SALES.
Sales are more likely to occur when prices of IPO stocks are declining, and
prices of IPO stocks may fall more rapidly than those of other securities.
THE FUND AND THE INVESTMENT ADVISER HAVE NO OPERATING HISTORY AND THE
SUB-ADVISER'S MODEL HAS NOT BEEN PREVIOUSLY IMPLEMENTED BY A MUTUAL FUND. The
model is based largely on a limited period of past market performance and may
fail to anticipate shifts in market dynamics over time.
THE SUB-ADVISER'S MODEL RELIES ON MARKET AND OTHER DATA COMPILED FROM OTHER
SOURCES, PRIMARILY QUOTE.COM, A LEADING PROVIDER OF IPO INFORMATION. If this
information were to become unavailable, the Fund's investment strategy could be
disrupted.
THE FUND MAY INVEST IN OTHER INSTRUMENTS THAT ALSO INVOLVE RISK. For example,
futures contracts and index participations, which the Fund may use to gain
exposure to the stock market, could hurt the Fund's performance if they do not
perform as expected.
-3-
<PAGE>
THE FUND COULD BE ADVERSELY AFFECTED BY THE FAILURE OF COMPUTER SYSTEMS USED BY
THE FUND'S SERVICE PROVIDERS AND OTHERS TO PROPERLY PROCESS DATA CONTAINING
DATES OCCURRING AFTER DECEMBER 31, 1999 (YEAR 2000 PROBLEM). The Year 2000
problem could also have an adverse effect on the companies whose securities are
held by the Fund or the securities markets and their participants generally.
-4-
<PAGE>
SPECIAL RISKS OF IPOS
[In a separate box]
Most IPOs involve a high degree of risk not normally associated with offerings
of more seasoned companies. Companies involved in IPOs generally have limited
operating histories, and their prospects for future profitability are uncertain.
These companies often are engaged in new and evolving businesses and are
particularly vulnerable to competition and to changes in technology, markets and
economic conditions. They may be dependent on certain key managers and third
parties, need more personnel and other resources to manage growth and require
significant additional capital. They may also be dependent on limited product
lines and uncertain property rights and need regulatory approvals. Investors in
IPOs can be affected by substantial dilution in the value of their shares, by
sales of additional shares and by concentration of control in existing
management and principal shareholders. Stock prices of IPOs can also be highly
unstable, due to the absence of a prior public market, the small number of
shares available for trading and limited investor information.
-5-
<PAGE>
FUND FEES AND EXPENSES
The following table describes what you can expect to pay as a Fund investor.
"Shareholder fees" are one-time expenses charged to you directly by Hambrecht &
Quist LLC (H&Q), the Fund's distributor. "Annual operating expenses" are paid
out of Fund assets, so their effect is included in total return.
The Fund offers multiple classes of shares. This prospectus offers the Class A
shares and Class B shares (Adviser Classes), which are sold through financial
intermediaries and have different costs. For information on choosing among the
Adviser Classes, see "Investing in the Fund--Buying Shares--Choosing a Share
Class." If you would prefer to invest in the Fund without the assistance of a
financial intermediary, please contact the Fund's transfer agent, PFPC Inc., at
800-___-____ to request a copy of the Fund's Common Class prospectus.
PERCENTAGE FEE TABLE
<TABLE>
<CAPTION>
Class A Class B
------- -------
<S> <C> <C>
SHAREHOLDER FEES
Maximum sales charge
(as a % of offering price)...................... 5.50%(1) None
Maximum deferred sales charge
(as a % of lower of offering
or sale price).................................. None 5.00%(2)
</TABLE>
- -------------------
(1)Imposed upon shares purchased (other than dividend reinvestments). Purchases
of $1,000,000 or more sold within a year may be subject to a 1.00% contingent
deferred sales charge. See "Investing in the Fund--Buying Shares--Choosing a
Share Class--Class A".
(2)Imposed upon shares sold (other than dividend
reinvestments) within five years of purchase at a rate of 5.00% the first year,
declining to 1.00% in the fifth year, and eliminated thereafter. See "Investing
in the Fund--Buying Shares--Choosing a Share Class--Class B."
<TABLE>
<CAPTION>
<S> <C> <C>
ANNUAL OPERATING EXPENSES
(as a % of average net assets)
Management fees................................. 0.65% 0.65%
Distribution fees............................... 0.30 1.00
Other expenses(1)............................... 0.60 0.60
----------------------------
Total annual operating expenses(2)............ 1.55% 2.25%
</TABLE>
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(1)Estimated amounts for the Fund's current fiscal year.
(2)Guaranteed by the investment adviser through December 31, 2000.
-6-
<PAGE>
EXPENSES ON A $10,000 INVESTMENT
DESIGNED TO HELP YOU COMPARE EXPENSES, THIS EXAMPLE USES THE SAME ASSUMPTIONS AS
ALL MUTUAL FUND PROSPECTUSES: A $10,000 INVESTMENT AND 5% RETURN EACH YEAR AND
SALE OF YOUR SHARES AT THE END OF THE PERIOD. YOUR ACTUAL COSTS MAY BE HIGHER OR
LOWER.
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Class A $699 $1013
Class B $728 $1003
</TABLE>
You would pay the following expenses if you did not sell your shares.
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Class A $699 $1013
Class B $228 $703
</TABLE>
FUND MANAGEMENT
The investment adviser for the Fund is Hambrecht & Quist Fund Management, LLC
(HQFM), One Bush Street, San Francisco, CA 94104. HQFM oversees the asset
management and administration of the Fund. As compensation for its services,
HQFM receives a management fee from the Fund of 0.65% of its average daily net
assets, a portion of which is used to pay the Fund's sub-adviser.
HQFM is wholly owned by Hambrecht & Quist California, the parent company for
H&Q, a leading investment bank specializing in emerging growth companies.
Hambrecht & Quist California is, in turn, a wholly-owned subsidiary of Hambrecht
& Quist Group. Through its subsidiaries, Hambrecht & Quist Group provides a
variety of financial services, including investment advisory services to
registered closed-end mutual funds, wrap-fee programs, employee benefit plans,
private investment funds and individuals. HQFM was recently formed to serve as
investment adviser for the Fund and has no other advisory clients.
The Fund's sub-adviser is Symphony Asset Management, LLC (Symphony), 555
California Street, San Francisco, CA 94104. Founded in 1994, Symphony is owned
50% by BARRA, Inc., a leading provider of analytical models since 1975, and 50%
by Symphony's managers through Maestro LLC. Symphony, and its affiliate,
Symphony Asset Management, Inc., have more than $2.7 billion in assets under
management.
Ross Sakamoto, who has been a Portfolio Manager for the sub-adviser since 1996,
handles the Fund's day-to-day management. Prior to 1996, he was a Principal in
the Investment Strategies Group of Barclays Global Investors and its
predecessors.
-7-
<PAGE>
INVESTING IN THE FUND
On the following pages you will find information on buying and selling shares.
Information on taxes is included as well.
BUYING SHARES
Shares of the Adviser Classes may be purchased through H&Q, the Fund's
distributor, or through a variety of brokers, dealers and other financial
intermediaries who have been authorized by the distributor to sell Fund shares.
You will need to take the following steps to buy shares of the Fund:
STEP 1
CHOOSING A SHARE CLASS
You will need to choose a share class before making your initial investment.
Each share class has its own fee structure. In making your choice, you should
weigh the impact of all potential costs over the length of your investment,
including sales charges and annual fees.
- Class A shares may be appropriate for investors who prefer to pay the
Fund's sales charge up front rather than upon the sale of their shares
or want to take advantage of the reduced sales charge for larger
investments.
- Class B shares may be appropriate for investors who wish to avoid a
front-end sales charge and put 100% of their investment dollars to work
immediately. Class B shares are subject to a contingent deferred sales
charge (CDSC) for sales within five years of purchase, and to a higher
distribution fee than Class A shares.
The Fund has adopted a plan under Rule 12b-1 that allows the Fund to pay
distribution expenses for the sale and distribution of the Class A and Class B
shares. Because these fees are paid out of Fund assets on an ongoing basis, over
time these fees will increase the cost of your investment in the Fund and may
cost more than paying other types of sales charges.
-8-
<PAGE>
CLASS A -- CHARGED WHEN YOU BUY SHARES
<TABLE>
<CAPTION>
Commission to
selected
Sales charge as a % of Sales charge as a % of dealers as % of
Your investment offering price(1) your net investment offering price
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.50% 5.82% 5.00%
$50,000 to $99,999 4.75% 4.99% 4.00%
$100,000 to $249,999 3.75% 3.90% 3.00%
$250,000 to $499,999 2.75% 2.83% 2.25%
$500,000 to $999,999 2.00% 2.04% 1.75%
$1,000,000 or more(2) None None 1.00%
- ------------------
</TABLE>
(1)Offering price includes the front-end sales charge.
(2)Purchases of $1,000,000 or more sold within one year of purchase may be
subject to a 1.00% CDSC.
Purchases of Class A shares may be eligible for reduced sales charges in
accordance with the Fund's Combined Purchase Privilege, Cumulative Quantity
Discount, Statement of Intention or Privilege for Certain Retirement Plans and
certain other investors. See the statement of additional information or consult
your financial intermediary to determine if you qualify for a reduced sales
charge. In addition to the front-end sales charge, Class A shares carry an
annual Rule 12b-1 fee of 0.30% of average daily net assets.
CLASS B -- CHARGED WHEN YOU SELL SHARES
<TABLE>
<CAPTION>
CDSC as a % of your
Time since you bought the offering or sale price
shares you are selling (whichever is less)
- --------------------- -------------------
<S> <C>
First year 5.00%
Second year 4.00%
Third year 3.00%
Fourth year 2.00%
Fifth year 1.00%
Sixth year and thereafter None
</TABLE>
In addition to the CDSC, Class B shares carry an annual Rule 12b-1 fee of 1.00%
of average daily net assets. Class B Shares automatically convert to Class A
shares five years from the date of purchase. The conversion will not occur if
the Fund is advised that the conversion may constitute a taxable event for
federal tax purposes.
-9-
<PAGE>
STEP 2
DECIDE HOW MUCH YOU WANT TO INVEST.
<TABLE>
<CAPTION>
Minimum Initial Minimum Additional Minimum Balance
Investment Investment
- --------------------------------------------------------------------------------
<S> <C> <C>
$5,000 $100 $2,500
($2,000 for retirement ($1,000 for retirement and
and custodial accounts) and custodial accounts)
</TABLE>
STEP 3
CHOOSE AN OPTION FOR FUND DISTRIBUTIONS. The three options are described below.
If you do not indicate a choice on the subscription application, we will assume
you have selected the first option.
<TABLE>
<CAPTION>
OPTION FEATURE
- --------------------------------------------------------------------------------
<S> <C>
Reinvestment All dividend and capital gain distributions are invested
automatically in shares of the Fund
- --------------------------------------------------------------------------------
Cash/Reinvestment You receive payment for dividends, while any capital
Mix gain distributions are invested in shares of the Fund
- --------------------------------------------------------------------------------
Cash You receive payment for all dividends and capital gains
distributions
</TABLE>
STEP 4
PLACE YOUR ORDER. Your financial intermediary may forward your purchase request
to the Fund by any of the following methods:
MAIL
Send a completed subscription application with a check payable to Hambrecht &
Quist IPO Discovery Fund for the purchase amount to:
PFPC Inc.
Attention: Hambrecht & Quist IPO Discovery Fund
400 Bellevue Parkway
Wilmington, Delaware 19809
-10-
<PAGE>
You may add to an account by sending a check payable to the Fund for the
purchase amount along with the investor's name and account number to the address
above.
WIRE
You may open or add to an account by wiring the purchase amount to:
PFPC Trust Co.
Attention: Hambrecht & Quist IPO Discovery Fund
with these instructions:
ABA#_____________
DDA#_____________
When opening an account by wire, call PFPC Inc. at 800-___-____ to obtain an
account number and mail a completed subscription application to PFPC Inc. at the
address above. When wiring funds to an existing account, include the investor's
name and account number.
AUTOMATIC INVESTMENT
To automatically invest a set amount in the Fund every month, complete the
automatic investment portion of the subscription application. To request this
service for existing accounts, call PFPC Inc. at 800-___-____.
Visit the Fund's website at www.hamquist.com to download a subscription
application and mail a completed application to PFPC Inc. at the address above.
Please note that orders to buy shares cannot be revoked after you mail the order
or wire funds.
SELLING SHARES
Shares of the Adviser Classes may be sold through H&Q or your financial
intermediary. Shares held in nominee or "street name" accounts may only be sold
through your financial intermediary. Your financial intermediary will be
responsible for forwarding the request to PFPC Inc. You will need to use one of
the following methods to sell shares of the Fund:
MAIL
Mail your request, including your name, account number and dollar amount of the
shares being sold to:
PFPC Inc.
Attention: Hambrecht & Quist IPO Discovery Fund
400 Bellevue Parkway
Wilmington, Delaware 19809
-11-
<PAGE>
Be sure to include the signature of all persons whose names are on the account
and indicate how you would like to receive the proceeds from the sale of your
shares (for example, by means of a check or a wire transfer to your bank
account). A fee of $10.00 will be charged to your account for wire transfers.
PHONE
Call 800-___-____. You may only sell shares by telephone if you have previously
authorized PFPC Inc., the Fund's transfer agent, to act on telephone
instructions by indicating this authority on your subscription application, or
by calling PFPC Inc. at 800-___-____ to request this service. Neither the Fund
nor PFPC Inc. will be liable for following telephone instructions reasonably
believed to be genuine.
When selling shares, please be aware of the following policies:
- The Fund may take up to seven days to pay sale proceeds
- If you are selling shares that were recently purchased by check, the
proceeds may be delayed until the check for purchase clears; this may take
up to 15 days from the date of purchase
- If necessary to minimize any applicable CDSC, the Fund will sell shares
you have held the longest
- Except for sales through certain authorized financial intermediaries,
shares sold through a financial intermediary will be priced at the net
asset value next calculated after the transfer agent receives the request
in proper form from the financial intermediary
- Sale requests in excess of $25,000 must be accompanied by a signature
guarantee of an eligible institution (available from most banks and trust
companies)
TRANSACTION POLICIES
The Fund is open for business each day that the New York Stock Exchange (NYSE)
is open for regular trading. The Fund calculates its share price each business
day, after the close of regular trading on the NYSE (generally 4 p.m. Eastern
time). The Fund's share price is its net asset value per share, or NAV, which is
the Fund's net assets divided by the number of shares outstanding.
In valuing its securities, the Fund uses market quotes if they are readily
available. In cases where quotes are not readily available, the Fund may value
securities based on fair values developed using methods approved by the Fund's
Trustees.
The effective time of your purchase or sale, which determines the price you pay
or receive for your shares, will be the time the Fund's transfer agent, PFPC
Inc., or an authorized financial intermediary receives your order. Orders
received in proper form prior to the close of regular
-12-
<PAGE>
trading on the NYSE will be valued at the net asset value per share calculated
that day. Orders received after the close of regular trading on the NYSE will be
priced the next day the Fund calculates its net asset value. Investors effecting
transactions through financial intermediaries may be charged transaction or
other fees in addition to those described in this prospectus.
THE FUND RESERVES CERTAIN RIGHTS, including the following:
- To withdraw or suspend any part of the offering made by this prospectus
- To close the Fund to investors, other than current shareholders and
certain retirement plans and investment advisory clients, when the Fund's
assets exceed $300 million
- To refuse any purchase order, including those that appear to be associated
with short-term trading activities
- To change or waive the Fund's investment minimums
- To suspend the right to sell shares back to the Fund, and delay sending
proceeds, during times when trading on the NYSE is restricted or halted,
or otherwise as permitted by the SEC
- To pay you in portfolio securities, rather than in cash, if the value of
the shares you sell exceeds $250,000 or 1% of the Fund's assets
- To automatically sell your shares if your account is closed for any reason
or if your balance falls below the minimum required as a result of selling
your shares
DISTRIBUTIONS AND TAXES
Any investment in the Fund typically involves several tax considerations. The
information below is meant as a general summary for U.S. citizens and residents.
Because each person's tax situation is different, you should consult your tax
adviser about the tax implications of your investment in the Fund. You also can
visit the Internal Revenue Service (IRS) web site at www.irs.ustreas.gov.
As a shareholder, you are entitled to your share of income and gains the Fund
earns. Every year, the Fund distributes to its shareholders substantially all of
its net investment income and net capital gains, if any. These distributions
typically are paid in December to all shareholders of record.
Unless you are investing through a tax-deferred or Roth retirement account, your
Fund distributions generally have tax consequences. The Fund's net investment
income and short-term capital gains are distributed as dividends and are taxable
as ordinary income. It is expected that most of the Fund's capital gains will be
short-term. Other capital gain distributions are taxable as long-term capital
gains, regardless of how long you have held your shares in the Fund.
-13-
<PAGE>
Distributions are generally taxable in the year they are declared, whether you
reinvest them or take them in cash.
If you are investing through a taxable account and purchase shares of the Fund
just before it declares a distribution, you may receive a portion of your
investment back as a taxable distribution. This is because when the Fund makes a
distribution, the share price is reduced by the amount of the distribution. You
can avoid "buying a dividend," as it is often called, by contacting PFPC Inc. at
800 -___-____ to determine if a distribution is imminent and waiting until
afterwards to invest. Of course, you may decide that the opportunity for
investment gain during the period before the distribution outweighs the tax
consequences of buying a dividend.
Generally, any sale of your shares is a taxable event. A sale may result in a
capital gain or loss to you. A gain or loss generally will be treated as
short-term if shares are held for 12 months or less, long-term if shares are
held longer.
At the beginning of every year, the Fund provides shareholders with information
detailing the tax status of any distributions the Fund paid during the previous
calendar year.
-14-
<PAGE>
TO LEARN MORE
This prospectus contains important information about the Fund and should be read
and kept for reference. You also can obtain more information from the following
sources:
- SHAREHOLDER REPORTS, which will be mailed to Fund investors semi-annually,
will discuss recent performance and portfolio holdings.
- THE STATEMENT OF ADDITIONAL INFORMATION (SAI) includes a more detailed
discussion of investment policies and the risks associated with various
investments. The SAI is incorporated by reference into the prospectus,
making it part of the prospectus.
You can obtain copies of these documents by contacting the Fund's transfer
agent, PFPC Inc., or the SEC at the locations below. All materials from the
transfer agent are free; the SEC charges a duplicating fee. You also can review
these materials in person at the SEC's Public Reference Room.
PFPC INC
400 Bellevue Parkway
Wilmington, Delaware 19809
800-___-____
www.hamquist.com
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-6009
800-SEC-0330 (Public Reference Section)
www.sec.gov
SEC FILE NUMBER
Hambrecht & Quist
IPO Discovery Fund 811-_______
-15-
<PAGE>
SUBSCRIPTION APPLICATION
HAMBRECHT & QUIST IPO DISCOVERY FUND
CLASS A OR CLASS B SHARES
PLEASE COMPLETE STEPS 1 THROUGH 4 AND MAIL TO:
PFPC INC.
400 BELLEVUE PARKWAY, WILMINGTON, DE 19809 TEL.# 1-800-___-____
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
STEP 1 Please type or print name exactly as account is to be registered
A. ACCOUNT
REGISTRATION 1._______________________________________________________________________________________________
First Name Middle Initial Last Name Social Security Number
/ / INDIVIDUAL Use line 1 2._______________________________________________________________________________________________
/ / JOINT ACCOUNT* First Name Middle Initial Last Name Social Security Number
Use lines 1 &2 3._______________________________________________________________________________________________
/ / FOR A MINOR Use line 3 Custodian's First Name Middle Initial Last Name
/ / FOR TRUST, CORPORATION,
PARTNERSHIP OR OTHER Custodian for____________________________________________________________________________________
ENTITY Minor's First Name Middle Initial Last Name
Use line 4
Under the__________________ UGTMA**______________________________________________________________
* Joint Accounts will be joint Name of State Minor's Social Security Number
tenants with rights of 4._______________________________________________________________________________________________
survivorship unless _________________________________________________________________________________________________
otherwise specified. (Name of Corporation or Organization, If a Trust, Include the name(s) of Trustees in which account
** Uniform Gifts/Transfers to will be registered and the name and date of the Trust Instrument. Account for a Pension or Profit
Minors Act. Sharing Plan or Trust may be registered in the name of the Plan or Trust itself.)
_________________________________________________________________________________________________
Tax I.D. Number Authorized Individual Title
- -----------------------------------------------------------------------------------------------------------------------------------
B. MAILING _________________________________________________________________________________________________
ADDRESS AND Street or PO Box City
TELEPHONE _______________________________________ (________ )________________________________________
NUMBER State Zip Daytime Phone Number
Occupation:____________________________ Employer:__________________________________________
Employer's Address:______________________________________________________________________________
Street Address City State Zip
Citizen or resident of: / / U.S. Other / /__________ Check here / / if you are a non-U.S.
Citizen or resident and not subject to back-up withholding. (See certification in Step 4,
Section B, below.)
- -----------------------------------------------------------------------------------------------------------------------------------
C. FINANCIAL INTERMEDIARY: _______________________________________ ___________________________________________________
(Important -- Dealer Name Branch Number
to be completed by
Financial Intermediary) _______________________________________ ___________________________________________________
Street Address Rep. Number/Name
_______________________________________ (________)_________________________________________
City State Zip Area Code Telephone
- -----------------------------------------------------------------------------------------------------------------------------------
STEP 2 Indicate Method of Payment (For either method, make check payment to Hambrecht & Quist IPO
PURCHASES OF SHARES Discovery Fund)
A. INITIAL INVESTMENT / / Initial Investment $_____________________ (Minimum $5,000)
(Indicate Class of Shares) / / Automatic Investment $_____________________ (Minimum $5,000)
For Automatic Investment of at least $100 per month, you must complete Step 3, Section A,
/ / Class A Shares Step 4, Sections A & B and ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK.
/ / Class B Shares IF NO SHARE CLASS IS MARKED, INVESTMENT WILL AUTOMATICALLY BE MADE IN CLASS A SHARES.
- -----------------------------------------------------------------------------------------------------------------------------------
<PAGE>
- -----------------------------------------------------------------------------------------------------------------------------------
B.DISTRIBUTIONS ALL INCOME DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS ARE AUTOMATICALLY REINVESTED IN ADDITIONAL
SHARES AT NET ASSET VALUE UNLESS OTHERWISE INDICATED BELOW.
Dividends are to be: / / Reinvested / / Paid in cash*
Capital Gains Distributions are to be: / / Reinvested / / Paid in cash*
*FOR CASH DIVIDENDS, PLEASE CHOOSE ONE OF THE FOLLOWING OPTIONS:
/ / Deposit directly into my/our Financial Institution account.
ATTACHED IS A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK
showing the Financial Institution account where I/we would like you to deposit
the dividend. (A Financial Institution is a commercial bank, savings bank or credit union.)
/ / Mail check to my/our address listed in Step 1B.
- -----------------------------------------------------------------------------------------------------------------------------------
STEP 3 This option provides you with a convenient way to have amounts automatically
SPECIAL FEATURES drawn on your Financial Institution account and invested in your Fund account.
To establish this program please complete Step 4, Sections A & B of this Application.
A. AUTOMATIC
INVESTMENT I/We wish to make regular monthly investments of $__________ (minimum $100) on
(Check appropriate box) the / / 1st day or / / 16th day of the month (or on the first business day after that
/ / YES / / NO date).
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK)
- -----------------------------------------------------------------------------------------------------------------------------------
B. INVESTMENT BY WIRE This option provides you with a convenient way to add to your account (minimum
(Check appropriate box) $100 and maximum $__________) at any time you wish by simply calling the Fund's
transfer agent, PFPC Inc. (TRANSFER AGENT), toll-free at 1-800-___-_____. To establish
/ / YES / / NO this program, please complete Step 4, Sections A & B of this Application.
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK)
- -----------------------------------------------------------------------------------------------------------------------------------
C. STATEMENT OF I/We intend to invest in Class A Shares of the Fund during the 13-month period from the date
INTENTION of my/our first purchase pursuant to this Letter (which purchase cannot be more than 90 days
APPLICABLE TO CLASS A SHARES prior to the date of this Letter), an aggregate amount (excluding any reinvestment of dividends
ONLY. or distributions) of at least $50,000 which, together with my/our present holdings of Class A
See Statement of Intention shares of the Fund (at public offering price on date of this Letter), will equal or exceed the
in the Statement of minimum amount checked below:
Additional Information.
/ / YES / / NO / / $50,000 / / $100,000 / / $250,000 / / $500,000
/ / $1,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
STEP 4 SECTION A DEPOSITOR'S AUTHORIZATION TO HONOR DEBITS
- -----------------------------------------------------------------------------------------------------------------------------------
IF YOU SELECTED AUTOMATIC INVESTMENT OR INVESTMENT BY WIRE
YOU MUST ALSO COMPLETE STEP 4, SECTIONS A & B.
I/We authorize the Financial Institution listed below to charge to my/our account any drafts or debits drawn on my/our account
initiated by the Transfer Agent, and to pay such sums in accordance therewith, provided my/our account has sufficient funds to
cover such drafts or debits. I/We further agree that your treatment of such orders will be the same as if I/we personally signed or
initiated the drafts or debits.
I/We understand that this authority will remain in effect until you receive my/our written instructions to cancel this service.
I/We also agree that if any such drafts or debits are dishonored, for any reason, you shall have no liabilities.
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Institution Account Number_____________________________________________________________________________________________
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Name and Address Name of Financial Institution____________________________________________________________________
where my/our account Street Address___________________________________________________________________________________
is maintained City_____________________________________________________ State________________ Zip_________
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Name(s) and Signature(s) of _____________________________________________________________________
Depositor(s as they appear (Please Print)
where account is registered _____________________________________________________________________ _________________________
(Signature) (Date)
_____________________________________________________________________
(Please Print)
_____________________________________________________________________ _________________________
(Signature) (Date)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
INDEMNIFICATION AGREEMENT
To: Financial Institution Named Above
So that you may comply with your depositor's request, Hambrecht & Quist LLC (the
"Distributor") agrees:
1. Electronic Funds Transfer debit and credit items transmitted pursuant to the
above authorization shall be subject to the provisions of the Operating Rules
of the National Automated Clearing House Association.
2. To indemnify and hold you harmless from any loss you may suffer in connection
with the execution and issuance of any electronic debit in the normal course
of business initiated by the Transfer Agent (except any loss due to your
payment of any amount drawn against insufficient or uncollected funds),
provided that you promptly notify us in writing of any claim against you with
respect to the same, and further provided that you will not settle or pay or
agree to settle or pay any such claim without the written permission of the
Distributor.
3. To indemnify you for any loss including your reasonable costs and expenses in
the event that you dishonor, with or without cause, any such electronic
debit.
- -------------------------------------------------------------------------------
STEP 4 SECTION B SHAREHOLDER AUTHORIZATION/SIGNATURE(S) REQUIRED
- -------------------------------------------------------------------------------
- - The undersigned warrants that he/she has full authority and is of legal age
to purchase shares of the Fund and has received and read a current Prospectus
of the Fund and agrees to its terms.
- - I/We authorize the Fund and its agents to act upon these instructions for the
features that have been checked.
- - I/We acknowledge that in connection with an Automatic Investment or
Investment By Wire, if my/our account at the Financial Institution has
insufficient funds, the Fund and its agents may cancel the purchase
transaction and are authorized to liquidate other shares or fractions thereof
held in my/our Fund account to make up any deficiency resulting from any
decline in the net asset value of shares so purchased and any dividends paid
on those shares. I/We authorize the Fund and its agents to correct any
transfer error by a debit or credit to my/our Financial Institution account
and/or Fund account and to charge the account for any related charges. I/We
acknowledge that shares purchased either through Automatic Investment or
Investment By Wire may be subject to applicable sales charges.
- - The Fund, the Transfer Agent and the Distributor and their Trustees,
directors, officers, members, shareholders, employees and agents will not be
liable for acting upon instructions believed to be genuine, and will not be
responsible for any losses resulting from unauthorized telephone transactions
if the Transfer Agent follows reasonable procedures designed to verify the
identity of the caller. The Transfer Agent will request some or all of the
following information: account name and number; name(s) and social security
number registered to the account and personal identification; the Transfer
Agent may also record calls. Shareholders should verify the accuracy of
confirmation statements immediately upon receipt. Under penalties of perjury,
the undersigned whose Social Security (Tax I.D.) Number is shown above
certifies that (i) that Number is my correct taxpayer identification number
and (ii) currently I am not under IRS notification that I am subject to
backup withholding (line out (II) if under notification). If no such Number
is shown, the undersigned further certifies, under penalties of perjury, that
either (a) no such Number has been issued, and a Number has been or will soon
be applied for; if a Number is not provided to you within sixty days, the
undersigned understands that all payments (including liquidations) are
subject to 31% withholding under federal tax law, until a Number is provided
and the undersigned may be subject to a $50 IRS penalty; of (b) that the
undersigned is not a citizen or resident of the U.S.; and either does not
expect to be in the U.S. for 183 days during each calendar year and does not
conduct a business in the U.S. which would received any gain from the Fund or
is exempt under an income tax treaty. NOTE: ALL REGISTERED OWNERS OF THE
ACCOUNT MUST SIGN BELOW. FOR A TRUST, ALL TRUSTEES MUST SIGN.*
<TABLE>
<S> <C> <C>
_______________________________________ _________________________________ _______________
Individual (or Custodian) Joint Registrant, if any Date
_______________________________________ _________________________________ _______________
Corporate Office, Partner, Trustee, etc. Title Date
</TABLE>
* For Trusts, Corporations or Associations, this form must be accompanied by
proof of authority to sign, such as a certified copy of the corporate
resolution or a certificate of incumbency under the trust instrument.
- - Certain features (Automatic Investment and Investment By Wire) are effective
15 days after this form is received in good order by the Transfer Agent.
- - You may cancel any feature at any time, effective 3 days after the Transfer
Agent receives written notice from you.
- - Either the Fund or the Transfer Agent may cancel any feature, without prior
notice, if in its judgment your use of any feature involves unusual effort or
difficulty in the administration of your account.
- - The Fund reserves the right to alter, amend or terminate any or all features
or to charge a service fee upon 30 days' written notice shareholders except
if additional notice is specifically required by the terms of the prospectus.
BANKING INFORMATION
- - If your Financial Institution account changes, you must complete a Ready
Access Features Form which may be obtained from the Transfer Agent at
1-800-___-____ and send it to the Transfer Agent together with a "VOIDED"
check or pre-printed deposit slip from the new account. The new Financial
Institution change is effective 15 days after this form is received in good
order by the Transfer Agent.
<PAGE>
HAMBRECHT & QUIST IPO DISCOVERY FUND
Prospectus _______________, 1999
Common Class
As with all mutual funds, the Securities and
Exchange Commission (SEC) has not approved these
securities or passed on whether the information
in this prospectus is adequate and accurate.
Anyone who indicates otherwise is committing a
federal crime.
ABOUT THE FUND
The Hambrecht & Quist IPO Discovery Fund (Fund) is designed to offer individual
investors the benefits of investing in a diversified portfolio of common stocks
issued as part of or after a company's initial public offering (IPO).
The Fund uses a quantitative strategy to make buy and sell decisions. The
strategy employs a range of proprietary techniques, developed through an
analysis of historical IPO performance.
Since 1993, IPOs have generally performed well relative to market indices,
such as the Russell 2000-Registered Trademark- Index, S&P 500-Registered
Trademark- Index and Hambrecht & Quist Growth Index. However, many individual
investors have not been able to purchase shares of IPOs at the offering
price, due to the strong demand for these securities. Even those investors
who are able to purchase IPO shares at the offering price may have difficulty
from time to time in diversifying their IPO investments. The Fund offers
investors the opportunity to benefit from the return potential inherent in
IPO investing, as well as from diversification across a portfolio of such
investments.
CONTENTS
Goal................................
Main Strategy.......................
Main Risks..........................
Fund Fees and Expenses..............
Fund Management.....................
Investing in the Fund...............
Buying Shares..................
Selling Shares.................
Transaction Policies................
Distributions and Taxes.............
To Learn More.......................
-1-
<PAGE>
GOAL
The Fund's goal is capital appreciation.
MAIN STRATEGY
The Fund seeks to achieve its goal by investing, under normal market conditions,
at least 65% of its assets in a diversified portfolio of IPOs. For this purpose,
an IPO is generally common stock issued as part of, or within 18 months after, a
company's initial public offering and traded on the New York Stock Exchange,
American Stock Exchange or NASDAQ National Market.
The Fund's sub-adviser, Symphony Asset Management, LLC, has developed a
quantitative model which tracks historical IPO performance. At the time of the
initial public offering, the sub-adviser will purchase IPO shares that meet
certain minimum quantitative criteria for offering size, issuer market
capitalization and lead underwriter, among other factors. The sub-adviser will
attempt to purchase these shares directly from the underwriters, at the offering
price. If shares cannot be obtained at the offering price, they will be
purchased in the secondary market. For a period of up to 18 months after the
initial public offering, the sub-adviser will also purchase IPO shares based
upon the above criteria and certain aftermarket criteria, such as analyst
ratings, price, performance, valuation relative to the industry and insider
activity. IPO shares held by the Fund will be sold based upon similar
aftermarket criteria. The Fund normally expects to sell most of its IPO holdings
within a year of purchase.
When the sub-adviser believes that the number or quality of IPOs available for
Fund investment is inadequate, the sub-adviser intends to invest in futures
contracts or participations based on equity indexes, such as the S&P
500-Registered Trademark Index or Russell 2000-Registered Trademark- Index. The
sub-adviser may also purchase non-IPO equity securities issued primarily by
companies which have capitalizations of $1 billion or less at the time of
investment. Pending investment and to provide liquidity for redemptions, the
Fund may also hold its assets in cash and cash equivalent instruments, such as
money market mutual funds, Treasury bills, commercial paper and repurchase
agreements. The Fund will consider closing to new purchasers when the Fund's
assets exceed $300 million.
MAIN RISKS
STOCK MARKETS RISE AND FALL DAILY. As with any investment whose performance is
tied to stock markets, the value of your investment in the Fund will fluctuate,
which means that you could lose money.
MANY FACTORS CAN AFFECT STOCK MARKET PERFORMANCE. Political and economic news
can influence market-wide trends; the outcome may be positive or negative,
short-term or long-term. Other factors may be ignored by the market as a whole
but may cause movements in the price of one company's stock or the stock of
companies in one or more industries.
THE MARKET FOR IPOS CAN BE INACTIVE FOR EXTENDED PERIODS OF TIME. When the
market is inactive, the Fund may be required to invest in futures contracts,
index participations and non-IPO securities or hold cash.
THE IPO MARKET TENDS TO FAVOR CERTAIN INDUSTRY SECTORS FROM TIME TO TIME. As a
result, the companies in which the Fund invests at any given time may represent
a limited number of
-2-
<PAGE>
industry sectors. In these circumstances, the Fund's share price may be subject
to greater volatility.
THE FUND MAY BE UNABLE TO PURCHASE IPOS AT THE OFFERING PRICE. The price of IPO
shares in the aftermarket may greatly exceed the offering price, making it more
difficult for the Fund to realize a profit.
THE INVESTMENT ADVISER MAY APPEAR TO HAVE A CONFLICT OF INTEREST WHEN THE FUND
PURCHASES IPOS FROM UNDERWRITING SYNDICATES OF WHICH HAMBRECHT & QUIST LLC, THE
FUND'S DISTRIBUTOR AND AN AFFILIATE OF THE FUND'S INVESTMENT ADVISER, ACTS AS A
MEMBER OR MANAGER. The Fund will not purchase IPOs directly from Hambrecht &
Quist LLC, and the Fund otherwise intends to conduct these purchases in
compliance with applicable SEC rules.
THE FUND NORMALLY EXPECTS TO SELL MOST OF ITS IPO HOLDINGS WITHIN A YEAR. This
turnover of the Fund's portfolio will tend to increase the Fund's transaction
costs. Any gains from such sales will also be treated as short-term capital
gains, taxable as ordinary income to the Fund's shareholders.
THE FUND MAY HAVE TO SELL STOCKS AT A LOSS IN ORDER TO FUND SHAREHOLDER SALES.
Sales are more likely to occur when prices of IPO stocks are declining, and
prices of IPO stocks may fall more rapidly than those of other securities.
THE FUND AND THE INVESTMENT ADVISER HAVE NO OPERATING HISTORY AND THE
SUB-ADVISER'S MODEL HAS NOT BEEN PREVIOUSLY IMPLEMENTED BY A MUTUAL FUND. The
model is based largely on a limited period of past market performance and may
fail to anticipate shifts in market dynamics over time.
THE SUB-ADVISER'S MODEL RELIES ON MARKET AND OTHER DATA COMPILED FROM OTHER
SOURCES, PRIMARILY QUOTE.COM, A LEADING PROVIDER OF IPO INFORMATION. If this
information were to become unavailable, the Fund's investment strategy could be
disrupted.
THE FUND MAY INVEST IN OTHER INSTRUMENTS THAT ALSO INVOLVE RISK. For example,
futures contracts and index participations, which the Fund may use to gain
exposure to the stock market, could hurt the Fund's performance if they do not
perform as expected.
THE FUND COULD BE ADVERSELY AFFECTED BY THE FAILURE OF COMPUTER SYSTEMS USED BY
THE FUND'S SERVICE PROVIDERS AND OTHERS TO PROPERLY PROCESS DATA CONTAINING
DATES OCCURRING AFTER DECEMBER 31, 1999 (YEAR 2000 PROBLEM). The Year 2000
problem could also have an adverse effect on the companies whose securities are
held by the Fund or the securities markets and their participants generally.
-3-
<PAGE>
SPECIAL RISKS OF IPOS
[In a separate box]
Most IPOs involve a high degree of risk not normally associated with offerings
of more seasoned companies. Companies involved in IPOs generally have limited
operating histories, and their prospects for future profitability are uncertain.
These companies often are engaged in new and evolving businesses and are
particularly vulnerable to competition and to changes in technology, markets and
economic conditions. They may be dependent on certain key managers and third
parties, need more personnel and other resources to manage growth and require
significant additional capital. They may also be dependent on limited product
lines and uncertain property rights and need regulatory approvals. Investors in
IPOs can be affected by substantial dilution in the value of their shares, by
sales of additional shares and by concentration of control in existing
management and principal shareholders. Stock prices of IPOs can also be highly
unstable, due to the absence of a prior public market, the small number of
shares available for trading and limited investor information.
-4-
<PAGE>
FUND FEES AND EXPENSES
The following table describes what you can expect to pay as a Fund investor.
"Shareholder fees" are one-time expenses charged to you directly by Hambrecht &
Quist LLC (H&Q), the Fund's distributor. "Annual operating expenses" are paid
out of Fund assets, so their effect is included in total return.
The Fund offers multiple classes of shares. This prospectus offers the Common
Class shares. If you would prefer to invest in the Fund with the assistance of a
financial intermediary, please contact the Fund's transfer agent, PFPC Inc., at
800-____-______ to request a copy of the Fund's Adviser Classes prospectus.
<TABLE>
<CAPTION>
PERCENTAGE FEE TABLE
<S> <C>
SHAREHOLDER FEES
Maximum sales charge imposed............... None
Maximum deferred sales charge.............. None
ANNUAL OPERATING EXPENSES
(as a % of average net assets)
Management fees............................ 0.65%
Distribution fees.......................... 0.25
Other expenses(1).......................... 0.60
----
Total annual operating expenses(2) 1.50%
</TABLE>
- -----------------------
(1) Estimated amounts for the Fund's current fiscal year.
(2) Guaranteed by the investment adviser through December 31, 2000.
-5-
<PAGE>
EXPENSES ON A $10,000 INVESTMENT
DESIGNED TO HELP YOU COMPARE EXPENSES, THIS EXAMPLE USES THE SAME ASSUMPTIONS AS
ALL MUTUAL FUND PROSPECTUSES: A $10,000 INVESTMENT AND 5% RETURN EACH YEAR AND
SALE OF YOUR SHARES AT THE END OF THE PERIOD. YOUR ACTUAL COSTS MAY BE HIGHER OR
LOWER.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C>
$153 $474
</TABLE>
FUND MANAGEMENT
The investment adviser for the Fund is Hambrecht & Quist Fund Management, LLC
(HQFM), One Bush Street, San Francisco, CA 94104. HQFM oversees the asset
management and administration of the Fund. As compensation for its services,
HQFM receives a management fee from the Fund of 0.65% of its average daily net
assets, a portion of which is used to pay the Fund's sub-adviser.
HQFM is wholly owned by Hambrecht & Quist California, the parent company for
H&Q, a leading investment bank specializing in emerging growth companies.
Hambrecht & Quist California is, in turn, a wholly-owned subsidiary of Hambrecht
& Quist Group. Through its subsidiaries, Hambrecht & Quist Group provides a
variety of financial services, including investment advisory services to
registered closed-end mutual funds, wrap-fee programs, employee benefit plans,
private investment funds and individuals. HQFM was recently formed to serve as
investment adviser for the Fund and has no other advisory clients.
The Fund's sub-adviser is Symphony Asset Management, LLC (Symphony), 555
California Street, San Francisco, CA 94104. Founded in 1994, Symphony is owned
50% by BARRA, Inc., a leading provider of analytical models since 1975, and 50%
by Symphony's managers through Maestro LLC. Symphony, and its affiliate,
Symphony Asset Management, Inc., have more than $2.7 billion in assets under
management.
Ross Sakamoto, who has been a Portfolio Manager for the sub-adviser since 1996,
handles the Fund's day-to-day management. Prior to 1996, he was a Principal in
the Investment Strategies Group of Barclays Global Investors and its
predecessors.
INVESTING IN THE FUND
On the following pages you will find information on buying and selling shares.
Information on taxes is included as well.
-6-
<PAGE>
BUYING SHARES
Common Class shares may be purchased either directly from the Fund or through
authorized mutual fund supermarkets. Common Class shares are purchased and sold
without the imposition of either an initial sales charge or a contingent
deferred sales charge and carry an annual Rule 12b-1 fee of 0.25% of average
daily net assets. Because this fee is paid out of Fund assets on an ongoing
basis, over time this fee will increase the cost of your investment in the Fund
and may cost more than paying other types of sales charges. You will need to
take the following steps to buy shares of the Fund:
STEP 1
Decide how much you want to invest.
<TABLE>
<CAPTION>
Minimum Initial Minimum Additional Minimum Balance
Investment Investment
- --------------------------------------------------------------------------------
<S> <C> <C>
$5,000 $100 $2,500
($2,000 for retirement and ($1,000 for retirement and
custodial accounts) custodial accounts)
</TABLE>
STEP 2
CHOOSE AN OPTION FOR FUND DISTRIBUTIONS. The three options are described below.
If you do not indicate a choice on the subscription application, we will assume
you have selected the first option.
<TABLE>
<CAPTION>
OPTION FEATURE
- -------------------------------------------------------------------------------------------------------------
<S> <C>
Reinvestment All dividend and capital gain distributions are invested automatically in
shares of the Fund
- -------------------------------------------------------------------------------------------------------------
Cash/Reinvestment Mix You receive payment for dividends, while any capital gain distributions
are invested in shares of the Fund
- -------------------------------------------------------------------------------------------------------------
Cash You receive payment for all dividends and capital gains distributions
- -------------------------------------------------------------------------------------------------------------
</TABLE>
-7-
<PAGE>
STEP 3
PLACE YOUR ORDER. Use any of the methods below to buy shares of the Fund:
MAIL
Send a completed subscription application with a check payable to Hambrecht &
Quist IPO Discovery Fund for the purchase amount to:
PFPC Inc.
Attention: Hambrecht & Quist IPO Discovery Fund
400 Bellevue Parkway
Wilmington, Delaware 19809
You may add to an account by sending a check payable to the Fund for the
purchase amount along with the investor's name and account number to the address
above.
WIRE
You may open or add to an account by wiring the purchase amount to:
PFPC Trust Co.
Attention: Hambrecht & Quist IPO Discovery Fund
with these instructions:
ABA#_____________
DDA#_____________
When opening an account by wire, call PFPC Inc. at 800-___-____ to obtain an
account number and mail a completed subscription application to PFPC Inc. at the
address above. When wiring funds to an existing account, include your name and
account number.
AUTOMATIC INVESTMENT
To automatically invest a set amount in the Fund every month, complete the
automatic investment portion of the subscription application. If you are an
existing shareholder you may request this by calling PFPC Inc. at 800-___-____.
Visit the Fund's website at www.hamquist.com to download a subscription
application and mail a completed application to PFPC Inc. at the address above.
Please note that orders to buy shares cannot be revoked after you mail the order
or wire funds.
-8-
<PAGE>
SELLING SHARES
You will need to use one of the following methods to sell shares of the Fund:
MAIL
Mail your request, including your name, account number and dollar amount of the
shares being sold to:
PFPC Inc.
Attention: Hambrecht & Quist IPO Discovery Fund
400 Bellevue Parkway
Wilmington, Delaware 19809
Be sure to include the signature of all persons whose names are on the account
and indicate how you would like to receive the proceeds from the sale of your
shares (for example, by means of a check or a wire transfer to your bank
account). A fee of $10.00 will be charged to your account for wire transfers.
PHONE
Call 800-___-____. You may only sell shares by telephone if you have previously
authorized PFPC Inc., the Fund's transfer agent, to act on telephone
instructions by indicating this authority on your subscription application, or
by calling PFPC Inc. at 800 -___-____ to request this service. Neither the Fund
nor PFPC Inc. will be liable for following telephone instructions reasonably
believed to be genuine.
MUTUAL FUND SUPERMARKETS
If you have purchased shares through a mutual fund supermarket you may sell
shares by contacting the supermarket. Your mutual fund supermarket will be
responsible for forwarding the request to PFPC Inc.
When selling shares, please be aware of the following policies:
- The Fund may take up to seven days to pay sale proceeds
- If you are selling shares that were recently purchased by check, the
proceeds may be delayed until the check for purchase clears; this may
take up to 15 days from the date of purchase
- Sale requests in excess of $25,000 must be accompanied by a signature
guarantee of an eligible institution (available from most banks and
trust companies)
-9-
<PAGE>
TRANSACTION POLICIES
The Fund is open for business each day that the New York Stock Exchange (NYSE)
is open for regular trading. The Fund calculates its share price each business
day, after the close of regular trading on the NYSE (generally 4 p.m. Eastern
time). The Fund's share price is its net asset value per share, or NAV, which is
the Fund's net assets divided by the number of shares outstanding.
In valuing its securities, the Fund uses market quotes if they are readily
available. In cases where quotes are not readily available, the Fund may value
securities based on fair values developed using methods approved by the Fund's
Trustees.
The effective time of your purchase or sale, which determines the price you pay
or receive for your shares, will be the time the Fund's transfer agent, PFPC
Inc., or an authorized financial intermediary receives your order. Orders
received in proper form prior to the close of regular trading on the NYSE will
be valued at the net asset value per share calculated that day. Orders received
after the close of regular trading on the NYSE will be priced the next day the
Fund calculates its net asset value. Investors effecting transactions through
financial intermediaries may be charged transaction or other fees in addition to
those described in this prospectus.
THE FUND RESERVES CERTAIN RIGHTS, including the following:
- To withdraw or suspend any part of the offering made by this prospectus
- To close the Fund to investors, other than current shareholders and
certain retirement plans and investment advisory clients, when the
Fund's assets exceed $300 million
- To refuse any purchase order, including those that appear to be
associated with short-term trading activities
- To change or waive the Fund's investment minimums
- To suspend the right to sell shares back to the Fund, and delay sending
proceeds, during times when trading on the NYSE is restricted or
halted, or otherwise as permitted by the SEC
- To pay you in portfolio securities, rather than in cash, if the value
of the shares you sell exceeds $250,000 or 1% of the Fund's assets
- To automatically sell your shares if your account is closed for any
reason or if your balance falls below the minimum required as a result
of selling your shares
-10-
<PAGE>
DISTRIBUTIONS AND TAXES
Any investment in the Fund typically involves several tax considerations. The
information below is meant as a general summary for U.S. citizens and residents.
Because each person's tax situation is different, you should consult your tax
adviser about the tax implications of your investment in the Fund. You also can
visit the Internal Revenue Service (IRS) web site at www.irs.ustreas.gov.
As a shareholder, you are entitled to your share of income and gains the Fund
earns. Every year, the Fund distributes to its shareholders substantially all of
its net investment income and net capital gains, if any. These distributions
typically are paid in December to all shareholders of record.
Unless you are investing through a tax-deferred or Roth retirement account, your
Fund distributions generally have tax consequences. The Fund's net investment
income and short-term capital gains are distributed as dividends and are taxable
as ordinary income. It is expected that most of the Fund's capital gains will be
short-term. Other capital gain distributions are taxable as long-term capital
gains, regardless of how long you have held your shares in the Fund.
Distributions are generally taxable in the year they are declared, whether you
reinvest them or take them in cash.
If you are investing through a taxable account and purchase shares of the Fund
just before it declares a distribution, you may receive a portion of your
investment back as a taxable distribution. This is because when the Fund makes a
distribution, the share price is reduced by the amount of the distribution. You
can avoid "buying a dividend," as it is often called, by contacting PFPC Inc. at
800 -___-____ to determine if a distribution is imminent and waiting until
afterwards to invest. Of course, you may decide that the opportunity for
investment gain during the period before the distribution outweighs the tax
consequences of buying a dividend.
Generally, any sale of your shares is a taxable event. A sale may result in a
capital gain or loss to you. A gain or loss generally will be treated as
short-term if shares are held for 12 months or less, long-term if shares are
held longer.
At the beginning of every year, the Fund provides shareholders with information
detailing the tax status of any distributions the Fund paid during the previous
calendar year.
-11-
<PAGE>
TO LEARN MORE
This prospectus contains important information about the Fund and should be read
and kept for reference. You also can obtain more information from the following
sources:
- SHAREHOLDER REPORTS, which will be mailed to Fund investors
semi-annually, will discuss recent performance and portfolio holdings.
- THE STATEMENT OF ADDITIONAL INFORMATION (SAI) includes a more detailed
discussion of investment policies and the risks associated with various
investments. The SAI is incorporated by reference into the prospectus,
making it part of the prospectus.
You can obtain copies of these documents by contacting the Fund's transfer
agent, PFPC Inc., or the SEC at the locations below. All materials from the
transfer agent are free; the SEC charges a duplicating fee. You also can review
these materials in person at the SEC's Public Reference Room.
PFPC INC.
400 Bellevue Parkway
Wilmington, Delaware 19809
800-___-____
www.hamquist.com
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-6009
800-SEC-0330 (Public Reference Section)
www.sec.gov
SEC FILE NUMBER
Hambrecht & Quist
IPO Discovery Fund 811-_______
-12-
<PAGE>
SUBSCRIPTION APPLICATION
HAMBRECHT & QUIST IPO DISCOVERY FUND
COMMON CLASS SHARES
PLEASE COMPLETE STEPS 1 THROUGH 4 AND MAIL TO:
PFPC INC.
400 BELLEVUE PARKWAY, WILMINGTON, DE 19809 TEL.# 1-800-____-______
<TABLE>
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<S> <C>
STEP 1 Please type or print name exactly as account is to be registered
A. ACCOUNT
REGISTRATION 1._______________________________________________________________________________________________
First Name Middle Initial Last Name Social Security Number
/ / INDIVIDUAL Use line 1 2._______________________________________________________________________________________________
/ / JOINT ACCOUNT* First Name Middle Initial Last Name Social Security Number
Use lines 1 &2 3._______________________________________________________________________________________________
/ / FOR A MINOR Use line 3 Custodian's First Name Middle Initial Last Name
/ / FOR TRUST, CORPORATION,
PARTNERSHIP OR OTHER Custodian for____________________________________________________________________________________
ENTITY Minor's First Name Middle Initial Last Name
Use line 4
Under the__________________ UGTMA**______________________________________________________________
* Joint Accounts will be joint Name of State Minor's Social Security Number
tenants with rights of 4._______________________________________________________________________________________________
survivorship unless _________________________________________________________________________________________________
otherwise specified. (Name of Corporation or Organization, If a Trust, Include the name(s) of Trustees in which account
** Uniform Gifts/Transfers to will be registered and the name and date of the Trust Instrument. Account for a Pension or Profit
Minors Act. Sharing Plan or Trust may be registered in the name of the Plan or Trust itself.)
_________________________________________________________________________________________________
Tax I.D. Number Authorized Individual Title
- -----------------------------------------------------------------------------------------------------------------------------------
B. MAILING _________________________________________________________________________________________________
ADDRESS AND Street or PO Box City
TELEPHONE _______________________________________ (________ )________________________________________
NUMBER State Zip Daytime Phone Number
Occupation:____________________________ Employer:__________________________________________
Employer's Address:______________________________________________________________________________
Street Address City State Zip
Citizen or resident of: / / U.S. Other / /__________ Check here / / if you are a non-U.S.
Citizen or resident and not subject to back-up withholding. (See certification in Step 4,
Section B, below.)
- -----------------------------------------------------------------------------------------------------------------------------------
C. FINANCIAL INTERMEDIARY: _______________________________________ ___________________________________________________
(Important -- Dealer Name Branch Number
to be completed by
Financial Intermediary) _______________________________________ ___________________________________________________
Street Address Rep. Number/Name
_______________________________________ (________)_________________________________________
City State Zip Area Code Telephone
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STEP 2 Indicate Method of Payment (For either method, make check payment to HAMBRECHT & QUIST IPO
PURCHASES OF SHARES DISCOVERY FUND)
A. INITIAL INVESTMENT / / Initial Investment $_____________________ (Minimum $5,000)
/ / Automatic Investment $_____________________ (Minimum $5,000)
For Automatic Investment of at least $100 per month, you must complete Step 3, Section A,
Step 4, Sections A & B and ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK.
- -----------------------------------------------------------------------------------------------------------------------------------
<PAGE>
- -----------------------------------------------------------------------------------------------------------------------------------
B.DISTRIBUTIONS ALL INCOME DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS ARE AUTOMATICALLY REINVESTED IN ADDITIONAL
SHARES AT NET ASSET VALUE UNLESS OTHERWISE INDICATED BELOW.
Dividends are to be: / / Reinvested / / Paid in cash*
Capital Gains Distributions are to be: / / Reinvested / / Paid in cash*
*FOR CASH DIVIDENDS, PLEASE CHOOSE ONE OF THE FOLLOWING OPTIONS:
/ / Deposit directly into my/our Financial Institution account.
ATTACHED IS A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK
showing the Financial Institution account where I/we would like you to deposit
the dividend. (A Financial Institution is a commercial bank, savings bank or credit union.)
/ / Mail check to my/our address listed in Step 1B.
- -----------------------------------------------------------------------------------------------------------------------------------
<PAGE>
- -----------------------------------------------------------------------------------------------------------------------------------
STEP 3 This option provides you with a convenient way to have amounts automatically
SPECIAL FEATURES drawn on your Financial Institution account and invested in your Fund account.
To establish this program please complete Step 4, Sections A & B of this Application.
A. AUTOMATIC
INVESTMENT I/We wish to make regular monthly investments of $__________ (minimum $100) on
(Check appropriate box) the / / 1st day or / / 16th day of the month (or on the first business day after that
/ / YES / / NO date).
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK)
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B. INVESTMENT BY WIRE This option provides you with a convenient way to add to your account (minimum
(Check appropriate box) $100 and maximum $__________) at any time you wish by simply calling the
transfer agent, PFPC Inc. (TRANSFER AGENT), toll-free at 1-800-___-_____. To establish
/ / YES / / NO this program, please complete Step 4, Sections A & B of this Application.
(YOU MUST ATTACH A PRE-PRINTED DEPOSIT SLIP OR VOIDED CHECK)
- -----------------------------------------------------------------------------------------------------------------------------------
STEP 4 SECTION A DEPOSITOR'S AUTHORIZATION TO HONOR DEBITS
- -----------------------------------------------------------------------------------------------------------------------------------
IF YOU SELECTED AUTOMATIC INVESTMENT OR INVESTMENT BY WIRE
YOU MUST ALSO COMPLETE STEP 4, SECTIONS A & B.
I/We authorize the Financial Institution listed below to charge to my/our account any drafts or debits drawn on my/our account
initiated by the Transfer Agent, and to pay such sums in accordance therewith, provided my/our account has sufficient funds to
cover such drafts or debits. I/We further agree that your treatment of such orders will be the same as if I/we personally signed or
initiated the drafts or debits.
I/We understand that this authority will remain in effect until you receive my/our written instructions to cancel this service.
I/We also agree that if any such drafts or debits are dishonored, for any reason, you shall have no liabilities.
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Institution Account Number_____________________________________________________________________________________________
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Name and Address Name of Financial Institution____________________________________________________________________
where my/our account Street Address___________________________________________________________________________________
is maintained City_____________________________________________________ State________________ Zip_________
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Name(s) and Signature(s) of _____________________________________________________________________
Depositor(s) as they appear (Please Print)
where account is registered _____________________________________________________________________ _________________________
(Signature) (Date)
_____________________________________________________________________
(Please Print)
_____________________________________________________________________ _________________________
(Signature) (Date)
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</TABLE>
INDEMNIFICATION AGREEMENT
To: Financial Institution Named Above
So that you may comply with your depositor's request, Hambrecht & Quist LLC (the
"Distributor") agrees:
1. Electronic Funds Transfer debit and credit items transmitted pursuant to the
above authorization shall be subject to the provisions of the Operating Rules
of the National Automated Clearing House Association.
2. To indemnify and hold you harmless from any loss you may suffer in connection
with the execution and issuance of any electronic debit in the normal course
of business initiated by the Transfer Agent (except any loss due to your
payment of any amount drawn against insufficient or uncollected funds),
provided that you promptly notify us in writing of any claim against you with
respect to the same, and further provided that you will not settle or pay or
agree to settle or pay any such claim without the written permission of the
Distributor.
3. To indemnify you for any loss including your reasonable costs and expenses in
the event that you dishonor, with or without cause, any such electronic
debit.
- -------------------------------------------------------------------------------
STEP 4 SECTION B SHAREHOLDER AUTHORIZATION/SIGNATURE(S) REQUIRED
- -------------------------------------------------------------------------------
- - The undersigned warrants that he/she has full authority and is of legal age
to purchase shares of the Fund and has received and read a current Prospectus
of the Fund and agrees to its terms.
- - I/We authorize the Fund and its agents to act upon these instructions for the
features that have been checked.
- - I/We acknowledge that in connection with an Automatic Investment or
Investment By Wire, if my/our account at the Financial Institution has
insufficient funds, the Fund and its agents may cancel the purchase
transaction and are authorized to liquidate other shares or fractions thereof
held in my/our Fund account to make up any deficiency resulting from any
decline in the net asset value of shares so purchased and any dividends paid
on those shares. I/We authorize the Fund and its agents to correct any
transfer error by a debit or credit to my/our Financial Institution account
and/or Fund account and to charge the account for any related charges. I/We
acknowledge that shares purchased either through Automatic Investment or
Investment By Wire may be subject to applicable sales charges.
- - The Fund, the Transfer Agent and the Distributor and their Trustees,
directors, officers, members, shareholders, employees and agents will not be
liable for acting upon instructions believed to be genuine, and will not be
responsible for any losses resulting from unauthorized telephone transactions
if the Transfer Agent follows reasonable procedures designed to verify the
identity of
<PAGE>
the caller. The Transfer Agent will request some or all of the following
information: account name and number; name(s) and social security number
registered to the account and personal identification; the Transfer Agent
may also record calls. Shareholders should verify the accuracy of
confirmation statements immediately upon receipt. Under penalties of
perjury, the undersigned whose Social Security (Tax I.D.) Number is shown
above certifies that (i) that Number is my correct taxpayer identification
number and (ii) currently I am not under IRS notification that I am
subject to backup withholding (line out (II) if under notification). If no
such Number is shown, the undersigned further certifies, under penalties
of perjury, that either (a) no such Number has been issued, and a Number
has been or will soon be applied for; if a Number is not provided to you
within sixty days, the undersigned understands that all payments
(including liquidations) are subject to 31% withholding under federal tax
law, until a Number is provided and the undersigned may be subject to a
$50 IRS penalty; of (b) that the undersigned is not a citizen or resident
of the U.S.; and either does not expect to be in the U.S. for 183 days
during each calendar year and does not conduct a business in the U.S.
which would received any gain from the Fund or is exempt under an income
tax treaty.
NOTE: ALL REGISTERED OWNERS OF THE ACCOUNT MUST SIGN BELOW.
FOR A TRUST, ALL TRUSTEES MUST SIGN.*
<TABLE>
<S> <C> <C>
_______________________________________ _________________________________ _______________
Individual (or Custodian) Joint Registrant, if any Date
_______________________________________ _________________________________ _______________
Corporate Office, Partner, Trustee, etc. Title Date
</TABLE>
* For Trusts, Corporations or Associations, this form must be accompanied by
proof of authority to sign, such as a certified copy of the corporate
resolution or a certificate of incumbency under the trust instrument.
- - Certain features (Automatic Investment and Investment By Wire) are effective
15 days after this form is received in good order by the Transfer Agent.
- - You may cancel any feature at any time, effective 3 days after the Transfer
Agent receives written notice from you.
- - Either the Fund or the Transfer Agent may cancel any feature, without prior
notice, if in its judgment your use of any feature involves unusual effort or
difficulty in the administration of your account.
- - The Fund reserves the right to alter, amend or terminate any or all features
or to charge a service fee upon 30 days' written notice shareholders except
if additional notice is specifically required by the terms of the prospectus.
BANKING INFORMATION
- - If your Financial Institution account changes, you must complete a Ready
Access Features Form which may be obtained from the Transfer Agent at
1-800-___-____ and send it to the Transfer Agent together with a "VOIDED"
check or pre-printed deposit slip from the new account. The new Financial
Institution change is effective 15 days after this form is received in good
order by the Transfer Agent.
<PAGE>
HAMBRECHT & QUIST IPO DISCOVERY FUND
Statement of Additional Information
Adviser Classes
Common Class
_____________ __, 1999
This statement of additional information (SAI) is not a
prospectus. It should be read in conjunction with the Hambrecht & Quist IPO
Discovery Fund (Fund) prospectuses for the Adviser Classes and the Common Class,
each dated ____________, 1999 (as amended from time to time). The Fund is
currently the only series of the Hambrecht & Quist Fund Trust.
To obtain a copy of either of the Fund's prospectuses, please
call the Fund's transfer agent, PFPC Inc., at 800-___-____, 24 hours a day, or
write to PFPC Inc., attention Hambrecht & Quist IPO Discovery Fund, at 400
Bellevue Parkway, Wilmington, Delaware 19809. For TDD service call 800-___-____,
between 8 a.m. and 5 p.m. Eastern standard time. The prospectuses also are
available on the Internet at www.hamquist.com.
TABLE OF CONTENTS
Page
----
OTHER STRATEGIES, RISKS AND LIMITATIONS
MANAGEMENT OF THE FUND
INVESTMENT ADVISORY AND OTHER SERVICES
BROKERAGE ALLOCATION AND OTHER PRACTICES
DESCRIPTION OF THE TRUST
PURCHASE, REDEMPTION AND PRICING OF SHARES
TAXATION
CALCULATION AND USE OF PERFORMANCE DATA
FINANCIAL STATEMENTS
1
<PAGE>
OTHER STRATEGIES, RISKS AND LIMITATIONS
OTHER STRATEGIES AND RISKS
The following discussion supplements and should be read in
conjunction with the sections in the prospectus entitled "Main Strategy" and
"Main Risks." In addition to the Fund's principal investment strategy discussed
in the prospectus, the Fund may invest in other securities and engage in other
investment techniques that are intended to help the Fund achieve its investment
objective, at all times in accordance with the limitations set forth below under
"Investment Limitations". Investment policies and limitations that state a
maximum percentage of assets that may be invested in a security or other asset,
or that set forth a quality standard, are measured immediately after and as a
result of the Fund's acquisition of the security or asset unless otherwise
noted. Any subsequent change in values, net assets or other circumstances will
not be considered when determining whether the investment complies with the
Fund's policies and limitations. Unless otherwise indicated, policies and
limitations may be changed by the Trustees without shareholder approval. The
Fund's investment objective may be changed only by vote of a majority of its
shareholders.
EQUITY SECURITIES. The Fund's investment in equity securities,
including IPOs and issuers which have capitalizations under $1 billion (small
capitalization issuers), represent ownership interests in corporations, and are
commonly called "stocks." Equity securities historically have outperformed most
other securities, although their prices can fluctuate based on changes in a
company's financial condition, market conditions and political, economic or even
company-specific news. When a stock's price declines, its market value is
lowered even though the intrinsic value of the company may not have changed.
Sometimes factors, such as economic conditions or political events, affect the
value of stocks of companies of the same or similar industry or group of
industries, and may affect the entire stock market. In many instances, the risk
factors described in the prospectus relating to IPO stocks are also applicable
to stocks of small capitalization issuers.
Types of equity securities include common stocks, preferred
stocks, convertible securities and warrants. Common stocks, which are probably
the most recognized type of equity security, usually entitle the owner to voting
rights in the election of the corporation's directors and any other matters
submitted to the corporation's shareholders for voting. Preferred stocks do not
ordinarily carry voting rights or may carry limited voting rights, but normally
have preference over the corporation's assets and earnings. For example,
preferred stocks have preference over common stock in the payment of dividends.
Preferred stocks also may pay specified dividends.
Convertible securities are typically preferred stock or bonds
that are exchangeable for a specific number of another form of security (usually
the issuer's common stock) at a specified price or ratio. A corporation may
issue a convertible security that is subject to
2
<PAGE>
redemption after a specified date and usually under certain circumstances.
Convertible bonds typically pay a lower interest rate than nonconvertible
bonds of the same quality and maturity, because of the conversion feature.
Due to their fixed income features, convertible securities provide higher
income potential than the issuer's common stock, but typically are more
sensitive to interest rate changes than the underlying common stock.
Warrants are a type of security usually issued with bonds and
preferred stock that entitle the holder to purchase a proportionate amount of
common stock at a specified price for a specific period of time. The prices of
warrants do not necessarily move parallel to the prices of the underlying common
stock. Warrants have no voting rights, receive no dividends and have no rights
with respect to the assets of the issuer. If a warrant is not exercised within
the specified time period, it becomes worthless.
ILLIQUID SECURITIES. The Fund may purchase and hold securities
considered to be illiquid. Illiquid securities generally are any securities that
cannot be disposed of promptly and in the ordinary course of business at
approximately the amount at which the Fund has valued the instruments. The
liquidity of the Fund's investments is monitored under the supervision and
direction of the Trustees. Investments currently not considered liquid include
repurchase agreements not maturing within seven days and certain restricted
securities. The IPO and small capitalization stocks held by the Fund will tend
to be less liquid than those issued by more established companies.
RESTRICTED SECURITIES. The Fund may purchase and hold restricted
securities. Restricted securities are securities that are subject to legal
restrictions on their sale. Restricted securities may be considered to be liquid
if an institutional or other market exists for these securities. In making this
determination, the Fund, under the direction and supervision of the Trustees,
will take into account the following factors: (1) the frequency of trades and
quotes for the security; (2) the number of dealers willing to purchase or sell
the security and the number of potential purchasers; (3) dealer undertakings to
make a market in the security; and (4) the nature of the security and
marketplace trades (e.g., the time needed to dispose of the security, the method
of soliciting offers and the mechanics of transfer). To the extent the Fund
invests in restricted securities that are deemed liquid, the general level of
illiquidity in the Fund's portfolio may be increased if qualified institutional
buyers become uninterested in purchasing these securities.
FUTURES CONTRACTS. The Fund intends to purchase and sell futures
contracts based on equity securities indices as a substitute for purchasing and
selling the individual equity securities represented by the indices. Such
transactions allow the Fund's cash balances to produce returns similar to those
of the indices on which the futures contracts are based. All futures contracts
to which the Fund is a party will be covered by segregating liquid assets equal
to the Fund's obligations under the contracts.
A futures contract on an equity index is an agreement between two
parties that obligates one party to buy and the other party to sell the specific
securities underlying the index at an agreed-upon price on a stipulated future
date. In the case of futures contracts relating to an
3
<PAGE>
index or otherwise not calling for physical delivery, the parties usually
agree to deliver the final cash settlement price of the contract at the close
of the transaction.
When buying or selling futures contracts, the Fund must place a
deposit with its broker equal to a fraction of the contract amount. This amount
is known as "initial margin" and must be in the form of liquid instruments,
including cash, cash-equivalents and U.S. government securities. Subsequent
payments to and from the broker, known as "variation margin" may be made daily,
if necessary, as the value of the futures contracts fluctuate. This process is
known as "marking-to-market." Any margin amount remaining after all contractual
obligations are satisfied will be returned to the Fund upon termination of the
futures contracts. The Fund's aggregate initial and variation margin payments
may not exceed 5% of its net assets.
Adverse market movements could cause the Fund to experience
substantial losses when buying and selling futures contracts. Of course, barring
significant market distortions, similar results would have been expected if the
Fund had instead transacted in the underlying securities directly. There also is
the risk of losing any margin payments held by a broker in the event of its
bankruptcy. To reduce the risk of such a loss, the sub-adviser will only deposit
margin amounts with brokers approved by the Trustees. The Fund incurs
transaction costs, including brokerage fees, when engaging in futures trading.
Under regulations of the Commodity Futures Trading Commission,
investment companies registered under the 1940 Act are excluded from regulation
as commodity pools or commodity pool operators if their use of futures is
limited in certain specified ways. The Fund will use futures in a manner
consistent with the terms of this exclusion.
SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
participations in equity indices (index participations), including Standard &
Poor's Depositary Receipts (SPDRs). Index participations are shares of publicly
traded unit investment trusts which own the stocks included in the relevant
index. Index participations, including SPDRs, are subject to the risk of an
investment in a broadly based portfolio of common stocks, including the risk of
declines in the general level of stock prices. They are also subject to trading
halts due to market conditions or other reasons that make trading index
participations inadvisable.
The Fund may also invest its cash reserves in securities issued
by other investment companies, including money market mutual funds managed by
the Fund's custodian. Because other investment companies employ investment
advisers and other service providers, investments by the Fund in other
investment companies may cause shareholders to pay duplicative fees.
U.S. GOVERNMENT SECURITIES, HIGH QUALITY COMMERCIAL PAPER AND
REPURCHASE AGREEMENTS. The Fund may also invest its cash reserves in
interest bearing instruments, including U.S. government securities, high
quality commercial paper and repurchase agreements.
U.S. government securities are debt securities issued by the
U.S. Treasury or issued or guaranteed by the U.S. government or any of its
agencies or instrumentalities. U.S. Treasury securities, include bills,
notes and bonds, and are backed by the full faith and credit of the United
States. Not all U.S. government securities are backed by the full faith and
credit of the United
4
<PAGE>
States. Some U.S. government securities are supported by a line of credit
the issuing entity has with the U.S. Treasury. Others are supported solely
by the credit of the issuing agency or instrumentality. There is no
assurance that the U.S. government will provide financial support to U.S.
government securities of its agencies and instrumentalities if it is not
obligated to do so. Like other fixed income securities, U.S. government
securities are sensitive to interest rate changes, which will cause their
prices to fluctuate.
Commercial paper is a short-term debt instrument issued by
corporations, financial institutions, governmental entities and other entities,
and may include funding agreements and other short-term debt obligations. The
principal risk associated with commercial paper is the potential insolvency of
the issuer. The Fund will only invest in commercial paper rated Prime 1 by
Moody's Investors Service, Inc. (Moody's) or A-1 by Standard and Poor's Rating
Service (S&P), or if not rated, issued by companies that have an outstanding
debt issue rated Aa or higher by Moody's or AA or higher by S&P.
Repurchase agreements are instruments under which the Fund
acquires ownership of certain securities (usually U.S. government securities)
from a bank or broker-dealer who agrees to repurchase the securities at a
mutually agreed-upon time and price, thereby determining the yield during the
buyer's holding period. The period of repurchase agreements is usually
short--from overnight to one week--although the securities underlying repurchase
agreements may have longer maturity dates. In the event of a bankruptcy or other
default of a repurchase agreement's seller, the Fund might incur expenses in
enforcing its rights, and could experience losses, including a decline in the
value of the underlying securities and loss of income. To reduce the risk of
such a loss the Fund only enters into repurchase agreement with banks or
broker-dealers approved by the Trustees.
BORROWING. The Fund may borrow at times to meet redemption
requests rather than sell portfolio securities to raise the necessary cash.
Borrowing may subject the Fund to interest costs, which may exceed the interest
received on the securities purchased with the borrowed funds.
LENDING. The Fund may engage in security lending arrangements
with the primary objective of increasing its income through investment of the
cash collateral in short-term, interest-bearing obligations, but will do so only
to the extent that it will not lose the tax treatment available to regulated
investment companies. Lending portfolio securities involves the risk that the
borrower may fail to return the securities or provide additional collateral. The
Fund may loan portfolio securities to qualified broker-dealers or other
institutional investors provided: (1) the loan is secured continuously by
collateral consisting of U.S. government securities, letters of credit, cash or
cash equivalents maintained on a daily marked-to-market basis in an amount at
least equal to the current market value of the securities loaned; (2) the Fund
may at any time call the loan and obtain the return of the securities loaned;
(3) the Fund will receive any interest or dividends paid on the loaned
securities, and (4) the aggregate market value of securities loaned will not at
any time exceed one-third of the total assets of the Fund.
YEAR 2000. The year 2000 presents uncertainties and possible
risks to the smooth
5
<PAGE>
operations of the Fund and the provision of services to shareholders. Many
computer programs use only two digits to identify a specific year and
therefore may not accurately recognize the upcoming change in the next
century. If not corrected, many computer applications could fail or create
erroneous results by or at year 2000. Due to the Fund's and its service
providers' dependence on computer technology to operate, the nature and
impact of year 2000 processing failures on the Fund could be material. The
Fund is taking steps to minimize the risks of year 2000, including seeking
assurances from the Fund's service providers that they are analyzing their
systems, testing them for potential problems and remediating them to the
extent possible. There can be no assurance that these steps will be
sufficient to avoid any adverse impact on the Fund. It is also possible that
the Fund's portfolio securities and performance may be materially affected by
year 2000 related problems experienced by issuers of securities and the
securities markets generally.
INVESTMENT LIMITATIONS
THE FOLLOWING FUNDAMENTAL INVESTMENT LIMITATIONS MAY BE CHANGED
ONLY BY VOTE OF A MAJORITY OF THE FUND'S SHAREHOLDERS.
THE FUND MAY NOT:
1) As to 75% of its assets, purchase securities of any issuer (other than
obligations of, or guaranteed by, the U.S. government, its agencies or
instrumentalities or investments in other registered investment
companies) if, as a result, more than 5% of the value of its total
assets would be invested in the securities of such issuer.
2) Purchase more than 10% of any class of securities of any issuer if, as a
result of such purchase, it would own more than 10% of such issuer's
outstanding voting securities. The definition of "securities" does not
include cash and cash items (including receivables), government
securities and the securities of other investment companies, including
private investment companies and qualified purchaser funds.
3) Purchase securities (other than securities issued or guaranteed by the
U.S. government, its agencies or instrumentalities) if, as a result of
such purchase, 25% or more of the value of its total assets would be
invested in any industry.
4) Purchase or sell commodities, commodity contracts or real estate,
including interests in real estate limited partnerships, provided that
the Fund may (1) purchase securities of companies that deal in
commodities, real estate or interests therein and (2) purchase or sell
futures contracts, options on future contracts, equity index
participations and index participation contracts.
5) Lend money to any person, except that the Fund may (1) purchase a
portion of an issue of short-term debt securities or similar obligations
(including repurchase agreements) that are distributed publicly or
customarily purchased by institutional investors, and (2) lend its
portfolio securities.
6
<PAGE>
6) Borrow money or issue senior securities, except that the Fund may borrow
from banks as a temporary measure to satisfy redemption requests or for
extraordinary or emergency purposes and then only in an amount not to
exceed one-third of the value of its total assets (including the amount
borrowed), provided that the Fund will not purchase securities while
borrowings represent more than 5% of its total assets.
7) Pledge, mortgage or hypothecate any of its assets, except that, to
secure allowable borrowings, the Fund may do so with respect to no more
than one-third of the value of its total assets.
8) Underwrite securities issued by others, except to the extent it may be
deemed to be an underwriter, under the federal securities laws, in
connection with the disposition of securities from its investment
portfolio.
THE FOLLOWING NON-FUNDAMENTAL INVESTMENT LIMITATIONS MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
THE FUND MAY NOT:
1) Purchase puts, calls, straddles, spreads or any combination thereof.
2) Make short sales.
3) Purchase or sell interests in oil, gas or other mineral development
programs or leases, although it may invest in companies that own or
invest in such interests or leases.
4) Purchase securities on margin, except such short-term credits as may be
necessary for the clearance of purchases and sales of securities.
5) Invest more than 15% of its net assets in illiquid securities, including
repurchase agreements with maturities in excess of seven days.
6) Invest for the purpose of exercising control or management of another
issuer.
7) Purchase securities of other investment companies, except as permitted
by the 1940 Act, including any exemptive relief granted by the
Securities and Exchange Commission (SEC).
With respect to the Fund's policy not to invest more than 25% of
the value of its total assets in any one industry, the Fund deems the following
industry groups, to be separate industries:
7
<PAGE>
<TABLE>
<S> <C>
Iron and Steel Health and Medical Services
Precious Metals Drugs and Biosciences
Miscellaneous Metals Medical Equipment/Supplies
Oil and Gas Publishing
Oil Refining Media
Energy Service Leisure Industry
Paper and Forest Products Hotels/Casinos
Agriculture/Foods Transportation/Freight
Construction Transportation
Chemicals Transportation Services
Producer Goods Restaurants
Pollution/Recycling Retail Food/Beverages
Electronics (excluding Semiconductors) Other Retail
Semiconductors and Related Telephone and Related
Aerospace/Defense Electric Utilities
Computer Hardware Gas Utilities
Computer Software Banks
Internet Related Thrift Institutions
Cosmetics/Personal Products Financial Services
Apparel and Textile Life and Other Insurance
Consumer Goods Real Property
Motor Vehicles & Parts Other Services
Miscellaneous
</TABLE>
MANAGEMENT OF THE FUND
The officers and Trustees of the Fund, their principal
occupations during the past five years and their affiliations, if any, with
Hambrecht & Quist Fund Management, LLC (HQFM) or Hambrecht & Quist LLC (H&Q) are
as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Name and Age Position With Principal Occupations During Past Five Years
the Trust
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Daniel H. Case III*, 42 Chairman, Trustee Chairman and Chief Executive Officer of Hambrecht &
Quist Group and H&Q since prior to 1994. Director of
Rational Software Corporation (software development
tools), Electronic Arts Inc.(entertainment software),
AMB Property Corporation, the National Science and
Technology Medal Foundation and the Bay Area Council.
- --------------------------------------------------------------------------------------------------------------------
William R. Timken*, 63 Trustee Director and Vice Chairman of Hambrecht & Quist Group
and H&Q since prior to 1994.
- --------------------------------------------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------------------------------------------
David R. Krimm, 45 President Director of Marketing of H&Q from 1998 to the present;
Vice President of ICVerify from 1996 to 1997; and
various positions at Intuit from 1994 to 1996,
including Director of Marketing, Automated Financial
Services, Director of Investment Services and
President of Quicken Investments.
- --------------------------------------------------------------------------------------------------------------------
Robert N. Savoie, 42 Chief Financial Officer Tax Director of H&Q from 1997 to the present;
Principal of Arthur Andersen LLP, prior to 1997.
- --------------------------------------------------------------------------------------------------------------------
Steven N. Machtinger, 49 Secretary General Counsel and Secretary of Hambrecht & Quist
Group and H&Q and a Managing Director of H&Q since prior
to 1994.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
* An "interested person" of the Fund as defined in the Investment Company Act of
1940, as amended.
Unless otherwise indicated, the address of each of the above listed individuals
is One Bush Street, San Francisco, California 94104.
The Fund is overseen by the Trustees. The Trustees meet regularly
to review the Fund's activities, contractual arrangements and performance and
are responsible for protecting the interests of the Fund's shareholders. The
following table provides information as to the expected annual compensation of
the Trustees:
<TABLE>
<CAPTION>
-------------------------------------------------------------------
Aggregate
Name of Trustee Compensation from
the Trust(1)
-------------------------------------------------------------------
<S> <C>
Daniel H. Case III $0
-------------------------------------------------------------------
William R. Timken $0
-------------------------------------------------------------------
$6,000
-------------------------------------------------------------------
$6,000
-------------------------------------------------------------------
$6,000
-------------------------------------------------------------------
</TABLE>
(1) Trustees who are not "interested persons" of the Trust receive a
quarterly fee of $1,000, plus $500 for each Fund meeting attended. Trustees
are also reimbursed for expenses incurred on behalf of the Trust.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As part of the Fund's organization, Hambrecht & Quist California,
a California
9
<PAGE>
corporation, purchased 10,000 Class A shares, or 100% of the Fund's
outstanding shares as of _______ __ 1999.
Hambrecht & Quist California is a wholly-owned subsidiary of
Hambrecht & Quist Group, a Delaware corporation. Through its ownership and
control of over 25% of the shares of Hambrecht & Quist California, Hambrecht &
Quist Group is considered to control the Fund.
As of _______, 1999 the officers and Trustees, as a group, owned
of record or beneficially less than 1% of the outstanding voting securities of
the Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
The investment adviser for the Fund is HQFM, which is a direct or
indirect wholly-owned subsidiary of Hambrecht & Quist California and Hambrecht &
Quist Group and an affiliate of H&Q, the Fund's distributor. HQFM oversees the
asset management and administration of the Fund. Services performed for the Fund
include maintaining office facilities; furnishing statistical and research data,
clerical services and stationery and office supplies; and generally assisting in
the operations of the Fund.
As compensation for these services, HQFM receives a management
fee from the Fund of 0.65% of each class's average daily net assets, a portion
of which is used to pay the Fund's sub-adviser. HQFM has guaranteed that,
through at least December 31, 2000, the total annual operating expenses of the
Class A shares will not exceed 1.55%, the total annual operating expenses of the
Class B shares will not exceed 2.25%, and the total annual operating expenses of
the Common Class shares will not exceed 1.50%, of such class's average daily net
assets.
The Fund pays all expenses not assumed by HQFM, including, but
not limited to, Trustees' expenses, audit fees, legal fees, interest expenses,
brokerage commissions, fees for registration and notification of shares for sale
with the SEC and various state securities commissions, taxes, insurance
premiums, fees of the Fund's administrator, transfer agent, fund accounting
agent or other service providers, and the cost of obtaining quotations for
portfolio securities and the pricing of Fund shares.
SUB-ADVISER
The investment adviser has entered into an investment
sub-advisory agreement with Symphony Asset Management, LLC (sub-adviser or
Symphony) pursuant to which Symphony will act as the Fund's sub-adviser. The
sub-adviser makes all investment decisions for the Fund and places orders for
the purchase and sale of securities. Symphony utilizes quantitative
10
<PAGE>
techniques and proprietary real-time databases and software models in the
performance of its services to the Fund. Symphony bases its quantitative
techniques on data provided by Quote.com, a leading provider of IPO
information, under an agreement granting Symphony exclusive advance access to
certain of Quote.com's IPO databases. In addition to quantitative techniques,
the sub-adviser will apply fundamental analysis when making investment
decisions. Among other considerations, the sub-adviser may review issuers'
prospectuses and attend "roadshows" when determining whether to invest in a
particular IPO.
For the sub-adviser's services, HQFM pays Symphony an annual
investment sub-advisory fee, payable monthly, of 0.35% of the Fund's average
daily net assets not in excess of $100 million and 0.375% of such assets over
$100 million. In the event that HQFM waives its management fee to satisfy the
expense guarantees described above under "Investment Adviser", the sub-adviser
has agreed to waive a pro rata portion of its fee from HQFM, subject to
receiving a minimum sub-advisory fee of 0.20% of the Fund's average daily net
assets.
DISTRIBUTOR
Pursuant to a distribution agreement, H&Q (distributor), whose
address is One Bush Street, San Francisco, California 94104, is the distributor
for shares of the Fund and is the Fund's agent for the purpose of the continuous
offering of the Fund's shares. The distributor is a wholly-owned subsidiary of
Hambrecht & Quist California and an affiliate of the investment adviser. The
Fund pays for prospectuses and shareholder reports to be prepared and delivered
to existing shareholders. The distributor pays such costs when the described
materials are used in connection with the offering of shares to prospective
investors and for supplementary sales literature and advertising. For its
services under the agreement, the distributor receives the sales charges
collected from sales of Class A shares and redemptions of Class A and Class B
shares and the 12b-1 fees collected on each class of shares of the Fund.
DISTRIBUTION PLAN
The Fund has adopted a distribution plan (Distribution Plan) to
permit the Fund to pay distribution fees and defray expenses associated with the
distribution of its shares in accordance with Rule 12b-1 under the 1940 Act. The
Distribution Plan was adopted because of its anticipated benefits to the Fund.
These benefits include increased sales of the Fund's shares, enhancement of the
Fund's ability to retain assets, potential economies of scale, increased
stability in the Fund's portfolio positions and greater flexibility in achieving
investment objectives.
Pursuant to the Distribution Plan, the Fund pays the distributor
at an annual rate of .30% of the value of the average daily net assets of Class
A shares, 1.00% of the value of the average daily net assets of Class B shares
and 0.25% of the value of the average daily net assets of Common Class shares.
Distribution fees are accrued daily and paid monthly and are charged as expenses
of the Fund as accrued.
11
<PAGE>
The fees payable under the Distribution Plan are used to
compensate the distributor for any expenses intended primarily to result in the
sale of the Fund's shares. Distribution fees paid from Class A and Class B
shares are used to compensate the distributor for, among other expenses,
payments made to financial intermediaries, including broker-dealers and other
financial intermediaries and industry professionals, for providing assistance in
distributing Class A and Class B shares of the Fund. Distribution fees paid from
Common Class shares are used to compensate the distributor for, among other
expenses, payments made to mutual fund supermarkets distributing Common Class
shares of the Fund. Distribution fees from each share class are also used to
reimburse the distributor for expenses incurred in the preparation, printing and
distribution of prospectuses and shareholder reports to non-shareholders.
Distribution fees payable from each share class may also be used to compensate
the distributor for payments made to third parties providing administrative
support services to Fund shareholders. The full amount of distribution fees are
payable to the distributor regardless of its expenses.
All distribution expenses incurred by the distributor in excess
of the fees provided for in the Distribution Plan may be carried forward and
resubmitted in a subsequent fiscal year provided that (i) distribution expenses
cannot be carried forward for more than three years following initial submission
and (ii) the non-interested Trustees of the Fund determine at the time of
initial submission that the distribution expenses are appropriate for
resubmission. Distribution expenses will be paid on a first in, first out basis.
All expenses covered by the Distribution Plan will be deemed to be incurred by
the distributor whether paid directly by the distributor or by a third party to
the extent reimbursed therefor by the distributor.
The investment adviser and/or distributor may from time to time
and from its own funds or such other resources as are permitted make payments
for distribution and shareholder services. The distributor provides the Trustees
with a quarterly report of the amounts expended under the Distribution Plan and
the purposes for which such expenditures were incurred.
The Distribution Plan may not be amended to increase materially
the costs which holders of Class A, Class B or Common Class shares may bear
pursuant to the Distribution Plan without the approval of the holders of such
shares. Other material amendments of the Distribution Plan must be approved by
the Trustees, and by a majority of the Trustees who are not "interested persons"
of the Fund and have no direct or indirect financial interest in the operation
of the Distribution Plan or in any related agreements, by vote cast in person at
a meeting called for the purpose of considering such amendments. The
Distribution Plan is subject to annual approval by such vote of the Trustees
cast in person at a meeting called for the purpose of voting on the Distribution
Plan. The Distribution Plan may be terminated with respect to any class of
shares at any time by vote of a majority of the Trustees who are not "interested
persons" and have no direct or indirect financial interest in the operation of
the Distribution Plan or in any related agreements or by vote of the holders of
a majority of such class of shares.
ADMINISTRATOR, FUND ACCOUNTANT, TRANSFER AGENT AND DIVIDEND DISBURSING
AGENT
PFPC Inc. (PFPC), whose principal offices are located at 400
Bellevue Parkway, Wilmington, Delaware 19809, serves as the administrator, fund
accountant, dividend disbursing
12
<PAGE>
and transfer agent for the Fund. The services provided by PFPC include day to
day maintenance of certain books and records, calculation of the offering
price of the shares, preparation of reports and liaison with the Fund's
custodian.
CUSTODIAN
PFPC Trust Company, whose principal offices are located at the
Airport Business Center, 200 Stevens Drive, Suite 440, Lester, Pennsylvania
19113, serves as custodian for the Fund. The custodian is responsible for the
daily safekeeping of securities and cash held by the Fund.
INDEPENDENT ACCOUNTANT
The Fund's independent accountant, PricewaterhouseCoopers LLP,
audits and reports on the annual financial statements of the Fund and reviews
certain regulatory reports and the Fund's federal income tax returns. It also
performs other professional accounting, auditing, tax and advisory services when
the Fund engages it to do so. Its address is 333 Market Street, San Francisco,
CA 94105.
BROKERAGE ALLOCATION AND OTHER PRACTICES
PORTFOLIO TURNOVER
For reporting purposes, the Fund's portfolio turnover rate is
calculated by dividing the value of purchases or sales of portfolio securities
for the year, whichever is less, by the monthly average value of portfolio
securities the Fund owned during the year. When making the calculation, all
securities whose maturities at the time of acquisition were one year or less
("short-term securities") are excluded. A 100% portfolio turnover rate would
occur, for example, if all portfolio securities (aside from short-term
securities) were sold and either repurchased or replaced once during the year.
The turnover rate of the Fund will fluctuate annually and is
expected to exceed 200% in any given year. Funds with high turnover (100% or
more) tend to generate higher taxable income and gains and transaction costs,
including brokerage commissions.
PORTFOLIO TRANSACTIONS
In effecting securities transactions for the Fund, the
sub-adviser seeks to obtain best price and execution. Subject to the supervision
of the Fund's Trustees, the sub-adviser will generally select brokers and
dealers for the Fund primarily on the basis of the quality and reliability of
brokerage services, including execution capability and financial responsibility.
In assessing these criteria, the sub-adviser will, among other
things, monitor the
13
<PAGE>
performance of brokers effecting transactions for the Fund to determine the
effect, if any, that the Fund's transactions through those brokers have on
the market prices of the stocks involved. This may be of particular
importance for the Fund's investments in relatively smaller companies whose
stocks are not as actively traded as those of their larger counterparts. The
Fund will seek to buy and sell securities in a manner that causes the least
possible fluctuation in the prices of those stocks in view of the size of the
transactions.
When the execution capability and price offered by two or more
broker-dealers are comparable, the sub-adviser may, in its discretion, in agency
transactions (and not principal transactions) utilize the services of
broker-dealers that provide it with investment information and other research
resources. Commissions charged by such broker-dealers may be higher than
commissions charged by broker-dealers not providing such resources. Such
resources may be used by the sub-adviser when providing advisory services to
other investment advisory clients, including other mutual funds.
In an attempt to obtain best execution for the Fund, the
sub-adviser may place orders directly with market makers or with third market
brokers or brokers on an agency basis. Placing orders with third market brokers
may enable the Fund to trade directly with other institutional holders on a net
basis. At times, this may allow the Fund to trade larger blocks than would be
possible trading through a single market maker.
The Fund expects to purchase IPOs from underwriting syndicates of
which H&Q, the Fund's distributor and an affiliate of the Fund's investment
adviser, acts as a member or manager. Such purchases will be effected in
accordance with the conditions set forth in Rule 10f-3 under the 1940 Act and
related procedures adopted by the Fund's Trustees, including a majority of the
Trustees who are not "interested persons" of the Fund. Among the conditions are
that the IPO issuer will have been in operation for at least three years, that
not more than 25% of the underwriting will be purchased by the Fund and any
other investment company having the same investment adviser or sub-adviser and
that no shares will be purchased from the distributor or any of its affiliates.
DESCRIPTION OF THE TRUST
The Fund is currently the only series of Hambrecht & Quist Fund
Trust, a diversified open-end investment management company organized as a
Delaware business trust on June 7, 1999.
The Fund may hold special meetings. These meetings may be called
for purposes such as electing trustees, changing fundamental policies and
amending management contracts. Shareholders are entitled to one vote for each
dollar of net asset value, and a proportional fractional vote for each
fractional dollar of net asset value, represented by the shares owned.
Shareholders may vote by proxy or in person. Proxy materials will be mailed to
shareholders prior to any meetings, and will include a voting card and
information explaining the matters to be voted upon.
14
<PAGE>
A majority of shares entitled to vote will be a quorum for the
transaction of business at a shareholders' meeting, except that where any
provision of law, or of the Agreement and Declaration of Trust (Declaration of
Trust) or Bylaws permits or requires that (1) holders of any series vote as a
series, then a majority of the aggregate number of shares of that series
entitled to vote will be necessary to constitute a quorum for the transaction of
business by that series, or (2) holders of any class vote as a class, then a
majority of the aggregate number of shares of that class entitled to vote will
be necessary to constitute a quorum for the transaction of business by that
class. Any lesser number is sufficient for adjournments. Any adjourned session
or sessions may be held, within a reasonable time after the date set for the
original meeting, without the necessity of further notice. The Declaration of
Trust specifically authorizes the Trustees to terminate the Trust (or any
series) by notice to the shareholders without shareholder approval.
Generally, Delaware business trust shareholders are not
personally liable for obligations of the Delaware business trust under
Delaware law. The Delaware Business Trust Act (Delaware Act) provides that
shareholders of a Delaware business trust are entitled to the same
limitations on liability extended to shareholders of private for-profit
corporations. The Declaration of Trust expressly provides that the Trust has
been organized under the Delaware Act and that the Declaration of Trust is to
be governed by Delaware law. It is nevertheless possible that a Delaware
business trust, such as the Trust, might become party to an action in another
state whose courts refused to apply Delaware law, in which case the Trust's
shareholders could be subject to personal liability. To guard against this
risk, the Declaration of Trust (i) contains an express disclaimer of
shareholder liability for acts or obligations of the Trust and provides that
notice of such disclaimer may be given in each agreement, obligation and
instrument entered into or executed by the Trust or its Trustees,
(ii) provides for the indemnification out of Trust property of shareholders
held personally liable for any obligations of the Trust or any series of the
Trust and (iii) provides that the Trust will, upon request, assume the
defense of any claim made against any shareholder for any act or obligation
of the Trust and satisfy any judgement thereon. Thus, the risk of a Trust
shareholder incurring financial loss beyond his or her investment because of
shareholder liability is limited to circumstances in which all of the
following factors are present: (1) a court refuses to apply Delaware law;
(2) the liability arose under tort law or, if not, no contractual limitation
of liability was in effect; and (3) the Trust itself would be unable to meet
its obligations. In light of Delaware law, the nature of the Trust's business
and the nature of its assets, the risk of personal liability to a Fund
shareholder is remote.
As more fully described in the Declaration of Trust, the Trustees
may each year, or more frequently, distribute to the shareholders of each series
accrued income less accrued expenses and any net realized capital gains less
accrued expenses. Distributions of each year's income of each series will be
distributed pro rata to shareholders in proportion to the number of shares of
each series held by each of them. Distributions will be paid in cash or shares
or a combination thereof as determined by the Trustees. Distributions paid in
shares will be paid at the net asset value as determined in accordance with the
Declaration of Trust.
Shares of the Trust may be automatically redeemed if held by a
shareholder in an amount less than the minimum required by the Fund.
15
<PAGE>
PURCHASE, REDEMPTION AND PRICING OF SHARES
CLASS A SHARES
Class A shares will normally be more beneficial than Class B
shares to investors who qualify for reduced initial sales charges on Class A
shares, as set forth in the prospectus. The transfer agent will, therefore,
reject any order for $250,000 or more for Class B shares.
With respect to purchases of $1,000,000 or more made through
authorized financial intermediaries, the distributor may pay from its own
resources a fee of up to 1% of the amount invested to compensate such
financial intermediaries for their distribution assistance. Proceeds from the
CDSC on Class A shares are used by the distributor to defray these expenses.
No initial sales charge is imposed on Class A shares issued (i)
pursuant to the automatic reinvestment of income and gains distributions or
(ii) upon the automatic conversion of Class B shares to Class A shares.
COMBINED PURCHASE PRIVILEGE AND CUMULATIVE QUANTITY DISCOUNT
Certain investors may qualify for a reduced sales charge
according to the Class A sales charge schedule set forth in the prospectus, by
combining purchases of shares of the Fund into a single "purchase" if the
resulting "purchase" equals at least $50,000. For purposes of this Combined
Purchase Privilege, the term "purchase" refers to: (i) a single purchase by an
individual, or concurrent purchases, which in the aggregate are at least equal
to the prescribed amounts, by an individual, his or her spouse and their
children under the age of 21 years; (ii) a single purchase by a trustee or
other fiduciary purchasing shares for a single fiduciary account even though
more than one beneficiary is involved; or (iii) a single purchase for the
employee benefit plans of a single employer. The term "purchase" also includes
purchases by a "company" as the term is defined in the 1940 Act, but does not
include purchases by any such company which has not been in existence for at
least six months or which has no other purpose than the purchase of shares of
the Fund or shares of other registered investment companies. The term
"purchase" does not include purchases by any group of individuals whose sole
organizational nexus is that the participants therein are credit card holders
of a company, policy holders of an insurance company, customers of either a
bank or broker-dealer or clients of an investment adviser.
An investor's purchase of additional Class A shares of the Fund
may qualify for a Cumulative Quantity Discount. The applicable sales charge will
be based on the total of: (i) the investor's current purchase; (ii) the net
asset value (at the close of business on the previous day) of all Class A shares
of the Fund held by the investor; and (iii) the net asset value of all shares
described in (ii) owned by another shareholder eligible to combine his or her
purchase with that of the investor in a single "purchase" as described above.
16
<PAGE>
To qualify for the Combined Purchase Privilege or to obtain the
Cumulative Quantity Discount on purchases made through a financial intermediary,
the investor or financial intermediary must provide the transfer agent with
sufficient information to verify that each purchase qualifies for the privilege
or discount.
STATEMENT OF INTENTION
Class A investors may also obtain a reduced sales charge, as
set forth in the prospectus, by means of a written Statement of Intention, which
expresses the investor's intention to invest at least $50,000 within a period of
13 months in Class A shares of the Fund. Each purchase under a Statement of
Intention will be made at the public offering price at the time of such purchase
applicable to a single transaction of the dollar amount indicated in the
Statement of Intention. At the investor's option, a Statement of Intention may
include purchases of Fund shares made not more than 90 days prior to the date
the investor signs the Statement of Intention; however, the 13 month period
during which the Statement of Intention is in effect will begin on the date of
the earliest purchase included.
The Statement of Intention is not a binding obligation on the
investor to purchase the full amount indicated. The minimum initial investment
under a Statement of Intention will be 5% of such amount. Shares purchased with
the first 5% will be held in escrow (while remaining registered in the name of
the investor) to secure payment of the higher sales charge applicable to the
shares actually purchased if the full amount indicated in the Statement of
Intention is not purchased, and such escrowed shares will be involuntarily
redeemed to pay the additional sales charge, if necessary. Dividends on escrowed
shares, whether paid in cash or reinvested in additional Fund shares, are not
subject to escrow. When the full amount has been purchased, the escrow will be
released. To the extent the investor purchases more than the dollar amount
indicated in the Statement of Intention and qualifies for a further reduced
sales charge, the sales charge will be adjusted for the entire amount purchased
at the end of the 13 month period. The difference in the sales charge will be
used to purchase additional Fund shares subject to the rate of the sales charge
applicable to the actual amount of the aggregate purchase.
PRIVILEGE FOR CERTAIN RETIREMENT PLANS
Multiple participant payroll deduction retirement plans, such
as 401(k) plans, may also purchase shares of the Fund at a reduced sales charge
on a monthly basis during the 13-month period following the plan's initial
purchase. The sales charge applicable to the initial purchase of shares of the
Fund will be that normally applicable under the sales charge schedule set forth
in the prospectus to an investment 13 times larger than such initial purchase.
The sales charge applicable to each succeeding monthly purchase will be that
normally applicable, under the schedule, to an investment equal to the sum of
(i) the total purchases previously made during the 13-month period and (ii) the
current month's purchase multiplied by the number of months (including the
current month) remaining in the 13-month period. Sales charges previously paid
during such period will not be retroactively adjusted based on later purchases.
17
<PAGE>
SALES AT NET ASSET VALUE
The Fund may sell its Class A shares at net asset value
(without an initial sales charge) and without a CDSC to certain categories of
investors, including:
(i) HQFM, H&Q, Symphony and their affiliates, and their current
officers, partners, directors and employees, any current or former Trustee or
officer of the Trust, any spouse or sibling, direct ancestor or direct
descendent (collectively "relatives") of any such individual, or any trust,
individual retirement account or retirement plan account for the benefit of any
such individual or relative;
(ii) qualified retirement plans of HQFM, H&Q, Symphony and their
affiliates;
(iii) any registered representative of any financial intermediary
authorized to sell Class A or Class B shares of the Fund or their respective
spouses, children and parents;
(iv) banks, trust companies and other types of depository
institutions investing for their own accounts or for their customers' accounts;
(v) any state, county or city, or any instrumentality,
department, authority or agent thereof, which is prohibited by applicable
investment laws from paying a sales charge or commission in connection with the
purchase of shares of the Fund;
(vi) pension and profit sharing plans, pension funds and other
company-sponsored benefit plans that (A) buy shares worth $500,000 or more, or
(B) have at the time of purchase, 100 or more eligible participants, or (C)
certify that they project to have annual plan purchases of $200,000 or more;
(vii) "wrap" accounts for the benefit of clients of
broker-dealers, financial institutions or other financial intermediaries that
have entered into an agreement with H&Q, specifying aggregate minimums and
certain operating policies and standards; and
(viii) registered investment advisers investing for accounts for
which they receive asset-based fees.
A purchaser must certify eligibility for an exemption from the
Class A sales charge on their account application (attached to the prospectus)
and notify the transfer agent if the purchaser is no longer eligible for an
exemption. Exemptions will be granted subject to verification of a purchaser's
entitlement. Investors purchasing Class A shares of the Fund at net asset value
may be charged a fee if they effect transactions in Fund shares through a
financial intermediary.
The CDSC imposed on certain purchases of Class A shares may be
waived in the same manner as the CDSC on Class B shares may be waived, as
described below under "Class B Shares."
18
<PAGE>
CLASS B SHARES
The combination of the CDSC and the distribution fee enables the
Fund to sell the Class B shares without an initial sales charge being deducted
at the time of purchase. The higher distribution fee incurred by Class B shares
will cause such shares to have a higher expense ratio and to pay lower dividends
than those related to Class A and Common Class shares.
The CDSC may be waived on Class B shares if the redemption
relates to: (a) retirement distributions or loans to participants or
beneficiaries from pension or profit sharing plans, pension funds and other
company-sponsored benefit plans (each a Plan); (b) the death or disability (as
defined in Section 72(m)(7) of the Internal Revenue Code of 1986, as amended
(Code)) of a participant in a Plan; (c) hardship withdrawals by a participant or
beneficiary in a Plan; (d) satisfying the minimum distribution requirements of
the Code; (e) the establishment of "substantially equal periodic payments" as
described in Section 72(m)(7) of the Code; (f) the separation from service by a
participant or beneficiary in a Plan; (g) excess contributions distributed from
a Plan; (i) the death or disability (as defined in Section 72(m)(7) of the Code)
of a shareholder if the redemption is made within one year of the event; and (h)
redemption proceeds which are being reinvested in accounts or non-registered
products over which an advisory affiliate of Hambrecht & Quist Group has
investment discretion.
Class B shares convert to Class A shares five years after the end
of the calendar month in which the shareholder's purchase order was accepted.
Such conversion will occur on the basis of the net asset values of the two
classes, without the imposition of any sales load, fee or other charge. The
purpose of the conversion is to reduce the distribution fee paid by Class B
shareholders that have been outstanding long enough for the distributor to have
been compensated for the distribution expenses incurred in the sale of the
shares.
For the purpose of conversion to Class A shares, Class B shares
purchased through reinvestment of dividends and distributions paid in respect of
Class B shares in a shareholder's account will be considered to be held in a
separate sub-account. Each time any Class B shares (other than those in the
sub-account) convert to Class A shares, an equal pro-rata portion of the Class B
shares held in the sub-account will also convert to Class A shares.
The conversion of Class B shares to Class A shares is subject to
the availability at the time of conversion of an opinion of counsel or other
assurance to the effect that the conversion of Class B shares to Class A shares
does not constitute a taxable event under federal law. In the event such
assurance is not available, no further conversion of Class B shares would occur
and shares would continue to be subject to a higher distribution fee for an
indefinite period.
PURCHASING AND REDEEMING SHARES OF THE FUND
As long as the Fund or PFPC Inc. follow reasonable procedures to
confirm that your telephone order is genuine, they will not be liable for any
losses you may experience due to
19
<PAGE>
unauthorized or fraudulent instructions. These procedures may include
requiring a form of personal identification before acting upon any telephone
order, providing written confirmation of telephone orders and tape recording
telephone orders.
PFPC Inc. does not accept third party checks as payment for
Fund shares. The Fund requires signature guarantees for redemptions in excess
of $25,000. A signature guarantee may be obtained from a domestic bank or
trust company, broker, dealer, clearing agency or savings association who are
participants in a medallion program recognized by the Securities Transfer
Association. The three recognized medallion programs are Securities Transfer
Agents Medallion Program, Stock Exchange Medallion Program and the New York
Stock Exchange, Inc. Medallion Signature Program. Signature guarantees that
are not part of these programs will not be accepted.
Share certificates will not be issued in order to avoid
additional administrative costs, however, share ownership records are maintained
by the Fund's transfer agent, PFPC Inc. Twice a year, financial reports will be
mailed to shareholders describing the Fund's performance and investment
holdings. In order to reduce these mailing costs, each household will receive
one consolidated mailing. If you do not want to receive consolidated mailings,
you may write to the Fund and request that your mailings not be consolidated.
The Fund has made an election with the SEC to pay in cash all
redemptions requested by any shareholder of record limited in amount during any
90-day period to the lesser of $250,000 or 1% of its net assets at the beginning
of such period. This election is irrevocable without the SEC's prior approval.
Redemption requests in excess of these limits may be paid, in whole or in part,
in investment securities or in cash, as the Trustees may deem advisable. Payment
will be made wholly in cash unless the Trustees believe that economic or market
conditions exist that would make such payment a detriment to the best interests
of the Fund. If redemption proceeds are paid in investment securities, such
securities will be valued as set forth in "Pricing of Shares." A redeeming
shareholder would normally incur brokerage expenses if he or she were to convert
the securities to cash.
PRICING OF SHARES
Securities traded on stock exchanges are valued at the last
quoted sales price that day on the exchange on which such securities are
primarily traded, or, lacking any sales, at the mean between the bid and ask
prices. Securities traded in the over-the-counter market are valued at the last
sales price that day, or if no sales that day, at the mean between the bid and
ask prices.
Open futures contracts will be valued using the closing
settlement price or, in the absence of such a price, the most recent quoted bid
price. If there are no quotations available on the valuation date, the last
available closing settlement price will be used.
U.S. government securities and other debt instruments having 60
days or less remaining until maturity are valued at amortized cost if their
original maturity was 60 days or less, or by amortizing their fair values as of
the 61st day prior to maturity if their original maturity exceeded 60 days
(unless in either case the Trustees determine that this method does not
represent fair value).
Fixed income securities not maturing within 60 days may be valued
on the basis of the price provided by a pricing service when such prices are
believed to reflect the fair market value of such securities. The prices
provided by a pricing service take into account many factors, including
institutional size trading in similar groups of securities and any developments
related to specific securities.
20
<PAGE>
Securities and assets for which market quotations are not readily
available (including restricted securities that are subject to limitations on
their sale and illiquid securities) are valued at fair value as determined in
good faith pursuant to guidelines adopted by the Trustees.
The assets attributable to Class A, Class B and Common Class
shares will be invested together in a single portfolio. The net asset value of
each class will be determined separately by subtracting the liabilities
allocated to that class from the assets belonging to that class in conformance
with the provisions of a plan adopted by the Fund in accordance with Rule 18f-3
under the 1940 Act.
TAXATION
FEDERAL TAX INFORMATION FOR THE FUNDS
It is the Fund's policy to qualify for taxation as a "regulated
investment company" (RIC) by meeting the requirements of Subchapter M of the
Code. By qualifying as a RIC, the Fund expects to eliminate or reduce to a
nominal amount the federal income tax to which it is subject. If the Fund does
not qualify as a RIC under the Code, it will be subject to federal income tax on
its net investment income and any net realized capital gains.
The Code imposes a non-deductible excise tax on RICs that do not
distribute in a calendar year (regardless of whether they otherwise have a
non-calendar taxable year) an amount equal to 98% of their "ordinary income" (as
defined in the Code) for the calendar year plus 98% of their net capital gain
for the one-year period ending on October 31 of such calendar year, plus any
undistributed amounts from prior years. The non-deductible excise tax is equal
to 4% of the deficiency. For the foregoing purposes, the Fund is treated as
having distributed any amount on which it is subject to income tax for any
taxable year ending in such calendar year.
The Fund's transactions in futures contracts may be restricted by
the Code and are subject to special tax rules. In a given case, these rules may
accelerate income to the Fund, defer its losses, cause adjustments in the
holding periods of the Fund's assets, convert short-term capital losses into
long-term capital losses or otherwise affect the character of the Fund's income.
These rules could therefore affect the amount, timing and character of
distributions to shareholders. The Fund will endeavor to make any available
elections pertaining to these transactions in a manner believed to be in the
best interest of the Fund and its shareholders.
FEDERAL INCOME TAX INFORMATION FOR SHAREHOLDERS
The discussion of federal income taxation presented below
supplements the discussion in the Fund's prospectus and only summarizes some of
the important federal tax considerations generally affecting shareholders of the
Fund. Accordingly, prospective investors (particularly those not residing or
domiciled in the United States) should consult their own tax advisers regarding
the consequences of investing in the Fund.
Any dividends declared by the Fund in October, November or
December and paid
21
<PAGE>
the following January are treated, for tax purposes, as if they were received
by shareholders on December 31 of the year in which they were declared.
Long-term capital gains distributions are taxable as long-term capital gains,
regardless of how long you have held your shares. However, if you receive a
long-term capital gains distribution with respect to Fund shares held for six
months or less, any loss on the sale or exchange of those shares will, to the
extent of the long-term capital gains distribution, be treated as a long-term
capital loss. For corporate investors in the Fund, dividend distributions the
Fund designate to be from dividends received from qualifying domestic
corporations will be eligible for the 70% corporate dividends-received
deduction to the extent they would qualify if the Fund were a regular
corporation. Distributions by the Fund also may be subject to state, local
and foreign taxes, and the Fund's treatment under applicable tax laws may
differ from the federal income tax treatment.
The Fund will be required in certain cases to withhold and remit
to the U.S. Treasury 31% of taxable dividends paid to any shareholder who (1)
fails to provide a correct taxpayer identification number certified under
penalty of perjury; (2) is subject to withholding by the Internal Revenue
Service for failure to properly report all payments of interest or dividends; or
(3) fails to provide a certified statement that he or she is not subject to
"backup withholding." Backup withholding is not an additional tax and any
amounts withheld may be credited against the shareholder's ultimate U.S. tax
liability.
Foreign shareholders (i.e., nonresident alien individuals and
foreign corporations, partnerships, trusts and estates) are generally subject to
U.S. withholding tax at the rate of 30% (or a lower tax treaty rate) on
distributions derived from net investment income and short-term capital gains.
Distributions to foreign shareholders of long-term capital gains and any gains
from the sale or other disposition of shares of the Fund generally are not
subject to U.S. taxation, unless the recipient is an individual who meets the
Code's definition of "resident alien." Different tax consequences may result if
the foreign shareholder is engaged in a trade or business within the United
States. In addition, the tax consequences to a foreign shareholder entitled to
claim the benefits of a tax treaty may be different than those described above.
CALCULATION AND USE OF PERFORMANCE DATA
Average annual total return is a standardized measure of
performance calculated using methods prescribed by SEC rules. It is calculated
by determining the ending value of a hypothetical initial investment of $1,000
made at the beginning of a specified period. The ending value is then divided by
the initial investment, the result of which is annualized and expressed as a
percentage. It is reported for periods of one, five and 10 years or since
commencement of operations for periods not falling on those intervals. In
computing average annual total return, the Fund assumes reinvestment of all
distributions at net asset value on applicable reinvestment dates.
An after-tax total return for the Fund may be calculated by
taking its total return and subtracting applicable federal taxes from the
portions of the Fund's total return attributable to capital gain and ordinary
income distributions. This after-tax total return may be compared to
22
<PAGE>
that of other mutual funds with similar investment objectives as reported by
independent sources.
The Fund also may report the percentage of its total return that
would be paid to taxes annually (at the applicable federal personal income and
capital gains tax rates) before redemption of Fund shares. This proportion may
be compared to that of other mutual funds with similar investment objectives as
reported by independent sources.
The Fund also may advertise its cumulative total return since
inception. This number is calculated using the same formula that is used for
average annual total return except that, rather than calculating the total
return based on a one-year period, cumulative total return is calculated from
commencement of operations to the most recent fiscal year end.
The performance of the Fund may be compared with the performance
of other mutual funds by comparing the ratings of mutual fund rating services,
various indices, U.S. government obligations, bank certificates of deposit, the
consumer price index and other investments for which reliable data is available.
The Fund's performance may also be compared to averages, performance rankings,
or other information prepared by recognized mutual fund statistical services. An
index's performance data assumes the reinvestment of dividends but does not
reflect deductions for administrative, management and trading expenses. The Fund
will be subject to these costs and expenses, while an index does not have these
expenses. In addition, various factors, such as holding a cash balance, may
cause the Fund's performance to be higher or lower than that of an index. The
Fund's annual report may contain additional performance information.
CERTAIN HISTORICAL INFORMATION ABOUT IPOS
The following chart, which the Fund may include in
advertisements, provides certain historical performance information about IPOs
by U.S. companies (domestic IPOs), compared to the performance of selected
indexes over the same period. The data is provided solely to illustrate the
performance over time of domestic IPOs. The domestic IPO return has been
calculated by averaging the performance of every IPO by a U.S. company that was
outstanding for 18 months or less as of the end of each month of the year
indicated.
You should not rely on this data as an indication of future
performance of IPOs or the Fund, as performance figures for earlier periods
may vary significantly from those shown and past performance may not be an
indication of future performance. You should also not rely on this data as an
indication of the future performance of the Fund for other reasons. The data
includes IPOs that are not traded on the NYSE, American Stock Exchange or
NASDAQ National Market and would not meet the sub-adviser's criteria for
offering size, issuer market capitalization or lead underwriter. Also, in
many cases a large percentage of an IPO's gain occurs during the first month,
and in particular, the first day of trading. There can be no assurance that
the Fund will be able to purchase IPOs at the offering price.
23
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Year Domestic IPO Return S&P 500-Registered Trademark- Russell 2000-Registered Trademark- Hambrecht & Quist
Index(1) Index(2) Growth Index(3)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1993 72.60% 10.02% 17.00% 9.71%
- ------------------------------------------------------------------------------------------------------------------------------
1994 (9.91) 1.35 (3.18) 3.22
- ------------------------------------------------------------------------------------------------------------------------------
1995 52.63 37.59 27.36 66.83
- ------------------------------------------------------------------------------------------------------------------------------
1996 23.03 23.24 16.42 4.64
- ------------------------------------------------------------------------------------------------------------------------------
1997 18.72 31.68 22.06 2.39
- ------------------------------------------------------------------------------------------------------------------------------
1998 8.17 26.84 (2.25) 45.04
- ------------------------------------------------------------------------------------------------------------------------------
1999(4) 14.79 4.86 (5.43) 23.95
- ------------------------------------------------------------------------------------------------------------------------------
Average
Annual
Return 26.31 21.11 11.46 22.96
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Source - Quote.com
1. The S&P 500-Registered Trademark- Index measures the average performance
of 500 widely held stocks from companies in the industrial, transportation,
financial and utility sectors.
2. The Russell 2000-Registered Trademark- Index measures the performance of
the smallest 2000 companies in the Russell 3000-Registered Trademark- Index,
which is comprised of the stocks of the largest 3000 U.S. publicly traded
companies.
3. The Hambrecht & Quist Growth Index measures the performance of
approximately 275 companies with annual revenues of less than $300 million,
including companies in the technology, healthcare, branded consumer and
internet sectors.
4. Includes non-annualized data for the first three months of 1999.
24
<PAGE>
HAMBRECHT & QUIST FUND 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 Contracts . . . . To be filed by amendment.
(e) Distribution Agreement. . . . . . . . To be filed by amendment.
(f) Bonus or Profit Sharing Contracts . . None.
(g) Custodian Agreements. . . . . . . . . To be filed by amendment.
(h) Other Material Contracts
(1) Transfer Agency Services
Agreement . . . . . . . . . . . . To be filed by amendment.
(2) Administration and
Accounting Services Agreement . . To be filed by amendment.
(i) Legal Opinion . . . . . . . . . . . . To be filed by amendment.
(j) Other Opinions
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 . . . . . . . . . . . To be filed by amendment.
<PAGE>
Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
As of _______, 1999 Hambrecht & Quist California, a California
corporation which is a wholly-owned subsidiary of Hambrecht & Quist
Group, a Delaware corporation, owned 100% of the shares of the Fund.
The Fund may be considered to be under common control with the
following direct and indirect subsidiaries of Hambrecht & Quist Group:
Hambrecht & Quist, LLC (Delaware limited liability company)
Hambrecht & Quist Fund Management, LLC (California limited
liability company)
Hambrecht & Quist Capital Management, Inc. (California
corporation)
Hambrecht & Quist Management Corporation (California corporation)
Hambrecht & Quist Venture Partners (California limited
partnership)
Hambrecht & Quist Guaranty Finance, LLC (California limited
liability company)
H&Q Venture Management, LLC (Delaware limited liability company)
Item 25. INDEMNIFICATION
The Agreement and Declaration of Trust (Article IV, Section 3) of the
Trust provides that, in the event a Trustee, officer, employee or
agent of the Trust is sued for his or her activities concerning the
Trust, the Trust will indemnify that person to the fullest extent
permitted by law except if that person has been found by a court or
body before which the proceeding was brought to have acted with
willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office or not to
have acted in good faith in the reasonable belief that his action was
in the best interest of the Trust.
The Registrant intends to purchase errors and omissions insurance with
Trustees and officers' liability coverage.
Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Hambrecht & Quist Fund Management, LLC (adviser), was recently formed
to act as the Fund's investment adviser and has no other businesses of
a substantial nature. Information as to the adviser's officers and
managing members is included in its Form ADV filed on ______________,
1999 with the Securities and Exchange Commission (Registration Number
___________) and is incorporated herein by reference.
Item 27. PRINCIPAL UNDERWRITERS
2
<PAGE>
Hambrecht & Quist LLC (distributor) serves as principal underwriter
of the shares of the Fund. The following table sets forth information
concerning each officer of the distributor.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
Name and Principal Position and Offices Position and Offices
Business Address* with Underwriter with Registrant
----------------------------------------------------------------------------------
<S> <C> <C>
Daniel H. Case III Chairman and Chief Executive Chairman, Trustee
Officer
----------------------------------------------------------------------------------
William R. Timken Director and Vice Chairman Trustee
----------------------------------------------------------------------------------
Patrick J. Allen Managing Director and Chief
Financial Officer
----------------------------------------------------------------------------------
Todd D. Bakar Managing Director and Director
of Research
----------------------------------------------------------------------------------
David G. Golden Managing Director and Co-
Director of Investment Banking
----------------------------------------------------------------------------------
John P. Hullar Managing Director and Director
or Worldwide Sales
----------------------------------------------------------------------------------
Steven N. Machtinger Managing Director, General Secretary
Counsel and Secretary
----------------------------------------------------------------------------------
David M. McAuliffe Chief Operating Officer
----------------------------------------------------------------------------------
Cristina M. Morgan Managing Director and Co-
Director of Investment Banking
----------------------------------------------------------------------------------
</TABLE>
* All addresses are One Bush Street, San Francisco, California 94104.
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 Rules thereunder, are maintained by
the Registrant's sub-adviser, Symphony Asset Management, LLC, at
555 California Street, San Francisco, California 94104. Certain
records, including records relating to Registrant's shareholders,
are maintained at the offices of the Registrant's transfer agent,
registrar, dividend disbursing agent and shareholder servicing
agent, PFPC Inc., 400 Bellevue Parkway, Wilmington, Delaware 19809.
Records relating to the physical possession of securities are
maintained by the Trust's custodian, PFPC Trust Company, 200
Stevens Drive, Lester, Pennsylvania 19113. All other records
required to be maintained, are maintained at the offices of the
adviser at One Bush Street, San Francisco, California 94104.
Item 29. MANAGEMENT SERVICES
Not applicable.
Item 30. UNDERTAKINGS
Not applicable.
3
<PAGE>
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, duly authorized, in the City of San Francisco, and State of
California, on the 11th day of June, 1999.
HAMBRECHT & QUIST FUND TRUST
(Registrant)
By: /s/ David R. Krimm
---------------------------
David R. Krimm, 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 date(s) indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
Principal Executive Officer
/s/ David R. Krimm Initial Trustee and June 11, 1999
- ------------------------------------ President
Principal Financial and
Accounting Officer
/s/ Robert N. Savoie Chief Financial Officer June 11, 1999
- ------------------------------------
</TABLE>
4
<PAGE>
HAMBRECHT & QUIST FUND TRUST
Exhibit Index to Part C
ITEM NO. DESCRIPTION
-------- -----------
99(a) Agreement and Declaration of Trust
99(a)(1) Certificate of Trust
99(b) By-laws
5
<PAGE>
EXHIBIT 99(a)
HAMBRECHT & QUIST FUND TRUST
AGREEMENT AND DECLARATION OF TRUST
JUNE 7, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
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...........................................................8
Section 4. Initial Trustee, Number of Trustees............................................8
Section 5. Term of Office of Trustees.....................................................8
Section 6. Vacancies; Appointment of Trustees.............................................8
Section 7. Ownership of Trust Property....................................................8
Section 8. Effect of Trustees Not Serving.................................................9
Section 9. Trustees, etc. as Shareholders.................................................9
Article III CONTRACTS WITH SERVICE PROVIDERS...............................................9
Section 1. Underwriting Contract..........................................................9
Section 2. Advisory or Management Contract...............................................10
Section 3. Administration Agreement......................................................10
Section 4. Service Agreement.............................................................10
Section 5. Transfer Agent................................................................10
Section 6. Custodian.....................................................................10
Section 7. Affiliations of Trustees or Officers, Etc.....................................11
Article IV COMPENSATION, LIMITATION OF LIABILITY AND INDEMNIFICATION.....................11
Section 1. Compensation..................................................................11
Section 2. Limitation of Liability.......................................................12
Section 3. Indemnification...............................................................12
Section 4. Indemnification of Shareholders...............................................13
Section 5. No Bond Required of Trustees..................................................13
Section 6. No Duty of Investigation; Notice in Trust Instruments, Etc....................14
Section 7. Reliance on Experts, etc......................................................14
Article V SERIES; CLASSES; SHARES.......................................................14
Section 1. Establishment of Series or Class..............................................14
Section 2. Shares........................................................................15
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 3. Investment in the Trust.......................................................16
Section 4. Assets and Liabilities of Series..............................................16
Section 5. Ownership and Transfer of Shares..............................................17
Section 6. Status of Shares; Limitation of Shareholder Liability.........................17
Article VI DISTRIBUTIONS AND REDEMPTIONS.................................................18
Section 1. Distributions.................................................................18
Section 2. Redemptions...................................................................19
Section 3. Determination of Net Asset Value..............................................19
Section 4. Suspension of Right of Redemption.............................................20
Section 5. Repurchase by Agreement.......................................................20
Article VII SHAREHOLDERS' VOTING POWERS AND MEETINGS......................................20
Section 1. Voting Powers.................................................................20
Section 2. Quorum; Required Vote.........................................................21
Section 3. Abstentions and Broker Non-Votes..............................................21
Section 4. Action Without Meeting........................................................21
Section 5. Record Dates..................................................................22
Section 6. Additional Provisions.........................................................22
Article VIII EXPENSES OF THE TRUST.........................................................22
Section 1. Payment of Expenses by the Trust..............................................22
Section 2. Payment of Expenses by Shareholders...........................................23
Article IX MISCELLANEOUS.................................................................23
Section 1. Trust Not a Partnership.......................................................23
Section 2. Trustee Action................................................................23
Section 3. Termination of the Trust......................................................23
Section 4. Reorganization................................................................24
Section 5. Declaration of Trust..........................................................25
Section 6. Applicable Law................................................................25
Section 7. Amendments....................................................................26
Section 8. Derivative Actions............................................................26
Section 9. Fiscal Year...................................................................27
Section 10. Severability..................................................................27
</TABLE>
ii
<PAGE>
HAMBRECHT & QUIST FUND TRUST
AGREEMENT AND
DECLARATION OF TRUST
This AGREEMENT AND DECLARATION OF TRUST is made on June 7, 1999 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 "Hambrecht & Quist Fund 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 a class of Shares of a Series established pursuant
to Article V.
(d) "COMMISSION," "ELIGIBLE FOREIGN CUSTODIAN," "QUALIFIED FOREIGN
BANK" and "INTERESTED PERSON" 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 3.
(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).
1
<PAGE>
(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 Schedule 14A under
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 or
Class 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.
2
<PAGE>
(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.
(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 Hambrecht & Quist Fund Trust established hereby,
and reference to the Trust, when applicable to one or more Series, refers to
that Series.
(t) "TRUSTEES" means the persons who have signed this Declaration
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 so long as they shall
continue in office in accordance with the terms hereof.
(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) "1940 ACT" means the Investment Company Act of 1940 and the
Rules and Regulations thereunder, all 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.
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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 evidences 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 instrumentality; 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
evidences 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
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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.
(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
Distributor 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,
Administrator, 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
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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.
(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 sell or exchange any or all of the assets of the Trust,
subject to Article IX, Section 4.
(y) To enter into joint ventures, partnerships and other
combinations and associations.
(z) 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
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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.
(aa) 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, Distributors or
independent contractors of the Trust, individually, against all claims and
liabilities of every nature arising by reason of holding Shares, holding,
being or having held any such office or position, or by reason of any action
alleged to have been taken or omitted by any such Person as Trustee, officer,
employee, agent, Investment Adviser, Distributor 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.
(bb) 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.
(cc) To enter into contracts of any kind and description.
(dd) To interpret the investment policies, practices or limitations
of any Series or Class.
(ee) To guarantee indebtedness and contractual obligations of others.
(ff) 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.
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.
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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 TRUSTEE, NUMBER OF TRUSTEES. The initial Trustee shall
be the person 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.
Section 5. TERM OF OFFICE OF TRUSTEES. Each Trustee shall hold office for
life or until his successor is duly elected and qualified 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 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. 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
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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 Class 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 8. 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.
Section 9. 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.
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
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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 determine. Notwithstanding any provisions of the
Declaration, the Trustees may authorize any such Investment Adviser or
Persons to whom such Investment Adviser delegates 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 Adviser, 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
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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 subcustodians as meets 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.
Section 7. AFFILIATIONS OF TRUSTEES OR OFFICERS, ETC. The fact that:
(a) 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
(b) any partnership, corporation, trust, association or other
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 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.
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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. 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 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
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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).
(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.
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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 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 or officers 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, officers, employees, agents 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.
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, by the Investment Adviser, the
Administrator, the Distributor, the Transfer Agent or by 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 Person may also be a Trustee.
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 Hambrecht & Quist IPO Discovery Fund.
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 Hambrecht & Quist IPO Discovery Fund, three
Classes of Shares which shall initially be designated,
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respectively, as Class A Shares, Class B Shares and Common Class Shares. 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 of Series or Classes 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,
prospectus or statement of additional information 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, including, without limitation, Shares issued in connection with a
dividend in Shares or a split or reverse split of Shares, shall be fully paid
and nonassessable. Except as otherwise provided by the Trustees, Shareholders
shall have no preemptive or other right to subscribe to any additional Shares
or other securities issued by the Trust. Subject to the further provisions of
this Article V and any applicable requirements of the 1940 Act, the Trustees
shall have full power and authority, in their sole discretion and without
obtaining Shareholder approval, to issue original or additional Shares at
such times and on such terms and conditions as they deem appropriate; to
issue fractional Shares; 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.
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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
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 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 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
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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
Agent 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 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 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,
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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 may 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 of 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 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
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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, as amended from
time to time, 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 shall be cancelled. 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 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
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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.
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 the 1940 Act; (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; (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. On any
matter submitted to a vote of Shareholders, 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 and each fractional
dollar amount shall be
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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 (33 1/3%) 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
applicable law, this Declaration or the By-laws, a majority of the
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. 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 4. 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
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meetings of Shareholders. Such consents shall be treated for all purposes as
a vote taken at a meeting of Shareholders.
Section 5. 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 6. ADDITIONAL PROVISIONS. The By-laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VIII
EXPENSES OF THE TRUST
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; insurance premiums; applicable fees, interest charges and expenses
of third parties, including the Trust's Investment Advisers, managers,
Administrators, Distributors, Custodians, Transfer Agents, and 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
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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 due from such Shareholder 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 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.
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
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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.
(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.
24
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(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 and of each amendment hereto or Declaration 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 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. This Declaration 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 State of Delaware; provided,
however, that there shall not be applicable to the Trust, the Trustees or
this Declaration (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.
25
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Section 7. AMENDMENTS. The Trustees may, without any Shareholder vote,
amend or otherwise supplement this Declaration by making an amendment, a
Declaration 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,
or (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.
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;
(c) Shareholders are not relieved of the conditions in Section 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; and
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(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.
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IN WITNESS WHEREOF, the undersigned being the sole initial Trustee
of the Trust executed this instrument as of the date first written above.
/s/ David R. Krimm
-------------------------------
DAVID R. KRIMM
as Trustee and not individually
28
<PAGE>
EXHIBIT 99(a)(1)
CERTIFICATE OF TRUST
THIS Certificate of Trust of Hambrecht & Quist Fund Trust (the
"Trust") dated June 7, 1999, 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
Hambrecht & Quist Fund 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
interest, a registered investment company under the Investment Company Act of
1940, as amended.
<PAGE>
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/ David R. Krimm
-------------------------------
David R. Krimm
as Trustee and not individually
2
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EXHIBIT 99(b)
HAMBRECHT & QUIST FUND TRUST
BY-LAWS
JUNE 7, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I DEFINITIONS....................................................................1
ARTICLE II OFFICES........................................................................1
Section 2.1. Principal Office...............................................................1
Section 2.2. Other Offices..................................................................1
Section 2.3. Registered Office and Registered Agent.........................................1
ARTICLE III SHAREHOLDERS...................................................................1
Section 3.1. Meetings.......................................................................1
Section 3.2. Notice of Meetings.............................................................2
Section 3.3. Proxies........................................................................2
Section 3.4. Inspection of Records..........................................................3
ARTICLE IV TRUSTEES.......................................................................3
Section 4.1. Meetings of the Trustees and Action by Written Consent.........................3
Section 4.2. Quorum and Manner of Acting at Meetings........................................3
ARTICLE V COMMITTEES.....................................................................4
Section 5.1. Executive and Other Committees.................................................4
Section 5.2. Meetings, Quorum and Manner of Acting..........................................4
ARTICLE VI OFFICERS.......................................................................5
Section 6.1. General Provisions.............................................................5
Section 6.2. Term of Office and Qualifications..............................................5
Section 6.3. Removal........................................................................5
Section 6.4. Powers and Duties of the Chairman..............................................5
Section 6.5. Powers and Duties of the President.............................................5
Section 6.6. Powers and Duties of Vice Presidents...........................................6
Section 6.7. Powers and Duties of the Chief Financial Officer...............................6
Section 6.8. Powers and Duties of the Secretary.............................................6
Section 6.9. Powers and Duties of Assistant Chief Financial Officers........................6
Section 6.10. Powers and Duties of Assistant Secretaries.....................................7
Section 6.11. Compensation of Officers and Trustees..........................................7
</TABLE>
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE VII FISCAL YEAR....................................................................7
ARTICLE VIII SEAL...........................................................................7
ARTICLE IX SUFFICIENCY AND WAIVERS OF NOTICE..............................................7
ARTICLE X AMENDMENTS.....................................................................8
</TABLE>
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HAMBRECHT & QUIST FUND TRUST
BY-LAWS
ARTICLE I
DEFINITIONS
All capitalized terms have the respective meanings given them in the
Agreement and Declaration of Hambrecht & Quist Fund Trust dated June 7, 1999,
as amended or restated from time to time.
ARTICLE II
OFFICES
Section 2.1. PRINCIPAL OFFICE. Until changed by the Trustees, the
principal office of the Trust shall be as designated by the Trustees by
resolution.
Section 2.2. 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 2.3. REGISTERED OFFICE AND REGISTERED AGENT. The 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 3.1. MEETINGS. Meetings of the Shareholders of the Trust or a
Series or Class thereof shall be held as provided in the Declaration at such
place within or without the State of Delaware as the Trustees shall designate.
Section 3.2. 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
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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 3.3. 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. 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. 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 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 3.4. 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.
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ARTICLE IV
TRUSTEES
Section 4.1. 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, video
teleconference or other electronic 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 such a
meeting shall constitute presence in person at such meeting (except as
otherwise provided by law). 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 4.2. 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 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.
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ARTICLE V
COMMITTEES
Section 5.1. 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 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 5.2. MEETINGS, QUORUM AND MANNER OF ACTING. The Trustees may
(1) provide for regular 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 the
powers delegated to such Committee, (4) authorize the making of decisions 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
conference telephone, video teleconference or other electronic media or
communication equipment by means of which all persons participating in the
meeting can communicate with each other.
ARTICLE VI
OFFICERS
Section 6.1. GENERAL PROVISIONS. The officers of the Trust shall be a
President, a Chief Financial Officer 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
Chief Financial Officers. The Trustees may delegate to any officer or
Committee the power to appoint any subordinate officers or agents.
Section 6.2. TERM OF OFFICE AND QUALIFICATIONS. Except as otherwise
provided by law, the Declaration or these By-laws, the President, the Chief
Financial Officer, the Secretary and any other officer shall each hold office
at the pleasure of the Trustees or until his successor shall have been duly
elected and qualified. Any two or more offices
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<PAGE>
may be held by the same person. Any officer may be, but none need be, a
Trustee or Shareholder.
Section 6.3. 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 6.4. 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 affairs of the
Trust, subject to the control of the Trustees and any Committees of the
Trustees.
Section 6.5. 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, in
the absence of the Chairman, shall preside at all meetings of the
Shareholders. Subject to the control of the Trustees and any Committees of
the Trustees, he shall at all times exercise general supervision over the
business and 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 or Class
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 6.6. 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 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 or the
President.
Section 6.7. POWERS AND DUTIES OF THE CHIEF FINANCIAL OFFICER. The Chief
Financial Officer 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 Chief Financial Officer and such other duties as from time to
time may be assigned to him by the Trustees. The Chief Financial Officer
shall give a bond for the
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<PAGE>
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 6.8. 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 6.9. POWERS AND DUTIES OF ASSISTANT FINANCIAL OFFICERS. In the
absence or disability of the Chief Financial Officer, any Assistant Financial
Officer designated by the Trustees shall perform all the duties, and may
exercise any of the powers, of the Chief Financial Officer. Each Assistant
Financial Officer shall perform such other duties as from time to time may be
assigned to him by the Trustees or the President. Each Assistant Financial
Officer 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 6.10. 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 or the President.
Section 6.11. COMPENSATION OF OFFICERS AND TRUSTEES. Subject to any
applicable provisions of the Declaration, the compensation of the officers
and Trustees 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.
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.
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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 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 or these By-laws, a vote of
the Shareholders.
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