<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON August 9, 1999
FILE NO.
FILE NO.
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT ACT OF 1940
NEWCO TRUST
(Exact Name of Registrant as Specified in Charter)
THE CORPORATION TRUST COMPANY
1209 ORANGE STREET
WILMINGTON, DELAWARE 19801, COUNTY OF NEW CASTLE
(Name and Address of Agent for Service)
Copies to:
JOHN H. GRADY, Jr., ESQUIRE
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
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/X/ Approximate date of Proposed Public Offering:
As soon as practicable after the
effective date of this Registration Statement
- -------------------------------------------------------------------------------
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a)
may determine.
<PAGE>
PROSPECTUS
NEWCO TRUST
MONEY MARKET FUND
FUND 1
FUND 2
FUND 3
FUND 4
1200 Orange Street, Wilmington, DE 19890
1-800-___-____
Newco Trust (the "Trust") is a no-load mutual fund complex with five separate
investment portfolios (the "Newco Funds"), each of which is described in this
Prospectus (the "Funds"). Shares of the Money Market Fund are designed to be
sold to investors through the Trust's Internet Web site -- www.newfunds.com.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
TRUST'S SHARES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
RISK/RETURN INFORMATION COMMON TO THE FUNDS
THE FUNDS' INVESTMENT OBJECTIVES
Each Fund has a separate investment objective. THE INVESTMENT OBJECTIVE OF
EACH FUND IS NON-FUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER
APPROVAL.
RISKS OF INVESTING IN THE FUNDS
- The value of the Funds may fluctuate in value from day to day.
- Fund shares may decline in value, and you may lose money.
THE FUNDS:
- are not federally insured
- are not guaranteed by any government agency
- are not bank deposits
- are not guaranteed to achieve their objectives
2
<PAGE>
FUND INFORMATION -- MONEY MARKET FUND
FUND OBJECTIVE
The Money Market Fund seeks to provide security of principal, high current
income, and liquidity.
PORTFOLIO INVESTMENT STRATEGY
The Money Market Fund pursues its investment objective through what is
sometimes called a "master-feeder" arrangement. The Fund invests
substantially all of its assets in the Master Money Market Fund, a
separate mutual fund with an identical investment objective.
The Master Fund invests primarily in money market instruments issued or
guaranteed as to principal and interest by the U.S. Government, its
agencies or instrumentalities, and enters into repurchase agreements fully
collateralized by U.S. Government securities. The Master Fund operates
under SEC rules which impose certain liquidity, maturity and
diversification requirements. All securities purchased by the Master Fund
must have remaining maturities of 397 days or less, and must be found by
the Advisor to represent minimal credit risk and be of eligible quality.
RISK CONSIDERATIONS
The Money Market Fund is subject to the following risks:
- INTEREST RATE RISK -- Interest Rate Risk involves the potential for
decline in the rate of dividends the Fund pays in the event of
declining interest rates.
- STABLE PRICE PER SHARE RISK -- The Master Fund's assets are valued
using the amortized cost method, which enables the Fund to maintain a
stable price of $1.00 per share. Although the Master Fund is managed to
maintain a stable price per share of $1.00, there is no guarantee that
the price will be constantly maintained, and it is possible to lose
money. The Master Fund's U.S. Government securities are not guaranteed
against price movements due to changing interest rates.
INVESTOR PROFILE
Investors who wish to preserve the value of their investment in all market
environments and wish to earn income through a liquid investment.
3
<PAGE>
FUND FEE INFORMATION
<TABLE>
<CAPTION>
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and
hold shares of the Money Market Fund.
<S> <C>
SHAREHOLDER FEES
Exchange Fees* None
Redemption Fees* None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM NET ASSETS)+
Management Fees .50%
Distribution (12b-1) Fees .25%
Other Expenses** .75%
----
Total Annual Fund Operating Expenses 1.50%
</TABLE>
+ THIS TABLE AND THE EXAMPLE REFLECT BOTH THE FEES PAID BY THE FUND AND ITS
SHARE OF THE FEES OF THE MASTER MONEY MARKET FUND.
* THE FUND MAY IMPOSE A PROCESSING CHARGE OF $50 ON TRANSACTIONS MADE OTHER
THAN BY INTERNET THROUGH THE TRUST'S WEB SITE - WWW.NEWFUNDS.COM. IN
ADDITION, THE FUND MAY IMPOSE A WIRE TRANSFER CHARGE OF $15 ON CERTAIN
REDEMPTIONS UNDER $5,000.
** OTHER EXPENSES ARE ESTIMATED.
EXAMPLE
- --------------------------------------------------------------------------------
This Example is intended to help you compare the cost of investing in the
Money Market Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time
period indicated and then redeem all of your shares at the end of those periods.
The Example also assumes that your investment has a 5% return each year and that
the Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your cost would be:
1 YEAR 3 YEARS
------ -------
$ $
4
<PAGE>
FUND INFORMATION -- FUND 1
FUND OBJECTIVE
Fund 1 seeks to provide investment results that match the performance of a
specific benchmark on a daily basis. The Fund's current benchmark is 200%
of the performance of the S&P 500 Index.
If the Fund meets its objective, the value of the Fund's shares will tend
to increase on a daily basis by 200% of the value of any increase in the
S&P 500 Index. When the value of the S&P 500 Index declines, the value of
the Fund's shares should also decrease on a daily basis by 200% of the
value of any decrease in the Index (e.g., if the S&P 500 Index goes down
by 5%, the value of the Fund's shares should go down by 10% on that day).
PORTFOLIO INVESTMENT STRATEGY
The Fund employs as its investment strategy a program of investing in
leveraged instruments, such as futures contracts and options on
securities, futures contracts, and stock indices. Futures and options
contracts enable the Fund to pursue its objective without investing
directly in the securities included in the benchmark, or in the same
proportion that those securities are represented in that benchmark. On a
day-to-day basis, the Fund holds U.S. Government securities or cash
equivalents to collateralize these futures and options contracts. The Fund
also may purchase equity securities and enter into repurchase agreements.
RISK CONSIDERATIONS
Fund 1 is subject to a number of risks that will affect the value of its
shares, including:
- EQUITY RISK -- The equity markets are volatile, and the value of the
Fund's futures and options contracts and other securities may fluctuate
significantly from day to day. This volatility may cause the value of
your investment in the Fund to decrease.
- LEVERAGING RISK -- The more the Fund invests in leveraged instruments,
the more this leverage will magnify any losses on those investments.
- TRACKING ERROR RISK -- The Advisor may not be able to cause the Fund's
performance to match that of the Fund's benchmark, either on a daily or
aggregate basis. Tracking Error may cause the Fund's performance to be
less than you expect.
INVESTOR PROFILE
Investors who expect the S&P 500 Index to go up and want highly
accelerated investment gains when the Index does so. These investors must
also be willing to bear the risk of equally accelerated losses if the S&P
500 Index goes down.
5
<PAGE>
FUND FEE INFORMATION
<TABLE>
<CAPTION>
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and
hold shares of Fund 1.
<S> <C>
SHAREHOLDER FEES
Exchange Fees* None
Redemption Fees* None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM NET ASSETS)
Management Fees 1.00%
Distribution (12b-1) Fees .25%
Other Expenses** .75%
-----
Total Annual Fund Operating Expenses 2.00%
</TABLE>
* THE FUND MAY IMPOSE A PROCESSING CHARGE OF $50 ON TRANSACTIONS MADE OTHER
THAN BY INTERNET THROUGH THE TRUST'S WEB SITE - WWW.NEWFUNDS.COM. IN
ADDITION, THE FUND MAY IMPOSE A WIRE TRANSFER CHARGE OF $15 ON CERTAIN
REDEMPTIONS UNDER $5,000.
** OTHER EXPENSES ARE ESTIMATED.
EXAMPLE
This Example is intended to help you compare the cost of investing in Fund
1 with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time
period indicated and then redeem all of your shares at the end of those periods.
The Example also assumes that your investment has a 5% return each year and that
the Fund's estimated operating expenses remain the same. Although your actual
costs may be higher of lower, based on these assumptions your cost would be:
1 YEAR 3 YEARS
---------------------------------------
$----- $-----
6
<PAGE>
FUND INFORMATION -- FUND 2
FUND OBJECTIVE
Fund 2 seeks to provide investment results that will match the performance
of a specific benchmark on a daily basis. The Fund's current benchmark is
200% of the inverse (opposite) performance of the S&P 500 Index.
If the Fund meets its objective, the value of the Fund's shares will tend
to increase on a daily basis by 200% of the value of any decrease in the
S&P 500 Index (e.g., if the S&P 500 Index goes down by 5%, the value of
the Fund's shares should go up by 10% on that day). When the value of the
S&P 500 Index increases, the value of the Fund's shares should decrease on
a daily basis by 200% of the value of any increase in the Index (e.g., if
the S&P 500 Index goes up by 5%, the value of the Fund's shares should go
down by 10% on that day).
PORTFOLIO INVESTMENT STRATEGY
The Fund employs as its investment strategy a program of engaging in short
sales of securities and investing in leveraged instruments, such as
futures contracts and options on securities, futures contracts, and stock
indices. Short sales and futures and options contracts enable the Fund to
pursue its objective without investing directly in the securities included
in the benchmark. On a day-to-day basis, the Fund holds U.S. Government
securities or cash equivalents to collateralize these futures and options
contracts. The Fund also may enter into repurchase agreements.
RISK CONSIDERATIONS
Fund 2 is subject to a number of risks that will affect the value of its
shares, including:
- EQUITY RISK -- The equity markets are volatile, and the value of the
Fund's futures and options contracts and other securities may fluctuate
significantly from day to day. Equity market volatility may also
negatively affect the Fund's short sales of securities. This volatility
may cause the value of your investment in the Fund to decrease.
- LEVERAGING RISK -- The more the Fund invests in leveraged instruments,
the more this leverage will magnify any losses on those investments.
- TRACKING ERROR RISK -- The Advisor may not be able to cause the Fund's
performance to match that of the Fund's benchmark, either on a daily or
aggregate basis. Tracking Error may cause the Fund's performance to be
less than you expect.
INVESTOR PROFILE
Investors who expect the S&P 500 Index to go down and want highly
accelerated investment gains when the Index does so. These investors must
also be willing to bear the risk of equally accelerated losses if the S&P
500 Index goes up.
7
<PAGE>
FUND FEE INFORMATION
<TABLE>
<CAPTION>
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and
hold shares of Fund 2.
<S> <C>
SHAREHOLDER FEES
Exchange Fees* None
Redemption Fees* None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM NET ASSETS)
Management Fees 1.00%
Distribution (12b-1) Fees .25%
Other Expenses** .75%
-----
Total Annual Fund Operating Expenses 2.00%
</TABLE>
* THE FUND MAY IMPOSE A PROCESSING CHARGE OF $50 ON TRANSACTIONS MADE OTHER
THAN BY INTERNET THROUGH THE TRUST'S WEB SITE - WWW.NEWFUNDS.COM. IN
ADDITION, THE FUND MAY IMPOSE A WIRE TRANSFER CHARGE OF $15 ON CERTAIN
REDEMPTIONS UNDER $5,000.
** OTHER EXPENSES ARE ESTIMATED.
EXAMPLE
- --------------------------------------------------------------------------------
This Example is intended to help you compare the cost of investing in Fund
2 with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time
period indicated and then redeem all of your shares at the end of those periods.
The Example also assumes that your investment has a 5% return each year and that
the Fund's estimated operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your cost would be:
1 YEAR 3 YEARS
------------------------------------------
$--- $---
8
<PAGE>
FUND INFORMATION -- FUND 3
FUND OBJECTIVE
Fund 3 seeks to provide investment results that will match the performance
of a specific benchmark on a daily basis. The Fund's current benchmark is
200% of the performance of the NASDAQ 100 Index-TM-.
If the Fund meets its objective, the value of the Fund's shares will tend
to increase on a daily basis by 200% of the value of any increase in the
NASDAQ 100 Index-TM-. When the value of the NASDAQ 100 Index-TM- declines,
the value of the Fund's shares should also decrease on a daily basis by
200% of the value of any decrease in the Index (e.g., if the NASDAQ 100
Index-TM- goes down by 5%, the value of the Fund's shares should go down
by 10% on that day).
PORTFOLIO INVESTMENT STRATEGY
The Fund employs as its investment strategy a program of investing in
leveraged instruments, such as futures contracts and options on
securities, futures contracts, and stock indices. Futures and options
contracts enable the Fund to pursue its objective without investing
directly in the securities included in the benchmark, or in the same
proportion that those securities are represented in that benchmark. On a
day-to-day basis, the Fund holds U.S. Government securities or cash
equivalents to collateralize these futures and options contracts. The Fund
also may purchase equity securities and enter into repurchase agreements.
RISK CONSIDERATIONS
Fund 3 is subject to a number of risks that will affect the value of its
shares, including:
- EQUITY RISK --The equity markets are volatile, and the value of the
Fund's futures and options contracts and other securities may fluctuate
significantly from day to day. This volatility may cause the value of
your investment in the Fund to decrease.
- LEVERAGING RISK -- The more the Fund invests in leveraged instruments,
the more this leverage will magnify any losses on those investments.
- TRACKING ERROR RISK -- The Advisor may not be able to cause the Fund's
performance to match that of the Fund's benchmark, either on a daily or
aggregate basis. Tracking Error may cause the Fund's performance to be
less than you expect.
INVESTOR PROFILE
Investors who expect the NASDAQ 100 Index-TM- to go up and want highly
accelerated investment gains when the Index does so. These investors must
also be willing to bear the risk of equally accelerated losses if the
NASDAQ 100 Index-TM- goes down.
9
<PAGE>
FUND FEE INFORMATION
<TABLE>
<CAPTION>
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and
hold shares of Fund 3.
<S> <C>
SHAREHOLDER FEES
Exchange Fees* None
Redemption Fees* None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM NET ASSETS)
Management Fees 1.00%
Distribution (12b-1) Fees .25%
Other Expenses** .75%
-----
Total Annual Fund Operating Expenses 2.00%
</TABLE>
* THE FUND MAY IMPOSE A PROCESSING CHARGE OF $50 ON TRANSACTIONS MADE OTHER
THAN BY INTERNET THROUGH THE TRUST'S WEB SITE - WWW.NEWFUNDS.COM. IN
ADDITION, THE FUND MAY IMPOSE A WIRE TRANSFER CHARGE OF $15 ON CERTAIN
REDEMPTIONS UNDER $5,000.
** OTHER EXPENSES ARE ESTIMATED.
EXAMPLE
- --------------------------------------------------------------------------------
This Example is intended to help you compare the cost of investing in Fund
3 with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time
period indicated and then redeem all of your shares at the end of those periods.
The Example also assumes that your investment has a 5% return each year and that
the Fund's estimated operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your cost would be:
1 YEAR 3 YEARS
------------------------------------------
$--- $---
10
<PAGE>
FUND INFORMATION -- FUND 4
FUND OBJECTIVE
Fund 4 seeks to provide investment results that will match the performance
of a specific benchmark on a daily basis. The Fund's current benchmark is
200% of the inverse (opposite) performance of the NASDAQ 100 Index-TM-.
If the Fund meets its objective, the value of the Fund's shares will
tend to increase on a daily basis by 200% of the value of any decrease
in the NASDAQ 100 Index-TM- (e.g., if the NASDAQ 100 Index-TM- goes
down by 5%, the value of the Fund's shares should go up by 10% on that
day). When the value of the NASDAQ 100 Index-TM- increases, the value
of the Fund's shares should decrease on a daily basis by 200% of the
value of any increase in the Index (e.g., if the NASDAQ 100 Index-TM-
goes up by 5%, the value of the Fund's shares should go down by 10% on
that day).
PORTFOLIO INVESTMENT STRATEGY
The Fund employs as its investment strategy a program of engaging in short
sales of securities and investing in leveraged instruments, such as
futures contracts and options on securities, futures contracts, and stock
indices. On a day-to-day basis, the Fund holds U.S. Government securities
or cash equivalents to collateralize these futures and options contracts.
Short sales and futures and options contracts enable the Fund to pursue
its objective without investing directly in the securities included in the
benchmark. The Fund also may enter into repurchase agreements.
RISK CONSIDERATIONS
Fund 4 is subject to a number of risks that will affect the value of its
shares, including:
- EQUITY RISK -- The equity markets are volatile, and the value of the
Fund's futures and options contracts and other securities may fluctuate
significantly from day to day. Equity market volatility may also
negatively affect the Fund's short sales of securities. This volatility
may cause the value of your investment in the Fund to decrease.
- LEVERAGING RISK -- The more the Fund invests in leveraged instruments,
the more this leverage will magnify any losses on those investments.
- TRACKING ERROR RISK -- The Advisor may not be able to cause the Fund's
performance to match that of the Fund's benchmark, either on a daily or
aggregate basis. Tracking Error may cause the Fund's performance to be
less than you expect.
INVESTOR PROFILE
Investors who expect the NASDAQ 100 Index-TM- to go down and want highly
accelerated investment gains when the Index does so. These investors must
also be willing to bear the risk of equally accelerated losses if the
NASDAQ 100 Index-TM- goes up.
11
<PAGE>
FUND FEE INFORMATION
<TABLE>
<CAPTION>
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and
hold shares of Fund 4.
<S> <C>
SHAREHOLDER FEES
Exchange Fees* None
Redemption Fees* None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM NET ASSETS)
Management Fees 1.00%
Distribution (12b-1) Fees .25%
Other Expenses** .75%
-----
Total Annual Fund Operating Expenses 2.00%
</TABLE>
* THE FUND MAY IMPOSE A PROCESSING CHARGE OF $50 ON TRANSACTIONS MADE OTHER
THAN BY INTERNET THROUGH THE TRUST'S WEB SITE - WWW.NEWFUNDS.COM. IN
ADDITION, THE FUND MAY IMPOSE A WIRE TRANSFER CHARGE OF $15 ON CERTAIN
REDEMPTIONS UNDER $5,000.
** OTHER EXPENSES ARE ESTIMATED.
EXAMPLE
- --------------------------------------------------------------------------------
This Example is intended to help you compare the cost of investing in Fund
4 with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time
period indicated and then redeem all of your shares at the end of those periods.
The Example also assumes that your investment has a 5% return each year and that
the Fund's estimated operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your cost would be:
1 YEAR 3 YEARS
------------------------------------------
$ $
12
<PAGE>
MORE INFORMATION ABOUT FUND INVESTMENTS AND RISK
THE FUNDS' INVESTMENT OBJECTIVES
Each Fund's objective (except the Money Market Fund) is to provide
investment results that match the performance of a specific benchmark. The
current benchmark used by each Fund is set forth below:
- --------------------------------------------------------------------------------
FUND (TICKER SYMBOL) BENCHMARK
- --------------------------------------------------------------------------------
Fund 1 200% of the performance, measured on a
daily basis, of the S&P 500 Composite
Stock Price Index-TM- (SPX)
- --------------------------------------------------------------------------------
Fund 2 200% of the inverse (opposite)
performance, measured on a daily basis,
of the S&P 500 Composite Stock Price
Index-TM- (SPX)
- --------------------------------------------------------------------------------
Fund 3 200% of the performance, measured on a
daily basis, of the NASDAQ 100
Index-TM- (NDX)
- --------------------------------------------------------------------------------
Fund 4 200% of the inverse (opposite)
performance, measured on a daily basis,
of the NASDAQ 100 Index-TM- (NDX)
- --------------------------------------------------------------------------------
A BRIEF GUIDE TO THE BENCHMARKS.
THE S&P 500 COMPOSITE STOCK PRICE INDEX-TM- (S&P 500 INDEX). The S&P 500
Index is a capitalization-weighted index composed of 500 common stocks, which
are chosen by the Standard & Poor's Corporation ("S&P") on a statistical
basis.
THE NASDAQ 100 INDEX-TM-. The NASDAQ 100 Index-TM- is a modified
capitalization-weighted index composed of 100 of the largest non-financial
companies listed on the National Association of Securities Dealers Automated
Quotations System.
ADVISOR'S INVESTMENT METHODOLOGY
In managing the Funds, the Advisor's primary objective is to match the
performance of each Fund's benchmark as closely as possible on a daily basis.
Through the use of quantitative analysis techniques, each Fund is structured to
obtain the highest correlation to its particular benchmark, while remaining
fully invested in all market environments. The Advisor monitors each Fund on an
ongoing basis, and makes adjustments to its portfolio, as necessary, to minimize
tracking error and to maximize liquidity. The Advisor will regularly utilize
options contracts to leverage a Fund's investment exposure. In addition, some
Funds will regularly utilize short selling techniques designed to help their
performance to inversely correlate to the performance of an index or benchmark.
13
<PAGE>
MASTER-FEEDER INVESTMENT STRUCTURE
Because the Money Market Fund invests through a master-feeder arrangement,
the Fund will have an indirect interest in all of the securities owned by the
Master Money Market Fund. In addition, the Fund's investment returns should be
the same as those of the Master Money Market Fund, adjusted for Fund expenses.
The Advisor monitors the performance of the Master Money Market Fund and may
choose to invest the Fund's assets in another mutual fund or manage the Fund
directly if it determines that doing so would be in the best interests of
shareholders.
RISKS OF INVESTING IN THE FUNDS
As indicated below, the Funds are subject to a number of risks that may
affect the value of Fund shares.
EQUITY RISK (ALL FUNDS EXCEPT MONEY MARKET FUND) -- The Funds invest primarily
in instruments that attempt to track the price movement of equity indices as
well as equity securities, including common stocks. Investments in equity
securities and equity derivatives in general are subject to market risks that
may cause their prices to fluctuate over time. Fluctuations in the value of
equity securities in which the Funds invest will cause the net asset value of
the Funds to fluctuate. Historically, the equity markets have moved in cycles,
and the value of the Funds' equity securities may fluctuate drastically from day
to day. This price volatility is the principal risk of investing in equity
securities. Because of their link to the equity markets, an investment in the
Funds may be more suitable for long-term investors who can bear the risk of
short-term principal fluctuations.
NON-DIVERSIFICATION RISK (ALL FUNDS EXCEPT MONEY MARKET FUND) -- Since each Fund
is non-diversified, each Fund may invest in the securities of a limited number
of issuers. To the extent that a Fund invests a significant percentage of its
assets in a limited number of issuers, the Fund is subject to the risks of
investing in those few issuers, and may be more susceptible to a single adverse
economic or regulatory occurrence.
TRACKING ERROR RISK (ALL FUNDS EXCEPT MONEY MARKET FUND) -- While the Funds do
not expect returns to deviate significantly from their respective benchmarks on
a daily basis, factors such as Fund expenses, imperfect correlation between the
Funds' investments and those of their benchmarks, rounding of share prices,
changes to the benchmark, regulatory policies, and leverage, may affect their
ability to achieve close correlation. The cumulative effect of these factors may
over time cause the Funds' returns to deviate from their respective benchmarks
on an aggregate basis. The magnitude of any tracking error may be affected by a
higher portfolio turnover rate.
TRADING HALT RISK (ALL FUNDS EXCEPT MONEY MARKET FUND) -- The Funds typically
will hold short-term options and futures contracts. The major exchanges on which
these contracts are
14
<PAGE>
traded, such as the Chicago Mercantile Exchange ("CME"), have established limits
on how much an option or futures contract may decline over various time periods
within a day. If an option or futures contract's price declines more than the
established limits, trading on the exchange is halted on that instrument. If a
trading halt occurs at the close of a trading day, a Fund may not be able to
purchase or sell options or futures contracts. In such an event, a Fund also may
be required to use a "fair-value" method to price its outstanding contracts.
FUTURES AND OPTIONS RISK (ALL FUNDS EXCEPT MONEY MARKET FUND) -- The Funds will
invest a percentage of their assets in futures and options contracts. The Funds
may use futures contracts and related options for bona fide hedging purposes to
offset changes in the value of securities held or expected to be acquired. They
may also be used to gain exposure to a particular market or instrument, to
create a synthetic money market position, and for certain other tax-related
purposes. The Funds will only enter into futures contracts traded on a national
futures exchange or board of trade. Futures and options contracts are described
in more detail below:
FUTURES CONTRACTS -- Futures contracts and options on futures contracts
provide for the future sale by one party and purchase by another party of
a specified amount of a specific security at a specified future time and
at a specified price. An option on a futures contract gives the purchaser
the right, in exchange for a premium, to assume a position in a futures
contract at a specified exercise price during the term of the option.
Index futures are futures contracts for various indices that are traded on
registered securities exchanges.
OPTIONS -- The buyer of an option acquires the right to buy (a call
option) or sell (a put option) a certain quantity of a security (the
underlying security) or instrument at a certain price up to a specified
point in time. The seller or writer of an option is obligated to sell (a
call option) or buy (a put option) the underlying security. When writing
(selling) call options on securities, the Funds may cover its position by
owning the underlying security on which the option is written or by owning
a call option on the underlying security. Alternatively, the Funds may
cover its position by maintaining in a segregated account cash or liquid
securities equal in value to the exercise price of the call option written
by the Funds.
The risks associated with the Funds' use of futures and options contracts
include:
- A Fund experiencing losses over certain ranges in the market that
exceed losses experienced by a Fund that does not use futures
contracts and options.
- There may be an imperfect correlation between the changes in market
value of the securities held by a Fund and the prices of futures and
options on futures.
15
<PAGE>
- Although the Funds will only purchase exchange-traded futures, due to
market conditions there may not always be a liquid secondary market
for a futures contract. As a result, the Funds may be unable to close
out their futures contracts at a time which is advantageous.
- Trading restrictions or limitations may be imposed by an exchange, and
government regulations may restrict trading in futures contracts and
options.
- Because option premiums paid or received by the Funds are small in
relation to the market value of the investments underlying the
options, buying and selling put and call options can be more
speculative than investing directly in securities.
EARLY CLOSING RISK (ALL FUNDS EXCEPT MONEY MARKET FUND) -- The normal close of
trading of securities listed on the National Association of Securities Dealers
Automated Quotations system ("NASDAQ") and the New York Stock Exchange ("NYSE")
is 4:00 P.M., Eastern Time. Unanticipated early closings may result in a Fund
being unable to sell or buy securities on that day. If an exchange closes early
on a day when one or more of the Funds needs to execute a high volume of
securities trades late in a trading day, a Fund might incur substantial trading
losses.
SHORT SALES RISK (FUND 2 AND FUND 4) -- Short sales are transactions in which a
Fund sells a security it does not own. To complete the transaction, the Fund
must borrow the security to make delivery to the buyer. The Fund is then
obligated to replace the security borrowed by purchasing the security at the
market price at the time of replacement. The price at such time may be higher or
lower than the price at which the security was sold by the Fund. If the price is
lower, the Fund will make money on the transaction. Conversely, if the price is
higher, the Fund will lose money on the transaction. The risk of such price
increases is the principal risk of engaging in short sales.
YEAR 2000 RISK (ALL FUNDS) -- The Funds depend on the smooth function of
computer systems in almost every aspect of their business. Like other mutual
funds, businesses and individuals around the world, the Funds could be adversely
affected if the computer systems used by its service providers do not properly
process dates on and after January 1, 2000 and distinguish between the year 2000
and the year 1900. The Trust has asked its service providers whether they expect
to have their computer systems adjusted for the year 2000 transition, and has
received assurances from all that they have devoted significant resources to
prevent material adverse consequences to the Funds. The Funds and their
respective shareholders may experience losses if these assurances prove to be
incorrect or as a result of year 2000 computer difficulties experienced by
issuers of portfolio securities or third parties, such as custodians, banks,
broker-dealers or others with which the Funds do business.
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SHAREHOLDER INFORMATION
HOW TO INVEST IN THE FUNDS
PURCHASING SHARES
Shares of the Money Market Fund are designed to be offered to investors
principally through the Trust's Web site -- www.newfunds.com. You can also
purchase shares of the Money Market Fund by mail, telephone or fax, but you may
be charged a processing fee by the Trust's transfer agent if you do not meet
certain minimum account balance requirements. The minimum account balance
requirements are discussed in more detail in the "MINIMUM INVESTMENT" section.
You may also make investments in the Money Market Fund through
intermediaries or securities dealers who have the responsibility to transmit
orders promptly. Intermediaries may charge fees for services provided in
connection with buying, selling or exchanging shares. Each intermediary also may
have its own rules about share transactions. For more information about how to
purchase shares through an intermediary, you should contact that intermediary
directly.
Investors may purchase shares on any day that the New York Stock Exchange
("NYSE") is open for business (a "Business Day"). Shares of Fund 1, Fund 2, Fund
3 and Fund 4 are not available by direct purchase and may be acquired only
through certain exchanges. Nonetheless, the Trust reserves the right to modify
or rescind this policy, or exempt certain transactions from this policy, at any
time. Procedures for exchanges are discussed in more detail in the "EXCHANGES"
section.
DETERMINATION OF NET ASSET VALUE
The price per share (the offering price) will be the net asset value per
share ("NAV") next determined after your purchase order is received by the
Trust. No sales charges are imposed on initial or subsequent investments in a
Fund. NAV is calculated by (1) taking the current market value of a Fund's total
assets, (2) subtracting the liabilities, and (3) dividing the amount by the
total number of shares owned by shareholders. The Funds calculate NAV twice each
Business Day, first in the morning and again in the afternoon. The morning NAV
is calculated at 10:30 a.m., Eastern Time and the afternoon NAV is calculated
after the close of the New York Stock Exchange (currently 4:00 p.m., Eastern
Time). If the exchange or market where a Fund's securities or other investments
are primarily traded closes early, NAV may be calculated earlier. To receive the
current NAV, the Trust must receive your purchase order before the cutoff times
specified below for each method of investing. Intermediaries may have earlier
cutoff times.
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MINIMUM INVESTMENT
The minimum initial investment in the Money Market Fund is $5,000.
However, shareholders who maintain an account balance of less than $15,000 may
be subject to certain processing fees for any communications with the Funds made
other than through the Trust's Web site. These minimums also apply to retirement
plan accounts.
The Trust, at its discretion, may accept lesser amounts in certain
circumstances. There is no minimum amount for subsequent investments in the
Money Market Fund. The Trust reserves the right to modify its minimum investment
requirements at any time. The Trust also reserves the right to reject or refuse,
at the Trust's discretion, any order for the purchase of a Fund's shares in
whole or in part.
INVESTING BY INTERNET -- WWW.NEWFUNDS.COM
Investing by Internet means that all of the communications between you and
the Funds will take place over the Internet, either through the use of
electronic mail or the Trust's Web site.
Initial applications and investments, as well as subsequent investments,
in the Money Market Fund made by Internet must be received in good form by the
Trust, on any Business Day, at or prior to 10:15 a.m., Eastern Time in order to
be processed for that Business Day's morning NAV and at or prior to 3:50 p.m.,
Eastern Time in order to be processed for that Business Day's afternoon NAV.
Intermediaries may have earlier cutoff times for purchases. For more information
about how to purchase through an intermediary, you should contact that
intermediary directly. An initial application that is sent to the Trust does not
constitute a purchase order until the application has been processed and correct
payment by check or wire transfer has been received by the Trust.
You will receive electronic confirmation of your investments or any other
transactions you may request. You may print a copy of the electronic
confirmation you receive for your records. IF YOUR ACCOUNT BALANCE IS LESS THAN
$15,000 AND YOU REQUEST A PAPER COPY OF ANY TRADE CONFIRMATION TO BE MAILED TO
YOU, THE TRUST MAY CHARGE YOU A $50.00 PROCESSING FEE.
SENDING YOUR PURCHASE PAYMENT BY BANK WIRE TRANSFER
First, fill out the Account Application Agreement located on the
Trust's Web site and send the completed application by Internet, along
with a request for a shareholder account number, to the Trust by following
the procedures described on the Trust's Web site. You do not need to fill
out an Account Application Agreement to make subsequent investments in the
Money Market Fund. Then, request that your bank wire transfer the purchase
amount to our custodian, along with the following instructions:
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----------------------------
----------------------------
----------------------------
For Account of NEWCO Trust
Trust Account Number: __________
[Your Name]
[Your Shareholder Account Number]
AFTER INSTRUCTING YOUR BANK TO TRANSFER MONEY BY WIRE FOR BOTH INITIAL
AND SUBSEQUENT PURCHASES INTO THE MONEY MARKET FUND, YOU MUST CONTACT THE
TRUST BY INTERNET (OR TELEPHONE AT 1-___-___-____) AND INFORM THE TRUST AS
TO THE AMOUNT THAT YOU HAVE TRANSFERRED AND THE NAME OF THE BANK SENDING
THE TRANSFER IN ORDER TO OBTAIN SAME-DAY OR MORNING PRICING OR CREDIT. FOR
INITIAL PURCHASES, YOU MUST ALSO SUPPLY THE TIME THE WIRE WAS SENT AND THE
FED WIRE REFERENCE NUMBER. IF THE PURCHASE IS CANCELED BECAUSE YOUR WIRE
TRANSFER IS NOT RECEIVED, YOU MAY BE LIABLE FOR ANY LOSS THAT THE TRUST
INCURS.
SENDING YOUR PURCHASE PAYMENT BY MAIL
First, fill out the Account Application Agreement located on the
Trust's Web site and send the completed application by Internet, along
with a request for a shareholder account number, to the Trust by following
the procedures described on the Trust's Web site. Then mail your check,
along with the application to:
NEWCO Trust
----------------------------
----------------------------
----------------------------
Even though your purchase request was sent by Internet, the Trust will
not process your request until it receives your check. You may avoid a
delay in processing your purchase request by purchasing shares by wire.
IN ADDITION TO CHARGES DESCRIBED ELSEWHERE IN THIS PROSPECTUS, THE
TRUST ALSO MAY CHARGE $25.00 FOR CHECKS RETURNED FOR INSUFFICIENT OR
UNCOLLECTIBLE FUNDS.
INVESTING BY MAIL OR FAX
Alternatively, investors may make initial investments, as well as
subsequent investments, in the Money Market Fund by printing out the Account
Application Agreement located on the Trust's Web site, completing it offline and
sending it by mail or fax to the Trust. Investors must also make arrangements
for payment by either bank wire transfer or check using the procedures described
above. Investments by mail or fax for both initial investments and
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subsequent investments in the Money Market Fund must be received in good form at
the Trust, on any Business Day, at or prior to 10:15 a.m. to be processed at
that Business Day's morning NAV and at or prior to 3:50 p.m. to be processed at
that Business Day's afternoon NAV. Intermediaries may have earlier cutoff times
for purchases. For more information about how to purchase through an
intermediary, you should contact that intermediary directly.
IF YOUR INITIAL INVESTMENT IS LESS THAN $15,000 OR YOUR ACCOUNT BALANCE
DROPS BELOW $15,000, THE TRUST MAY ALSO CHARGE A PROCESSING FEE OF $50.00 TO
PROCESS YOUR INITIAL AND ANY SUBSEQUENT PURCHASE REQUEST THAT IS NOT TRANSMITTED
BY INTERNET.
TAX-QUALIFIED RETIREMENT PLANS
Investors may purchase shares of the Money Market Fund through any of the
following types of tax-qualified retirement plans:
Individual Retirement Accounts (IRAs, including Roth IRAs)
Keogh Accounts -- Defined Contribution Plans (Profit Sharing Plans)
Keogh Accounts -- Pension Plans (Money Purchase Plans)
Internal Revenue Code Section 403(b) Plans
Retirement plans are charged an annual $15.00 maintenance fee and a $15.00
account closing fee. Additional information regarding these accounts, including
the annual maintenance fee, may be obtained by calling 1-800-___-____ or
___-___-____.
EXCHANGES
Shares of Fund 1, Fund 2, Fund 3 and Fund 4 are available by exchange
through the Trust's Web site -- www.newfunds.com. You may exchange shares of any
Fund of the Trust for shares of any other Fund of the Trust that currently
offers shares on the basis of the respective net asset values of the shares
involved.
You may also acquire shares of Fund 1, Fund 2, Fund 3 and Fund 4 through
exchanges with the OLDCO Master Money Market Fund. In addition, you may exchange
shares of the Money Market Fund for shares of any Fund in the OLDCO Trust. The
OLDCO Trust currently is composed of separate funds with different objectives
which are offered in separate prospectuses. Some OLDCO funds may require higher
minimum investments. If you are contemplating an exchange for shares of a fund
not described in this Prospectus, you should obtain and review the current
prospectus of that fund before making the exchange. Exchanges may be made
subject to the procedures set forth below.
To exchange your shares, you need to provide certain information,
including the name on the account, the account number (or your taxpayer
identification number), the number or dollar value of shares (or the percentage
of the total value of your account) you want to exchange, and
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<PAGE>
the names of the Funds involved in the exchange transaction. Investors should
review the "Exchange Request Form" on the Trust's Web site for more information.
The cutoff times for exchange requests are as follows:
FUND(S) MORNING CUT OFF TIME AFTERNOON CUT OFF TIME
- --------------------------------------------------------------------------------
1 10:15 a.m. 3:50 p.m.
2
3
4
Money Market
- --------------------------------------------------------------------------------
Exchange requests received after the above cutoff times will receive the
next determined NAV (i.e., if your exchange request is received after the
morning cutoff time, you will receive that Business Day's afternoon NAV). Shares
of Fund 1, Fund 2, Fund 3 and Fund 4 acquired through exchanges with the OLDCO
Master Market Fund will receive that Business Day's afternoon NAV. The exchange
privilege may be modified or discontinued at any time.
REDEEMING FUND SHARES
GENERAL
You may redeem all or any portion of your Fund shares at the next
determined NAV after receipt of the redemption request (subject to applicable
account minimums). You may redeem your shares by Internet by following the
procedures set forth on the Trust's Web site. Your redemption proceeds normally
will be sent within five Business Days of the Trust receiving your request. For
investments made by check, payment on redemption requests may be delayed until
the Trust's transfer agent is reasonably satisfied that payment has been
collected by the Trust (which may require up to 10 Business Days). If you invest
by check, you may not wire out any redemption proceeds for the 30 calendar days
following the purchase. You may avoid a delay in receiving redemption proceeds
by purchasing shares by wire or with a certified check. Telephone redemptions
will be sent only to your address or your bank account (as listed in the Trust's
records). The Trust may charge $15.00 for certain wire transfers of redemption
proceeds.
You may also redeem your shares by letter or by telephone subject to the
procedures and fees set forth in "Procedures For Redemptions and Exchanges."
The proceeds of Internet redemption requests will be sent directly to your
address (as listed in the Trust's records). If you request payment of redemption
proceeds to a third party or to a location other than your address or your bank
account (as listed in the Trust's records), this request must be in writing,
must include a signature guarantee and, for shareholders with an account balance
of less than $15,000, is subject to a $10.00 processing fee. You may have to
transmit your redemption request to your intermediary at an earlier time in
order for your
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<PAGE>
redemption to be effective that Business Day. Please contact your intermediary
to find out their specific requirements for written and telephone requests for
redemptions and signature guarantees.
INVOLUNTARY REDEMPTIONS
Because of the administrative expense of handling small accounts, any
request for a redemption when your account balance (a) is below the currently
applicable minimum investment, or (b) would be below that minimum as a result of
the redemption, will be treated as a request for the complete redemption of that
account. If, due to withdrawals or transfers, your account balance across all
Funds advised by the Advisor drops below the required minimum, the Trust
reserves the right to redeem your remaining shares without any additional
notification to you.
SUSPENSION OF REDEMPTIONS
With respect to each Fund, and as permitted by the Securities and Exchange
Commission ("Commission"), the right of redemption may be suspended, or the date
of payment postponed: (i) for any period during which the NYSE, the Federal
Reserve Bank of New York (the "New York Fed"), NASDAQ, the CME or the Chicago
Board Options Exchange ("CBOE") as appropriate, is closed (other than customary
weekend or holiday closings) or trading on the NYSE, NASDAQ, the CME or the CBOE
as appropriate, is restricted; (ii) for any period during which an emergency
exists so that disposal of Fund investments or the determination of NAV is not
reasonably practicable; or (iii) for such other periods as the Commission, by
order, may permit for protection of fund investors. On any day that the New York
Fed or the NYSE closes early, the principal government securities and corporate
bond markets close early (such as on days in advance of holidays generally
observed by participants in these markets), or as permitted by the Commission,
the right is reserved to advance the time on that day by which purchase and
redemption orders must be received.
PROCEDURES FOR EXCHANGES AND REDEMPTIONS
You should follow the procedures described above and on the Trust's Web
site for electronic exchanges and redemptions. The Trust anticipates that most
shareholders will make exchange and redemption requests by Internet through the
Trust's Web site. The Trust reserves the right to suspend the right of
redemption in the section above.
You may also request redemptions and exchanges by mail or telephone.
Written requests for redemptions and exchanges should be sent to NEWCO Trust,
[ADDRESS] and should be signed by the record owner or owners. Telephone
redemption and exchange requests may be made by calling 1-800-___-____ or
___-___-____ by 3:50 p.m., Eastern Time, or by any earlier cutoff time specified
above for exchanges between Funds, on any Business Day. The Trust's offices are
open between 8:30 a.m. and 5:30 p.m., Eastern time on each Business Day.
22
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IF YOUR ACCOUNT BALANCE IS LESS THAN $15,000, IN ADDITION TO CHARGES
DESCRIBED ELSEWHERE IN THIS PROSPECTUS, THE TRUST MAY ALSO CHARGE A PER
TRANSACTION FEE OF $50.00 FOR EACH EXCHANGE OR REDEMPTION REQUEST THAT IS NOT
TRANSMITTED BY INTERNET.
If you own shares that are registered in your intermediary's name, and you
want to transfer the registration to another intermediary or want the shares
registered in your name, then you should contact your intermediary for
instructions to make this change.
TRANSACTIONS OVER THE INTERNET
Internet redemption and exchange transactions are extremely convenient,
but are not risk-free. To ensure that your Internet transactions are safe,
secure, and as risk-free as possible, the Trust has instituted certain
safeguards and procedures for determining the identity of Web site users and
authenticity of instructions. As a result, neither the Trust nor its transfer
agent will be responsible for any loss, liability, cost, or expense for
following Internet or wire instructions they reasonably believe to be genuine.
If you or your intermediary make exchange or redemption requests by Internet,
you will generally bear the risk of any loss. If you are unable to reach the
Trust by Internet, you may want to try to reach the Trust by other means.
MANAGEMENT OF THE FUNDS
THE INVESTMENT ADVISOR -- NEWCO ADVISORS, a ____________ corporation with
offices at ____ _________________________________________________________,
serves as investment advisor and manager of the funds.
The Advisor makes investment decisions for the assets of the Funds and
continuously reviews, supervises, and administers each Fund's investment
program. The Trustees of the Trust supervise the Advisor and establish policies
that the Advisor must follow in its day-to-day management activities. Under an
investment advisory agreement between the Trust and the Advisor, the Funds pay
the Advisor a fee at an annualized rate, based on the average daily net assets
for each fund, as set forth below:
<TABLE>
<CAPTION>
FUND ADVISORY FEE
- ------------------------------------------------------------------------------
<S> <C>
Money Market Fund .00%
Fund 1 1.00%
Fund 2 1.00%
Fund 3 1.00%
Fund 4 1.00%
</TABLE>
The Advisor also makes the investment decisions for the assets of the
Master Money Market Fund and continuously reviews, supervises, and administers
that Fund's investment program. Under its investment advisory agreement between
the Master Money Market Fund's
23
<PAGE>
trust and the Advisor, the Fund pays the Advisor a fee of .50% at an annualized
rate, based on the average daily net assets of the Master Money Market Fund.
The Advisor bears all of its own costs associated with providing these
advisory services and the expenses of the Trustees which are affiliated with the
Advisor. The Advisor may make payments from its own resources to broker-dealers
and other financial institutions in connection with the sale of fund shares.
The Advisor has voluntarily agreed to maintain the actual Total Annual
Operating Expenses of the Funds at 2.00% for the first three years of Fund
operations. This means that the Advisor will reimburse certain expenses of the
Funds so that expenses do not exceed 2.00%. It also means that if at any point
during the first three years of Fund operations it becomes unnecessary for the
Advisor to make reimbursements, the Advisor may retain the difference between
the Total Annual Operating Expenses of any Fund and 2.00% to offset any of its
prior reimbursements.
DISTRIBUTION PLAN
The Funds have adopted a Distribution Plan (the "Plan") that allows the
Funds to pay distribution fees to NEWCO Distributors (the "Distributor") and
other firms that provide distribution services ("Service Providers"). The Funds
will pay distribution fees to the Distributor at an annual rate not to exceed
.25% of average daily net assets, pursuant to Rule 12b-1 of the 1940 Act. If a
Service Provider provides distribution services, the Distributor will, in turn,
pay the Service Provider out of its fees. Because the Funds pay these fees out
of assets on an ongoing basis, over time these fees may cost you more than other
types of sales charges.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
Income dividends, if any, are paid at least annually by each of the Funds,
except the Money Market Fund, which declares dividends daily and pays them
monthly. If you own Fund shares on a Fund's record date, you will be entitled to
receive the dividend. The Funds may declare and pay dividends on the same date.
The Funds make distributions of capital gains, if any, at least annually. The
Trust, however, may declare a special capital gains distribution if the Trustees
believe that such a distribution would be in the best interest of the
shareholders of a Fund.
You will receive dividends and distributions in the form of additional
fund shares unless you have elected to receive payment in cash. If you have not
already elected to receive cash payments on your application, you must notify
the Trust in writing prior to the date of distribution. Your election will
become effective for dividends paid after the Trust receives your written
notice. To cancel your election, simply send written notice to the Trust.
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Dividends and distributions from a Fund are taxable to you whether they
are reinvested in additional shares of the Fund or are received in cash. You
will receive an account statement at least quarterly.
TAX INFORMATION
The following is a summary of some important tax issues that affect the
Funds and their shareholders. The summary is based on current tax laws, which
may be changed by legislative, judicial or administrative action. The Trust has
not tried to present a detailed explanation of the tax treatment of the Funds,
or the tax consequences of an investment in the Funds. MORE INFORMATION ABOUT
TAXES IS LOCATED IN THE STATEMENT OF ADDITIONAL INFORMATION (SAI). YOU ARE URGED
TO CONSULT YOUR TAX ADVISOR REGARDING SPECIFIC QUESTIONS AS TO FEDERAL, STATE
AND LOCAL INCOME TAXES.
TAX STATUS OF EACH FUND
Each Fund is treated as a separate entity for federal tax purposes, and
intends to qualify for the special tax treatment afforded regulated investment
companies. As long as a Fund qualifies as a regulated investment company, it
pays no federal income tax on the earnings it distributes to Shareholders.
TAX STATUS OF DISTRIBUTIONS
- Each Fund will distribute substantially all of its income. THE INCOME
DIVIDENDS YOU RECEIVE FROM THE FUNDS WILL BE TAXED AS ORDINARY INCOME
WHETHER YOU RECEIVE THE DIVIDENDS IN CASH OR IN ADDITIONAL SHARES.
- Corporate shareholders may be entitled to a dividends-received
deduction for the portion of dividends they receive which are
attributable to dividends received by a fund from U.S. corporations.
- Capital gains distributions will result from gains on the sale or
exchange of capital assets held for more than one year.
- Distributions paid in January but declared by a Fund in October,
November or December of the previous year, may be taxable to you in
the previous year.
TAX STATUS OF SHARE TRANSACTIONS
EACH SALE, EXCHANGE, OR REDEMPTION OF FUND SHARES IS A TAXABLE EVENT TO
YOU. YOU SHOULD CONSIDER THE TAX CONSEQUENCES OF ANY REDEMPTION OR EXCHANGE
BEFORE MAKING SUCH A REQUEST, ESPECIALLY WITH RESPECT TO REDEMPTIONS, IF YOU
INVEST IN THE FUNDS THROUGH A TAX-QUALIFIED RETIREMENT PLAN.
25
<PAGE>
STATE TAX CONSIDERATIONS
A Fund is not liable for any income or franchise tax in Delaware as long
as it qualifies as a regulated investment company for Federal income tax
purposes.
Distributions by the Funds may be subject to state and local taxation. You
should verify your tax liability with your tax advisor.
26
<PAGE>
BENCHMARK INFORMATION
NEITHER FUND 1 NOR FUND 2 IS SPONSORED, ENDORSED, SOLD, OR PROMOTED BY STANDARD
& POOR'S CORP. (S&P); AND NEITHER FUND 3 NOR FUND 4 IS SPONSORED, ENDORSED,
SOLD, OR PROMOTED BY NASDAQ OR ANY OF NASDAQ'S AFFILIATES (NASDAQ AND ITS
AFFILIATES HEREINAFTER COLLECTIVELY REFERRED TO AS "NASDAQ").
NEITHER S&P NOR NASDAQ MAKE ANY REPRESENTATION OR WARRANTY, IMPLIES OR EXPRESS,
TO THE INVESTORS IN THE FUNDS, OR ANY MEMBER OF THE PUBLIC, REGARDING THE
ADVISABILITY OF INVESTING IN INDEX FUNDS OR THE ABILITY OF THE S&P 500 INDEX OR
THE NASDAQ 100 INDEX-TM-, RESPONSIBILITY, TO TRACK GENERAL STOCK MARKET
PERFORMANCE.
NEITHER S&P NOR NASDAQ GUARANTEES THE ACCURACY AND/OR THE COMPLETENESS OF THE
S&P 500 INDEX AND NASDAQ 100 INDEX-TM-, RESPECTIVELY, OR ANY DATA INCLUDED
THEREIN.
NEITHER S&P NOR NASDAQ MAKE ANY WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO
BE OBTAINED BY ANY OF THE FUNDS, THE INVESTORS IN THE FUNDS, OR ANY PERSON OR
ENTITY FROM THE USE OF THE S&P 500 INDEX OR THE NASDAQ 100 INDEX-TM-,
RESPECTIVELY, OR ANY DATA INCLUDED THEREIN.
NEITHER S&P NOR NASDAQ MAKE ANY EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE FOR USE WITH RESPECT TO THE S&P 500 INDEX OR
THE NASDAQ 100 INDEX-TM-, RESPECTIVELY, OR ANY DATA INCLUDED THEREIN.
27
<PAGE>
Additional information about the Funds is included in a Statement of Additional
Information dated ______________ (the "SAI"), which contains more detailed
information about the Funds. The SAI has been filed with the Securities and
Exchange Commission ("SEC") and is incorporated by reference into this
Prospectus and, therefore, legally forms a part of this Prospectus. The SEC
maintains a Web site ("http://www.sec.gov") that contains the SAI, material
incorporated by reference, and other information regarding registrants that file
electronically with the SEC. You may also review and copy documents at the SEC
Public Reference room in Washington, D.C. (for information call 1-800-SEC-0330).
You may request documents by mail from the SEC, upon payment of a duplication
fee, by writing to: Securities and Exchange Commission, Public Reference
Section, Washington, D.C. 20549-6009. To help you to obtain additional
information, the Fund's SEC registration number is 811-____.
You may obtain a copy of the SAI or the annual or semi-annual reports, without
charge by calling ______________ or by writing to NEWCO Trust, at
______________________________________________________________. Additional
information about the Funds' investments is available in the annual and
semi-annual reports. Also, in the Funds' annual report, you will find a
discussion of the market conditions and investment strategies that significantly
affected the Funds' performance during its last fiscal year.
- --------------------------------------------------------------------------------
NO ONE HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE TRUST'S SAI IN
CONNECTION WITH THE OFFERING OF FUND SHARES. DO NOT RELY ON ANY SUCH INFORMATION
OR REPRESENTATIONS AS HAVING BEEN AUTHORIZED BY THE TRUST OR NEWCO ADVISORS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE TRUST IN ANY JURISDICTION
WHERE SUCH AN OFFERING IS NOT LAWFUL.
28
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
NEWCO TRUST
ADDRESS TO BE INSERTED
NewCo Trust (the "Trust") is a no-load mutual fund complex with five separate
investment portfolios (the "Funds"). This Statement of Additional Information
("SAI") relates to shares of the following portfolios:
MONEY MARKET FUND
FUND 1
FUND 2
FUND 3
FUND 4
This SAI is not a prospectus. It should be read in conjunction with the Trust's
Prospectus, dated ____________, 1999. A copy of the Trust's Prospectus is
available, without charge, upon request to the Trust at the address above or by
telephoning the Trust at the telephone number above.
The date of this SAI is October , 1999.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
----
GENERAL INFORMATION ABOUT THE TRUST............................................3
INVESTMENT POLICIES, TECHNIQUES AND RISK FACTORS...............................3
INVESTMENT RESTRICTIONS.......................................................11
PORTFOLIO TRANSACTIONS AND BROKERAGE..........................................12
MANAGEMENT OF THE TRUST.......................................................13
DETERMINATION OF NET ASSET VALUE..............................................15
PERFORMANCE INFORMATION.......................................................17
CALCULATION OF RETURN QUOTATIONS..............................................17
INFORMATION ON COMPUTATION OF YIELD...........................................18
PURCHASE AND REDEMPTION OF SHARES.............................................19
DIVIDENDS, DISTRIBUTIONS, AND TAXES...........................................20
OTHER INFORMATION.............................................................23
COUNSEL.......................................................................23
AUDITORS AND CUSTODIAN........................................................23
2
<PAGE>
GENERAL INFORMATION ABOUT THE TRUST
The Trust was organized as a Delaware business trust on August 6, 1999. The
Trust is permitted to offer separate portfolios and different classes of shares.
The Trust currently offers one class of shares. Additional Funds and/or classes
may be created from time to time.
Currently, the Trust has five separate series. All payments received by the
Trust for shares of any Fund belong to that Fund. Each Fund has its own assets
and liabilities.
INVESTMENT POLICIES, TECHNIQUES AND RISK FACTORS
GENERAL
Each Fund's investment objective and principal investments are described in the
Prospectuses. The following information supplements, and should be read in
conjunction with, those sections of the Prospectuses.
Portfolio management is provided to each Fund by the Trust's investment adviser,
NewCo Advisor (the "Advisor"). The investment strategies of the Funds discussed
below and in the Prospectuses may be used by a Fund if, in the opinion of the
Advisor, these strategies will be advantageous to that Fund. A Fund is free to
reduce or eliminate its activity in any of those areas without changing the
Fund's fundamental investment policies. There is no assurance that any of these
strategies or any other strategies and methods of investment available to a Fund
will result in the achievement of that Fund's objectives.
BORROWING
The Funds may borrow money, including borrowing for investment purposes.
Borrowing for investment is known as leveraging. Leveraging investments, by
purchasing securities with borrowed money, is a speculative technique which
increases investment risk, but also increases investment opportunity. Since
substantially all of a Fund's assets will fluctuate in value, whereas the
interest obligations on borrowings may be fixed, the net asset value per share
of the Fund will increase more when the Fund's portfolio assets increase in
value and decrease more when the Fund's portfolio assets decrease in value than
would otherwise be the case. Moreover, interest costs on borrowings may
fluctuate with changing market rates of interest and may partially offset or
exceed the returns on the borrowed funds. Under adverse conditions, the Funds
might have to sell portfolio securities to meet interest or principal payments
at a time investment considerations would not favor such sales. The Funds intend
to use leverage during periods when the Advisor believes that the respective
Fund's investment objective would be furthered.
Each Fund may borrow money to facilitate management of the Fund's portfolio by
enabling the Fund to meet redemption requests when the liquidation of portfolio
instruments would be inconvenient or disadvantageous. Such borrowing is not for
investment purposes and will be repaid by the borrowing Fund promptly.
As required by the 1940 Act, a Fund must maintain continuous asset coverage
(total assets, including assets acquired with borrowed funds, less liabilities
exclusive of borrowings) of 300% of all amounts borrowed. If, at any time, the
value of the Fund's assets should fail to meet this 300% coverage test, the
Fund, within three days (not including Sundays and holidays), will reduce the
amount of the Fund's borrowings to the extent necessary to meet this 300%
coverage. Maintenance of this percentage limitation may result in the sale of
portfolio securities at a time when investment considerations otherwise indicate
that it would be disadvantageous to do so.
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In addition to the foregoing, the Funds are authorized to borrow money from a
bank as a temporary measure for extraordinary or emergency purposes in amounts
not in excess of 5% of the value of the Fund's total assets. This borrowing is
not subject to the foregoing 300% asset coverage requirement The Funds are
authorized to pledge portfolio securities as the Advisor deems appropriate in
connection with any borrowings.
ILLIQUID SECURITIES
While none of the Funds anticipates doing so, each Fund may purchase illiquid
securities, including securities that are not readily marketable and securities
that are not registered ("restricted securities") under the Securities Act of
1933, as amended (the "1933 Act"), but which can be offered and sold to
"qualified institutional buyers" under Rule 144A under the 1933 Act. A Fund will
not invest more than 15% (10% with respect to the Money Market Fund) of the
Fund's net assets in illiquid securities. Each Fund will adhere to a more
restrictive limitation on the Fund's investment in illiquid securities as
required by the securities laws of those jurisdictions where shares of the Fund
are registered for sale. The term "illiquid securities" for this purpose means
securities that cannot be disposed of within seven days in the ordinary course
of business at approximately the amount at which the Fund has valued the
securities. Under the current guidelines of the staff of the Securities and
Exchange Commission (the "Commission"), illiquid securities also are considered
to include, among other securities, purchased over-the-counter options, certain
cover for over-the-counter options, repurchase agreements with maturities in
excess of seven days, and certain securities whose disposition is restricted
under the Federal securities laws. The Fund may not be able to sell illiquid
securities when the Advisor considers it desirable to do so or may have to sell
such securities at a price that is lower than the price that could be obtained
if the securities were more liquid. In addition, the sale of illiquid securities
also may require more time and may result in higher dealer discounts and other
selling expenses than does the sale of securities that are not illiquid.
Illiquid securities also may be more difficult to value due to the
unavailability of reliable market quotations for such securities, and investment
in illiquid securities may have an adverse impact on net asset value.
Institutional markets for restricted securities have developed as a result of
the promulgation of Rule 144A under the 1933 Act, which provides a "safe harbor"
from 1933 Act registration requirements for qualifying sales to institutional
investors. When Rule 144A restricted securities present an attractive investment
opportunity and meet other selection criteria, a Fund may make such investments
whether or not such securities are "illiquid" depends on the market that exists
for the particular security. The trustees of the Trust (the "Trustees") have
delegated the responsibility for determining the liquidity of Rule 144A
restricted securities which may be invested in by a Fund to the Advisor.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
The Funds presently may invest in the securities of other investment companies
to the extent that such an investment would be consistent with the requirements
of Section 12(d)(1) of the 1940 Act. A Fund, therefore, may invest in the
securities of another investment company (the "acquired company") provided that
the Fund, immediately after such purchase or acquisition, does not own in the
aggregate: (i) more than 3% of the total outstanding voting stock of the
acquired company; (ii) securities issued by the acquired company having an
aggregate value in excess of 5% of the value of the total assets of the Fund; or
(iii) securities issued by the acquired company and all other investment
companies (other than Treasury stock of the Fund) having an aggregate value in
excess of 10% of the value of the total assets of the Fund. The Money Market
Fund intends to invest substantially all of its assets in the securities of the
Master Money Market Fund subject to the requirements of the 1940 Act. The Master
Money Market Fund may not invest in other investment companies except as part of
a merger, reorganization or acquisition.
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If a Fund invests in, and, thus, is a shareholder of, another investment
company, the Fund's shareholders will indirectly bear the Fund's proportionate
share of the fees and expenses paid by such other investment company, including
advisory fees, in addition to both the management fees payable directly by the
Fund to the Fund's own investment adviser and the other expenses that the Fund
bears directly in connection with the Fund's own operations.
LENDING OF PORTFOLIO SECURITIES
Subject to the investment restrictions set forth below, each of the Funds may
lend portfolio securities to brokers, dealers, and financial institutions,
provided that cash equal to at least 100% of the market value of the securities
loaned is deposited by the borrower with the Fund and is maintained each
business day in a segregated account pursuant to applicable regulations. While
such securities are on loan, the borrower will pay the lending Fund any income
accruing thereon, and the Fund may invest the cash collateral in portfolio
securities, thereby earning additional income. A Fund will not lend its
portfolio securities if such loans are not permitted by the laws or regulations
of any state in which the Fund's shares are qualified for sale, and the Funds
will not lend more than 33 1/3% of the value of the Fund's total assets, except
that the Money Market Fund will not lend more than 10% of the value of the Money
Market Fund's total assets. Loans would be subject to termination by the lending
Fund on four business days' notice, or by the borrower on one day's notice.
Borrowed securities must be returned when the loan is terminated. Any gain or
loss in the market price of the borrowed securities which occurs during the term
of the loan inures to the lending Fund and that Fund's shareholders. A lending
Fund may pay reasonable finders, borrowers, administrative, and custodial fees
in connection with a loan.
OPTIONS TRANSACTIONS
OPTIONS ON SECURITIES. Fund 1, and Fund 3 may buy call options and write (sell)
put options on securities, and Fund 2 and Fund 4 may buy put options and write
call options on securities for the purpose of realizing the Fund's investment
objective. By writing a call option on securities, a Fund becomes obligated
during the term of the option to sell the securities underlying the option at
the exercise price if the option is exercised. By writing a put option, a Fund
becomes obligated during the term of the option to purchase the securities
underlying the option at the exercise price if the option is exercised.
During the term of the option, the writer may be assigned an exercise notice by
the broker-dealer through whom the option was sold. The exercise notice would
require the writer to deliver, in the case of a call, or take delivery of, in
the case of a put, the underlying security against payment of the exercise
price. This obligation terminates upon expiration of the option, or at such
earlier time that the writer effects a closing purchase transaction by
purchasing an option covering the same underlying security and having the same
exercise price and expiration date as the one previously sold. Once an option
has been exercised, the writer may not execute a closing purchase transaction.
To secure the obligation to deliver the underlying security in the case of a
call option, the writer of a call option is required to deposit in escrow the
underlying security or other assets in accordance with the rules of the Option
Clearing Corporation (the "OCC"), an institution created to interpose itself
between buyers and sellers of options. The OCC assumes the other side of every
purchase and sale transaction on an exchange and, by doing so, gives its
guarantee to the transaction.
A Fund may purchase and write options on an exchange or over-the-counter.
Over-the-counter options ("OTC options") differ from exchange-traded options in
several respects. They are transacted directly with dealers and not with a
clearing corporation, and therefore entail the risk of non-performance by the
dealer. OTC options are available for a greater variety of securities and for a
wider range of expiration dates and
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exercise prices than are available for exchange-traded options. Because OTC
options are not traded on an exchange, pricing is done normally by reference to
information from a market maker. It is the position of the SEC that OTC options
are illiquid.
OPTIONS ON SECURITY INDEXES. Fund 1, and Fund 3 may purchase call options and
write put options, and Fund 2 and Fund 4 may purchase put options and write call
options, on stock indexes listed on national securities exchanges or traded in
the over-the-counter market as an investment vehicle for the purpose of
realizing the Fund's investment objective.
Options on indexes are settled in cash, not in delivery of securities. The
exercising holder of an index option receives, instead of a security, cash equal
to the difference between the closing price of the securities index and the
exercise price of the option. When a Fund writes a covered option on an index,
the Fund will be required to deposit and maintain with a custodian cash or
liquid securities equal in value to the aggregate exercise price of a put or
call option pursuant to the requirements and the rules of the applicable
exchange. If, at the close of business on any day, the market value of the
deposited securities falls below the contract price, the Fund will deposit with
the custodian cash or liquid securities equal in value to the deficiency.
OPTIONS ON FUTURES CONTRACTS. Under Commodities Futures Trading Commission
("CFTC") Regulations, a Fund (other than the Money Market Fund) may engage in
futures transactions, either for "bona fide hedging" purposes, as this term is
defined in the CFTC Regulations, or for non-hedging purposes to the extent that
the aggregate initial margins and option premiums required to establish such
non-hedging positions do not exceed 5% of the liquidation value of the Fund's
portfolio. In the case of an option on futures contracts that is "in-the-money"
at the time of purchase (I.E., the amount by which the exercise price of the put
option exceeds the current market value of the underlying security, or the
amount by which the current market value of the underlying security exceeds the
exercise price of the call option), the in-the-money amount may be excluded in
calculating this 5% limitation.
When a Fund purchases or sells a stock index futures contract, or sells an
option thereon, the Fund "covers" its position. To cover its position, a Fund
may maintain with its custodian bank (and marked-to-market on a daily basis), a
segregated account consisting of cash or liquid securities that, when added to
any amounts deposited with a futures commission merchant as margin, are equal to
the market value of the futures contract or otherwise "cover" its position. If
the Fund continues to engage in the described securities trading practices and
properly segregates assets, the segregated account will function as a practical
limit on the amount of leverage which the Fund may undertake and on the
potential increase in the speculative character of the Fund's outstanding
portfolio securities. Additionally, such segregated accounts will generally
assure the availability of adequate funds to meet the obligations of the Fund
arising from such investment activities.
A Fund may cover its long position in a futures contract by purchasing a put
option on the same futures contract with a strike price (I.E., an exercise
price) as high or higher than the price of the futures contract. In the
alternative, if the strike price of the put is less than the price of the
futures contract, the Fund will maintain in a segregated account cash or liquid
securities equal in value to the difference between the strike price of the put
and the price of the futures contract. A Fund may also cover its long position
in a futures contract by taking a short position in the instruments underlying
the futures contract, or by taking positions in instruments with prices which
are expected to move relatively consistently with the futures contract. A Fund
may cover its short position in a futures contract by taking a long position in
the instruments underlying the futures contracts, or by taking positions in
instruments with prices which are expected to move relatively consistently with
the futures contract.
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A Fund may cover its sale of a call option on a futures contract by taking a
long position in the underlying futures contract at a price less than or equal
to the strike price of the call option. In the alternative, if the long position
in the underlying futures contracts is established at a price greater than the
strike price of the written (sold) call, the Fund will maintain in a segregated
account cash or liquid securities equal in value to the difference between the
strike price of the call and the price of the futures contract. A Fund may also
cover its sale of a call option by taking positions in instruments with prices
which are expected to move relatively consistently with the call option. A Fund
may cover its sale of a put option on a futures contract by taking a short
position in the underlying futures contract at a price greater than or equal to
the strike price of the put option, or, if the short position in the underlying
futures contract is established at a price less than the strike price of the
written put, the Fund will maintain in a segregated account cash or liquid
securities equal in value to the difference between the strike price of the put
and the price of the futures contract. A Fund may also cover its sale of a put
option by taking positions in instruments with prices which are expected to move
relatively consistently with the put option.
PORTFOLIO TURNOVER
The Trust anticipates that investors in the Funds, as part of an asset
allocation investment strategy, will frequently purchase and/or redeem shares of
the Funds. The nature of the Funds as asset allocation tools will cause the
Funds to experience substantial portfolio turnover. Because each Fund's
portfolio turnover rate to a great extent will depend on the purchase,
redemption, and exchange activity of the Fund's investors, it is very difficult
to estimate what the Fund's actual turnover rate will be in the future.
"Portfolio Turnover Rate" is defined under the rules of the SEC as the value of
the securities purchased or securities sold, excluding all securities whose
maturities at the time of acquisition were one year or less, divided by the
average monthly value of such securities owned during the year. Based on this
definition, instruments with remaining maturities of less than one year are
excluded from the calculation of the portfolio turnover rate. Instruments
excluded from the calculation of portfolio turnover generally would include the
futures contracts and option contracts in which the Funds invest since such
contracts generally have remaining maturity of less than one year. The Funds
typically hold most of their investments in short-term options and futures
contracts, which are excluded for purposes of computing portfolio turnover.
Therefore, based on the portfolio's turnover formula, each Fund expects a
portfolio turnover rate of approximately 0%.
REPURCHASE AGREEMENTS
Each of the Funds may enter into repurchase agreements with financial
institutions. The Funds each follow certain procedures designed to minimize the
risks inherent in such agreements. These procedures include effecting repurchase
transactions only with large, well-capitalized and well-established financial
institutions whose condition will be continually monitored by the Advisor. In
addition, the value of the collateral underlying the repurchase agreement will
always be at least equal to the repurchase price, including any accrued interest
earned on the repurchase agreement. In the event of a default or bankruptcy by a
selling financial institution, a Fund will seek to liquidate such collateral.
However, the exercising of each Fund's right to liquidate such collateral could
involve certain costs or delays and, to the extent that proceeds from any sale
upon a default of the obligation to repurchase were less than the repurchase
price, the Fund could suffer a loss. It is the current policy of each of the
Funds, other than the Money Market Fund, not to invest in repurchase agreements
that do not mature within seven days if any such investment, together with any
other illiquid assets held by the Fund, amounts to more than 15% (10% with
respect to the Money Market Fund) of the Fund's total assets. The investments of
each of the Funds in repurchase agreements, at times, may be substantial when,
in the view of the Advisor, liquidity or other considerations so warrant.
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REVERSE REPURCHASE AGREEMENTS
Fund 2 and Fund 4 may use reverse repurchase agreements as part of that Fund's
investment strategy. Reverse repurchase agreements involve sales by a Fund of
portfolio assets concurrently with an agreement by the Fund to repurchase the
same assets at a later date at a fixed price. Generally, the effect of such a
transaction is that the Fund can recover all or most of the cash invested in the
portfolio securities involved during the term of the reverse repurchase
agreement, while the Fund will be able to keep the interest income associated
with those portfolio securities. Such transactions are advantageous only if the
interest cost to the Fund of the reverse repurchase transaction is less than the
cost of obtaining the cash otherwise. Opportunities to achieve this advantage
may not always be available, and the Funds intend to use the reverse repurchase
technique only when this will be to the Fund's advantage to do so. Each Fund
will establish a segregated account with the Trust's custodian bank in which the
Fund will maintain cash or cash equivalents or other portfolio securities equal
in value to the Fund's obligations in respect of reverse repurchase agreements.
SHORT SALES
Fund 2 and Fund 4 also may engage in short sales transactions under which the
Fund sells a security it does not own. To complete such a transaction, the Fund
must borrow the security to make delivery to the buyer. The fund then is
obligated to replace the security borrowed by purchasing the security at the
market price at the time of replacement. The price at such time may be more or
less than the price at which the security was sold by the Fund. Until the
security is replaced, the Fund is required to pay to the lender amounts equal to
any dividends or interest which accrue during the period of the loan. To borrow
the security, the Fund also may be required to pay a premium, which would
increase the cost of the security sold. The proceeds of the short sale will be
retained by the broker, to the extent necessary to meet the margin requirements,
until the short position is closed out.
Until Fund 2 or Fund 4 closes its short position or replaces the borrowed
security, the Fund will: (a) maintain a segregated account containing cash or
liquid securities at such a level that (i) the amount deposited in the account
plus the amount deposited with the broker as collateral will equal the current
value of the security sold short and (ii) the amount deposited in the segregated
account plus the amount deposited with the broker as collateral will not be less
than the market value of the security at the time the security was sold short;
or (b) otherwise cover the Fund's short position. Each of the Funds may sell up
to 100% of its portfolio short.
Fund 1 and Fund 3 each may engage in short sales if, at the time of the short
sale, the Fund owns or has the right to acquire an equal amount of the security
being sold at no additional cost. These Funds may make a short sale when the
Fund wants to sell the security the Fund owns at a current attractive price, in
order to hedge or limit the exposure of the Fund's position.
STOCK INDEX FUTURES CONTRACTS
A Fund may buy and sell stock index futures contracts with respect to any stock
index traded on a recognized stock exchange or board of trade. A stock index
futures contract is a contract to buy or sell units of an index at a specified
future date at a price agreed upon when the contract is made. The stock index
futures contract specifies that no delivery of the actual stocks making up the
index will take place. Instead, settlement in cash must occur upon the
termination of the contract, with the settlement being the difference between
the contract price and the actual level of the stock index at the expiration of
the contract.
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At the time a Fund purchases a futures contract, an amount of cash, U.S.
Government securities or other liquid securities equal to the market value of
the futures contract will be deposited in a segregated account with the Fund's
custodian. When writing a futures contract, the Fund will maintain with its
custodian liquid assets that, when added to the amounts deposited with a futures
commission merchant or broker as margin, are equal to the market value of the
instruments underlying the contract. Alternatively, a Fund may "cover" its
position by owning the instruments underlying the contract (or, in the case of
an index futures contract, a portfolio with a volatility substantially similar
to that of the index on which the futures contract is based), or holding a call
option permitting the Fund to purchase the same futures contract at a price no
higher than the price of the contract written by the Fund (or at a higher price
if the difference is maintained in liquid assets with the Fund's custodian).
TRACKING ERROR
The Funds do not expect that the returns over a year will deviate adversely from
their respective benchmarks by more than ten percent. But several factors may
affect their ability to achieve this correlation. Among these are: (1) Fund
expenses, including brokerage (which may be increased by high portfolio
turnover); (2) less than all of the securities in the benchmark being held by a
Fund and securities not included in the benchmark being held by a Fund; (3) an
imperfect correlation between the performance of instruments held by a Fund,
such as futures contracts and options, and the performance of the underlying
securities in the market; (4) bid-ask spreads (the effect of which may be
increased by portfolio turnover); (5) a Fund holds instruments traded in a
market that has become illiquid or disrupted; (6) Fund share prices being
rounded to the nearest cent; (7) changes to the benchmark index that are not
disseminated in advance; (8) the need to conform a Fund's portfolio holdings to
comply with investment restrictions or policies or regulatory or tax law
requirements; or (9) market movements that run counter to a leveraged Fund's
investments (which will cause divergence between the Fund and its benchmark over
time due to the mathematical effects of leveraging). Market movements that run
counter to a leveraged Fund's investments will cause some divergence between the
Fund and its benchmark over time due to the mathematical effects of leveraging.
The magnitude of the divergence is dependent upon the magnitude of the market
movement, its duration, and the degree to which the Fund is leveraged. The
tracking error of a leveraged Fund is generally small during a well-defined up
trend or downtrend in the market when measured from price peak to price peak,
access a market decline and subsequent recovery, however, the deviation of the
Fund from its benchmark may be significant.
U.S. GOVERNMENT SECURITIES
The Funds may invest in U.S. Government Securities. Securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities include
U.S. Treasury securities, which are backed by the full faith and credit of the
U.S. Treasury and which differ only in their interest rates, maturities, and
times of issuance. U.S. Treasury bills have initial maturities of one year or
less; U.S. Treasury notes have initial maturities of one to ten years; and U.S.
Treasury bonds generally have initial maturities of greater than ten years.
Certain U.S. Government Securities are issued or guaranteed by agencies or
instrumentalities of the U.S. Government including, but not limited to,
obligations of U.S. Government agencies or instrumentalities such as Fannie Mae,
the Government National Mortgage Association, the Small Business Administration,
the Federal Farm Credit Administration, the Federal Home Loan Banks, Banks for
Cooperatives (including the Central Bank for Cooperatives), the Federal Land
Banks, the Federal Intermediate Credit Banks, the Tennessee Valley Authority,
the Export-Import Bank of the United States, the Commodity Credit Corporation,
the Federal Financing Bank, the Student Loan Marketing Association, and the
National Credit Union Administration.
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Some obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, including, for example, Government National Mortgage
Association pass-through certificates, are supported by the full faith and
credit of the U.S. Treasury. Other obligations issued by or guaranteed by
Federal agencies, such as those securities issued by Fannie Mae, are supported
by the discretionary authority of the U.S. Government to purchase certain
obligations of the Federal agency, while other obligations issued by or
guaranteed by Federal agencies, such as those of the Federal Home Loan Banks,
are supported by the right of the issuer to borrow from the U.S. Treasury, while
the U.S. Government provides financial support to such U.S. Government-sponsored
Federal agencies, no assurance can be given that the U.S. Government will always
do so, since the U.S. Government is not so obligated by law. U.S. Treasury notes
and bonds typically pay coupon interest semi-annually and repay the principal at
maturity.
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES
Each Fund, from time to time, in the ordinary course of business, may purchase
securities on a when-issued or delayed-delivery basis (I.E., delivery and
payment can take place between a month and 120 days after the date of the
transaction). These securities are subject to market fluctuation and no interest
accrues to the purchaser during this period. At the time a Fund makes the
commitment to purchase securities on a when-issued or delayed-delivery basis,
the Fund will record the transaction and thereafter reflect the value of the
securities, each day, of such security in determining the Fund's net asset
value. A Fund will not purchase securities on a when-issued or delayed-delivery
basis if, as a result, more than 15% (10% with respect to the Money Market Fund)
of the Fund's net assets would be so invested. At the time of delivery of the
securities, the value of the securities may be more or less than the purchase
price. The Fund will also establish a segregated account with the Fund's
custodian bank in which the Fund will maintain cash or liquid securities equal
to or greater in value than the Fund's purchase commitments for such when-issued
or delayed-delivery securities. The Trust does not believe that a Fund's net
asset value or income will be adversely affected by the Fund's purchase of
securities on a when-issued or delayed-delivery basis.
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INVESTMENT RESTRICTIONS
FUNDAMENTAL POLICIES
The following investment limitations (and those set forth in the Prospectuses)
are fundamental policies of the Funds which cannot be changed with respect to a
Fund without the consent of the holders of a majority of that Fund's outstanding
shares. The term "majority of the outstanding shares" means the vote of (i) 67%
or more of a Fund's shares present at a meeting, if more than 50% of the
outstanding shares of that Fund are present or represented by proxy, or (ii)
more than 50% of that Fund's outstanding shares, whichever is less.
A Fund shall not:
1. Make loans if, as a result, more than 33 1/3% of its total
assets would be lent to other parties, except that the Fund
may (i) purchase or hold debt instruments in accordance with
its investment objective and policies; (ii) enter into
repurchase agreements; and (iii) lend its securities.
2. Act as an underwriter of securities of other issuers except as
it may be deemed an underwriter in selling a portfolio
security.
3. Invest in interests in oil, gas, or other mineral exploration
or development programs and oil, gas or mineral leases.
4. Issue senior securities (as defined in the 1940 Act) except as
permitted by rule, regulation or order of the SEC.
5. Purchase or sell real estate, physical commodities, or
commodities contracts, except that the Fund may purchase (i)
marketable securities issued by companies which own or invest
in real estate (including real estate investment trusts),
commodities, or commodities contracts; and (ii) commodities
contracts relating to financial instruments, such as financial
futures contracts and options on such contracts.
6. Invest 25% or more of the value of the Fund's total assets in
the securities of one or more issuers conducting their
principal business activities in the same industry; except
that, to the extent the benchmark selected for a particular
Fund is concentrated in a particular industry, the Fund will
necessarily be concentrated in that industry. This limitation
does not apply to investments or obligations of the U.S.
Government or any of its agencies or instrumentalities.
NON-FUNDAMENTAL POLICIES
The following investment limitations are non-fundamental policies of the Funds
and may be changed with respect to any Fund by the Board of Trustees.
Each Fund may not:
1. Invest in warrants.
2. Invest in real estate limited partnerships.
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3. Invest in mineral leases.
4. Pledge, mortgage or hypothecate assets except to secure
borrowing permitted by the Fund's fundamental limitation on
borrowing.
5. Invest in companies for the purpose of exercising control.
6. Purchase securities on margin or effect short sales, except
that a Fund may (i) obtain short-term credits as necessary for
the clearance of security transactions; (ii) provide initial
and variation margin payments in connection with transactions
involving futures contracts and options on such contracts; and
(iii) make short sales "against the box" or in compliance with
the SEC's position regarding the asset segregation
requirements imposed by Section 18 of the 1940 Act.
7. Invest its assets in securities of any investment company,
except as permitted by the 1940 Act or any rule, regulation or
order of the SEC.
8. Purchase or hold illiquid securities, I.E., securities that
cannot be disposed of for their approximate carrying value in
seven days or less (which term includes repurchase agreements
and time deposits maturing in more than seven days) if, in the
aggregate, more than 15% ( 10% with respect to the Money
Market Fund) of its net assets would be invested in illiquid
securities.
The foregoing percentages are: (i) based on total assets (except for the
limitation on illiquid securities, which is based on net assets); (ii) will
apply at the time of the purchase of a security; and (iii) shall not be
considered violated unless an excess or deficiency occurs or exists immediately
after and as a result of a purchase of such security.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the general supervision by the Trustees, the Advisor is responsible
for decisions to buy and sell securities for each of the Funds, the selection of
brokers and dealers to effect the transactions, and the negotiation of brokerage
commissions, if any. The Advisor expects that the Funds may execute brokerage or
other agency transactions through registered broker-dealers, for a commission,
in conformity with the 1940 Act, the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
The Advisor may serve as an investment manager to a number of clients, including
other investment companies. It is the practice of the Advisor to cause purchase
and sale transactions to be allocated among the Funds and others whose assets
the Advisor manages in such manner as the Advisor deems equitable. The main
factors considered by the Advisor in making such allocations among the Funds and
other client accounts of the Advisor are the respective investment objectives,
the relative size of portfolio holdings of the same or comparable securities,
the availability of cash for investment, the size of investment commitments
generally held, and the opinions of the person(s) responsible, if any, for
managing the portfolios of the Funds and the other client accounts.
The policy of each Fund regarding purchases and sales of securities for the
Fund's portfolio is that primary consideration will be given to obtaining the
most favorable prices and efficient executions of transactions.
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Consistent with this policy, when securities transactions are effected on a
stock exchange, each Fund's policy is to pay commissions which are considered
fair and reasonable without necessarily determining that the lowest possible
commissions are paid in all circumstances. Each Fund believes that a requirement
always to seek the lowest possible commission cost could impede effective
portfolio management and preclude the Fund and the Advisor from obtaining a high
quality of brokerage and research services. In seeking to determine the
reasonableness of brokerage commissions paid in any transaction, the Advisor
relies upon its experience and knowledge regarding commissions generally charged
by various brokers and on its judgment in evaluating the brokerage and research
services received from the broker effecting the transaction. Such determinations
are necessarily subjective and imprecise, as in most cases an exact dollar value
for those services is not ascertainable.
Purchases and sales of U.S. Government securities are normally transacted
through issuers, underwriters or major dealers in U.S. Government securities
acting as principals. Such transactions are made on a net basis and do not
involve payment of brokerage commissions. The cost of securities purchased from
an underwriter usually includes a commission paid by the issuer to the
underwriters; transactions with dealers normally reflect the spread between bid
and asked prices.
In seeking to implement a Fund's policies, the Advisor effects transactions with
those brokers and dealers who the Advisor believes provide the most favorable
prices and are capable of providing efficient executions. If the Advisor
believes such prices and executions are obtainable from more than one broker or
dealer, the Advisor may give consideration to placing portfolio transactions
with those brokers and dealers who also furnish research and other services to
the Fund or the Advisor. Such services may include, but are not limited to, any
one or more of the following: information as to the availability of securities
for purchase or sale; statistical or factual information or opinions pertaining
to investment; wire services; and appraisals or evaluations of portfolio
securities. If the broker-dealer providing these additional services is acting
as a principal for its own account, no commissions would be payable. If the
broker-dealer is not a principal, a higher commission may be justified, at the
determination of the Advisor, for the additional services.
The information and services received by the Advisor from brokers and dealers
may be of benefit to the Advisor in the management of accounts of some of the
Advisor's other clients and may not in all cases benefit a Fund directly, while
the receipt of such information and services is useful in varying degrees and
would generally reduce the amount of research or services otherwise performed by
the Advisor and thereby reduce the Advisor's expenses, this information and
these services are of indeterminable value and the management fee paid to the
Advisor is not reduced by any amount that may be attributable to the value of
such information and services.
MANAGEMENT OF THE TRUST
The Trustees are responsible for the general supervision of the Trust's
business. The day-to-day operations of the Trust are the responsibilities of the
Trust's officers. The names and addresses (and ages) of the Trustees and the
officers of the Trust and the officers of the Advisor, together with information
as to their principal business occupations during the past five years, are set
forth below. Fees and expenses for non-interested Trustees will be paid by the
Trust.
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TRUSTEES
THE ADVISORY AGREEMENT
Under an investment advisory agreement the Advisor serves as the investment
adviser for each series of the Trust and provides investment advice to the Funds
and oversees the day-to-day operations of the Funds, subject to direction and
control by the Trustees and the officers of the Trust. As of June 30, 1999, net
assets under management of the Advisor were approximately ____ billion.
The Advisor manages the investment and the reinvestment of the assets of each of
the Funds, in accordance with the investment objectives, policies, and
limitations of the Fund, subject to the general supervision and control of the
Trustees and the officers of the Trust. The Advisor bears all costs associated
with providing these advisory services and the expenses of the Trustees of the
Trust who are affiliated with or interested persons of the Advisor. The Advisor,
from its own resources, including profits from advisory fees received from the
Funds, provided such fees are legitimate and not excessive, may make payments to
broker-dealers and other financial institutions for their expenses in connection
with the distribution of Fund shares, and otherwise currently pay all
distribution costs for Fund shares.
THE SERVICE AGREEMENT
General administrative, shareholder, dividend disbursement, transfer agent, and
registrar services are provided to the Trust and the Funds by the NewCo
Administration (the "Administrator"), subject to the general supervision and
control of the Trustees and the officers of the Trust, pursuant to a service
agreement between the Trust and the Administrator.
Under the service agreement, the Administrator provides the Trust and each Fund
with all required general administrative services, including, without
limitation, office space, equipment, and personnel; clerical and general back
office services; bookkeeping, internal accounting, and secretarial services; the
determination of net asset values; and the preparation and filing of all
reports, registration statements, proxy statements, and all other materials
required to be filed or furnished by the Trust and each Fund under Federal and
state securities laws. The Administrator also maintains the shareholder account
records for each Fund, disburses dividends and distributions payable by each
Fund, and produces statements with respect to account activity for each Fund and
each Fund's shareholders. The Administrator pays all fees and expenses that are
directly related to the services provided by the Administrator to each Fund;
each Fund reimburses the Administrator for all fees and expenses incurred by the
Administrator which are not directly related to the services the Administrator
provides to the Fund under the service agreement.
DISTRIBUTION
Pursuant to the Distribution Agreement adopted by the Trust, NewCo Distributors
(the "Distributor"), acts as distributor for the Shares of the Trust under the
general supervision and control of the Trustees and the officers of the Trust.
Under a Distribution Plan, the Distributor may use its fees for: (i)
compensation for its services in connection with distribution assistance; or
(ii) payments to financial institutions and intermediaries such as banks,
savings and loan associations, insurance companies and investment counselors,
broker-dealers, mutual fund supermarkets and the Distributor's affiliates and
subsidiaries as compensation for services or reimbursement of expenses incurred
in connection with distribution assistance. The Distributor may, at its
discretion, retain a portion of such payments to compensate itself for
distribution services and distribution related expenses such as the costs of
preparation,
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printing, mailing or otherwise disseminating sales literature, advertising, and
prospectuses (other than those furnished to current shareholders of the Fund),
promotional and incentive programs, and such other marketing expenses that the
Distributor may incur.
COSTS AND EXPENSES
Each Fund bears all expenses of its operations other than those assumed by the
Advisor or the Administrator. Fund expenses include: the management fee; the
servicing fee (including administrative, transfer agent, and shareholder
servicing fees); custodian and accounting fees and expenses; legal and auditing
fees; securities valuation expenses; fidelity bonds and other insurance
premiums; expenses of preparing and printing prospectuses, confirmations, proxy
statements, and shareholder reports and notices; registration fees and expenses;
proxy and annual meeting expenses, if any; all Federal, state, and local taxes
(including, without limitation, stamp, excise, income, and franchise taxes);
organizational costs; non-interested Trustees' fees and expenses; the costs and
expenses of redeeming shares of the Fund; fees and expenses paid to any
securities pricing organization; dues and expenses associated with membership in
any mutual fund organization; and costs for incoming telephone WATTS lines. In
addition, each of the Funds pays an equal portion of the Trustee fees and
expenses for attendance at Trustee meetings for the Trustees of the Trust who
are not affiliated with or interested persons of the Advisor.
DETERMINATION OF NET ASSET VALUE
The net asset value of a Fund serves as the basis for the purchase and
redemption price of that Fund's shares. The net asset value per share of a Fund
is calculated by dividing the market value of the Fund's securities plus the
values of its other assets, less all liabilities, by the number of outstanding
shares of the Fund. If market quotations are not readily available, a security
will be valued at fair value by the Board of Trustees or by the Advisor using
methods established or ratified by the Board of Trustees.
For purposes of determining net asset value per share of a Fund. Options on
securities and indices purchased by a Fund generally are valued at their last
bid price in the case of exchange-traded options or, in the case of options
traded in the over-the-counter ("OTC") market, the average of the last bid price
as obtained from two or more dealers unless there is only one dealer, in which
case that dealer's price is used. The value of a futures contract equals the
unrealized gain or loss on the contract settlement price for a like contract
acquired on the day on which the futures contract is being valued. The value of
options on futures contracts is determined based upon the current settlement
price for a like option acquired on the day on which the option is being valued.
A settlement price may not be used for the foregoing purposes if the market
makes a limit move with respect to a particular commodity.
On days when the CBOT is closed during its usual business hours, but the shares
of a Fund have been purchased, redeemed, and/or exchanged, the portfolio
securities held by a Fund which are traded on the CBOT are valued at the earlier
of (i) the time of the execution of the last trade of the day for a Fund in
those CBOT-traded portfolio securities and (ii) the time of the close of the
CBOT Evening Session. On days when the CBOT is closed during its usual business
hours and there is no need for a Fund to execute trades on the CBOT, the value
of the CBOT-traded portfolio securities held by a Fund will be the mean of the
bid and asked prices for those CBOT-traded portfolio securities at the open of
the CBOT Evening Session.
OTC securities held by a Fund shall be valued at the last sales price or, if no
sales price is reported, the mean of the last bid and asked price is used. The
portfolio securities of a Fund that are listed on national exchanges are taken
at the last sales price of such securities on such exchange; if no sales price
is reported, the mean of the last bid and asked price is used. For valuation
purposes, all assets and liabilities initially expressed in foreign currency
values will be converted into U.S. dollar values at the mean between the bid and
the offered quotations of such currencies against U.S. dollars as last quoted by
any recognized dealer. If such quotations are not available, the
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rate of exchange will be determined in good faith by the Advisor based on
guidelines adopted by the Trustees. Dividend income and other distributions are
recorded on the ex-dividend date, except for certain dividends from foreign
securities which are recorded as soon as the Trust is informed after the
ex-dividend date.
Illiquid securities, securities for which reliable quotations or pricing
services are not readily available, and all other assets will be valued at their
respective fair value as determined in good faith by, or under procedures
established by, the Trustees, which procedures may include the delegation of
certain responsibilities regarding valuation to the Advisor or the officers of
the Trust. The officers of the Trust report, as necessary, to the Trustees
regarding portfolio valuation determination. The Trustees, from time to time,
will review these methods of valuation and will recommend changes which may be
necessary to assure that the investments of the Funds are valued at fair value.
The Master Money Market Fund will utilize the amortized cost method in valuing
its portfolio securities for purposes of determining the net asset value of its
shares even though the portfolio securities may increase or decrease in market
value, generally, in connection with changes in interest rates. The amortized
cost method of valuation involves valuing a security at its cost adjusted by a
constant amortization to maturity of any discount or premium, regardless of the
impact of fluctuating interest rates on the market value of the instrument while
this method provides certainty in valuation, this method may result in periods
during which value, as determined by amortized cost, is higher or lower than the
price the Master Money Market Fund would receive if this Fund sold the
instrument. During such periods, the yield to investors in the Money Market Fund
may differ somewhat from that obtained if the Master Money Market Fund used
mark-to-market values for all its portfolio securities. For example, if the use
of amortized cost resulted in a lower (higher) aggregate portfolio value on a
particular day, a prospective investor in the Money Market Fund would be able to
obtain a somewhat higher (lower) yield than would result if the Master Money
Market Fund used mark-to-market values for its portfolio securities and existing
investors would receive less (more) investment income. The purpose of this
method of calculation is to facilitate the maintenance of a constant net asset
value per share of $1.00.
The Master Money Market Fund's use of the amortized cost method is permitted
pursuant to Rule 2a-7 under the 1940 Act (the "Rule"). The Rule requires that
the Master Money Market Fund limit its investments to U.S. dollar-denominated
instruments that meet the Rule's quality, maturity and diversification
requirements. The Rule also requires the Master Money Market Fund to maintain a
dollar-weighted average portfolio maturity of not more than ninety days and
precludes the purchase of any instrument with a remaining maturity of more than
thirteen months.
The Master Money Market Fund may only purchase Eligible Securities. Eligible
Securities are securities which: (a) have remaining maturities of thirteen
months or less; (b) either (i) are rated in the two highest short-term rating
categories by any two nationally-recognized statistical rating organizations
("NRSROs") that have issued a short-term rating with respect to the security or
class of debt obligations of the issuer, or (ii) if only one NRSRO has issued a
short-term rating with respect to the security, then by that NRSRO; (c) were
long-term securities at the time of issuance whose issuers have outstanding
short-term debt obligations which are comparable in priority and security and
has a ratings as specified in (b) above; or (d) if no rating is assigned by any
NRSRO as provided in (b) and (c) above, the unrated securities are determined by
the Trustees to be of comparable quality to any rated securities.
If the Trustees determine that it is no longer in the best interests of the
Money Market Fund and its shareholders to invest in the Master Money Market Fund
the Trustees have the right to invest the Fund's assets in a different money
market fund or directly in money market securities. The Money Market Fund will
notify shareholders of any such change.
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PERFORMANCE INFORMATION
From time to time, each of the Funds (other than the Money Market Fund) may
include the Fund's total return in advertisements or reports to shareholders or
prospective shareholders. Quotations of average annual total return for a Fund
will be expressed in terms of the average annual compounded rate of return on a
hypothetical investment in the Fund over a period of at least one, five, and ten
years (up to the life of the Fund) (the ending date of the period will be
stated). Total return of a Fund is calculated from two factors: the amount of
dividends earned by each Fund share and by the increase or decrease in value of
the Fund's share price. See "Calculation of Return Quotations."
Performance information for each of the Funds contained in reports to
shareholders or prospective shareholders, advertisements, and other promotional
literature may be compared to the record of various unmanaged indexes.
Performance information for the Funds may be compared to various unmanaged
indexes, including, but not limited to, the S&P 500 Index or the Dow Jones
Industrial Average, the NASDAQ 100 Index-TM-, and the NASDAQ Composite
Index-TM-.
Such unmanaged indexes may assume the reinvestment of dividends, but generally
do not reflect deductions for operating costs and expenses. In addition, a
Fund's total return may be compared to the performance of broad groups of
comparable mutual funds with similar investment goals, as such performance is
tracked and published by such independent organizations as Lipper Analytical
Services, Inc. ("Lipper"), and CDA Investment Technologies, Inc., among others,
when Lipper's tracking results are used, the Fund will be compared to Lipper's
appropriate fund category, that is, by fund objective and portfolio holdings.
Performance figures are based on historical results and are not intended to
indicate future performance.
In addition, rankings, ratings, and comparisons of investment performance and/or
assessments of the quality of shareholder service appear in numerous financial
publications such as MONEY, FORBES, KIPLINGER'S MAGAZINE, PERSONAL INVESTOR,
MORNINGSTAR, INC., and similar sources.
CALCULATION OF RETURN QUOTATIONS
For purposes of quoting and comparing the performance of a Fund (other than the
Money Market Fund) to that of other mutual funds and to other relevant market
indexes in advertisements or in reports to shareholders, performance for the
Fund may be stated in terms of total return. Under the rules of the Securities
and Exchange Commission ("SEC Rules"), Funds advertising performance must
include total return quotes calculated according to the following formula:
P(1+T)to the power of M = ERV
Where: P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years (1, 5 or 10); and
ERV= ending redeemable value of a hypothetical $1,000
payment, made at the beginning of the 1, 5 or 10
year periods, at the end of the 1, 5, or 10 year
periods (or fractional portion thereof).
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Under the foregoing formula, the time periods used in advertising will be based
on rolling calendar quarters, updated to the last day of the most recent quarter
prior to submission of the advertising for publication, and will cover 1, 5, and
10 year periods or a shorter period dating from the effectiveness of the
Registration Statement of the Trust. In calculating the ending redeemable value,
all dividends and distributions by a Fund are assumed to have been reinvested at
net asset value as described in the Trust's Prospectus on the reinvestment dates
during the period. Total return, or 'T' in the formula above, is computed by
finding the average annual compounded rates of return over the 1, 5, and 10 year
periods (or fractional portion thereof) that would equate the initial amount
invested to the ending redeemable value.
INFORMATION ON COMPUTATION OF YIELD
THE MONEY MARKET FUND
The Money Market Fund's annualized current yield, as may be quoted from time to
time in advertisements and other communications to shareholders and potential
investors, is computed by determining, for a stated seven-day period, the net
change, exclusive of capital changes and including the value of additional
shares purchased with dividends and any dividends declared therefrom (which
reflect deductions of all expenses of the Money Market Fund such as management
fees), in the value of a hypothetical pre-existing account having a balance of
one share at the beginning of the period, and dividing the difference by the
value of the account at the beginning of the base period to obtain the base
period return, and then multiplying the base period return by 365 divided by 7.
The Money Market Fund's annualized effective yield, as may be quoted from time
to time in advertisements and other communications to shareholders and potential
investors, is computed by determining (for the same stated seven-day period as
the current yield) the net change, exclusive of capital changes and including
the value of additional shares purchased with dividends and any dividends
declared therefrom (which reflect deductions of all expenses of the Money Market
Fund such as management fees), in the value of a hypothetical pre-existing
account having a balance of one share at the beginning of the period, and
dividing the difference by the value of the account at the beginning of the base
period to obtain the base period return, and then compounding the base period
return by adding 1, raising the sum to a power equal to 365 divided by 7, and
subtracting 1 from the result.
The yields quoted in any advertisement or other communication should not be
considered a representation of the yields of the Money Market Fund in the future
since the yield is not fixed. Actual yields will depend not only on the type,
quality, and maturities of the investments held by the Master Money Market Fund
and changes in interest rates on such investments, but also on changes in the
Money Market Fund's expenses during the period.
Yield information may be useful in reviewing the performance of the Money Market
Fund and for providing a basis for comparison with other investment
alternatives. However, unlike bank deposits or other investments which typically
pay a fixed yield for a stated period of time, the Money Market Fund's yield
fluctuates.
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PURCHASE AND REDEMPTION OF SHARES
MINIMUM INVESTMENT REQUIREMENTS
Shareholders will be informed of any increase in the minimum investment
requirements by a new prospectus or a prospectus supplement, in which the new
minimum is disclosed. Any request for a redemption (including pursuant to check
writing privileges) by an investor whose account balance is (a) below the
currently applicable minimum investment, or (b) would be below that minimum as a
result of the redemption, will be treated as a request by the investor of a
complete redemption of that account. In addition, the Trust may redeem an
account whose balance (due in whole or in part to redemptions since the time of
last purchase) has fallen below the minimum investment amount applicable at the
time of the shareholder's most recent purchase of Fund shares (unless the
shareholder brings his or her account value up to the currently applicable
minimum investment).
TAX CONSEQUENCES
Note that in the case of tax-qualified retirement plans, a redemption from such
a plan may have adverse tax consequences. A shareholder contemplating such a
redemption should consult his or her own tax advisor. Other shareholders should
consider the tax consequences of any redemption.
SUSPENSION OF THE RIGHT OF REDEMPTION
The Funds may suspend the right of redemption or the date of payment: (i) for
any period during which the NYSE, the Federal Reserve Bank of New York, the
NASDAQ, the Chicago Mercantile Exchange ("CME"), the CBOT, or any other
exchange, as appropriate, is closed (other than customary weekend or holiday
closings), or trading on the NYSE, the NASDAQ, the CME, the CBOT, or any other
exchange, as appropriate, is restricted; (ii) for any period during which an
emergency exists so that sales of a Fund's investments or the determination of
its NAV is not reasonably practicable; or (iii) for such other periods as the
SEC may permit for the protection of a Fund's investors.
HOLIDAYS
The NYSE, the Federal Reserve Bank of New York, the NASDAQ, the CME, the CBOT,
and other U.S. exchanges are closed on weekends and on the following holidays:
(i) New Year's Day, Martin Luther King Jr.'s Birthday, President's Day, Good
Friday, Memorial Day, July Fourth, Labor Day, Columbus Day, Thanksgiving Day,
and Christmas Day; and (ii) the preceding Friday if any of these holidays falls
on a Saturday, or the subsequent Monday if any of these holidays falls on a
Sunday. Although the Trust expects the same holiday schedules to be observed in
the future, each of the aforementioned exchanges may modify its holiday schedule
at any time.
REDEMPTIONS IN-KIND
The Trust intends to pay your redemption proceeds in cash. However, under
unusual conditions that make the payment in cash unwise (and for the protection
of the remaining shareholders of the Fund) the Trust reserves the right to pay
all, or part, of your redemption proceeds in liquid securities with a market
value equal to the redemption price (redemption in-kind). Although it is highly
unlikely that your shares would ever actually be redeemed in kind, you would
probably have to pay brokerage costs to sell the securities distributed to you.
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DIVIDENDS, DISTRIBUTIONS, AND TAXES
DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income and any distributions of net realized
capital gains from each of the Funds will be distributed as described in the
Trust's Prospectus under "Dividends and Distributions." All such distributions
of a Fund normally automatically will be reinvested without charge in additional
shares of the same Fund.
The Money Market Fund intends to declare dividends daily from net investment
income (and net short-term capital gains, if any) and distribute such dividends
monthly. Net income, for dividend purposes, includes accrued interest and
accretion of original issue and market discount, plus or minus any short-term
gains or losses realized on sales of portfolio securities, less the amortization
of market premium and the estimated expenses of the Money Market Fund. Net
income will be calculated immediately prior to the determination of net asset
value per share of the Money Market Fund.
The Trustees may revise the dividend policy, or postpone the payment of
dividends, if the Money Market Fund should have or anticipate any large
unexpected expense, loss, or fluctuation in net assets which, in the opinion of
the Trustees, might have a significant adverse effect on shareholders of the
Money Market Fund. On occasion, in order to maintain a constant $1.00 per share
net asset value for the Money Market Fund, the Trustees may direct that the
number of outstanding shares of the Money Market Fund be reduced in each
shareholder's account. Such reduction may result in taxable income to a
shareholder of the Money Market Fund in excess of the net increase (I.E.,
dividends, less such reduction), if any, in the shareholder's account for a
period of time. Furthermore, such reduction may be realized as a capital loss
when the shares are liquidated.
REGULATED INVESTMENT COMPANY STATUS
As a RIC, a Fund would not be subject to Federal income taxes on the net
investment income and capital gains that the Fund distributes to the Fund's
shareholders. The distribution of net investment income and capital gains will
be taxable to Fund shareholders regardless of whether the shareholder elects to
receive these distributions in cash or in additional shares. Distributions
reported to Fund shareholders as long-term capital gains shall be taxable as
such, regardless of how long the shareholder has owned the shares. Fund
shareholders will be notified annually by the Fund as to the Federal tax status
of all distributions made by the Fund. Distributions may be subject to state and
local taxes.
Shareholders of the Money Market Fund will be subject to Federal income tax on
dividends paid from interest income delved from taxable securities and on
distributions of realized net short-term capital gains. Interest and realized
net short-term capital gains distributions are taxable to a shareholder of the
Money Market Fund as ordinary dividend income regardless of whether the
shareholder receives such distributions in additional shares of the Money Market
Fund or in cash. Since the Money Market Fund's income is expected to be derived
entirely from interest rather than dividends, none of such distributions will be
eligible for the Federal dividends received deduction available to corporations.
Each of the Funds will seek to qualify for treatment as a RIC under the Code.
Provided that a Fund (i) is a RIC and (ii) distributes at least 90% of the
Fund's net investment income (including, for this purpose, net realized
short-term capital gains), the Fund itself will not be subject to Federal income
taxes to the extent the Fund's net investment income and the Fund's net realized
long- and short-term capital gains, if any, are distributed to the Fund's
shareholders. To avoid an excise tax on its undistributed income, each Fund
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generally must distribute at least 98% of its income, including its net
long-term capital gains. One of several requirements for RIC qualification is
that the Fund must receive at least 90% of the Fund's gross income each year
from dividends, interest, payments with respect to securities loans, gains from
the sale or other disposition of securities or foreign currencies, or other
income derived with respect to the Fund's investments in stock, securities, and
foreign currencies (the "90% Test"). Income from investments in precious metals
and in precious minerals will not qualify as gross income from "securities" for
purposes of the 90% Test. The Metals Fund, therefore, intends to restrict its
investment in precious metals and in precious minerals to avoid a violation of
the 90% Test.
In the event of a failure by a Fund to quality as an RIC, the Fund's
distributions, to the extent such distributions are derived from the Fund's
current or accumulated earnings and profits, would constitute dividends that
would be taxable to the shareholders of the fund as ordinary income and would be
eligible for the dividends received deduction for corporate shareholders. This
treatment would also apply to any portion of the distributions that might have
been treated in the shareholder's hands as long-term capital gains, as discussed
below, had the Fund qualified as an RIC.
If a fund were to fail to qualify as an RIC for one or more taxable years, the
Fund could then qualify (or requalify) as an RIC for a subsequent taxable year
only if the Fund had distributed to the Fund's shareholders a taxable dividend
equal to the full amount of any earnings or profits (less the interest charge
mentioned below, if applicable) attributable to such period. The fund might also
be required to pay to the U.S. Internal Revenue Service (the "IRS") interest on
50% of such accumulated earnings and profits. In addition, pursuant to the Code
and an interpretative notice issued by the IRS, if the Fund should fail to
qualify as an RIC and should thereafter seek to requalify as an RIC, the Fund
may be subject to tax on the excess (if any) of the fair market of the Fund's
assets over the Fund's basis in such assets, as of the day immediately before
the first taxable year for which the Fund seeks to requalify as an RIC.
If a fund determines that the fund will not qualify as an RIC under Subchapter M
of the Code, the Fund will establish procedures to reflect the anticipated tax
liability in the Fund's net asset value.
TRANSACTIONS BY THE FUNDS
If a call option written by a Fund expires, the amount of the premium received
by the Fund for the option will be short-term or long-term capital gain to the
Fund depending on the Fund's holding period for the underlying security or
underlying futures contract. If such an option is closed by a Fund, any gain or
loss realized by the Fund as a result of the closing purchase transaction will
be short-term or long-term capital gain or loss depending on the Fund's holding
period for the underlying security or underlying futures contract. If the holder
of a call option exercises the holder's right under the option, any gain or loss
realized by the Fund upon the sale of the underlying security or underlying
futures contract pursuant to such exercise will be short-term or long-term
capital gain or loss to the Fund depending on the Fund's holding period for the
underlying security or underlying futures contract.
With respect to call options purchased by a Fund, the Fund will realize
short-term or long-term capital gain or loss if such option is sold and will
realize short-term or long-term capital loss if the option is allowed to expire
depending on the Fund's holding period for the call option. If such a call
option is exercised, the amount paid by the Fund for the option will be added to
the basis of the stock or futures contract so acquired.
A Fund has available to it a number of elections under the Code concerning the
treatment of option transactions for tax purposes. A Fund will utilize the tax
treatment that, in the Fund's judgment, will be most
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favorable to a majority of investors in the Fund. Taxation of these transactions
will vary according to the elections made by the Fund. These tax considerations
may have an impact on investment decisions made by the Fund.
Each of the Funds (except the Money Market Fund) in its operations also will
utilize options on stock indexes. Options on "broad based" stock indexes are
classified as "nonequity options" under the Code. Gains and losses resulting
from the expiration, exercise, or closing of such nonequity options, as well as
gains and losses resulting from futures contract transactions, will be treated
as long-term capital gain or loss to the extent of 60% thereof and short-term
capital gain or loss to the extent of 40% thereof (hereinafter, "blended gain or
loss"). In addition, any nonequity option and futures contract held by a Fund on
the last day of a fiscal year will be treated as sold for market value on that
date, and gain or loss recognized as a result of such deemed sale will be
blended gain or loss.
The trading strategies of each (except the Money Market Fund) of the Funds
involving nonequity options on stock indexes may constitute "straddle"
transactions. "Straddles" may affect the taxation of such instruments and may
cause the postponement of recognition of losses incurred in certain closing
transactions. Each of these Funds will also have available to the Fund a number
of elections under the Code concerning the treatment of option transactions for
tax purposes. Each such Fund will utilize the tax treatment that, in the Fund's
judgment, will be most favorable to a majority of investors in the Fund.
Taxation of these transactions will vary according to the elections made by the
Fund. These tax considerations may have an impact on investment decisions made
by the Fund.
A Fund's transactions in options, under some circumstances, could preclude the
Fund's qualifying for the special tax treatment available to investment
companies meeting the requirements of Subchapter M of the Code. However, it is
the intention of each Fund's portfolio management to limit gains from such
investments to less than 10% of the gross income of the Fund during any fiscal
year in order to maintain this qualification.
BACK-UP WITHHOLDING
Each Fund is required to withhold and remit to the U.S. Treasury 31% of (i)
reportable taxable dividends and distributions and (ii) the proceeds of any
redemptions of Fund shares with respect to any shareholder who is not exempt
from withholding and who fails to furnish the Trust with a correct taxpayer
identification number, who fails to report fully dividend or interest income, or
who fails to certify to the Trust that the shareholder has provided a correct
taxpayer identification number and that the shareholder is not subject to
withholding. (An individual's taxpayer identification number is the individual's
social security number.) The 31% "back-up withholding tax" is not an additional
tax and may be credited against a taxpayer's regular Federal income tax
liability.
OTHER ISSUES
Each Fund may be subject to tax or taxes in certain states where the Fund does
business. Furthermore, in those states which have income tax laws, the tax
treatment of a Fund and of Fund shareholders with respect to distributions by
the Fund may differ from Federal tax treatment.
Shareholders are urged to consult their own tax advisors regarding the
application of the provisions of tax law described in this Statement of
Additional Information in light of the particular tax situations of the
shareholders and regarding specific questions as to Federal, state, or local
taxes.
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OTHER INFORMATION
VOTING RIGHTS
You receive one vote for every full Fund share owned. Each Fund will vote
separately on matters relating solely to that Fund. All shares of the Funds are
freely transferable.
As a Delaware business trust, the Trust is not required to hold annual
Shareholder meetings unless otherwise required by the Investment Company Act of
1940. However, a meeting may be called by Shareholders owning at least 10% of
the outstanding shares of the Trust. If a meeting is requested by Shareholders,
the Trust will provide appropriate assistance and information to the
Shareholders who requested the meeting. Shareholder inquiries can be made by
calling
REPORTING
You will receive the Trust's unaudited financial information and audited
financial statements. In addition, the Trust will send you proxy statements and
other reports. If you are a customer of a financial institution that has
purchased shares of a Fund for your account, you may, depending upon the nature
of your account, receive all or a portion of this information directly from your
financial institution.
SHAREHOLDER INQUIRIES
You may call 1-800-___-____ to obtain information on account statements,
procedures, and other related information.
COUNSEL
Morgan, Lewis & Bockius LLP serves as counsel to the Trust.
AUDITORS AND CUSTODIAN
____________________________________________, are the auditors and the
independent certified public accountants of the Trust and each of the Funds.,
________________________________________________ serves as custodian for the
Trust and the Funds under a custody agreement between the Trust and the
Custodian. Under the custody agreement, the Custodian holds the portfolio
securities of each Fund and keeps all necessary related accounts and records.
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PART C: OTHER INFORMATION
Item 23. Exhibits:
(a)(1) Certificate of Trust
(a)(2) Declaration of Trust of NewCo Trust
(b) By-Laws
Item 24. Persons Controlled by or under Common Control with the Fund
Not applicable.
Item 25. Indemnification
Article X, Section 10.02 of the Declaration of Trust filed as Exhibit (a)(2) to
this Registration Statement is incorporated herein by reference.
Item 26. Business and other Connections of the Investment Adviser:
To be completed by Amendment.
Item 27. Principal Underwriters
(a) not applicable
Item 28. Location of Accounts and Records
To be completed by Amendment.
Item 29. Management Services
Not applicable
Item 30. Undertakings
Not applicable
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement (File No._________) to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of St. Charles, State of Missouri on this
9th day of August, 1999.
NewCo Trust
By: /s/ Jean Dahl
------------------------------------
Jean Dahl
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacity on the dates indicated.
By: /s/ Jean Dahl President, Trustee and Chief August 9, 1999
----------------------------- Financial Officer
Jean Dahl
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EXHIBIT INDEX
Name Exhibit Page
- ---- ------------
Certificate of Trust EX-99B(a)(1)
Declaration of Trust of NewCo Trust EX-99.B(a)(2)
By-Laws EX-99.B(b)
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CERTIFICATE OF TRUST
OF
NEWCO TRUST
This Certificate of Trust for NewCo Trust, a business trust registered under the
Investment Company Act of 1940, is filed in accordance with the provisions of
the Delaware Business Trust Act (Del. Code Ann. tit.12, Section 3801 (1997)) and
sets forth the following:
1. The name of the trust is:
NewCo Trust
2. As required by 12 Del. C Section 3807 and 3810 (a)(1)b, the NewCo Trust
business address of the registered office of the Trust and of the
registered agent of the Trust for service of process is:
The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801, County of Newcastle
3. This certificate shall be effective upon FILING.
4. Notice is hereby given that the Trust is a series Trust. 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.
This certificate is executed this 6th day of August 1999 in Washington, D.C.
upon the penalties of perjury and constitutes the oath or affirmation that the
facts stated above are true to the undersigned trustees belief or knowledge.
/s/ Jean Dahl
- ---------------
Jean Dahl
Initial Trustee
<PAGE>
NEWCO TRUST
DECLARATION OF TRUST
DATED AUGUST 6, 1999
<PAGE>
NEWCO TRUST
Dated August 6, 1999
This DECLARATION OF TRUST (hereinafter "Trust Instrument") is
made August 6, 1999 (together with all other persons from time to time duly
elected, qualified and serving as Trustees in accordance with Article III
hereof, the "Trustees").
WHEREAS, the Trustees desire to establish a business trust for
the investment and reinvestment of funds contributed thereto;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust hereunder shall be held and managed in trust under this
Trust Instrument as herein set forth below.
ARTICLE I
NAME AND DEFINITIONS
SECTION 1.01. NAME. The name of the trust created hereby is the "NewCo
Trust."
SECTION 1.02. DEFINITIONS. Wherever used herein, unless otherwise required
by the context or specifically provided:
(a) The term "Bylaws" means the Bylaws referred to in Article
IV, Section 4.01(e) hereof, as from time to time amended;
(b) The term "Commission" has the meaning given it in the 1940
Act (as defined below). The terms "Affiliated Person," "Assignment," "Interested
Person," and "Principal Underwriter" shall have the meanings given them in the
1940 Act, as modified by or interpreted by any applicable order or orders of the
Commission or any rules or regulations adopted by or interpretive releases of
the Commission thereunder;
(c) The term "Delaware Act" refers to Chapter 38 of Title 12
of the Delaware Code entitled "Treatment of Delaware Business Trusts," as it may
be amended from time to time;
(d) The term "Net Asset Value" means the net asset value of
each Series (as defined below) of the Trust (as defined below) determined in the
manner provided in Article IX, Section 9.03 hereof;
(e) The term "Outstanding Shares" means those Shares (as
defined below) shown from time to time in the books of the Trust or its Transfer
Agent as then issued and outstanding, but
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shall not include Shares which have been redeemed or repurchased by the Trust
and which are at the time held in the treasury of the Trust;
(f) The term "Series" means a series of Shares of the Trust
established in accordance with the provisions of Article II, Section 2.06
hereof;
(g) The term "Shareholder" means a record owner of
Outstanding Shares of the Trust;
(h) The term "Shares" means the equal proportionate
transferable units of beneficial interest into which the beneficial interest of
each Series of the Trust or class thereof shall be divided and may include
fractions of Shares as well as whole Shares;
(i) The term "Trust" refers to the NewCo Trust and all Series
of the NewCo Trust, and reference to the Trust, when applicable to one or more
Series of the Trust, shall refer to any such Series;
(j) The term "Trustee" or "Trustees" means the person or
persons who has or have signed this Trust Instrument, so long as he or they
shall continue in office in accordance with the terms hereof, and all other
persons who may from time to time be duly qualified and serving as Trustees in
accordance with the provisions of Article III hereof and reference herein to a
Trustee or to the Trustees shall refer to the individual Trustees in their
capacity as Trustees hereunder;
(k) The term "Trust Property" means any and all property, real
or personal, tangible or intangible, which is owned or held by or for the
account of one or more of the Trust or any Series, or the Trustees on behalf of
the Trust or any Series.
(l) The term "1940 Act" refers to the Investment Company Act
of 1940, as amended from time to time.
ARTICLE II
BENEFICIAL INTEREST
SECTION 2.01. SHARES OF BENEFICIAL OWNERSHIP INTEREST. The beneficial interest
in the Trust shall be divided into such transferable Shares of one or more
separate and distinct Series or classes of a Series as the Trustees shall from
time to time create and establish. The number of Shares of each Series, and
class thereof, authorized hereunder is unlimited. Each Share shall have no par
value. 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.
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SECTION 2.02. ISSUANCE OF SHARES. The Trustees in their discretion may, from
time to time, without vote of the Shareholders, issue Shares, in addition to the
then issued and outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount and type of consideration, subject to
applicable law, including cash or securities, at such time or times and on such
terms as the Trustees may deem appropriate, and may in such manner acquire other
assets (including the acquisition of assets subject to, and in connection with,
the assumption of liabilities) and businesses. In connection with any issuance
of Shares, the Trustees may issue fractional Shares and Shares held in the
treasury. The Trustees from time to time may divide or combine the Shares into a
greater or lesser number without thereby changing the proportionate beneficial
interests in the Trust. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/1,000th of a Share or
integral multiples thereof.
SECTION 2.03. OWNERSHIP AND TRANSFER OF SHARES. The Trust or a transfer agent
for the Trust shall maintain a register containing the names and addresses of
the Shareholders of each Series and class thereof, the number of Shares of each
Series and class held by such Shareholders, and a record of all Share transfers.
The register shall be conclusive as to the identity of Shareholders of record
and the number of Shares held by them from time to time. The Trustees may
authorize the issuance of certificates representing Shares and adopt rules
governing their use. The Trustees may make rules governing the transfer of
Shares, whether or not represented by certificates. Except as otherwise provided
by the Trustees, Shares shall be transferable on the books of the Trust only by
the record holder thereof or by his duly authorized agent upon delivery to the
Trustees or the Trust's transfer agent of a duly executed instrument of
transfer, together with a Share certificate if one is outstanding, and such
evidence or 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.
SECTION 2.04. TREASURY SHARES. Shares held in the treasury shall, until
reissued pursuant to Section 2.02 hereof, not confer any voting rights on the
Trustees, nor shall such Shares be entitled to any dividends or other
distributions declared with respect to the Shares.
SECTION 2.05. ESTABLISHMENT OF SERIES. The Trust created hereby shall consist
of one or more Series and separate and distinct records shall be maintained by
the Trust of each Series and the assets associated with any such Series shall be
held and accounted for separately from the assets of the Trust or any other
Series. The Trustees shall have full power and authority, in their sole
discretion, and without obtaining any prior authorization or vote of the
Shareholders of any Series of the Trust, to establish and designate and to
change in any manner such Series of Shares or any classes of initial or
additional Series and to fix such preferences, voting powers, rights and
privileges of such Series or classes thereof as the Trustees may from time to
time determine, to divide and combine the Shares or any Series or classes
thereof into a greater or lesser number, to classify or reclassify any issued
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Shares or any Series or classes thereof into one or more Series or classes of
Shares, to abolish any one or more Series or classes of Shares or to take such
other action with respect to the Shares as the Trustees may deem desirable. The
establishment and designation of any Series shall be effective upon the adoption
of a resolution by a majority of the Trustees setting forth such establishment
and designation and the relative rights and preferences of the Shares of such
Series. A Series may issue any number of Shares and need not issue shares.
All references to Shares in this Trust Instrument shall be
deemed to be Shares of any or all Series, or classes thereof, as the context may
require. All provisions herein relating to the Trust shall apply equally to each
Series of the Trust, and each class thereof, except as the context otherwise
requires.
Each Share of a Series of the Trust shall represent an equal
beneficial interest in the net assets of such Series. Each holder of Shares of a
Series shall be entitled to receive his pro rata share of distributions of
income and capital gains, if any, made with respect to such Series. Upon
redemption of his Shares, such Shareholder shall be paid solely out of the funds
and property of such Series of the Trust.
SECTION 2.06. INVESTMENT IN THE TRUST. The Trustees shall accept investments
in any Series of the Trust 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 the
affected Series is authorized to invest, valued as provided in Article IX,
Section 9.03 hereof. Investments in a Series shall be credited to each
Shareholder's account in the form of full or fractional Shares at the Net Asset
Value per Share next determined after the investment is received; provided,
however, that the Trustees may, in their sole discretion, (a) fix the Net Asset
Value per Share of the initial capital contribution or (b) impose a sales charge
upon investments in the Trust in such manner and at such time as determined by
the Trustees. 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 2.07. 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 other assets of the Trust and of
every other Series and may be referred to herein as "assets belonging to" that
Series. The assets belonging to a particular Series shall belong to that Series
for all purposes, and to no other Series, subject only to the rights of
creditors of that Series. In addition, any assets, income, earnings, profits or
funds, or payments and proceeds with respect thereto, which are not readily
identifiable as belonging to any particular Series shall be allocated by the
Trustees between and among one or more of the Series in such manner as the
Trustees, in their sole discretion, deem fair and equitable. Each such
allocation shall be conclusive and binding upon the Shareholders of all Series
for all purposes, and such assets, income,
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earnings, profits or funds, or payments and proceeds with respect thereto shall
be assets belonging to that Series. The assets belonging to a particular 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 holders of Shares of that Series. The
assets belonging to each particular Series shall be charged with the liabilities
of that Series and all expenses, costs, charges, and reserves attributable to
that Series. Any general liabilities, expenses, costs, charges, or reserves of
the Trust which are not readily identifiable as belonging to a particular Series
shall be allocated and charged by the Trustees between or among any one or more
of the Series in such manner as the Trustees, in their sole discretion, deem
fair and equitable. Each such allocation shall be conclusive and binding upon
the Shareholders of all Series for all purposes.
Without limitation of the foregoing provisions of this Section
2.07, but subject to the right of the Trustees in their discretion to allocate
general liabilities, expenses, costs, charges, or reserves as herein provided,
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 the Trust generally. Notice of this contractual limitation
on inter-Series liabilities may, in the Trustee's sole 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,
liability, obligation or expense incurred, contracted for or otherwise existing
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 2.08. NO PREEMPTIVE RIGHTS. Shareholders shall have no preemptive or
other right to subscribe to any additional Shares or other securities issued by
the Trust or the Trustees, whether of the same or other Series.
SECTION 2.09. PERSONAL LIABILITY OF SHAREHOLDERS. Each Shareholder of the
Trust and of each Series shall not be personally liable for debts, liabilities,
obligations and expenses incurred by, contracted for, or otherwise existing with
respect to, the Trust or by or on behalf of any Series. The Trustees shall have
no power to bind any Shareholder personally or to call upon any Shareholder for
the payment of any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay by way of subscription for
any Shares or otherwise. Every note, bond, contract or other undertaking issued
by or on behalf of the Trust or the Trustees relating to the Trust or to a
Series shall include a recitation limiting the obligation represented thereby to
the Trust or to one or more Series and its or their assets (but the omission of
such a recitation shall not operate to bind any Shareholder or Trustee of the
Trust). Shareholders shall have the same limitation of personal liability as is
extended to shareholders of a private corporation for profit incorporated in the
State of Delaware. Every written obligation of the Trust or any Series shall
contain a statement to the effect that such obligation may only be enforced
against the assets of the appropriate Series
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or all Series; however, the omission of such statement shall not operate to bind
or create personal liability for any Shareholder or Trustee.
SECTION 2.10. ASSENT TO TRUST INSTRUMENT. Every Shareholder, by virtue of
having purchased a Share shall become a Shareholder and shall be held to have
expressly assented and agreed to be bound by the terms hereof.
ARTICLE III
THE TRUSTEES
SECTION 3.01. MANAGEMENT OF THE TRUST. The Trustees shall have exclusive and
absolute control over the Trust Property and over the business of the Trust to
the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Trust Instrument. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the State of Delaware, in any and
all states of the United States of America, in the District of Columbia, in any
and all commonwealths, territories, dependencies, colonies, or possessions of
the United States of America, and in any foreign jurisdiction and to do all such
other things and execute all such instruments as they deem necessary, proper or
desirable in order to promote the interests of the Trust although such things
are not herein specifically mentioned. Any determination as to what is in the
interests of the Trust made by the Trustees in good faith shall be conclusive.
In construing the provisions of this Trust Instrument, the presumption shall be
in favor of a grant of power to the Trustees.
The enumeration of any specific power in this Trust Instrument
shall not be construed as limiting the aforesaid power. The powers of the
Trustees may be exercised without order of or resort to any court.
Except for the Trustees named herein or appointed to fill
vacancies pursuant to Section 3.04 of this Article III, the Trustees shall be
elected by the Shareholders owning of record a plurality of the Shares voting at
a meeting of Shareholders. Such a meeting shall be held on a date fixed by the
Trustees. In the event that less than a majority of the Trustees holding office
have been elected by Shareholders, the Trustees then in office will call a
Shareholders' meeting for the election of Trustees.
SECTION 3.02. INITIAL TRUSTEES. The initial Trustees shall be the persons
named herein. On a date fixed by the Trustees, the Shareholders shall elect
additional Trustees subject to Section 3.06 of this Article III.
SECTION 3.03. TERM OF OFFICE OF TRUSTEES. The Trustees shall hold office
during the lifetime of this Trust, and until its termination as herein
provided, except that: (a) any Trustee may resign his trust
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by written instrument signed by him and delivered to the other Trustees, which
shall take effect upon such delivery or upon such later date as is specified
therein; (b) any Trustee may be removed at any time by a vote of at least
two-thirds of the number of Trustees prior to such removal, specifying the date
when such removal shall become effective; (c) any Trustee who requests in
writing to be retired or who has died, become physically or mentally
incapacitated by reason of disease or otherwise, or is otherwise unable to
serve, may be retired by written instrument signed by a majority of the other
Trustees, specifying the date of his retirement; and (d) a Trustee may be
removed at any meeting of the Shareholders of the Trust by a vote of
Shareholders owning at least two-thirds of the outstanding Shares.
SECTION 3.04. VACANCIES AND APPOINTMENT OF TRUSTEES. In case of the
declination to serve, death, resignation, retirement, removal, physical or
mental incapacity by reason of disease or otherwise, or a Trustee is otherwise
unable to serve, or an increase in the number of Trustees, a vacancy shall
occur. Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled, the other Trustees shall have all the powers hereunder and
the certificate of the other Trustees of such vacancy shall be conclusive. In
the case of an existing vacancy, the remaining Trustees shall fill such vacancy
by appointing such other person as they in their discretion shall see fit
consistent with the limitations under the 1940 Act. Such appointment shall be
evidenced by a written instrument signed by a majority of the Trustees in office
or by resolution of the Trustees, duly adopted, which shall be recorded in the
minutes of a meeting of the Trustees, whereupon the appointment shall take
effect.
An appointment of a Trustee may be made by the Trustees then
in office in anticipation of a vacancy to occur by reason of retirement,
resignation or increase in number of Trustees effective at a later date,
provided that said appointment shall become effective only at or after the
effective date of said retirement, resignation or increase in number of
Trustees. As soon as any Trustee appointed pursuant to this Section 3.04 shall
have accepted this trust, the trust estate shall vest in the new Trustee or
Trustees, together with the continuing Trustees, without any further act or
conveyance, and he shall be deemed a Trustee hereunder. The power to appoint a
Trustee pursuant to this Section 3.04 is subject to the provisions of Section
16(a) of the 1940 Act.
SECTION 3.05. TEMPORARY ABSENCE OF TRUSTEE. Any Trustee may, by power of
attorney, delegate his power for a period not exceeding six months at any one
time to any other Trustee or Trustees, provided that in no case shall less than
two Trustees personally exercise the other powers hereunder except as herein
otherwise expressly provided.
SECTION 3.06. NUMBER OF TRUSTEES. The number of Trustees shall be at least
three (3), and thereafter shall be such number as shall be fixed from time
to time by a majority of the Trustees, provided, however, that the number of
Trustees shall in no event be more than fifteen (15).
SECTION 3.07. EFFECT OF DEATH, RESIGNATION, ETC., OF A TRUSTEE. The
declination to serve, death, resignation, retirement, removal, incapacity, or
inability of the Trustees, or any one of them, shall
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not operate to terminate the Trust or to revoke any existing agency created
pursuant to the terms of this Trust Instrument.
SECTION 3.08. OWNERSHIP OF ASSETS OF THE TRUST. The assets of the Trust and
of each Series shall be held separate and apart from any assets now or hereafter
held in any capacity other than as Trustee hereunder by the Trustees or any
successor Trustees. Legal title in and beneficial ownership of all of the assets
of the Trust and the right to conduct any business shall at all times be
considered as vested in the Trustees on behalf of the Trust, except that the
Trustees may cause legal title to any Trust Property to be held by, or in the
name of, the Trust, or in the name of any person as nominee. No Shareholder
shall be deemed to have a severable ownership in any individual asset of the
Trust or of any Series or any right of partition or possession thereof, but each
Shareholder shall have, except as otherwise provided for herein, a proportionate
undivided beneficial interest in the Trust or Series. 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 3.09. COMPENSATION. The Trustees as such shall be entitled to
reasonable compensation from the Trust, and they may periodically 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.
ARTICLE IV
POWERS OF THE TRUSTEES
SECTION 4.01. POWERS. The Trustees in all instances shall act as principals,
and are and shall be free from the control of the Shareholders. The Trustees
shall have full power and authority to do any and all acts and to make and
execute any and all contracts and instruments that they may consider necessary
or appropriate in connection with the management of the Trust. The Trustees
shall not in any way be bound or limited by present or future laws or customs in
regard to trust investments, but shall have full authority and power to make any
and all investments which they, in their sole discretion, shall deem proper to
accomplish the purpose of this Trust without recourse to any court or other
authority. Subject to any applicable limitation in this Trust Instrument or the
Bylaws of the Trust, the Trustees shall have power and authority:
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(a) To invest and reinvest cash and other property, and to
hold cash or other property uninvested, without in any event being bound or
limited by any present or future law or custom in regard to investments by
trustees, and to sell, exchange, lend, pledge, mortgage, hypothecate, write
options on and lease any or all the assets of the Trust;
(b) 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;
(c) To borrow money and in this connection issue notes or
other evidence of indebtedness; to secure borrowings by mortgaging, pledging or
otherwise subjecting as security the Trust Property; to endorse, guarantee, or
undertake the performance of an obligation or engagement of any other Person and
to lend Trust Property;
(d) To provide for the distribution of interests of the Trust
either through a principal underwriter in the manner hereinafter provided for or
by the Trust itself, or both, or otherwise pursuant to a plan of distribution of
any kind;
(e) To adopt Bylaws not inconsistent with this Trust
Instrument providing for the conduct of the business of the Trust and to amend
and repeal them to the extent that they do not reserve that right to the
Shareholders; such Bylaws shall be deemed incorporated and included in this
Trust Instrument;
(f) To elect and remove such officers and appoint and
terminate such agents as they consider appropriate;
(g) To employ one or more banks, trust companies or companies
that are members of a national securities exchange or such other entities as the
Commission may permit as custodians of any assets of the Trust subject to any
conditions set forth in this Trust Instrument or in the By-laws;
(h) To retain one or more transfer agents and shareholder
servicing agents, or both;
(i) To set record dates in the manner provided herein or in
the Bylaws;
(j) To delegate such authority as they consider desirable to
any officers of the Trust and to any investment advisor, manager, custodian,
underwriter or other agent or independent contractor;
(k) To sell or exchange any or all of the assets of the
Trust, subject to the provisions of Article XI, Section 11.04(b) hereof;
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(l) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property; and to execute
and deliver powers of attorney to such person or persons as the Trustee shall
deem proper, granting to such person or persons such power and discretion with
relation to securities or property as the Trustees shall deem proper;
(m) To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities;
(n) To hold any security or property in a form not indicating
any trust, whether in bearer, book entry, unregistered or other negotiable form;
or either in the name of the Trust or in the name of a custodian or a nominee or
nominees, subject in either case to proper safeguards according to the usual
practice of Delaware business trusts or investment companies;
(o) To establish separate and distinct Series with separately
defined investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article II hereof and to establish classes of
such Series having relative rights, powers and duties as they may provide
consistent with applicable law;
(p) Subject to the provisions of Section 3804 of the Delaware
Act, to allocate assets, liabilities and expenses of the Trust to a particular
Series or to apportion the same between or among two or more Series, provided
that any liabilities or expenses incurred by a particular Series shall be
payable solely out of the assets belonging to that Series as provided for in
Article II hereof;
(q) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or concern, any
security of which is held in 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;
(r) 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;
(s) To make distributions of income and of capital gains to
Shareholders in the manner hereinafter provided;
(t) To establish, from time to time, a minimum investment for
Shareholders in the Trust or in one or more Series or class, and to require the
redemption of the Shares of any Shareholders whose investment is less than such
minimum upon giving notice to such Shareholder;
(u) To establish one or more committees, to delegate any of
the powers of the Trustees to said committees and to adopt a committee charter
providing for such responsibilities, membership (including Trustees, officers or
other agents of the Trust therein) and any other characteristics of said
committees as the Trustees may deem proper. Notwithstanding the provisions of
this Article IV, and in addition to such provisions or any other provision of
this Trust Instrument
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or of the Bylaws, the Trustees may by resolution appoint a committee consisting
of less than the whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office, with respect to the
institution, prosecution, dismissal, settlement, review or investigation of any
action, suit or proceeding which shall be pending or threatened to be brought
before any court, administrative agency or other adjudicatory body;
(v) To interpret the investment policies, practices, or
limitations of any Series;
(w) To establish a registered office and have a registered
agent in the state of Delaware;
(x) In general to carry on any other business in connection
with or incidental to any of the foregoing powers, to do everything necessary,
suitable, or proper for the accomplishment of any purpose or the attainment of
any object or the furtherance of any power hereinbefore set forth, either alone
or in association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed both as objects and
power, and the foregoing enumeration of specific powers shall not be held to
limit or restrict in any manner 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.
The Trustees shall not be limited to investing in obligations
maturing before the possible termination of the Trust.
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.
SECTION 4.02. ISSUANCE AND REPURCHASE OF SHARES. The Trustees shall have the
power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell,
reissue, dispose of, and otherwise deal in Shares and, subject to the provisions
set forth in Article II and Article IX, to apply to any such repurchase,
redemption, retirement, cancellation, or acquisition of Shares any funds or
property of the Trust, or the particular Series of the Trust, with respect to
which such Shares are issued.
SECTION 4.03. TRUSTEES AND OFFICERS AS SHAREHOLDERS. Any Trustee, officer, or
agent of the Trust may acquire, own, and dispose of Shares to the same extent as
if he were not a Trustee, officer, or agent; and the Trustees may issue and sell
or cause to be issued and sold Shares to and buy such Shares from any such
person or any firm or company in which he is interested, subject only to the
general limitations herein contained as to the sale and purchase of such Shares;
and all subject to any restrictions which may be contained in the Bylaws.
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SECTION 4.04. ACTION BY THE TRUSTEES. The Trustees shall act by majority vote
at a meeting duly called or by written consent of a majority of the Trustees
without a meeting or by telephone meeting provided a quorum of Trustees
participate in any such telephone meeting, unless the 1940 Act requires that a
particular action be taken only at a meeting at which the Trustees are present
in person. At any meeting of the Trustees, three (3) of the Trustees shall
constitute a quorum. Meetings of the Trustees may be called orally or in writing
by the Chairman or by any two (2) other Trustees. Notice of the time, date and
place of all meetings of the Trustees shall be given by the party calling the
meeting to each Trustee by telephone, telefax, or telegram sent to his home or
business address at least twenty-four (24) hours in advance of the meeting or by
written notice mailed to his home or business address at least seventy-two (72)
hours in advance of the meeting. Notice need not be given to any Trustee who
attends the meeting without objecting to the lack of notice or who executes a
written waiver of notice with respect to the meeting. Any meeting conducted by
telephone shall be deemed to take place at the principal office of the Trust, as
determined by the Bylaws or by the Trustees. Subject to the requirements of the
1940 Act, the Trustees by majority vote may delegate to any one or more of their
number their authority to approve particular matters or take particular actions
on behalf of the Trust. Written consents or waivers of the Trustees may be
executed in one or more counterparts. Execution of a written consent or waiver
and delivery thereof to the Trust may be accomplished by telefax.
SECTION 4.05. CHAIRMAN OF THE TRUSTEES. The Trustees shall appoint one of
their number to be Chairman of the Board of Trustees. The Chairman shall
preside at all meetings of the Trustees, shall be responsible for the
execution of policies established by the Trustees and the administration of
the Trust, and may be (but is not required to be) the chief executive,
financial, and/or accounting officer of the Trust.
SECTION 4.06. PRINCIPAL TRANSACTIONS. Except to the extent prohibited by
applicable law, the Trustees, on behalf of the Trust, may, in a manner
consistent with applicable legal requirements, buy any securities from or sell
any securities to, or lend any assets of the Trust to, any Trustees 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 advisor, distributor
or transfer agent for the Trust or with any interested Person of such person;
and the Trust may employ any such person, or firm or company in which such
person is an Interested Person, as broker, legal counsel, registrar, investment
advisor, distributor, transfer agent, dividend disbursing agent, or custodian,
or in any other capacity upon customary terms.
ARTICLE V
EXPENSES OF THE TRUST
SECTION 5.01. PAYMENT OF EXPENSES BY THE TRUST. Subject to the provisions of
Article II, Section 2.07 hereof, the Trust or a particular Series shall pay, or
shall reimburse the Trustees from the assets belonging to all Series or the
appropriate Series for their expenses (or the expenses of a Class of such
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Series) and disbursements, including, without limitation, fees and expenses of
Trustees, interest expense, taxes, fees and commissions of every kind, expenses
of pricing Trust portfolio securities, expenses of issue, repurchase and
redemption of shares, including expenses attributable to a program of periodic
repurchases or redemptions, expenses of registering and qualifying the Trust and
its Shares under Federal and State laws and regulations or under the laws of any
foreign jurisdiction, charges of third parties, including investment advisors,
managers, custodians, transfer agents, portfolio accounting and/or pricing
agents, and registrars, expenses of preparing and setting up in type
prospectuses and statements of additional information and other related Trust
documents, expenses of printing and distributing prospectuses sent to existing
Shareholders, auditing and legal expenses, reports to Shareholders, expenses of
meetings of Shareholders and proxy solicitations therefor, insurance expenses,
association membership dues and for such non-recurring items as may arise,
including litigation to which the Trust (or a Trustee acting as such) is a
party, and for all losses and liabilities by them incurred in administering the
Trust, and for the payment of such expenses, disbursements, losses and
liabilities the Trustees shall have a lien on the assets belonging to the
appropriate Series, on the assets of each such Series, prior to any rights or
interests of the Shareholders thereto. This section shall not preclude the Trust
from directly paying any of the aforementioned fees and expenses.
SECTION 5.02. PAYMENT OF EXPENSES BY SHAREHOLDERS. The Trustee shall have the
power, as frequently as they may determine, to cause each Shareholder, or each
Shareholder of any particular Series, to pay directly, in advance or arrears,
for charges of the Trust's custodian or transfer, shareholder servicing or
similar agent, an amount fixed from time to time by the Trustees, by setting off
such charges due from such Shareholder from declared but unpaid dividends owed
such Shareholder and/or by reducing the number of Shares in the account of such
Shareholder by that number of full and/or fractional Shares which represents the
outstanding amount of such charges due from such Shareholder.
ARTICLE VI
CONTRACTS WITH SERVICE PROVIDERS
SECTION 6.01. INVESTMENT ADVISOR. The Trustees may in their discretion, from
time to time, enter into an investment advisory or management contract or
contracts with respect to the Trust or any Series; provided, however, that the
initial approval and entering into of such contract or contracts shall be
subject to a "majority shareholder vote," as defined by the 1940 Act.
Notwithstanding any other provision of this Trust Instrument, the Trustees may
authorize any investment advisor (subject to such general or specific
instructions as the Trustees from time to time may adopt) to effect purchases,
sales or exchanges of portfolio securities, other investment instruments of the
Trust, or other Trust Property on behalf of the Trustees, or may authorize any
officer, agent, or Trustee to effect such purchases, sales, or exchanges
pursuant to recommendations of the investment advisor (and all without further
action by the Trustees). Any such purchases, sales, and exchanges shall be
deemed to have been authorized by all of the Trustees.
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The Trustees may authorize, subject to applicable requirements
of the 1940 Act, including those relating to Shareholder approval, the
investment advisor to employ, from time to time, one or more sub-advisors to
perform such of the acts and services of the investment advisor, and upon such
terms and conditions, as may be agreed upon between the investment advisor and
sub- advisor. Any reference in this Trust Instrument to the investment advisor
shall be deemed to include such sub-advisors, unless the context otherwise
requires.
SECTION 6.02. PRINCIPAL UNDERWRITER. 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 Shares, whereby the Trust may either agree
to sell Shares to the other party to the contract or appoint such other party
its sales agent for such Shares. In either case, the contract shall be on such
terms and conditions, if any, as may be prescribed in the Bylaws, and such
further terms and conditions as the Trustees may in their discretion determine
not inconsistent with the provisions of this Article VI, or of the Bylaws; and
such contract may also provide for the repurchase or sale of Shares by such
other party as principal or as agent of the Trust.
SECTION 6.03. TRANSFER AGENT. The Trustees may in their discretion from time
to time enter into one or more transfer agency and shareholder service contracts
whereby the other party or parties shall undertake to furnish the Trustees with
transfer agency and shareholder services. The contract or contracts shall be on
such terms and conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Trust Instrument or of the Bylaws.
SECTION 6.04. 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 of the Trust 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 6.05. 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 6.06. PARTIES TO CONTRACT. Any contract of the character described in
Sections 6.01, 6.02, 6.03, 6.04 and 6.05 of this Article VI or any contract of
the character described in Article VIII hereof may be entered into with any
corporation, firm, partnership, trust, or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, or member of such other party to the contract, and no such contract
shall be invalidated or rendered void or voidable by reason of the existence of
any such relationship, nor shall any person holding
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such relationship be disqualified from voting on or executing the same in his
capacity as Shareholder and/or Trustee, nor shall any person holding such
relationship be liable merely by reason of such relationship for any loss or
expense to the Trust under or by reason of said contract or accountable for any
profit realized directly or indirectly therefrom, provided that the contract
when entered into was not inconsistent with the provisions of this Article VI or
Article VIII hereof or of the Bylaws. The same person (including a firm,
corporation, partnership, trust or association) may be the other party to
contracts entered into pursuant to Sections 6.01, 6.02, 6.03, 6.04 and 6.05 of
this Article VI or pursuant to Article VIII hereof, and any individual may be
financially interested or otherwise affiliated with persons who are parties to
any or all of the contracts mentioned in this Section 6.06.
SECTION 6.07. PROVISIONS AND AMENDMENTS. Any contract entered into pursuant to
Sections 6.01 or 6.02 of this Article VI shall be consistent with and subject to
the requirements of Section 15 of the 1940 Act or other applicable Act of
Congress hereafter enacted with respect to its continuance in effect, its
termination, and the method of authorization and approval of such contract or
renewal thereof, and no amendment to any contract, entered into pursuant to
Section 6.01 of this Article VI shall be effective unless assented to in a
manner consistent with the requirements of said Section 15, as modified by any
applicable rule, regulation or order of the Commission.
ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
SECTION 7.01. VOTING POWERS. The Shareholders shall have power to vote only
(i) for the election of Trustees as provided in Article III, Section 3.01 and
3.02 hereof, (ii) for the removal of Trustees as provided in Article III,
Section 3.03(d) hereof, (iii) with respect to any investment advisory or
management contract as provided in Article VI, Sections 6.01 and 6.07 hereof,
and (iv) with respect to such additional matters relating to the Trust as may be
required by law, by this Trust Instrument, or the Bylaws or any registration of
the Trust with the Commission or any State, or as the Trustees may consider
necessary or desirable.
On any matter submitted to a vote of the Shareholders, all
Shares shall be voted separately by individual Series, except: (i) when required
by the 1940 Act, Shares shall be voted in the aggregate and not by individual
Series; and (ii) when the Trustees have determined that the matter affects the
interests of more than one Series, then the Shareholders of all such affected
Series shall be entitled to vote thereon. The Trustees also may determine that a
matter affects only the interests of one (1) or more classes of a Series, in
which case any such matter shall be voted on by such class or classes. Each
whole share shall be entitled to one (1) vote as to any matter on which it is
entitled to vote, and each fractional Share shall be entitled to a proportionate
fractional vote. There shall be no cumulative voting in the election of
Trustees. Shares may be voted in person or by proxy or in any manner provided
for in the Bylaws. A proxy may be given in writing. The Bylaws may provide that
proxies may also, or may instead, be given by any electronic or
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telecommunications device or in any other manner. Notwithstanding anything else
herein or in the Bylaws, in the event a proposal by anyone other than the
officers or Trustees of the Trust is submitted to a vote of the Shareholders of
one or more Series or of the Trust, or in the event of any proxy contest or
proxy solicitation or proposal in opposition to any proposal by the officers or
Trustees of the Trust, Shares may be voted only in person or by written proxy.
Until Shares are issued, the Trustees may exercise all rights of Shareholders
and may take any action required or permitted by law, this Trust Instrument or
any of the Bylaws of the Trust to be taken by Shareholders. Meetings of
shareholders shall be called and notice thereof and record dates therefor shall
be given and set as provided in the Bylaws.
SECTION 7.02. QUORUM AND REQUIRED VOTE. One-third of Shares entitled to vote
in person or by proxy shall be a quorum for the transaction of business at a
Shareholders' meeting, except that where any provision of law or of this Trust
Instrument permits or requests that holders of any Series shall vote as a Series
(or that holders of a class shall vote as a class), then one-third of the
aggregate number of Shares of that Series (or that class) entitled to vote shall
be necessary to constitute a quorum for the transactions of business by that
Series (or that class). Any lesser number shall be sufficient for adjournments.
Any adjourned session or sessions may be held, within a reasonable time after
the date set for the original meeting, without the necessity of further notice.
Except when a larger vote is required by law or by any provision of this Trust
Instrument of the Bylaws, a majority of the Shares voted in person or by proxy
shall decide any questions and a plurality shall elect a Trustee, provided that
where any provision of law or of this Trust Instrument permits or requires that
the holders of any Series shall vote as a Series (or that the holders of any
class shall vote as a class), then a majority of the Shares present in person or
by proxy of that Series or, if required by law, subject to a "majority
shareholder vote", as defined by the 1940 Act, of that Series (or class), voted
on the matter in person or by proxy shall decide matter insofar as that Series
(or class) is concerned. Shareholders may act by unanimous written consent.
Actions taken by Series (or class) may be consented to unanimously in writing by
Shareholders of that Series.
ARTICLE VIII
CUSTODIAN
SECTION 8.01. APPOINTMENT AND DUTIES. The Trustees at all times shall employ a
bank, a company that is a member of a national securities exchange, or a trust
company, each having capital, surplus and undivided profits of at least two
million dollars ($2,000,000), or any other entity satisfying the requirements of
the 1940 Act, as custodian with authority as its agent, but subject to such
restrictions, limitations, and other requirements, if any, as may be contained
in the Bylaws of the Trust:
(1) to hold the securities and other assets of the Trust
and deliver the same upon written order or oral order
confirmed in writing;
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(2) to receive and receipt for any moneys due to the
Trust and deposit the same in its own banking
department or elsewhere as the Trustees may direct;
and
(3) to disburse such funds upon orders or vouchers;
and the Trust also may employ such custodian as its agent:
(4) to keep the books and accounts of the Trust or of any
Series or class and furnish clerical and accounting
services; and
(5) to compute, if authorized to do so by the Trustees,
the Net Asset Value of any Series, or class thereof,
in accordance with the provisions hereof; all upon
such basis of compensation as may be agreed upon
between the Trustees and the custodian.
The Trustees also may authorize the custodian to employ one or
more sub-custodians from time to time to perform such of the acts and services
of the custodian, and upon such terms and conditions, as may be agreed upon
between the custodian and such sub-custodian and approved by the Trustees,
provided that in every case such sub-custodian shall be a bank, a company that
is a member of a national securities exchange, a trust company or any other
entity satisfying the requirements of the 1940 Act.
SECTION 8.02. CENTRAL CERTIFICATE SYSTEM. Subject to such rules, regulations,
and orders as the Commission may adopt, the Trustees may direct the custodian to
deposit all or any part of the securities owned by the Trust in a system for the
central handling of securities established by a national securities exchange or
a national securities association registered with the Commission under the
Securities Exchange Act of 1934, as amended, or such other person as may be
permitted by the Commission, or otherwise in accordance with the 1940 Act,
pursuant to which system all securities of any particular class or series of any
issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust or its custodians, sub-custodians or other agents.
ARTICLE IX
DISTRIBUTIONS AND REDEMPTIONS
SECTION 9.01. DISTRIBUTIONS.
(a) The Trustees from time to time may declare and pay
dividends or other distributions with respect to any 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
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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 of such dividends or distributions and the payment of
them and whether they are in cash or any other Trust Property shall be wholly in
the discretion of the Trustees.
(b) Dividends and other distributions may be paid or made to
the Shareholders of record at the time of declaring a dividend or other
distribution or among the Shareholders of record at such other date or time or
dates or times as the Trustees shall determine, which dividends or
distributions, at the election of the Trustees, may be paid pursuant to a
standing resolution or resolutions adopted only once or with such frequency as
the Trustees may determine. The Trustees may adopt and offer to Shareholders
such dividend reinvestment plans, cash dividend payout plans, or related plans
as the Trustees shall deem appropriate.
(c) Anything in this Trust Instrument to the contrary
notwithstanding, the Trustees at any time may declare and distribute a stock
dividend pro rata among the Shareholders of a particular Series, or class
thereof, as of the record date of that Series fixed as provided in paragraph (b)
of this Section 9.01.
SECTION 9.02. 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 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. 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 to be withheld from
redemption proceeds. Payment of the redemption price may be wholly or partly
in securities or other assets at the value of such securities or assets used
in such determination of Net Asset Value, or may be in cash. Upon redemption,
Shares may be reissued from time to time. The Trustees may require
Shareholders to redeem Shares for any reason under terms set by the Trustees,
including, but not limited to, the failure of a Shareholder to supply a
taxpayer identification number if required to do so, 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. Notwithstanding the foregoing, the Trustees may
postpone payment of the
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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 9.03. DETERMINATION OF NET ASSET VALUE AND VALUATION OF PORTFOLIO
ASSETS. The term "Net Asset Value" of any Series shall mean that amount by which
the assets of that Series exceed its liabilities, all as determined by or under
the direction of the Trustees. Such value shall be determined separately for
each Series and shall be determined on such days and at such times as the
Trustees may determine. The Trustees may delegate any of their powers and duties
under this Section 9.03 with respect to valuation of assets and liabilities. The
resulting amount, which shall represent the total Net Asset Value of the
particular Series, shall be divided by the total number of shares of that Series
outstanding at the time and the quotient so obtained shall be the Net Asset
Value per Share of that Series. At any time the trustees may cause the Net Asset
Value per Share last determined to be determined again in similar manner and may
fix the time when such redetermined value shall become effective. If, for any
reason, the net income of any Series, determined at any time, is a negative
amount, the Trustees shall have the power with respect to that Series: (i) to
offset each Shareholder's pro rata share of such negative amount from the
accrued dividend account of such Shareholder; or (ii) to reduce the number of
Outstanding Shares of such Series by reducing the number of Shares in the
account of each Shareholder by a pro rata portion of the number of full and
fractional Shares which represents the amount of such excess negative net
income; or (iii) to cause to be recorded on the books of such Series an asset
account in the amount of such negative net income (provided that the same shall
thereupon become the property of such Series with respect to such Series and
shall not be paid to any Shareholder), which account may be reduced by the
amount, of dividends declared thereafter upon the Outstanding Shares of such
Series on the day such negative net income is experienced, until such asset
account is reduced to zero; or (iv) to combine the methods described in clauses
(i) and (ii) and (iii) of the sentence; or (v) to take any other action they
deem appropriate, in order to cause (or in order to assist in causing) the Net
Asset Value per Share of such Series to remain at a constant amount per
Outstanding Share immediately after each such determination and declaration. The
Trustees also shall have the power not to declare a dividend out of net income
for the purpose of causing the Net Asset Value per share to be increased. The
Trustees shall not be required to adopt, but at any time may adopt, discontinue,
or amend the practice of maintaining the Net Asset value per Share of the Series
at a constant amount. In the event that any Series are divided into classes, the
provisions of this Section 9.03, to the extent applicable as determined in the
discretion of the Trustees and consistent with applicable law, may be equally
applied to each such class.
SECTION 9.04. SUSPENSION OF THE RIGHT OF REDEMPTION. The Trustees may declare
a suspension of the right of redemption or postpone the date of payment as
permitted under the 1940 Act. Such suspension shall take effect at such time as
the Trustees shall specify but not later than the close of business on the
business day next following the declaration of suspension, and thereafter there
shall be no right of redemption or payment until the Trustees shall declare the
suspension at an end. In the case of a suspension of the right of redemption, a
Shareholder may either withdraw his request for redemption or receive payment
based on the Net Asset Value per Share next determined after the termination of
the suspension.
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ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION
SECTION 10.01. LIMITATION OF LIABILITY. All persons contracting with or having
any claim against the Trust or a particular Series shall look only to the assets
of all Series or such particular Series for payment under such contract or
claim; and neither the Trustees nor, when acting in such capacity, any of the
Trust's officers, employees or agents, whether past, present or future, shall be
personally liable therefor. Every written instrument or obligation on behalf of
the Trust or any Series shall contain a statement to the foregoing effect, but
the absence of such statement shall not operate to make any Trustee or officer
of the Trust liable thereunder. Provided they have exercised reasonable care and
have acted under the reasonable belief that their actions are in the best
interest of the Trust, the Trustees and officers of the Trust shall not be
responsible or liable for any act or omission or for neglect or wrongdoing of
them or any officer, agent, employee, investment adviser or independent
contractor of the Trust, but nothing contained in this Declaration or in the
Delaware Act shall protect any Trustee or 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 10.02. INDEMNIFICATION.
(a) Subject to the exceptions and limitations contained in
paragraph (b) below:
(i) every Person who is, or has been, a Trustee or
officer of the Trust (hereinafter referred to as a "Covered
Person") shall be indemnified by the Trust 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 Trustee or officer and against amounts paid or
incurred by hm in the settlement thereof; and
(ii) 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, while in office or thereafter, and the
words "liability" and "expenses" shall include, without
limitation, attorney's 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
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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 Trustee or officer 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 neither are Interested Persons of the Trust nor
are parties to the matter based upon a review of
readily-available facts (as opposed to a full
trial-type inquiry); or
(C) by written opinion of independent legal
counsel based upon a review of readily-available
facts (as opposed to a full trial-type inquiry);
provided, however, that any Shareholder, by
appropriate legal proceedings, may challenge any such
determination by the Trustees or by independent
counsel.
(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, shall continue as to a person who has ceased to be
a Covered Person and shall inure to the benefit of the heirs, executors, and
administrators of such a person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel, other than Covered Persons,
and other persons may be entitled by contract or otherwise under law.
(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 paragraph (a)
of this Section 10.02 may be paid by the Trust or Series from time to time prior
to final disposition thereof upon receipt of any undertaking by or on behalf of
such Covered Person that such amount will be paid over by him to the Trust or
Series if it ultimately is determined that he is not entitled to indemnification
under this Section 10.02; provided, however, that either (a) such Covered Person
shall have provided appropriate security for such undertaking; (b) the Trust is
insured against losses arising out of any such advance payments, or (c) 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
trial-type inquiry or full investigation), that there is a reason to believe
that such Covered Person will be found entitled to indemnification under this
Section 10.02.
SECTION 10.03. SHAREHOLDERS. In case any Shareholder or former Shareholder of
any Series shall be held to be personally liable solely by reason of his being
or having been a Shareholder of such Series
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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 a corporation or other entity,
its corporate or other 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 assume, upon request by the Shareholder, the
defense of any claim made against the Shareholder for any act or obligation of
the Series and satisfy any judgment thereon from the assets of the Series.
SECTION 10.04. NO BOND REQUIRED OF TRUSTEES. No Trustee shall be obligated to
give any bond or other security for the performance of any of his duties
hereunder.
SECTION 10.05. 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 may recite that the same is executed
or made by them not individually, but as Trustees under the Declaration, and
that the obligations of the Trust or a Series thereof under any such instrument
are not binding upon any of the Trustees or Shareholders individually, but bind
only the Trust Property or the Trust Property of the applicable Series, and may
contain any further recital which they may deem appropriate, but the omission of
such recital shall not operate to bind the Trustees individually. The Trustees
shall at all times maintain insurance for the protection of the Trust Property
or the Trust Property of the applicable Series, its Shareholders, Trustees,
officers, employees and agents in such amount as the Trustees shall deem
adequate to cover possible tort liability, and such other insurance as the
Trustees in their sole judgment shall deem advisable.
SECTION 10.6. 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 discretions hereunder be fully and completely justified and protected with
regard to any act or any failure to act resulting from reliance in good faith
upon the books of account or other records of the Trust or a Series thereof,
upon an opinion of counsel, or upon reports made to the Trust or a Series
thereof by any of its officers or employees or by the Investment Adviser, the
Administrator, the Distributor, Transfer Agent, selected dealers, accountants,
appraisers or other experts or consultants selected with reasonable care by the
Trustees, officers or employees of the Trust, regardless of whether such counsel
or expert may also be a Trustee.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.01. TRUST NOT A PARTNERSHIP. It is hereby expressly declared that a
trust and not a partnership is created hereby. No Trustee hereunder shall have
any power to bind personally either the Trust's officers or any Shareholder. All
persons extending credit to, contracting with, or having any claim against the
Trust or the Trustees shall look only to the assets of the appropriate Series or
(If the Trustees shall have yet to have established the Series) the Trust for
payment under such credit, contract, or claim; and neither the Shareholders nor
the Trustees, nor any of their agents, whether past, present, or future, shall
be personally liable therefore. Nothing in this Trust Instrument shall protect a
Trustee against any liability to which the Trustee otherwise would be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of the office of Trustee
hereunder.
SECTION 11.02. TRUSTEE ACTION. The exercise by the Trustees of their powers and
discretions 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 X hereof and to Section 11.01 of this Article XI,
the Trustees shall not be liable for errors of judgment or mistakes of fact or
law.
SECTION 11.03. ESTABLISHMENT OF RECORD DATES. 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). The Trustees may
fix in advance a date, to be determined by the Trustees and no longer than
that permitted by applicable law, before the date of any Shareholders'
meeting, or the date for the payment of any dividends or other distributions,
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 entitled to receive payment of such dividend or other
distribution, 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 11.04. TERMINATION OF TRUST.
(a) This Trust shall continue without limitation of time but
subject to the provisions of paragraph (b) of this Section 11.04.
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(b) The Trustees, subject to a majority shareholder vote of
each Series affected by the matter, or, if applicable, to a majority shareholder
vote of the Trust, and subject to a vote of a majority of the Trustees, may:
(i) sell and convey all or substantially all of the
assets of the Trust or any affected Series to another trust,
partnership, association, or corporation, or to a separate
series of shares thereof, organized under the laws of any
state, which trust, partnership, association, or corporation
is an open-end management investment company as defined in the
1940 Act, or is a series thereof, for adequate consideration
which may include the assumption of all outstanding
obligations, taxes, and other liabilities, accrued or
contingent, of the Trust or any affected Series, and which may
include shares of beneficial interest, stock, or other
ownership interests of such trust, partnership, association,
or corporation or of a series thereof; or
(ii) at any time, sell and convert into money all of the
assets of the Trust or any affected series.
Upon making reasonable provision, in the determination of the
Trustees, for the payment of all such liabilities in either (i) or (ii) of this
Section 11.04(b), by such assumption or otherwise, the Trustees shall distribute
the remaining proceeds or assets (as the case may be) of each Series (or class)
ratably among the holders of Shares of that Series then outstanding.
(c) The Trustees may take any of the actions specified in this
Section 11.04(b)(i) and (ii) above without obtaining the approval of
shareholders if a majority of the Trustees determines that the continuation of
the Trust or Series (or class) is not in the best interests of the Trust, such
Series (or class), or their respective Shareholders as a result of factors or
events adversely affecting the ability of the Trust or such Series (or class) 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 (or class)
to maintain its assets at an appropriate size, changes in laws or regulations
governing the Trust or the Series (or class) or affecting assets of the type in
which the Trust or Series (or class) invests, or economic developments or trends
having a significant adverse impact on the business or operations of the Trust
or such Series (or class).
(d) Upon completion of the distribution of the remaining
proceeds or the remaining assets as provided in paragraph (b) of this Section
11.04, the Trust or any affected Series shall terminate and the Trustees and the
Trust shall be discharged of any and all further liabilities and duties
hereunder and the right, title, and interest of all parties with respect to the
Trust or Series shall be canceled and discharged.
Upon termination of the Trust, following completion of winding
up of the Trust's 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.
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SECTION 11.05. REORGANIZATION. Notwithstanding anything else herein, the
Trustees, in order to change the form of organization of the Trust, may, without
prior Shareholder approval, (i) cause the Trust to merge or consolidate with or
into one (1) or more trusts, partnerships, associations, or corporations so long
as the surviving or resulting entity is an open-end management investment
company under the 1940 Act, or is a series thereof, that will succeed to or
assume the Trust's registration under that Act and which is formed, organized,
or existing under the laws of a state, commonwealth, territory, possession, or
colony of the United States or (ii) cause the Trust to incorporate under the
laws of State of Delaware. Any agreement of merger or consolidation or
certificate of merger may be signed by a majority of Trustees and facsimile
signature conveyed by electronic or telecommunication means shall be valid.
Pursuant to and in accordance with the provisions of Section
3815(f) of the Delaware Act, and notwithstanding anything to the contrary
contained in this Trust Instrument, an agreement of merger or consolidation
approved by the Trustees in accordance with this Section 11.05 may effect any
amendment to the Trust Instrument or effect the adoption of a new trust
instrument of the Trust if the Trust is the surviving or resulting trust in the
merger or consolidation.
SECTION 11.06. FILING OF COPIES; REFERENCES; HEADINGS. The original or a copy
of this Trust Instrument and the original or a copy of each amendment hereof
or Trust Instrument supplemental hereto shall be kept at the office of the
Trust where it may be inspected by any Shareholder. Anyone dealing with the
Trust may rely on a certificate by an officer or Trustee of the Trust as to
whether or not any such amendments or supplements have been made and as to
any matters in connection with the Trust hereunder, and, with the same effect
as if it were the original, may rely on a copy certified by an officer or
Trustee of the Trust to be a copy of this Trust Instrument or of any such
amendment or supplemental Trust Instrument, and references to this Trust
Instrument, and all expressions such as or similar to "herein," "hereof," and
"hereunder" shall be deemed to refer to this Trust Instrument as amended or
affected by any such supplemental Trust Instrument. All expressions such as
or similar to "his," "he," and "him" shall be deemed to include the feminine
and neuter, as well as masculine, genders. Headings are placed herein for
convenience of reference only and, in case of any conflict, the text of this
Trust Instrument, rather than the headings, shall control. This Trust
Instrument may be executed in any number of counterparts each of which shall
be deemed an original.
SECTION 11.07. APPLICABLE LAW. The trust set forth in this instrument is made
in the State of Delaware, and the Trust and this Trust Instrument, and the
rights and obligations of the Trustees and Shareholders hereunder, are to be
governed by and construed and administered according to the Delaware Act and
the laws of said State; provided, however, that there shall not be applicable
to the trust, the Trust, the Trustee or this Trust Instrument (a) the
provisions of Section 3540 of Title 12 of the Delaware Code or (b) any
provisions of he 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
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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 and 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 or 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 Trust
Instrument. 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 or privileges afforded to trusts or actions that may be engaged in by
trusts under the Delaware Act, and the absence of a specific reference herein to
any such power, privilege, or action shall not imply that the Trust may not
exercise such power or privilege or take such actions.
SECTION 11.08. AMENDMENTS. Except as specifically provided herein, the
Trustees, without shareholder vote, may amend or otherwise supplement this Trust
Instrument by making an amendment, a Trust Instrument supplemental hereto, or an
amended and restated trust instrument. Shareholders shall have the right to vote
(i) on any amendment which would affect their right to vote granted in Section
7.01 of the Article VII hereof, (ii) on any amendment to this Section 11.08,
(iii) on any amendment as may be required by law or by the Trust's registration
statement filed with the Commission, and (iv) on any amendment submitted to the
Shareholders by the Trustees. Any amendment required or permitted to be
submitted to Shareholders which, as the Trustees determine, shall affect the
Shareholders of one or more Series shall be authorized by vote of the
Shareholders of each Series affected and no vote of Shareholders of a Series not
affected shall be required. Notwithstanding anything else herein, any amendment
to Article X hereof shall not limit the rights to indemnification or insurance
provided therein with respect to action or omission of Covered Persons prior to
such amendment.
SECTION 11.09. 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; and
(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.
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SECTION 11.10. FISCAL YEAR. The fiscal year of the Trust shall end on a
specified date as set forth in the Bylaws, provided, however, that the Trustees,
without Shareholder approval, may change the fiscal year of the Trust.
SECTION 11.11. PROVISIONS IN CONFLICT WITH LAW. The provisions of this Trust
Instrument are severable, and if the Trustees shall determine, with the advice
of counsel, that any of such provisions is in conflict with the 1940 Act, with
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 Trust Instrument; provided, however,
that such determination shall not affect any of the remaining provisions of this
Trust Instrument or render invalid or improper any action taken or omitted prior
to such determination. If any provision of this Trust Instrument shall be held
invalid or improper, unenforceability shall attach only to such provision in
such jurisdiction and shall not in any manner affect such provisions in any
other jurisdiction or any other provision of this Trust Instrument in any
jurisdiction.
IN WITNESS WHEREOF, the undersigned, being the initial Trustee
of the Trust, has executed this instrument this 6th day of August, 1999.
/s/ Jean Dahl
-------------------------------
Jean Dahl,
as Trustee and not individually
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BY-LAWS
OF
NEWCO TRUST
These By-Laws of NewCo Trust (the "Trust"), a Delaware
business trust, are subject to the Trust's Declaration of Trust, dated August
6,1999, as from time to time amended, supplemented, or restated (the "Trust
Instrument"). Capitalized terms used herein which are defined in the Trust
Instrument are used as therein defined.
ARTICLE I
PRINCIPAL OFFICE
The principal office of the Trust shall be located in
_____________or such other location as the Trustees, from time to time, may
determine. The Trust may establish and maintain such other offices and places of
business as the Trustees, from time to time, may determine.
ARTICLE II
OFFICERS AND THEIR ELECTION
SECTION 1. OFFICERS. The officers of the Trust shall be President, a Treasurer,
a Secretary, and such other officers as the Trustees from time to time may
elect. The Trustees may delegate to any officer or committee the power to
appoint any subordinate officers or agents. It shall not be necessary for any
Trustee or officer to be a holder of Shares in the Trust.
SECTION 2. ELECTION OF OFFICERS. The Treasurer and Secretary shall be chosen by
the Trustees. The President shall be chosen by and from the Trustees. Two (2) or
more offices may be held by a single person except the offices of President and
Secretary. Subject to the provisions of Section 3 of Article II of these Bylaws,
the President, the Treasurer, and the Secretary shall each hold office until
their successors are chosen and qualified and all other officers shall hold
office at the pleasure of the Trustees.
SECTION 3. RESIGNATIONS. Any officer of the Trust may resign, notwithstanding
Section 2 of Article II of these Bylaws, by filing a written resignation with
the President, the Trustees, or the Secretary, which resignation shall take
effect on being so filed or at such time as may be therein specified.
ARTICLE III
POWERS AND DUTIES OF OFFICERS AND TRUSTEES
SECTION 1. MANAGEMENT OF THE TRUST; GENERAL. The business and affairs of the
Trust shall be managed by, or under the direction of, the Trustees, and the
Trustees shall have all powers necessary
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and desirable to carry out their responsibilities, so far as such powers are not
inconsistent with the laws of the State of Delaware, the Trust Instrument, or
with these By-Laws.
SECTION 2. EXECUTIVE AND OTHER COMMITTEES. The Trustees may elect from their
own number an executive committee, which shall have any or all the powers of the
Trustees while the Trustees are not in session. The Trustees also may elect from
their own number other committees from time to time. The number composing such
committees and the powers conferred upon the same are to be determined by vote
of a majority of the Trustees. All members of such committees shall hold such
offices at the pleasure of the Trustees. The Trustees may abolish any such
committee at any time. Any committee to which the Trustees delegate any of their
powers or duties shall keep records of its meetings and shall report its actions
to the Trustees. The Trustees shall have power to rescind any action of any
committee, but no such rescission shall have retroactive effect.
SECTION 3. COMPENSATION. Each Trustee and each committee member may receive
such compensation for his services and reimbursement for his expenses as may be
fixed from time to time by resolution of the Trustees.
SECTION 4. CHAIRMAN OF THE TRUSTEES. The Trustees shall appoint from among
their number a Chairman who shall serve as such at the pleasure of the Trustees.
When present, he shall preside at all meetings of the Shareholders and the
Trustees, and he may appoint, subject to the approval of the Trustees, a Trustee
to preside at such meetings in his absence. He shall perform such other duties
as the Trustees from time to time may designate.
SECTION 5. PRESIDENT. The President shall be the chief executive officer of the
Trust and, subject to the direction of the Trustees, shall have general
administration of the business and policies of the Trust. Except as the Trustees
otherwise may order, the President shall have the power to grant, issue,
execute, or sign such powers of attorney, proxies, agreements, or other
documents as may be deemed advisable or necessary in the furtherance of the
interest of the Trust or any Series thereof. He also shall have the power to
employ attorneys, accountants, and other advisers and agents and counsel for the
Trust. The President shall perform such duties additional to all of the
foregoing as the Trustees from time to time may designate.
SECTION 6. TREASURER. The Treasurer shall be the principal financial and
accounting officer of the Trust. He shall deliver all funds and securities of
the Trust which may come into his hands to such company as the Trustees shall
employ as Custodian in accordance with the Trust Instrument and applicable
provisions of law. He shall make annual reports regarding the business and
condition of the Trust, which reports shall be preserved in Trust records, and
he shall furnish such other reports regarding the business and condition of the
Trust as the Trustees from time to time may require. The Treasurer shall perform
such additional duties as the Trustees from time to time may designate.
SECTION 7. SECRETARY. The Secretary shall record in books kept for the
purpose all votes and proceedings of the Trustees and the Shareholders at their
respective meetings. He shall have the
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custody of the seal of the Trust. The Secretary shall perform such additional
duties as the Trustees from time to time may designate.
SECTION 8. VICE PRESIDENT. Any Vice President of the Trust shall perform such
duties as the Trustees or the President from time to time may designate. At the
request or in the absence or disability of the President, the Vice President
(or, if there are two (2) or more Vice Presidents, then the senior of the Vice
Presidents present and able to act) may perform all the duties of the President
and, when so acting, shall have all the powers of and be subject to all the
restrictions upon the President.
SECTION 9. ASSISTANT TREASURER. Any Assistant Treasurer of the Trust shall
perform such duties as the Trustees or the Treasurer from time to time may
designate, and, in the absence of the Treasurer, the senior Assistant Treasurer,
present and able to act, may perform all the duties of the Treasurer.
SECTION 10. ASSISTANT SECRETARY. Any Assistant Secretary of the Trust shall
perform such duties as the Trustees or the Secretary from time to time may
designate, and, in the absence of the Secretary, the senior Assistant Secretary,
present and able to act, may perform all the duties of the Secretary.
SECTION 11. SUBORDINATE OFFICERS. The Trustees from time to time may appoint
such other officers or agents as the Trustees may deem advisable, each of whom
shall have such title, hold office for such period, have such authority, and
perform such duties as the Trustees may determine. The Trustees from time to
time may delegate to one (1) or more officers or committees of Trustees the
power to appoint any such subordinate officers or agents and to prescribe their
respective terms of office, authorities, and duties.
SECTION 12. SURETY BONDS. The Trustees may require any officer or agent of the
Trust to execute a bond (including, without limitation, any bond required by the
Investment Company Act of 1940, as amended ("the 1940 Act") and the rules and
regulations of the Securities and Exchange Commission ("Commission")) to the
Trust in such sum and with such surety or sureties as the Trustees may
determine, conditioned upon the faithful performance of such officer's or
agent's duties to the Trust including responsibility for negligence and for the
accounting of any of the Trust's property, funds, or securities that may come
into such officer's or agent's hands.
SECTION 13. REMOVAL. Any officer of the Trust may be removed from office
whenever in the judgment of the Trustees the best interest of the Trust will be
served thereby, by the vote of a majority of the Trustees given at any regular
meeting or any special meeting of the Trustees. In addition, any officer or
agent appointed in accordance with the provisions of Section 11 hereof may be
removed, either with or without cause, by any officer upon whom such power of
removal shall have been conferred by the Trustees.
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SECTION 14. RENUMERATION. The salaries or other compensation, if any, of the
officers of the Trust shall be fixed from time to time by resolution of the
Trustees.
ARTICLE IV
SHAREHOLDERS' MEETING
SECTION 1. SPECIAL MEETINGS. A special meeting of the Shareholders shall be
called by the Secretary whenever (i) ordered by the Trustees or (ii) requested
in writing by the holder or holders of at least ten percent (10%) of the
Outstanding Shares entitled to vote. If the Secretary, when so ordered or
requested, refuses or neglects for more than thirty (30) days to call such
special meeting, the Trustees or the Shareholders so requesting, in the name of
the Secretary, may call the meeting by giving notice thereof in the manner
required when notice is given by the Secretary. If the meeting is a meeting of
the Shareholders of one (1) or more Series or classes of Shares, but not a
meeting of all Shareholders of the Trust, then only special meetings of the
Shareholders of such one (1) or more Series or Classes shall be called and only
the Shareholders of such one (1) or more Series or Classes shall be entitled to
notice of and to vote at such meeting.
SECTION 2. NOTICES. Except as above provided, notices of any meeting of the
Shareholders shall be given by the Secretary by delivering or mailing, postage
prepaid, to each Shareholder entitled to vote at said meeting, written or
printed notification of such meeting at least fifteen (15) days before the
meeting, to such address as may be registered with the Trust by the Shareholder.
Notice of any Shareholder meeting need not be given to any Shareholder if a
written waiver of notice, executed before or after such meeting, is filed with
the record of such meeting, or to any Shareholder who shall attend such meeting
in person or by proxy. Notice of adjournment of a Shareholders' meeting to
another time or place need not be given, if such time and place are announced at
the meeting and reasonable notice is given to persons present at the meeting and
the adjourned meeting is held within a reasonable time after the date set for
the original meeting.
SECTION 3. VOTING-PROXIES. Subject to the provisions of the Trust Instrument,
Shareholders entitled to vote may vote either in person or by proxy, provided
that either (i) an instrument authorizing such proxy to act is executed by the
Shareholder in writing and dated not more than eleven (11) months before the
meeting, unless this instrument specifically provides for a longer period or
(ii) the Trustees adopt by resolution an electronic, telephonic, computerized,
or other alternative to execution of a written instrument authorizing the proxy
to act, which authorization is received no more than eleven (11) months before
the meeting. Proxies shall be delivered to the Secretary of the Trust or other
persons responsible for recording the proceedings before being voted. A proxy
with respect to Shares held in the name of two (2) or more persons shall be
valid if executed by one (1) of them unless at or prior to exercise of such
proxy the Trust receives specific written notice to the contrary from any one
(1) of them. Unless otherwise specifically limited by their terms, proxies shall
entitle the holder thereof to vote at any adjournment of a meeting. A proxy
purporting to be exercised by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the burden or providing
invalidity shall rest on the challenger. At all meetings of the Shareholders,
unless the voting is conducted by inspectors, all questions relating to the
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qualifications of voters, the validity or proxies, and the acceptance or
rejection of votes shall be decided by the Chairman of the meeting. Except as
otherwise provided herein or in the Trust Instrument, as these Bylaws or such
Trust Instrument may be amended or supplemented from time to time, all matters
relating to the giving, voting, or validity or proxies shall be governed by the
General Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the Trust were a Delaware corporation
and the Shareholders were shareholders of a Delaware corporation.
SECTION 4. PLACE OF MEETING. All special meetings of the Shareholders shall
be held at the principal place of business of the Trust or at such other place
in the United States as the Trustees may designate.
SECTION 5. ACTION WITHOUT A MEETING. Any action to be taken by Shareholders may
be taken without a meeting if all Shareholders entitled to vote on the matter
consent to the action in writing and the written consents are filed with the
records of meetings of Shareholders of the Trust. Such consent shall be treated
for all purposes as a vote at a meeting of the Trustees held at the principal
place of business of the Trust.
ARTICLE V
TRUSTEES' MEETINGS
SECTION 1. SPECIAL MEETINGS. Special meetings of the Trustees may be called
orally or in writing by the Chairman of the Board of Trustees or any two (2)
other Trustees.
SECTION 2. REGULAR MEETING. Regular meetings of the Trustees may be held at
such places and at such times as the Trustees from time to time may determine;
each Trustee present at such determination shall be deemed a party calling the
meeting and no call or notice will be required to such Trustee provided that any
Trustee who is absent when such determination is made shall be given notice of
the determination by the Chairman or any two (2) other Trustees, as provided for
in Section 4.04 of the Trust Instrument.
SECTION 3. QUORUM. Three (3) Trustees shall constitute a quorum for the
transaction of business and an action of a majority of the quorum shall
constitute action of the Trustees.
SECTION 4. NOTICE. Except as otherwise provided, notice of any special meeting
of the Trustees shall be given by the party calling the meeting to each Trustee,
as provided for in Section 4.04 of the Trust Instrument. A written notice may be
mailed, postage prepaid, addressed to him at his address as registered on the
books of the Trust or, if not so registered, at his last known address.
SECTION 5. PLACE OF MEETING. All special meetings of the Trustees shall be
held at the principal place of business of the Trust or such other place as the
Trustees may designate. Any meeting may adjourn to any place.
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SECTION 6. SPECIAL ACTION. When all the Trustees shall be present at any
meeting, however called or wherever held, or shall assent to the holding of the
meeting without notice, or shall sign a written assent thereto filed with the
record of such meeting, the acts of such meeting shall be valid as if such
meeting had been regularly held.
SECTION 7. ACTION BY CONSENT. Any action by the Trustees may be taken without a
meeting if a written consent thereto is signed by all the Trustees and filed
with the records of the Trustees' meeting. Such consent shall be treated, for
all purposes, as a vote at a meeting of the Trustees held at the principal place
of business of the Trustees.
SECTION 8. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Trustees may
participate in a meeting of Trustees by conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation shall constitute presence in
person at such meeting. Any meeting conducted by telephone shall be deemed to
take place at and from the principal office of the Trust.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
SECTION 1. BENEFICIAL INTEREST. The beneficial interest in the Trust at all
times shall be divided into such transferable Shares of one (1) or more separate
and distinct Series, or classes thereof, as the Trustees from time to time shall
create and establish. The number of Shares is unlimited, and each Share of each
Series or class thereof shall be without par value and shall represent an equal
proportionate interest with each other Share in the Series, none having priority
or preference over another, except to the extent that such priorities or
preferences are established with respect to one (1) or more classes of shares
consistent with applicable law and any rule or order to the Commission.
SECTION 2. TRANSFER OF SHARES. The Shares of the Trust shall be transferable,
so as to affect the rights of the Trust, only by transfer recorded on the books
of the Trust, in person or by attorney.
SECTION 3. EQUITABLE INTEREST NOT RECOGNIZED. The Trust shall be entitled to
treat the holder of record of any Share or Shares of beneficial interest as the
holder in fact thereof, and shall not be bound to recognize any equitable or
other claim or interest in such Share or Shares on the part of any other person
except as otherwise may be expressly provided by law.
SECTION 4. SHARE CERTIFICATE. In lieu of issuing certificates for Shares, the
Trustees or the transfer or shareholder services agent either may issue receipts
therefor or may keep accounts upon the books of the Trust for the record holders
of such Shares, who in either case shall be deemed, for all purposes hereunder,
to be holders of certificates for such Shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof.
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ARTICLE VII
OWNERSHIP OF ASSETS OF THE TRUST
The Trustees, acting for and on behalf of the Trust, shall be
deemed to hold legal and beneficial ownership of any income earned on securities
held by the Trust issued by any business entity formed, organized or existing
under the laws of any jurisdiction other than a state, commonwealth, possession,
territory, or colony of the United States or the laws of the United States.
ARTICLE VIII
INSPECTION OF BOOKS
The Trustees from time to time shall determine whether and to
what extent, and at what times and places, and under what conditions and
regulations, the accounts and books of the Trust or any of them shall be open to
the inspection of the Shareholders; and no Shareholder shall have any right to
inspect any account or book or document of the Trust except as conferred by law
or otherwise by the Trustees or by resolution of the Shareholders.
ARTICLE IX
INSURANCE OF OFFICERS, TRUSTEES, AND EMPLOYEES
The Trust may purchase and maintain insurance on behalf of any
Covered Person or employee of the Trust, including any Covered Person or
employee of the Trust who is or was serving at the request of the Trust as a
Trustee, officer, or employee of a corporation, partnership, association, joint
venture, trust, or other enterprise, against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the Trustees would have the power to indemnify him against such
liability.
The Trust may not acquire or obtain a contract for insurance
that protects or purports to protect any Trustee or officer of the Trust against
any liability to the Trust or its Shareholders to which he otherwise would be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office.
ARTICLE X
SEAL
The seal of the Trust shall be circular in form bearing the
inscription:
"NewCo TRUST
THE STATE OF DELAWARE"
The form of the seal shall be subject to alteration by the
Trustees and the seal may be used by causing the seal or a facsimile to be
impressed or affixed or printed or otherwise reproduced.
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Any officer or Trustee of the Trust shall have authority to
affix the seal of the Trust to any document, instrument, or other paper executed
and delivered by or on behalf of the Trust; however, unless otherwise required
by the Trustees, the seal shall not be necessary to be placed on, and the seal's
absence shall not impair the validity of, any document, instrument, or other
paper executed by or on behalf of the Trust.
ARTICLE XI
FISCAL YEAR
The fiscal year of the Trust shall end on such date as the
Trustees from time to time shall determine.
ARTICLE XII
AMENDMENTS
These Bylaws may be amended at any meeting of the Trustees of
the Trust by a majority vote.
ARTICLE XIII
REPORT TO SHAREHOLDERS
The Trustees at least semi-annually shall submit to the
Shareholders a written financial report of the Trust including financial
statements which shall be certified at least annually by independent public
accountants.
ARTICLE XIV
HEADINGS
Headings are placed in these By-Laws for convenience of
reference only and, in case of any conflict, the text of these By-Laws rather
than the headings shall control.
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