SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [ ]
(Check appropriate box or boxes)
ROCHDALE INVESTMENT INSURANCE TRUST
(Exact Name of Registrant as Specified in Charter)
570 Lexington Ave.
New York, NY 10022-6837
(Address of Principal Executive Offices, including Zip Code)
(212) 702-3500
Registrant's Telephone Number, including Area Code:
Lane Steven Bucklan, Esq.
Rochdale Investment Management Inc.
570 Lexington Avenue
New York, NY 10022
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
[ ] Immediately upon filing pursuant to paragraph (b)
[ ] On ______________ pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] On ______________ pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] On ______________ pursuant to paragraph (a)(2)of Rule 485
The Registrant hereby amends this Registration Statement on such 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 this Registration Statement shall be come effective on such
date as the Commission, acting pursuant to said Section 8(a) may determine.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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ROCHDALE INVESTMENT INSURANCE TRUST
PROSPECTUS
_____________, 2000
NASDAQ LEADERS FUND
- a domestic equity fund
MID/SMALL ENHANCED FUND
- a mid- and small-cap domestic equity fund
COUNTRY OPPORTUNITY FUND
- a foreign equity fund
GLOBAL TITANS FUND
- a global equity fund
AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION DOES NOT
APPROVE OR DISAPPROVE OF THESE SHARES OR DETERMINE WHETHER THE INFORMATION IN
THIS COMBINED PROSPECTUS IS TRUTHFUL OR COMPLETE. IT IS A CRIMINAL OFFENSE FOR
ANYONE TO INFORM YOU OTHERWISE.
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TABLE OF CONTENTS
Information About the Funds .............................................
An Overview of each Fund ................................................
Past Performance ........................................................
Fees and Expenses for the Funds .........................................
Example .................................................................
Investment Goal and Principal Investment Strategies for the Funds .......
Principal Risks of Investing in the Funds ...............................
Investment Advisor ......................................................
Shareholder Information .................................................
Pricing of Fund Shares ..................................................
Dividends and Distributions .............................................
Tax Consequences ........................................................
Distribution Arrangements ...............................................
Financial Highlights ....................................................
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INFORMATION ABOUT THE FUNDS
Rochdale Investment Insurance Trust is an open-end management investment company
that currently consists of four separate mutual funds. Rochdale Investment
Management, Inc. is the Advisor to each fund.
The Shares of each fund can only be purchased by insurance company separate
accounts ( the "Companies"). Shares are available to the public through the
purchase of certain variable annuity, variable life insurance or other insurance
contracts ("Contracts(s)") issued by the Companies.
This prospectus contains important information about each fund's investment
objective, its investment policies, strategies and risk. Please read this
prospectus carefully.
Please see the Contract Prospectus that accompanies this Prospectus for a
detailed explanation of your Contract.
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AN OVERVIEW OF EACH FUND
NASDAQ LEADERS FUND
INVESTMENT GOAL
The fund seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily in the common stocks of select companies the
Advisor considers the most attractive within the Nasdaq universe. The
portfolio will own up to 150 companies that are selected using our
proprietary methodology and most companies will have a market
capitalization greater than $1 billion. The fund will have representation
in many of the industry groups associated with that of the Nasdaq
capitalization weighted index. The Fund is expected to experience
substantially higher volatility given the nature of the companies within
this universe as well as the heavy concentration of companies in the
technology industry. At the present time there is heavy concentration of
the Nasdaq in technology companies. The Fund would expect to have a similar
heavy representation to the technology industry. The Fund seeks to
outperform the index over the long term through our company selection
process.
PRINCIPAL RISKS
As with all mutual funds, there is the risk that you could lose money on
your investment. The principal risks that could adversely affect the value
of your investment include:
o The companies the Advisor selects decline in value.
o The stock market goes down.
o Interest rates rise, which can result in a decline in the equity
market.
o The market undervalues the stocks held by the Fund.
o The stocks held by the Fund fail to grow their earnings.
o Growth style investing moves out of favor.
o Technology stocks move out of favor.
WHO MAY WANT TO INVEST IN THIS FUND
The Fund may be appropriate for investors who:
o Are pursuing a long-term investment goal.
o Seek broad access to growth industries, particularly in the technology
sector.
o Are willing to accept wider short-term fluctuations in the value of
their investment with the offsetting goal of earning higher long-term
returns.
The Fund may not be appropriate for investors who:
o Are pursuing a short-term goal.
o Need regular income.
o Wish to have their equity allocation invested less aggressively.
o Categorize themselves as conservative investors.
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MID/SMALL ENHANCED FUND
INVESTMENT GOAL
The fund seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily in equity securities of small and medium-size
U.S. companies the Advisor considers most attractive within their
respective industries. The Advisor will invest in up to 150 companies are
that are selected, generally, with a market capitalization less than $10
billion, across both growth and value industry groups, based on company
fundamental characteristics relative to industry peers. The Fund provides
broad-based industry, sector, and market cycle exposure. Due to the
selectivity of only those companies considered most attractive, the Advisor
expects the portfolio to, over the long-term, generate incremental returns
greater than that of the broad small- and mid-cap market.
PRINCIPAL RISKS
As with all mutual funds, there is the risk that you could lose money on
your investment. The principal risks that could adversely affect the value
of your investment include:
o The stocks selected by the Advisor decline in value.
o The stock market goes down.
o Interest rates rise, which can result in a decline in the equity
market.
o The market undervalues the stocks held by the Fund.
o The stocks held by the Fund fail to grow their earnings.
o The stocks held by the Fund exhibit characteristics typical of small
and medium-size companies. These companies are typically more volatile
and less liquid than larger companies.
WHO MAY WANT TO INVEST IN THIS FUND
The Fund may be appropriate for investors who:
o Are pursuing a long-term investment goal.
o Want to diversify their investment portfolio and enhance return
potential by investing in small and medium-size companies.
o Seek broad industry representation within the small- and mid-cap
market.
o Seek long-term economic exposure to both growth and value.
o Are willing to accept fluctuations in the value of their investment
with the offsetting goal of earning higher long-term returns.
The Fund may not be appropriate for investors who:
o Are pursuing a short-term investment goal.
o Need regular income.
o Wish to have their equity allocation invested in large companies only.
o Categorize themselves as conservative investors and are not willing to
experience more volatility than that of a large company mutual fund.
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COUNTRY OPPORTUNITY FUND
INVESTMENT GOAL
The fund seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily in equity securities of foreign companies in
both developed and emerging foreign markets. In constructing the portfolio,
the Advisor will first identify the most attractive countries in which the
stock of foreign countries will be selected. The countries selected will be
those identified through the Advisor's proprietary country selection
process and will focus on the top half of countries that appear
attractively valued relative to entire universe of countries. The Advisor
then selects primarily the leading large capitalization companies across
that country's stock market. The Fund may also invest in options, futures,
and other types of derivatives, as well as country funds, as a way to
efficiently capture the stock market returns for the country. The Fund
invests a minimum of 40% of its assets in securities of foreign developed
markets and will have up to approximately 60% of the value of the portfolio
in emerging markets.
PRINCIPAL RISKS
As with all mutual funds, there is the risk that you could lose money on
your investment. The principal risks that could adversely affect the value
of your investment include:
o The Advisor selects stocks that decline in value.
o The stock market goes down.
o Interest rates rise, which can result in a decline in the equity
market.
o The market undervalues the stocks held by the Fund.
o Adverse developments occur in foreign markets. These investments
involve greater risk, including currency fluctuation risk, which may
affect the value of securities held by the Fund.
o Adverse developments in the political and/or economic stability of a
foreign country. An emerging country may be especially vulnerable to
changes in political leadership and may experience serious economic
downturns from which it is unable to recover.
o Derivatives held by the Fund vary from the Advisor's expectation of
movements in securities, foreign exchange, and interest rate markets.
WHO MAY WANT TO INVEST IN THIS FUND
The Fund may be appropriate for investors who:
o Are pursuing a long-term investment goal.
o Want to diversify their investment portfolio and enhance return
potential by investing in foreign markets.
o Are seeking access to foreign economic growth and economic cycle
diversification.
o Are willing to accept fluctuations in the value of their investment
with the offsetting goal of earning higher long-term returns.
o Are aggressive long-term investors willing to experience substantially
higher volatility relative to that of a general-purpose mutual fund.
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The Fund may not be appropriate for investors who:
o Are pursuing a short-term investment goal.
o Need regular income.
o Wish to have their equity allocation invested in domestic stocks only.
o Do not want to invest in emerging markets.
GLOBAL TITANS FUND
INVESTMENT GOAL
The fund seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily in equity securities of large companies from all
the major world markets, including the U.S. The fund seeks to capture the
benefits of exposure to leading companies in industries contributing to and
benefiting from global economic growth. In selecting companies for
investment, the Advisor focuses first on industry selection - identifying
faster-growing industries with dynamics in place for sustained growth.
Within the selected industries, the Advisor then selects companies that
exhibit industry leadership or dominance and strong competitive
characteristics relative to their peers. The Fund will invest in a variety
of industries, market economies, and geographic regions. Due to the
selectivity of only leading companies within leading industries, the
Advisor expects the Fund, over the long-term, to generate returns greater
than that of the world markets.
PRINCIPAL RISKS
As with all mutual funds, there is the risk that you could lose money on
your investment. The principal risks that could adversely affect the value
of your investment include:
o The stocks selected by the Advisor decline in value.
o The stock market goes down.
o Interest rates rise, which can result in a decline in the equity
market.
o The market undervalues the stocks held by the Fund.
o Adverse developments occur in foreign markets. These investments
involve greater risk, including currency fluctuation risk, which may
affect the value of securities held by the Fund.
o Adverse developments in the political and/or economic stability of a
foreign country. An emerging country may be especially vulnerable to
changes in political leadership and may experience serious economic
downturns from which it is unable to recover.
WHO MAY WANT TO INVEST IN THIS FUND
The Fund may be appropriate for investors who:
o Are pursuing a long-term investment goal.
o Want to diversify their investment portfolio and enhance return
potential by investing in foreign markets.
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o Seek access to leading industries driving and benefiting from global
economic growth.
o Seek access to world economic growth and economic cycle
diversification.
o Are willing to accept fluctuations in the value of their investment
with the offsetting goal of earning higher long-term returns.
o Are willing to accept volatility levels associated with the major
world equity markets, which at times will be expected to be quite high
relative to that of other non-equity or general purpose equity mutual
funds.
The Fund may not be appropriate for investors who:
o Are pursuing a short-term investment goal.
o Need regular income.
o Wish to have their equity allocation invested in domestic stocks only.
o Do not want to invest in emerging markets.
PERFORMANCE
FEES AND EXPENSES FOR THE FUNDS
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Funds.
[TO BE SUPPLIED BY AMENDMENT]
EXAMPLE
This Example is intended to help you compare the costs of investing in the Funds
with the cost of investing in other mutual funds.
[TO BE SUPPLIED BY AMENDMENT]
INVESTMENT GOALS AND PRINCIPAL INVESTMENT STRATEGIES
NASDAQ LEADERS FUND
INVESTMENT GOAL
The Nasdaq Leaders Fund seeks long-term growth of capital.
INVESTMENT PHILOSOPHY
Through investment in select leading companies of the Nasdaq composite, the Fund
attempts to capture the higher returns associated with faster-growing companies
in prospering economic sectors. The Nasdaq is dominated by technology companies
that may contribute to and benefit from stock market and economic growth in the
near and long term. A portfolio of select leading companies of that broad market
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may provide the potential for higher returns (as well as higher volatility). The
fund seeks to provide industry, sector, and market cycle exposure commensurate
with that of the broad Nasdaq market, which is expected to result in greater
exposure to technology and growth companies. Due to selectivity of only those
companies considered most attractive, the Advisor expects the Fund, over the
long-term, to generate incremental returns greater than that of the broad
market.
PRINCIPAL INVESTMENT STRATEGIES
Each company selected for investment is subject to the Advisor's active
disciplined research process. The Advisor applies a multi-factor approach based
on fundamental measures the Advisor considers as predictive of superior
performance in technology and growth companies. The qualities that the Advisor
looks for include industry dominance, above average earnings momentum, positive
earnings revision, positive earnings surprise, and above average return on
equity, sales growth, and profit margin.
The companies identified as leading companies are screened further for their
appropriateness in light of expected economic and market conditions. The
companies selected are then subject to the process of portfolio optimization, a
sophisticated technique used to achieve broad economic sector diversification
and managed variability in line with the characteristics of the Nasdaq composite
index. Due to the nature of industry exposure in the broad Nasdaq market, the
fund may be more heavily concentrated (i.e., more than 25%) in certain
industries, such as computer hardware and software, telecommunications,
retail/wholesale trade, and biotechnology.
The Fund invests primarily in equity securities of U.S. companies that have a
market capitalization greater than $1 billion. Investments in common stock are
emphasized, but the Fund may also buy other types of equity securities,
including preferred stocks, convertible securities, or warrants. Although not
principal investment strategies, the Fund may also invest in companies outside
the Nasdaq universe and in foreign securities, including those of emerging
markets, as well as sell securities short, use derivative instruments and
related investment techniques to hedge equity exposure, for investment gain, or
for other purposes considered appropriate by the Advisor to meet the Fund's
investment goal.
Under normal conditions, the Fund will stay fully invested in accordance with
its investment strategy. However, the Fund may temporarily depart from its
principal investment strategies by making short-term investments in cash or cash
equivalents in response to adverse market, economic, or political conditions.
This may result in the Fund not achieving its investment goal.
The Advisor continuously monitors the fundamentals and business performance of
each company and will replace a company whose fundamentals change materially
with a more attractive company. Under normal market conditions, Fund turnover is
not expected to exceed 50%. Less frequent trading leads to lower transaction
costs, which could contribute to performance.
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MID/SMALL ENHANCED FUND
INVESTMENT GOAL
The Mid/Small Enhanced Fund seeks long-term growth of capital.
INVESTMENT PHILOSOPHY
Through investment in select small and medium-size leading U.S. companies across
a wide variety of industries, the Fund attempts to capture the higher returns
associated with faster-growing, smaller companies in prospering economic
sectors.
In managing the Fund, the Advisor takes an enhanced approach to broad market
investing. By investing methodologically and consistently and in a disciplined
manner in only the top few companies within each industry, the Fund seeks to
outperform a passively managed fund that owns all companies in the Nasdaq
Capitalization Weighted Index regardless of their level of attractiveness. As
compared to most actively managed funds, the Fund seeks to capture the benefits
of lower turnover, reduced management fees, and reduced risk.
The Advisor believes that exposure to the most attractive companies across a
broad range of industries through both growth and value market cycles provides
the best opportunity for long-term return in the small and medium-size company
asset class. In the shorter term, the market's preference for any one sector or
industry group fluctuates. Longer-term investors benefit from effective
broad-based industry, sector, and market cycle exposure.
PRINCIPAL INVESTMENT STRATEGIES
In determining in which securities to invest, the Advisor seeks to identify the
most attractive companies within each major industry. Industries are classified
as growth or value based on fundamental characteristics. This classification is
necessary because the fundamental measures predictive of superior performing
companies are different for growth versus value industry groups. Value
industries experience greater fluctuations related to the economy, while growth
industries are less influenced by economic cycles. Companies in growth
industries are evaluated on earnings growth, price momentum, and analyst
sentiment. Companies in value industries are evaluated on their ability to
generate cash flow, profit margin, and return on equity, and their price
momentum, which helps identify those companies most likely to achieve earlier
market recognition for their growth.
The companies identified as leading companies within their respective growth and
value industry groups are screened further for their appropriateness in light of
expected economic and market conditions. The companies selected are then subject
to the process of portfolio optimization, a sophisticated technique used to
achieve broad economic sector diversification and managed variability in line
with the characteristics of the broad mid- and small-cap market.
The Fund invests primarily in equity securities of U.S. companies that have a
market capitalization less than $10 billion. Investments in common stock are
emphasized, but the Fund may also buy other types of equity securities,
including preferred stocks, convertible securities, or warrants. Although not
principal investment strategies, the Fund may also invest in larger companies
and in foreign securities, including those of emerging markets, as well as sell
securities short, use derivative instruments and related investment techniques
to hedge equity exposure, for investment gain, or for other purposes considered
appropriate by the Advisor to meet the Fund's investment goal.
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Under normal conditions, the Fund will stay fully invested in accordance with
its investment strategy. However, the Fund may temporarily depart from its
principal investment strategies by making short-term investments in cash or cash
equivalents in response to adverse market, economic, or political conditions.
This may result in the Fund not achieving its investment goal.
The Advisor continuously monitors the fundamentals and business performance of
each company and will replace a company whose fundamentals change materially
with a more attractive company. Under normal market conditions, Fund turnover is
not expected to exceed 50%. Less frequent trading leads to lower transaction
costs, which could contribute to performance.
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COUNTRY OPPORTUNITY FUND
INVESTMENT GOAL
The Country Opportunity Fund seeks long-term growth of capital.
INVESTMENT PHILOSOPHY
Through investment in foreign companies of select developed and emerging foreign
markets, the Fund attempts to achieve long-term performance in excess of the
foreign market universe.
The Fund has a unique approach to investing internationally. The Advisor's
research focuses on country selection, which empirical studies demonstrate is
the key to earning competitive international returns. The Fund invests in
leading companies selected from those foreign developed and emerging markets the
Advisor identifies as most attractive, based on measures of valuation and
economic growth. Such selectivity creates a greater potential for higher
returns.
PRINCIPAL INVESTMENT STRATEGIES
The Advisor uses its proprietary country analysis methodology, analyzing each
country's aggregate macroeconomic, company fundamental, and market sentiment
measures, to determine which foreign markets are likely to generate the highest
returns. The foreign markets most worthy of investment have higher forecasted
GDP, lower valuation relative to growth, higher equity risk premiums, higher
current account relative to GDP, and positive analyst sentiment.
After selecting countries for investment, the Advisor uses a global equity
optimization process to invest in each country's leading companies across the
industries driving economic growth. This sophisticated process enables the
Advisor to develop a portfolio that captures substantially all of the combined
top-ranked countries' stock market movements with only a few companies per
selected country. The Fund invests in the "blue-chip" companies in each country.
Each company must meet the Advisor's standards for market and industry
representation, financial condition, credit rating, and liquidity. A minimum of
40% is invested in developed markets.
The Fund invests primarily in equity securities of foreign-domiciled, publicly
traded companies worldwide. Equity securities include common stocks, depositary
receipts, warrants, convertible bonds, debentures, and convertible preferred
stocks.
Depending on the circumstances and opportunities that might arise, and given the
volatile nature of foreign markets, the Fund may use country funds, futures,
derivative instruments, or other securities as deemed appropriate by the Advisor
in seeking to maximize the efficiency of its country selection process or hedge
equity or currency exposure. Although not a principal investment strategy, the
Fund may also sell securities short.
The Fund intends to be fully invested in accordance with its investment
strategy. However, the Fund may temporarily depart from its principal investment
strategies by making short-term investments in cash or cash equivalents in
response to adverse market, economic, or political conditions. This may result
in the Fund not achieving its investment goal.
The Fund sells a holding if another company provides more suitable country
representation or if a country is no longer an attractive investment. Due to the
longer-term nature of the country and stock selection
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criteria, the Fund expects to have a turnover rate of less than 50%. Less
frequent trading leads to lower transaction costs, which could contribute to
performance.
GLOBAL TITANS FUND
INVESTMENT GOAL
The Global Titans Fund seeks long-term growth of capital.
INVESTMENT PHILOSOPHY
Through investment in select large companies identified by the Advisor as global
leaders, the Fund attempts to capture the long-term performance potential of
companies and industries contributing to and benefiting from global economic
growth. The Fund provides exposure to major world markets, including the U.S.
The world economy and capital markets are increasingly affected by an
integration of markets for goods, services and capital. This trend leads us to
examine mega-cap companies (those with market capitalization in excess of $10
billion) at a global industry level, rather than at a country level. The world's
largest companies operate on a global rather than a national level. An
investment research process for identifying leading global companies must
therefore focus efforts first on identifying those industries that benefit from
globalization.
PRINCIPAL INVESTMENT STRATEGIES
The Advisor's security selection approach is two-tiered. From the world equity
universe, the Advisor first seeks to identify the industries that will grow at a
rate in excess of that of global economic growth. These faster-growing
industries exhibit fundamental characteristics such as rising profits, growing
sales, and higher relative strength, and have behavioral dynamics in place for
sustained growth over the long term. Within the selected industries, the Advisor
then seeks to identify companies that exhibit industry dominance and potential
for continued growth. These companies exhibit fundamental characteristics such
as above average earnings momentum, positive earnings revision, positive
earnings surprise, and above average return on equity, sales growth, and profit
margin. The company selection process focuses on a universe of only the largest
global companies, generally those with market cap in excess of $10 billion.
The companies identified as global leaders are then subject to the process of
portfolio optimization, a sophisticated technique used to achieve broad economic
sector diversification and managed variability in line with the characteristics
of the broad world market.
The Fund invests primarily in equity securities of publicly traded companies
worldwide that have a market capitalization greater than $10 billion. Equity
securities include common stocks, depositary receipts, warrants, convertible
bonds, debentures, and convertible preferred stocks. The companies may be
domiciled in any market, and the Fund may invest in U.S., foreign developed, and
emerging markets.
Depending on the circumstances and opportunities that might arise, and given the
volatile nature of foreign markets, the Fund may use country funds, futures,
derivative instruments, or other securities as deemed appropriate by the Advisor
in seeking to hedge equity or currency exposure. Although not a principal
investment strategy, the Fund may also sell securities short.
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The Fund intends to be fully invested in accordance with its investment
strategy. However, the Fund may temporarily depart from its principal investment
strategies by making short-term investments in cash or cash equivalents in
response to adverse market, economic, or political conditions. This may result
in the Fund not achieving its investment goal.
The Advisor continuously monitors the fundamentals and business performance of
each company and will replace a company whose fundamentals change materially
with a more attractive company. Under normal market conditions, Fund turnover is
not expected to exceed 50%. Less frequent trading leads to lower transaction
costs, which could contribute to performance.
PRINCIPAL RISKS OF INVESTING IN THE FUNDS
The principal risks of investing in the Funds that may adversely affect a Fund's
net asset value or total return are discussed above in "An Overview of each
Fund" These risks are discussed in more detail below.
MARKET RISK. The risk that the market value of a security may move up and down,
sometimes rapidly and unpredictably. These fluctuations may cause a security to
be worth less than the price originally paid for it, or less than it was worth
at an earlier time. Market risk may affect a single issuer, industry or sector
of the economy, or the market as a whole.
SMALL AND MEDIUM-SIZE COMPANIES RISK. Although each of the Funds may invest in
the securities of small and medium-size companies, the Mid/Small Enhanced Fund
will concentrate its investments in these types of securities. Investing in
securities of small- and mid-capitalization companies involves greater risk than
investing in larger companies, because smaller companies can be subject to more
abrupt or erratic share price changes than can larger companies. Smaller
companies typically have more limited product lines, markets, or financial
resources than larger companies, and their management may be dependent on a
limited number of key individuals. Smaller companies may have limited market
liquidity, and their prices may be more volatile. These risks are greater when
investing in the securities of newer small companies. As a result, small company
stocks, and therefore a Fund, may fluctuate significantly more in value than
will larger company stocks and mutual funds that focus on them.
FOREIGN SECURITIES RISK. Although each of the Funds may invest in foreign
securities, the Country Opportunity Fund will focus its investments in the
securities of foreign companies. The risk of investing in the securities of
foreign companies is greater than the risk of investing in domestic companies.
Some of these risks include: (1) unfavorable changes in currency exchange rates,
(2) economic and political instability, (3) less publicly available information,
(4) less strict auditing and financial reporting requirements, (5) less
governmental supervision and regulation of securities markets, (6) higher
transaction costs, and (7) greater possibility of not being able to sell
securities on a timely basis. These risks are more pronounced when investing in
foreign securities in emerging markets.
MULTIPLE LEVELS OF EXPENSE. To the extent that a Fund invests in another
investment company it will be subject to its pro-rata share of that investment
company's advisory and administrative expenses.
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FIXED-INCOME SECURITIES - INTEREST AND CREDIT RISK. To the extent that any of
the Funds invests a portion of its assets in fixed-income securities, a
fundamental risk is that the value of fixed income securities will fall if
interest rates rise. Generally, the value of a fixed income portfolio will
decrease when interest rates rise. Under these circumstances, the Fund's NAV may
also decrease. Also, fixed income securities with longer maturities generally
entail greater risk than those with shorter maturities. In addition to interest
rate risk, changes in the creditworthiness of an issuer of fixed income
securities and the market's perception of that issuer's ability to repay
principal and interest when due can also affect the value of fixed income
securities held by the Fund. The value of securities that are considered below
investment grade, sometimes known as junk bonds, may be more volatile than the
value of fixed income securities that carry ratings higher than "BB." For
example, the market price of junk bonds may be more susceptible to real or
perceived economic, interest rate or market changes, political changes or
adverse developments specific to the issuer. It is not expected that the Funds
will hold more than 25% of their assets in fixed-income securities rated below
investment grade.
DERIVATIVES RISK. The use of derivative instruments involves risks different
from, or greater than, the risks associated with investing directly in
securities and other more traditional investments. Derivatives are subject to a
number of risks described elsewhere in this section, including market risk,
liquidity risk, and the credit risk of the counterparty to the derivatives
contract. Since their value is calculated and derived from the value of other
assets, instruments or references, there is greater risk that derivatives will
be improperly valued. Derivatives also involve the risk that changes in the
value of the derivative may not correlate perfectly with relevant assets, rates
or indices they are designed to hedge or to closely track.
Specific risks associated with the use of derivatives include:
Credit and Counterparty Risk. If the issuer of, or the counterparty to, the
derivative does not make timely principal, interest or other payment when due,
or otherwise fulfill its obligations, a Fund could lose money on its investment.
A Fund is exposed to credit risk, especially when it uses over-the-counter
derivatives (such as swap contracts) or it engages to a significant extent in
the lending of the Funds' securities or use of repurchase agreements.
Liquidity Risk. Liquidity risk exists when particular investments are difficult
to purchase or sell due to a limited market or to legal restrictions, such that
a Fund may be prevented from selling particular securities at the price at which
a Fund values them.
Management Risk. The Advisor may fail to use derivatives effectively. For
example, the Advisor may choose to hedge or not to hedge at inopportune times.
This will adversely affect the Funds' performance.
YEAR 2000 RISK. The Funds could be adversely affected if the computer systems
used by the Advisor and other service providers do not properly process and
calculate information related to dates beginning January 1, 2000. This is
commonly known as the "Y2K Problem." This situation may negatively affect the
companies in which the Funds invest and, by extension, the value of the Funds'
shares. Although the Funds' service providers are taking steps to address this
15
<PAGE>
issue, there may still be some risk of adverse effects. To the extent the Funds
invest in foreign companies, there will be a greater degree of Y2K Problem risk,
because foreign countries are not as advanced in dealing with this issue as is
the U.S.
INVESTMENT ADVISOR
Rochdale Investment Management Inc. is the investment advisor to the Funds. The
Advisor is located at 570 Lexington Avenue, New York, NY 10022-6837. The Advisor
currently manages assets of more than $800 million for individual and
institutional investors. The Advisor provides advice on buying and selling
securities and also furnishes the Funds with office space and certain
administrative services and provides most of the personnel needed by the Funds.
For its services, each Fund pays the Advisor a monthly management fee based upon
the average daily net assets of the Funds at the following annual rates:
[TO BE SUPPLIED BY AMENDMENT]
FUND MANAGERS
Mr. Carl Acebes and Mr. Garrett R. D'Alessandro are responsible for the
day-to-day management of the Funds. Mr. Acebes has been the Advisor's Chairman
and Chief Investment Officer since its founding. Mr. D'Alessandro is the
Advisor's President, Chief Executive Officer, and Director of Research, and is a
Chartered Financial Analyst. Mr. D'Alessandro joined the Advisor in 1986.
FUND EXPENSES
Each Fund is responsible for its own operating expenses. The Advisor has
contractually agreed to reduce its fees and/or pay expenses of the Funds to
ensure that each Fund's aggregate total annual fund operating expenses
(excluding interest and tax expenses) will not exceed the limits set forth in
the Expense Table. Any reduction in advisory fees or payment of expenses made by
the Advisor is subject to reimbursement by the Fund if requested by the Advisor
in subsequent fiscal years. The Advisor may request this reimbursement if the
aggregate amount actually paid by a Fund toward operating expenses for such
fiscal year (taking into account the reimbursements) does not exceed the
applicable limitation on Fund expenses. Rochdale is permitted to be reimbursed
for fee reductions and/or expense payments made in the prior three fiscal years.
(After startup, each Fund is permitted to look for longer periods of four and
five years.) The Trustees will review any such reimbursement. Each Fund must pay
its current ordinary operating expenses before Rochdale is entitled to any
reimbursement of fees and/or expenses.
16
<PAGE>
SHAREHOLDER INFORMATION
BUYING AND SELLING SHARES
The Funds do not sell their shares directly to individual investors. Shares of
the funds may be purchased only by separate investment accounts of participating
insurance Companies. The Funds continuously sell their shares to each Company's
separate accounts, without a sales charge, at the next net asset value per share
determined after a proper purchase order is placed with the Company. Each
Company submits purchase and redemption orders to the Funds based on allocation
instructions for premium payments, transfer instructions and surrender or
partial withdrawal requests of their Contract owners, as set forth in the
accompanying prospectus for the Contracts. Redemption orders are effected at the
next net asset value per share determined after a proper redemption order is
placed with the Company.
PRICING OF FUND SHARES
The price of each Fund's shares is based on the Fund's net asset value. The net
asset value of the Fund's shares is determined by dividing the Fund's assets,
minus its liabilities, by the number of shares outstanding. The Fund's assets
are the market value of securities it holds, plus any cash and other assets. The
Fund's liabilities are fees and expenses it owes. The number of Fund shares
outstanding is the amount of shares that have been issued to shareholders. The
price paid by the Companies to buy Fund shares and the amount the Companies will
receive when they sell Fund shares is based on the net asset value next
calculated after their order is received in by the Transfer Agent.
The net asset value of each Fund's shares is determined as of the close of
regular trading on the NYSE. This is normally 4:00 p.m., Eastern time. Fund
shares will not be priced on days that the NYSE is closed for trading (including
certain U.S. holidays).
DIVIDENDS AND DISTRIBUTIONS
All Funds will distribute dividends and capital gains to the Companies' Separate
Accounts on an annual basis. Distributions are automatically reinvested in
shares of the Fund making the distribution and not cash unless a Company elects
to have distributions made in cash.
TAX CONSEQUENCES
The shares of the Funds may be purchased only through Company Contracts and the
income, dividends or capital gains distributions from the Funds are taxable, if
at all, to the participating Companies. For an explanation of the tax status
and/or consequences of a variable annuity contract, variable life insurance
contract or other investment product of an insurance company, please refer to
the accompanying prospectus of your participating insurance company.
17
<PAGE>
DISTRIBUTION ARRANGEMENTS
The Funds have adopted a distribution plan under Rule 12b-1. This rule allows
the Funds to pay distribution fees for the sale and distribution of their shares
and for services provided to their shareholders. The distribution and service
fee is at an annual rate of 0.25% of each Fund's average daily net assets, which
is payable to the Advisor, as Distributor. Because these fees are paid out of a
Fund's assets on an ongoing basis, over time these fees will increase the cost
of your investment and may cost you more than paying other types of sales
charges.
FINANCIAL HIGHLIGHTS
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INVESTMENT ADVISOR
Rochdale Investment Management Inc.
570 Lexington Avenue
New York, New York 10022-6837
(212) 702-3500
DISTRIBUTOR
Rochdale Investment Management Inc.
570 Lexington Avenue
New York, New York 10022-6837
(212) 702-3500
CUSTODIAN
[TO BE PROVIDED BY AMENDMENT]
TRANSFER AND DIVIDEND DISBURSING AGENT
[TO BE PROVIDED BY AMENDMENT]
INDEPENDENT AUDITORS
Tait, Weller & Baker
8 Penn Center, Suite 800
Philadelphia, Pennsylvania 19103
LEGAL COUNSEL
Lane Steven Bucklan, Esq.
Rochdale Investment Management Inc.
570 Lexington Avenue
New York, New York 10022-6837
<PAGE>
ROCHDALE INVESTMENT INSURANCE TRUST
570 Lexington Avenue
New York, NY 10022-6837
800-245-9888
www.rochdale.com
You can discuss your questions about the Funds, and request other information,
including the Statement of Additional Information (SAI), Annual Report or
Semi-Annual Report, free of charge, by calling the Funds at 800-245-9888 or
visiting our Web site at www.rochdale.com. In the Funds' Annual Reports, you
will find a discussion of the market conditions and investment strategies that
significantly affected the Funds' performance during their last fiscal year. The
SAI provides detailed information about the Funds and is incorporated into this
Prospectus by reference.
You can review and copy information about the Funds, including the Funds'
reports and SAI, at the Public Reference Room of the Securities and Exchange
Commission, or get copies for a fee, by writing or calling the Public Reference
Room of the Commission, Washington, DC 20549-6009 (1-202-942-8090). You may also
send email to the Commission requesting information at [email protected]. You
can obtain the same information free of charge from the Commission's Internet
Web site at http://www.sec.gov.
(Rochdale investment insurance trust's SEC Investment Company Act file
number is -----------)
<PAGE>
B-1
STATEMENT OF ADDITIONAL INFORMATION
, 2000
ROCHDALE INSURANCE TRUST SERIES
NASDAQ LEADERS FUND
S&P MID/SMALLCAP ENHANCED FUND
COUNTRY OPPORTUNITY FUND
GLOBAL TITANS FUND
EACH A SERIES OF ROCHDALE INVESTMENT INSURANCE TRUST
570 LEXINGTON AVENUE
NEW YORK, NY 10022-6837
(212) 702-3500
This Statement of Additional Information ("SAI") is not a prospectus and it
should be read in conjunction with the Prospectus dated _________, 2000, as may
be revised of the Rochdale Funds named above, which are series of Rochdale
Investment Insurance Trust (the "Trust"). Rochdale Investment Management Inc.
("Rochdale") is investment advisor to the Funds. A copy of the Funds' Prospectus
is available by calling the number listed above or (212) 633-9700.
TABLE OF CONTENTS
The Trust ............................................................. B-2
Investment Objectives and Policies .................................... B-2
Investment Restrictions ............................................... B-18
Distributions and Tax Information ..................................... B-19
Trustees and Executive Officers ....................................... B-23
The Funds' Investment Advisor ......................................... B-23
The Funds' Administrator .............................................. B-24
The Funds' Distributor ................................................ B-24
Execution of Fund Transactions ........................................ B-25
Additional Purchase and Redemption Information ........................ B-27
Determination of Share Price .......................................... B-29
Performance Information ............................................... B-30
General Information ................................................... B-30
Financial Statements .................................................. B-31
Appendix A ............................................................ B-31
Appendix B ............................................................ B-33
B-1
<PAGE>
THE TRUST
Rochdale Investment Insurance trust (the "Trust") is an open-end management
investment company organized as a Delaware business trust on March 2, 2000. The
Trust may consist of various series, which represent separate investment funds.
This SAI relates only to the Funds listed on the cover page.
The Trust is registered with the SEC as a management investment company. Such a
registration does not involve supervision of the management or policies of the
Funds. The Prospectus for the Funds and this SAI omit certain information
contained in the Registration Statement filed with the SEC. Copies of such
information may be obtained from the SEC upon payment of the prescribed fee.
The Funds sell their shares only to separate accounts of various insurance
companies (the "Companies"). Shares are available to the public only through the
purchase of certain variable annuity, variable life insurance or other insurance
contracts ("Contract(s)") issued by the Companies.
INVESTMENT OBJECTIVES AND POLICIES
Each of the Funds has the investment objective of long-term capital
appreciation. Each Fund is diversified, which under applicable federal law means
that as to 75% of its total assets, not more than 5% may be invested in the
securities of a single issuer and that it may hold no more than 10% of the
voting securities of a single issuer. The following discussion supplements the
discussion of the Funds' investment objective and policies as set forth in the
Prospectus. There can be no assurance that the objective of any Fund will be
attained.
CONVERTIBLE SECURITIES AND WARRANTS
The Funds may invest in convertible securities and warrants. A convertible
security is a fixed income security (a debt instrument or a preferred stock)
which may be converted at a stated price within a specified period of time into
a certain quantity of the common stock of the same or a different issuer.
Convertible securities are senior to common stocks in an issuer's capital
structure, but are usually subordinated to similar non-convertible securities.
While providing a fixed income stream (generally higher in yield than the income
derivable from common stock but lower than that afforded by a similar
nonconvertible security), a convertible security also affords an investor the
opportunity, through its conversion feature, to participate in the capital
appreciation attendant upon a market price advance in the convertible security's
underlying common stock.
A warrant gives the holder a right to purchase at any time during a specified
period a predetermined number of shares of common stock at a fixed price. Unlike
convertible debt securities or preferred stock, warrants do not pay a fixed
dividend. Investments in warrants involve certain risks, including the possible
lack of a liquid market for resale of the warrants, potential price fluctuations
as a result of speculation or other factors, and failure of the price of
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the underlying security to reach or have reasonable prospects of reaching a
level at which the warrant can be prudently exercised (in which event the
warrant may expire without being exercised, resulting in a loss of a Fund's
entire investment therein).
INVESTMENT COMPANIES
Each Fund may under certain circumstances invest a portion of its assets in
other investment companies, including money market funds. In addition to a
Fund's advisory fee, an investment in an underlying mutual fund will involve
payment by a Fund of its pro rata share of advisory and administrative fees
charged by such fund.
SECURITIES LOANS
Each Fund is permitted to lend its securities to broker-dealers and other
institutional investors in order to generate additional income. Such loans of
fund securities may not exceed one-half of the value of a Fund's total assets.
In connection with such loans, a Fund will receive collateral consisting of
cash, cash equivalents, U.S. Government securities, or irrevocable letters of
credit issued by financial institutions. Such collateral will be maintained at
all times in an amount equal to at least 102% of the current market value plus
accrued interest of the securities loaned. A Fund can increase its income
through the investment of such collateral. A Fund continues to be entitled to
the interest payable or any dividend-equivalent payments received on a loaned
security and, in addition, to receive interest on the amount of the loan.
However, the receipt of any dividend-equivalent payments by a Fund on a loaned
security from the borrower will not qualify for the dividends-received
deduction. Such loans will be terminable at any time upon specified notice. A
Fund might experience risk of loss if the institutions with which it has engaged
in fund loan transactions breach their agreements with the Fund. The risks in
lending fund securities, as with other extensions of secured credit, consist of
possible delays in receiving additional collateral or in the recovery of the
securities or possible loss of rights in the collateral should the borrower
experience financial difficulty. Loans will be made only to firms deemed by
Rochdale to be of good standing and will not be made unless, in the judgment of
Rochdale, the consideration to be earned from such loans justifies the risk.
SHORT SALES
Each Fund may seek to hedge investments or realize additional gains through
short sales. Each Fund may make short sales, which are transactions in which a
Fund sells a security it does not own, in anticipation of a decline in the
market value of that security. To complete such a transaction, the Fund must
borrow the security to make delivery to the buyer. A Fund then is obligated to
replace the security borrowed by purchasing it at the market price at or prior
to the time of replacement. The price at such time may be more or less than the
price at which a Fund sold the security. Until the security is replaced, the
Fund is required to repay the lender any dividends or interest that accrue
during the period of the loan. To borrow the security, a Fund also may be
required to pay a premium, which would increase the cost of the security sold.
To the extent necessary to meet margin requirements, the broker will retain the
net proceeds of the short sale until the short position is closed out. A Fund
also will incur transaction costs in effecting short sales.
B-3
<PAGE>
A Fund will incur a loss as a result of the short sale if the price of the
security increases between the date of the short sale and the date on which the
Fund replaces the borrowed security. A Fund will realize a gain if the security
declines in price between those dates. The amount of any gain will be decreased,
and the amount of any loss increased, by the amount of the premium, dividends,
interest, or expenses a Fund may be required to pay in connection with a short
sale.
No securities will be sold short if, after effect is given to any such short
sale, the total market value of all securities sold short would exceed 25% of
the value of a Fund's net assets.
Whenever a Fund engages in short sales, its custodian will segregate liquid
assets equal to the difference between (a) the market value of the securities
sold short at the time they were sold short and (b) any assets required to be
deposited with the broker in connection with the short sale (not including the
proceeds from the short sale). The segregated assets are marked to market daily,
provided that at no time will the amount segregated plus the amount deposited
with the broker be less than the market value of the securities at the time they
were sold short.
ILLIQUID SECURITIES
Each Fund may not invest more than 15% of the value of its net assets in
securities that at the time of purchase have legal or contractual restrictions
on resale or are otherwise illiquid. Rochdale will monitor the amount of
illiquid securities held by the Funds, under the supervision of the Trust's
Board of Trustees, to ensure compliance with the Funds' investment restrictions.
Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933 (the "Securities Act"), securities
which are otherwise not readily marketable and repurchase agreements having a
maturity of longer than seven days. Securities which have not been registered
under the Securities Act are referred to as private placement or restricted
securities and are purchased directly from the issuer or in the secondary
market. Mutual funds do not typically hold a significant amount of these
restricted or other illiquid securities because of the potential for delays on
resale and uncertainty in valuation. Limitations on resale may have an adverse
effect on the marketability of fund securities, and a Fund might be unable to
sell restricted or other illiquid securities promptly or at reasonable prices
and might thereby experience difficulty satisfying redemption requests within
seven days. A Fund might also have to register such restricted securities in
order to sell them, resulting in additional expense and delay. Adverse market
conditions could impede such a public offering of securities.
In recent years, however, a large institutional market has developed for certain
securities that are not registered under the Securities Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are
B-4
<PAGE>
contractual or legal restrictions on resale to the general public or to certain
institutions may not reflect the actual liquidity of such investments. If such
securities are subject to purchase by institutional buyers in accordance with
Rule 144A promulgated by the SEC under the Securities Act, the Trust's Board of
Trustees may determine that such securities are not illiquid securities despite
their legal or contractual restrictions on resale. In all other cases, however,
securities subject to restrictions on resale will be deemed illiquid.
REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements. Under such agreements, the
seller of the security agrees to repurchase it at a mutually agreed upon time
and price. The repurchase price may be higher than the purchase price, the
difference being income to a Fund, or the purchase and repurchase prices may be
the same, with interest at a stated rate due to a Fund together with the
repurchase price on repurchase. In either case, the income to a Fund is
unrelated to the interest rate on the U.S. Government security itself. Such
repurchase agreements will be made only with banks with assets of $500 million
or more that are insured by the Federal Deposit Insurance Corporation or with
Government securities dealers recognized by the Federal Reserve Board and
registered as broker-dealers with the Securities and Exchange Commission ("SEC")
or exempt from such registration. Each Fund will generally enter into repurchase
agreements of short duration, from overnight to one week, although the
underlying securities generally have longer maturities. Each Fund may not enter
into a repurchase agreement with more than seven days to maturity if, as a
result, more than 15% of the value of its net assets would be invested in
illiquid securities including such repurchase agreements.
For purposes of the Investment Company Act of 1940 (the "Investment Company
Act"), a repurchase agreement is deemed to be a loan from a Fund to the seller
of the U.S. Government security subject to the repurchase agreement. It is not
clear whether a court would consider the U.S. Government security acquired by a
Fund subject to a repurchase agreement as being owned by the Fund or as being
collateral for a loan by the Fund to the seller. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the U.S. Government security before its repurchase under a repurchase
agreement, a Fund may encounter delays and incur costs before being able to sell
the security. Delays may involve loss of interest or a decline in price of the
U.S. Government security. If a court characterizes the transaction as a loan and
a Fund has not perfected a security interest in the U.S. Government security,
the Fund may be required to return the security to the seller's estate and be
treated as an unsecured creditor of the seller. As an unsecured creditor, a Fund
would be at the risk of losing some or all of the principal and income involved
in the transaction. As with any unsecured debt instrument purchased for a Fund,
Rochdale seeks to minimize the risk of loss through repurchase agreements by
analyzing the creditworthiness of the other party, in this case the seller of
the U.S. Government security.
Apart from the risk of bankruptcy or insolvency proceedings, there is also the
risk that the seller may fail to repurchase the security. However, a Fund will
always receive as collateral for any repurchase agreement to which it is a party
securities acceptable to it, the market value of which is equal to at least 100%
of the amount invested by the Fund plus accrued interest, and the Fund
B-5
<PAGE>
will make payment against such securities only upon physical delivery or
evidence of book entry transfer to the account of its Custodian. If the market
value of the U.S. Government security subject to the repurchase agreement
becomes less than the repurchase price (including interest), a Fund will direct
the seller of the U.S. Government security to deliver additional securities so
that the market value of all securities subject to the repurchase agreement will
equal or exceed the repurchase price. It is possible that a Fund will be
unsuccessful in seeking to impose on the seller a contractual obligation to
deliver additional securities.
WHEN-ISSUED SECURITIES
Each Fund may from time to time purchase securities on a "when-issued" basis.
The price of such securities, which may be expressed in yield terms, is fixed at
the time the commitment to purchase is made, but delivery and payment for the
when-issued securities take place at a later date. Normally, the settlement date
occurs within one month of the purchase; during the period between purchase and
settlement, a Fund makes no payment to the issuer and no interest accrues to the
Fund. To the extent that assets of a Fund are held in cash pending the
settlement of a purchase of securities, the Fund would earn no income. While
when-issued securities may be sold prior to the settlement date, a Fund intends
to purchase such securities with the purpose of actually acquiring them unless a
sale appears desirable for investment reasons. At the time a Fund makes the
commitment to purchase a security on a when-issued basis, it will record the
transaction and reflect the value of the security in determining its net asset
value. The market value of the when-issued securities may be more or less than
the purchase price. Rochdale does not believe that a Fund's net asset value or
income will be adversely affected by the purchase of securities on a when-issued
basis. A Fund will segregate liquid assets equal in value to commitments for
when-issued securities, which reduces but does not eliminate leverage.
FIXED INCOME SECURITIES
Each Fund may invest in fixed income securities and hold such securities when
Rochdale believes that opportunities for long-term capital growth exist. The
Funds' investments in fixed income securities of domestic and foreign issuers
are limited to corporate debt securities (bonds, debentures, notes, and other
similar corporate debt instruments), and bills, notes and bonds issued by the
U.S. Government, its agencies and instrumentalities.
The market value of fixed income securities is influenced significantly by
changes in the level of interest rates. Generally, as interest rates rise, the
market value of fixed income securities decreases. Conversely, as interest rates
fall, the market value of fixed income securities increases. Factors which could
result in a rise in interest rates, and a decrease in market value of fixed
income securities, include an increase in inflation or inflation expectations,
an increase in the rate of U.S. economic growth, an expansion in the Federal
budget deficit, or an increase in the price of commodities, such as oil. In
addition, the market value of fixed income securities is influenced by
perceptions of the credit risks associated with such securities. Credit risk is
the risk that adverse changes in economic conditions can affect an issuer's
ability to pay principal and interest.
B-6
<PAGE>
Fixed income securities that will be eligible for purchase by the Funds include
investment grade corporate debt securities, those rated BBB or better by
Standard & Poor's Ratings Group ("S&P") or Baa or better by Moody's Investors
Service, Inc. ("Moody's). Securities rated BBB by S&P are considered investment
grade, but Moody's considers securities rated Baa to have speculative
characteristics.
The Funds reserve the right to invest in securities rated lower than BB by S&P
or lower than Baa by Moody's. Lower-rated securities generally offer a higher
current yield than that available for higher grade issues. However, lower-rated
securities involve higher risks, in that they are especially subject to adverse
changes in general economic conditions and in the industries in which the
issuers are engaged, to changes in the financial condition of the issuers and to
price fluctuations in response to changes in interest rates. During periods of
economic downturn or rising interest rates, highly leveraged issuers may
experience financial stress which could adversely affect their ability to make
payments of interest and principal and increase the possibility of default. In
addition, the market for lower-rated debt securities has expanded rapidly in
recent years, and its growth paralleled a long economic expansion. At times in
recent years, the prices of many lower-rated debt securities declined
substantially, reflecting an expectation that many issuers of such securities
might experience financial difficulties. As a result, the yields on lower-rated
debt securities rose dramatically, but such higher yields did not reflect the
value of the income stream that holders of such securities expected, but rather,
the risk that holders of such securities could lose a substantial portion of
their value as a result of the issuers' financial restructuring or default.
There can be no assurance that such declines will not recur. The market for
lower-rated debt issues generally is thinner and less active than that for
higher quality securities, which may limit a Fund's ability to sell such
securities at fair value in response to changes in the economy or financial
markets. Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may also decrease the values and liquidity of lower-rated
securities, especially in a thinly traded market.
Lower-rated debt obligations also present risks based on payment expectations.
If an issuer calls the obligation for redemption, a Fund may have to replace the
security with a lower-yielding security, resulting in a decreased return for
investors. Also, as the principal value of bonds moves inversely with movements
in interest rates, in the event of rising interest rates the value of the
securities held by a Fund may decline proportionately more than a Fund
consisting of higher-rated securities. If a Fund experiences unexpected net
redemptions, it may be forced to sell its higher-rated bonds, resulting in a
decline in the overall credit quality of the securities held by the Fund and
increasing the exposure of the Fund to the risks of lower-rated securities.
Ratings of debt securities represent the rating agencies' opinions regarding
their quality, are not a guarantee of quality and may be reduced after the Fund
has acquired the security. If a security's rating is reduced while it is held by
the Fund, the Advisor will consider whether the Fund should continue to hold the
security but is not required to dispose of it. Credit ratings attempt to
evaluate the safety of principal and interest payments and do not evaluate the
risks of fluctuations in market value. Also, rating agencies may fail to make
timely changes in credit ratings in response to subsequent events, so that an
issuer's current financial conditions may be
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better or worse than the rating indicates. The ratings for debt securities are
described in Appendix A.
Fixed income securities with longer maturities generally entail greater risk
than those with shorter maturities.
U.S. GOVERNMENT SECURITIES. U.S. Government securities in which the Funds may
invest include direct obligations issued by the U.S. Treasury, such as Treasury
bills, certificates of indebtedness, notes and bonds. U.S. Government agencies
and instrumentalities that issue or guarantee securities include, but are not
limited to, the Federal Housing Administration, Federal National Mortgage
Association, Federal Home Loan Banks, Government National Mortgage Association,
International Bank for Reconstruction and Development and Student Loan Marketing
Association.
All Treasury securities are backed by the full faith and credit of the United
States. Obligations of U.S. Government agencies and instrumentalities may or may
not be supported by the full faith and credit of the United States. Some, such
as the Federal Home Loan Banks, are backed by the right of the agency or
instrumentality to borrow from the Treasury. Others, such as securities issued
by the Federal National Mortgage Association, are supported only by the credit
of the instrumentality and not by the Treasury. If the securities are not backed
by the full faith and credit of the United States, the owner of the securities
must look principally to the agency issuing the obligation for repayment and may
not be able to assert a claim against United States in the event that the agency
or instrumentality does not meet its commitment. See Appendix A for a
description of corporate bond ratings.
SHORT-TERM INVESTMENTS
Each Fund may invest in any of the following securities and instruments:
CERTIFICATES OF DEPOSIT, BANKER'S ACCEPTANCES AND TIME DEPOSITS. Each Fund may
hold certificates of deposit, bankers' acceptances and time deposits.
Certificates of deposit are negotiable certificates issued against funds
deposited in a commercial bank for a definite period of time and earning a
specified return. Bankers' acceptances are negotiable drafts or bills of
exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning in effect that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Certificates of deposit and bankers' acceptances acquired by a Fund will be
dollar-denominated obligations of domestic banks, savings and loan associations
or financial institutions which, at the time of purchase, have capital, surplus
and undivided profits in excess of $100 million (including assets of both
domestic and foreign branches), based on latest published reports, or less than
$100 million if the principal amount of such bank obligations are fully insured
by the U.S. Government.
In addition to buying certificates of deposit and bankers' acceptances, each
Fund also may make interest-bearing time or other interest-bearing deposits in
commercial or savings banks. Time
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deposits are non-negotiable deposits maintained at a banking institution for a
specified period of time at a specified interest rate.
COMMERCIAL PAPER AND SHORT-TERM NOTES. Each Fund may invest a portion of its
assets in commercial paper and short-term notes. Commercial paper consists of
unsecured promissory notes issued by corporations. Commercial paper and
short-term notes will normally have maturities of less than nine months and
fixed rates of return, although such instruments may have maturities of up to
one year.
Commercial paper and short-term notes will consist of issues rated at the time
of purchase "A-2" or higher by S&P, "Prime-1" or "Prime-2" by Moody's, or
similarly rated by another nationally recognized statistical rating organization
or, if unrated, will be determined by Rochdale to be of comparable quality. See
Appendix B for a description of commercial paper ratings.
FOREIGN INVESTMENT AND CURRENCIES.
The Funds may invest in securities of foreign issuers that are not publicly
traded in the United States. The Funds may also invest in Depositary Receipts,
purchase and sell foreign currency on a spot basis, and enter into forward
currency contracts (see "Forward Currency Contracts," below).
DEPOSITARY RECEIPTS. The Funds may invest in securities of foreign issuers in
the form of American Depositary Receipts ("ADRs"), European Depositary Receipts
("EDRs"), Global Depositary Receipts ("GDRs") or other securities convertible
into securities of foreign issuers. These securities may not necessarily be
denominated in the same currency as the securities for which they may be
exchanged. The Funds may also hold American Depositary Shares ("ADSs"), which
are similar to ADRs. ADRs and ADSs are typically issued by an American bank or
trust company and evidence ownership of underlying securities issued by a
foreign corporation. EDRs, which are sometimes referred to as Continental
Depositary Receipts ("CDRs"), are receipts issued in Europe, typically by
foreign banks and trust companies, that evidence ownership of either foreign or
domestic securities. Generally, ADRs in registered form are designed for use in
U.S. securities markets.
RISKS OF INVESTING IN FOREIGN SECURITIES. Investments in foreign securities
involve certain inherent risks, including the following:
POLITICAL AND ECONOMIC FACTORS. Individual foreign economies of certain
countries may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, and diversification and balance of
payments position. The internal politics of some foreign countries may not be as
stable as those of the United States. Governments in some foreign countries also
continue to participate to a significant degree, through ownership interest or
regulation, in their respective economies. Action by these governments could
include restrictions on foreign investment, nationalization, expropriation of
goods or imposition of taxes, and could have a significant effect on market
prices of securities and payment of interest. The economies of many foreign
countries
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are heavily dependent upon international trade and are affected by the trade
policies and economic conditions of their trading partners. If these trading
partners enacted protectionist trade legislation, it could have a significant
adverse effect upon the securities markets of such countries.
CURRENCY FLUCTUATIONS. The Funds may invest in securities denominated in foreign
currencies. A change in the value of any such currency against the U.S. dollar
will result in a corresponding change in the U.S. dollar value of a Fund's
assets denominated in that currency. Such changes will also affect a Fund's
income. The value of a Fund's assets may also be affected significantly by
currency restrictions and exchange control regulations enacted from time to
time.
EURO CONVERSION. Several European countries adopted a single uniform currency
known as the "Euro," effective January 1, 1999. The Euro conversion, that will
take place over a several-year period, could have potential adverse effects on a
Fund's ability to value its fund holdings in foreign securities, and could
increase the costs associated with a Fund's operations. The Funds and Rochdale
are working with providers of services to the Funds in the areas of clearance
and settlement of trades to avoid any material impact on the Funds due to the
Euro conversion; there can be no assurance, however, that the steps taken will
be sufficient to avoid any adverse impact on a Fund.
MARKET CHARACTERISTICS. Rochdale expects that many foreign securities in which a
Fund invests will be purchased in over-the-counter markets or on exchanges
located in the countries in which the principal offices of the issuers of the
various securities are located, if that is the best available market. Foreign
exchanges and markets may be more volatile than those in the United States.
Though growing, they usually have substantially less volume than U.S. markets,
and a Fund's foreign securities may be less liquid and more volatile than U.S.
securities. Also, settlement practices for transactions in foreign markets may
differ from those in United States markets, and may include delays beyond
periods customary in the United States. Foreign security trading practices,
including those involving securities settlement where Fund assets may be
released prior to receipt of payment or securities, may expose a Fund to
increased risk in the event of a failed trade or the insolvency of a foreign
broker-dealer.
LEGAL AND REGULATORY MATTERS. Certain foreign countries may have less
supervision of securities markets, brokers and issuers of securities, and less
financial information available to issuers, than is available in the United
States.
TAXES. The interest and dividends payable on some of a Fund's foreign fund
securities may be subject to foreign withholding taxes, thus reducing the net
amount of income available for distribution to Fund shareholders.
COSTS. To the extent that a Fund invests in foreign securities, its expense
ratio is likely to be higher than those of investment companies investing only
in domestic securities, since the cost of maintaining the custody of foreign
securities is higher.
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EMERGING MARKETS. Some of the securities in which a Fund may invest may be
located in developing or emerging markets, which entail additional risks,
including less social, political and economic stability; smaller securities
markets and lower trading volume, which may result in less liquidity and greater
price volatility; national policies that may restrict a Fund's investment
opportunities, including restrictions on investment in issuers or industries, or
expropriation or confiscation of assets or property; and less developed legal
structures governing private or foreign investment.
OPTIONS AND FUTURES STRATEGIES
Each Fund may purchase put and call options, engage in the writing of covered
call options and secured put options, and employ a variety of other investment
techniques. Specifically, a Fund may engage in the purchase and sale of options
on securities and stock indices, index future contracts and options on such
futures, all as described more fully below. Such investment policies and
techniques may involve a greater degree of risk than those inherent in more
conservative investment approaches. The Funds will not engage in such
transactions for the purposes of speculation or leverage.
OPTIONS ON SECURITIES. To hedge against adverse market shifts, a Fund may
purchase put and call options on securities held in its fund. In addition, a
Fund may seek to increase its income in an amount designed to meet operating
expenses or may hedge a portion of its fund investments through writing (that
is, selling) "covered" put and call options. A put option provides its purchaser
with the right to compel the writer of the option to purchase from the option
holder an underlying security at a specified price at any time during or at the
end of the option period. In contrast, a call option gives the purchaser the
right to buy the underlying security covered by the option from the writer of
the option at the stated exercise price. A covered call option contemplates
that, for so long as a Fund is obligated as the writer of the option, it will
own (1) the underlying securities subject to the option or (2) securities
convertible into, or exchangeable without the payment of any consideration for,
the securities subject to the option. The value of the underlying securities on
which covered call options will be written at any one time by a Fund will not
exceed 25% of the Fund's total assets. A Fund will be considered "covered" with
respect to a put option it writes if, so long as it is obligated as the writer
of a put option, it segregates liquid assets that are acceptable to the
appropriate regulatory authority.
Each Fund may purchase options on securities that are listed on securities
exchanges or that are traded over-the-counter ("OTC"). As the holder of a put
option, a Fund has the right to sell the securities underlying the option, and
as the holder of a call option, a Fund has the right to purchase the securities
underlying the option, in each case at the option's exercise price at any time
prior to, or on, the option's expiration date. A Fund may choose to exercise the
options it holds, permit them to expire or terminate them prior to their
expiration by entering into closing sale transactions. In entering into a
closing sale transaction, a Fund would sell an option of the same series as the
one it has purchased.
A Fund receives a premium when it writes call options, which increases the
Fund's return on the underlying security in the event the option expires
unexercised or is closed out at a profit. By
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writing a call, a Fund limits its opportunity to profit from an increase in the
market value of the underlying security above the exercise price of the option
for as long as the Fund's obligation as writer of the option continues. A Fund
receives a premium when it writes put options, which increases the Fund's return
on the underlying security in the event the option expires unexercised or is
closed out at a profit. By writing a put, a Fund limits its opportunity to
profit from an increase in the market value of the underlying security above the
exercise price of the option for as long as the Fund's obligation as writer of
the option continues. Thus, in some periods, a Fund will receive less total
return and in other periods greater total return from its hedged positions than
it would have received from its underlying securities if unhedged.
In purchasing a put option, a Fund seeks to benefit from a decline in the market
price of the underlying security, whereas in purchasing a call option, a Fund
seeks to benefit from an increase in the market price of the underlying
security. If an option purchased is not sold or exercised when it has remaining
value, or if the market price of the underlying security remains equal to or
greater than the exercise price, in the case of a put, or remains equal to or
below the exercise price, in the case of a call, during the life of the option,
a Fund will lose its investment in the option. For the purchase of an option to
be profitable, the market price of the underlying security must decline
sufficiently below the exercise price, in the case of a put, and must increase
sufficiently above the exercise price, in the case of a call, to cover the
premium and transaction costs. Because option premiums paid by a Fund are small
in relation to the market value of the investments underlying the options,
buying options can result in large amounts of leverage. The leverage offered by
trading in options could cause a Fund's net asset value to be subject to more
frequent and wider fluctuations than would be the case if the Fund did not
invest in options.
OTC OPTIONS. OTC options differ from exchange-traded options in several
respects. They are transacted directly with dealers and not with a clearing
corporation, and there is a risk of non-performance by the dealer. However, the
premium is paid in advance by the dealer. OTC options are available for a
greater variety of securities and foreign currencies, and in a wider range of
expiration dates and exercise prices than exchange-traded options. Since there
is no exchange, pricing is normally done by reference to information from a
market maker, which information is carefully monitored or caused to be monitored
by Rochdale and verified in appropriate cases.
A writer or purchaser of a put or call option can terminate it voluntarily only
by entering into a closing transaction. In the case of OTC options, there can be
no assurance that a continuous liquid secondary market will exist for any
particular option at any specific time. Consequently, a Fund may be able to
realize the value of an OTC option it has purchased only by exercising it or
entering into a closing sale transaction with the dealer that issued it.
Similarly, when a Fund writes an OTC option, it generally can close out that
option prior to its expiration only by entering into a closing purchase
transaction with the dealer to which it originally wrote the option. If a
covered call option writer cannot effect a closing transaction, it cannot sell
the underlying security or foreign currency until the option expires or the
option is exercised. Therefore, the writer of a covered OTC call option may not
be able to sell an underlying security even though it might otherwise be
advantageous to do so. Likewise, the writer of a covered OTC put option may be
unable to sell the securities pledged to secure the put for other investment
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purposes while it is obligated as a put writer. Similarly, a purchaser of an OTC
put or call option might also find it difficult to terminate its position on a
timely basis in the absence of a secondary market.
Each Fund may purchase and write OTC put and call options in negotiated
transactions. The staff of the SEC has previously taken the position that the
value of purchased OTC options and the assets used as "cover" for written OTC
options are illiquid securities and, as such, are to be included in the
calculation of a Fund's 15% limitation on illiquid securities. However, the
staff has eased its position somewhat in certain limited circumstances. A Fund
will attempt to enter into contracts with certain dealers with which it writes
OTC options. Each such contract will provide that a Fund has the absolute right
to repurchase the options it writes at any time at a repurchase price which
represents the fair market value, as determined in good faith through
negotiation between the parties, but which in no event will exceed a price
determined pursuant to a formula contained in the contract. Although the
specific details of such formula may vary among contracts, the formula will
generally be based upon a multiple of the premium received by a Fund for writing
the option, plus the amount, if any, of the option's intrinsic value. The
formula will also include a factor to account for the difference between the
price of the security and the strike price of the option. If such a contract is
entered into, a Fund will count as illiquid only the initial formula price minus
the option's intrinsic value. Each Fund will enter into such contracts only with
primary U.S. Government securities dealers recognized by Federal Reserve Banks.
Moreover, such primary dealers will be subject to the same standards as are
imposed upon dealers with which a Fund enters into repurchase agreements.
STOCK INDEX OPTIONS. In seeking to hedge all or a portion of its investment, a
Fund may purchase and write put and call options on stock indices listed on
securities exchanges.
A stock index measures the movement of a certain group of stocks by assigning
relative values to the securities included in the index. Options on stock
indices are generally similar to options on specific securities. Unlike options
on specific securities, however, options on stock indices do not involve the
delivery of an underlying security; the option in the case of an option on a
stock index represents the holder's right to obtain from the writer in cash a
fixed multiple of the amount by which the exercise price exceeds (in the case of
a put) or is less than (in the case of a call) the closing value of the
underlying stock index on the exercise date.
When a Fund writes an option on a stock index, it will segregate liquid assets
in an amount equal to the market value of the option, and will maintain liquid
assets with a value sufficient at all times to cover its potential obligations
while the option is open.
Stock index options are subject to position and exercise limits and other
regulations imposed by the exchange on which they are traded. If a Fund writes a
stock index option, it may terminate its obligation by effecting a closing
purchase transaction, which is accomplished by purchasing an option of the same
series as the option previously written. The ability of a Fund to engage in
closing purchase transactions with respect to stock index options depends on the
existence of a liquid secondary market. Although a Fund generally purchases or
writes stock index options only if a liquid secondary market for the options
purchased or sold appears to exist, no such
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secondary market may exist, or the market may cease to exist at some future
date, for some options. No assurance can be given that a closing purchase
transaction can be effected when a Fund desires to engage in such a transaction.
RISKS RELATING TO PURCHASE AND SALE OF OPTIONS ON STOCK INDICES. Purchase and
sale of options on stock indices by a Fund are subject to certain risks that are
not present with options on securities. Because the effectiveness of purchasing
or writing stock index options as a hedging technique depends upon the extent to
which price movements in a Fund's fund correlate with price movements in the
level of the index rather than the price of a particular stock, whether the Fund
will realize a gain or loss on the purchase or writing of an option on a stock
index depends upon movements in the level of stock prices in the stock market
generally or, in the case of certain indices, in an industry or market segment,
rather than movements in the price of a particular stock. Accordingly,
successful use by a Fund of options on stock indices will be subject to the
ability of Rochdale to correctly predict movements in the direction of the stock
market generally or of a particular industry. This requires different skills and
techniques than predicting changes in the price of individual stocks. In the
event Rochdale is unsuccessful in predicting the movements of an index, a Fund
could be in a worse position than had no hedge been attempted.
Stock index prices may be distorted if trading of certain stocks included in the
index is interrupted. Trading in stock index options also may be interrupted in
certain circumstances, such as if trading were halted in a substantial number of
stocks included in the index. If this occurred, a Fund would not be able to
close out options which it had purchased or written and, if restrictions on
exercise were imposed, might be unable to exercise an option it holds, which
could result in substantial losses to the Fund. However, it will be each Fund's
policy to purchase or write options only on indices which include a sufficient
number of stocks so that the likelihood of a trading halt in the index is
minimized.
FUTURES CONTRACTS. Each Fund may purchase and sell stock index futures contracts
and interest rate futures contracts ("futures contracts"). The purpose of the
acquisition or sale of a futures contract by a Fund is to hedge against
fluctuations in the value of its fund without actually buying or selling
securities. The futures contracts in which a Fund may invest have been developed
by and are traded on national commodity exchanges. A Fund may assume both "long"
and "short" positions with respect to futures contracts. A long position
involves entering into a futures contract to buy a commodity, whereas a short
position involves entering into a futures contract to sell a commodity.
A stock index futures contract is a bilateral agreement pursuant to which one
party agrees to accept, and the other party agrees to make, delivery of an
amount of cash equal to a specified dollar amount times the difference between
the stock index value at the close of trading of the contract and the price at
which the futures contract is originally struck. No physical delivery of the
stocks comprising the index is made. Generally, contracts are closed out prior
to the expiration date of the contract.
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An interest rate futures contract is a bilateral agreement pursuant to which one
party agrees to make, and the other party agrees to accept, delivery of a
specified type of debt security at a specified future time and at a specified
price. Although such futures contracts by their terms call for actual delivery
or acceptance of debt securities, in most cases, the contracts are closed out
before the settlement date without the making or taking of delivery.
The purpose of trading futures contracts is to protect a Fund from fluctuations
in value of its investment securities without necessarily buying or selling the
securities. Because the value of a Fund's investment securities will exceed the
value of the futures contracts sold by it, an increase in the value of the
futures contracts could only mitigate, but not totally offset, the decline in
the value of the Fund's assets. No consideration is paid or received by a Fund
upon trading a futures contract. Instead, upon entering into a futures contract,
a Fund is required to deposit an amount of cash or U.S. Government securities
generally equal to 10% or less of the contract value. This amount is known as
"initial margin" and is in the nature of a performance bond or good faith
deposit on the contract that is returned to a Fund upon termination of the
futures contract, assuming that all contractual obligations have been satisfied;
the broker will have access to amounts in the margin account if the Fund fails
to meet its contractual obligations. Subsequent payments, known as "variation
margin," to and from the broker, will be made daily as the price of the currency
or securities underlying the futures contract fluctuates, making the long and
short positions in the futures contract more or less valuable, a process known
as "marking-to-market." At any time prior to the expiration of a futures
contract, a Fund may elect to close a position by taking an opposite position,
which will operate to terminate the Fund's existing position in the contract.
Each short position in a futures contract entered into by a Fund is secured by
the Fund's ownership of underlying securities. A Fund does not use leverage when
it enters into long futures contracts; the Fund segregates, with respect to each
of its long positions, liquid assets having a value equal to the underlying
commodity value of the contract.
Each Fund may trade futures contracts to the extent permitted under rules and
interpretations adopted by the Commodity Futures Trading Commission (the
"CFTC"). U.S. futures contracts have been designed by exchanges that have been
designated as "contract markets" by the CFTC, and must be executed through a
futures commission merchant, or brokerage firm, that is a member of the relevant
contract market. Futures contracts trade on a number of contract markets, and,
through their clearing corporations, the exchanges guarantee performance of the
contracts as between the clearing members of the exchange.
Each Fund intends to comply with CFTC regulations and avoid "commodity pool
operator" or "commodity trading advisor" status. These regulations require that
a Fund use futures positions (a) for "bona fide hedging purposes" (as defined in
the regulations) or (b) for other purposes so long as aggregate initial margins
and premiums required in connection with non-hedging positions do not exceed 5%
of the liquidation value of a Fund's fund.
RISKS OF TRANSACTIONS IN FUTURES CONTRACTS. There are several risks in using
futures contracts as hedging devices. First, all participants in the futures
market are subject to initial margin and
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variation margin requirements. Rather than making additional variation margin
payments, investors may close the contracts through offsetting transactions
which could distort the normal relationship between the index or security and
the futures market. Second, the margin requirements in the futures market are
lower than margin requirements in the securities market, and as a result the
futures market may attract more speculators than does the securities market.
Increased participation by speculators in the futures market may also cause
temporary price distortions. Because of possible price distortion in the futures
market and because of imperfect correlation between movements in stock indices
or securities and movements in the prices of futures contracts, even a correct
forecast of general market trends may not result in a successful hedging
transaction over a very short period.
Another risk arises because of imperfect correlation between movements in the
value of the futures contracts and movements in the value of securities subject
to the hedge. With respect to stock index futures contracts, the risk of
imperfect correlation increases as the composition of a Fund's fund diverges
from the securities included in the applicable stock index. It is possible that
a Fund might sell stock index futures contracts to hedge against a decline in
the market, only to have the market advance and the value of securities held by
the Fund decline. If this occurred, a Fund would lose money on the contracts and
also experience a decline in the value of its fund securities. While this could
occur, Rochdale believes that over time the value of a Fund will tend to move in
the same direction as the market indices and will attempt to reduce this risk,
to the extent possible, by entering into futures contracts on indices whose
movements they believe will have a significant correlation with movements in the
value of the fund securities sought to be hedged.
Successful use of futures contracts by a Fund is subject to the ability of
Rochdale to predict correctly movements in the direction of the market. If a
Fund has hedged against the possibility of a decline in the value of the stocks
it holds and stock prices increase instead, the Fund would lose part or all of
the benefit of the increased value of its security which it has hedged because
it will have offsetting losses in its futures positions. In addition, in such
situations, if a Fund has insufficient cash, it may have to sell securities to
meet daily variation margin requirements. Such sales of securities may, but will
not necessarily, be at increased prices which reflect the rising market. A Fund
may have to sell securities at a time when it may be disadvantageous to do so.
LIQUIDITY OF FUTURES CONTRACTS. Each Fund may elect to close some or all of its
contracts prior to expiration. The purpose of making such a move would be to
reduce or eliminate the hedge position held by a Fund. A Fund may close its
positions by taking opposite positions. Final determinations of variation margin
are then made, additional cash as required is paid by or to a Fund, and the Fund
realizes a loss or a gain. Positions in futures contracts may be closed only on
an exchange or board of trade providing a secondary market for such futures
contracts. Although each Fund intends to enter into futures contracts only on
exchanges or boards of trade where there appears to be an active secondary
market, there is no assurance that a liquid secondary market will exist for any
particular contract at any particular time.
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In addition, most domestic futures exchanges and boards of trade limit the
amount of fluctuation permitted in futures contract prices during a single
trading day. The daily limit establishes the maximum amount that the price of a
futures contract may vary either up or down from the previous day's settlement
price at the end of a trading session. Once the daily limit has been reached in
a particular contract, no trades may be made that day at a price beyond that
limit. The daily limit governs only price movement during a particular trading
day and therefore does not limit potential losses because the limit may prevent
the liquidation of unfavorable positions. It is possible that futures contract
prices could move to the daily limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of futures positions
and subjecting some futures traders to substantial losses. In such event, it
will not be possible to close a futures position and, in the event of adverse
price movements, a Fund would be required to make daily cash payments of
variation margin. In such circumstances, an increase in the value of the portion
of the fund being hedged, if any, may partially or completely offset losses on
the futures contract. However, as described above, there is no guarantee that
the price of the securities being hedged will, in fact, correlate with the price
movements in the futures contract and thus provide an offset to losses on a
futures contract.
Investments in futures contracts by their nature tend to be more short-term than
other securities investments made by a Fund. A Fund's ability to make such
investments, therefore, may result in an increase in fund activity and thereby
may result in the payment of additional transaction costs.
FORWARD CURRENCY CONTRACTS
Each Fund may enter into forward currency contracts in anticipation of changes
in currency exchange rates. A forward currency contract is an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. For example, a Fund might purchase a
particular currency or enter into a forward currency contract to preserve the
U.S. dollar price of securities it intends to or has contracted to purchase.
Alternatively, it might sell a particular currency on either a spot or forward
basis to hedge against an anticipated decline in the dollar value of securities
it intends to or has contracted to sell. Although this strategy could minimize
the risk of loss due to a decline in the value of the hedged currency, it could
also limit any potential gain from an increase in the value of the currency.
SWAP CONTRACTS
TYPES OF SWAPS. The Funds may use the following: (i) Long equity swap contracts:
where a Fund pays a fixed rate plus the negative performance, if any, and
receives the positive performance, if any, of an index or basket of securities;
(ii) Short equity swap contracts: where a Fund receives a fixed rate plus the
negative performance, if any, and pays the positive performance of an index or
basket of securities; (iii) Contracts for differences: equity swaps that contain
both a long and short equity component; (iv) Interest rate swap contracts: where
a Fund exchanges fixed interest payments for floating payments or vice versa;
(v) Currency swap contracts: where a Fund exchanges one currency for another at
a forward exchange rate; and (vi) other similar contractual agreements to
exchange credit obligations.
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USES. The Funds may use swaps for (i) various reasons, including, but not
limited to traditional hedging purposes - short equity swap contracts used to
hedge against an equity risk already present in a Fund; (ii) anticipatory
purchase hedging purposes - where a Fund that anticipates significant cash
purchase transactions enters into long equity swap contracts to obtain market
exposure until such a time where direct investment becomes possible or can be
made efficiently; (iii) anticipatory redemption hedging purposes - where a Fund
that expects significant demand for redemptions enters into short equity swap
contracts, to allow it to dispose of securities in a more orderly fashion; (iv)
direct investment - where a Fund purchases (particularly long equity swap
contracts in place of investing directly in securities; (v) risk management
where a Fund uses equity swap contracts to adjust the weight of the Fund to a
level the Advisor feels is the optimal exposure to individual markets, sectors
and equities or where the Fund uses currency swap contracts to capture
inefficiencies in foreign exchange rates or to minimize exposure to the purchase
price of a foreign security held by the Fund or where a Fund uses interest rate
swap contracts to exchange a disadvantageous interest rate (whether floating or
fixed) for a different interest rate.
LIMITATIONS ON USE. There is generally no limit on the use of swaps except to
the extent such swaps are subject to the liquidity requirement of a Fund.
INVESTMENT RESTRICTIONS
The following policies and investment restrictions have been adopted by each
Fund and (unless otherwise noted) are fundamental and cannot be changed without
the affirmative vote of a majority of the Fund's outstanding voting securities
as defined in the Investment Company Act.
A Fund may not:
1. Make loans to others, except (a) through the purchase of debt securities in
accordance with its investment objectives and policies, (b) through the lending
of fund securities, or (c) to the extent the entry into a repurchase agreement
is deemed to be a loan.
2. (a) Borrow money, except temporarily for extraordinary or emergency purposes
from a bank and then not in excess of 10% of total assets (at the lower of cost
or fair market value; any such borrowing will be made only if immediately
thereafter there is an asset coverage of at least 300% of all borrowings and no
investments may be made while any borrowings are in excess of 5% of total
assets).
(b) Mortgage, pledge or hypothecate any of its assets except in connection
with any such borrowings.
3. Purchase securities on margin, participate on a joint or joint and several
basis in any securities trading account, or underwrite securities, except that
this restriction does not preclude a Fund from obtaining such short-term credit
as may be necessary for the clearance of purchases and sales of its Fund
securities.
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4. Purchase or sell real estate, or commodities or commodity contracts, except
that a Fund may purchase or sell currencies (including forward currency exchange
contracts), futures contracts, and related options.
5. Invest 25% or more of the market value of its assets in the securities of
companies engaged in any one industry, except that this restriction does not
apply to investment in the securities of the U.S. Government, its agencies or
instrumentalities and except with respect to the Nasdaq Leaders Fund which may
be more heavily concentrated (i.e., more than 25%) in certain industries, such
as computer hardware and software, telecommunications, retail/wholesale trade,
and biotechnology
6. Issue senior securities, as defined in the Investment Company Act except that
this restriction shall not be deemed to prohibit a Fund from (a) making any
permitted borrowings, mortgages or pledges, (b) entering into repurchase
transactions, or (c) engaging in options or futures transactions.
7. Invest in any issuer for purposes of exercising control or management.
8. With respect to 75% of its total assets, invest more than 5% of its total
assets in securities of a single issuer or hold more than 10% of the voting
securities of such issuer, except that this restriction does not apply to
investment in the securities of the U.S. Government, its agencies or
instrumentalities.
Each Fund observes the following policies, which are not deemed fundamental and
which may be changed without shareholder vote. A Fund may not:
9. Invest in securities of other investment companies except as provided for in
the Investment Company Act.
10. Invest, in the aggregate, more than 15% of its net assets in securities with
legal or contractual restrictions on resale, securities which are not readily
marketable, and repurchase agreements with more than seven days to maturity.
If a percentage restriction set forth in the prospectus or in this SAI is
adhered to at the time of investment, a subsequent increase or decrease in a
percentage resulting from a change in the values of assets will not constitute a
violation of that restriction, except with respect to borrowing and illiquid
securities, or as otherwise specifically noted.
DISTRIBUTIONS AND TAX INFORMATION
DISTRIBUTIONS
Dividends from net investment income and distributions from net profits from the
sale of securities are generally made annually by the Funds to the Companies
separate accounts. Annual
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<PAGE>
distributions of any undistributed net investment income by the Funds is
expected on or about December 31 of each year. Any net capital gains realized
through the one-year period ended October 31 of each year will also be
distributed by December 31 of each year.
Distributions are automatically reinvested in shares of the Fund making the
distribution and not cash unless a Company elects to have distributions made in
cash.
Each distribution by a Fund will be accompanied by a brief explanation of the
form and character of the distribution. In January of each year the Funds will
issue to each shareholder a statement of the federal income tax status of all
distributions made during the preceding calendar year.
TAX INFORMATION
Each Fund is treated as a separate entity for federal income tax purposes. Each
Fund intends to continue to qualify and elect to be treated as a "regulated
investment company" under Subchapter M of the Internal Revenue Code (the
"Code"), provided that it complies with all applicable requirements regarding
the source of its income, diversification of its assets, and timing of
distributions. It is each Fund's policy to distribute to the Companies separate
accounts, all of its investment company taxable income and any net realized
capital gains for each fiscal year in a manner that complies with the
distribution requirements of the Code, so that the Fund will not be subject to
any federal income tax or excise taxes based on net income. To avoid the excise
tax, each Fund must also distribute (or be deemed to have distributed) by
December 31 of each calendar year (i) at least 98% of its ordinary income for
such year, (ii) at least 98% of the excess of its realized capital gains over
its realized capital losses for the one-year period ending on October 31 during
such year and (iii) any amounts from the prior calendar year that were not
distributed and on which the Fund paid no federal excise tax.
Each Fund's ordinary income generally consists of interest, dividend income and
income from short sales, less expenses. Net realized capital gains for a fiscal
period are computed by taking into account any capital loss carry forward of the
Fund.
Each Fund may write, purchase, or sell certain options, futures, and foreign
currency. Such transactions are subject to special tax rules that may affect the
amount, timing, and character of distributions to shareholders. For example,
such contracts that are "Section 1256 contracts" will be "marked-to-market" for
Federal income tax purposes at the end of each taxable year (i.e., each contract
will be treated as sold for its fair market value on the last day of the taxable
year). In general, unless certain special elections are made, gain or loss from
transactions in such contracts will be 60% long term and 40% short-term capital
gain or loss. Section 1092 of the Code, which applies to certain "straddles,"
may also affect the taxation of a Fund's transactions in options, futures, and
foreign currency contracts. Under Section 1092 of the Code, a Fund may be
required to postpone recognition for tax purposes of losses incurred in certain
of such transactions.
Distributions of net investment income and net short-term capital gains are
taxable to shareholders as ordinary income. In the case of corporate
shareholders, a portion of the
B-20
<PAGE>
distributions may qualify for the intercorporate dividends-received deduction to
the extent a Fund designates the amount distributed as a qualifying dividend.
This designated amount cannot, however, exceed the aggregate amount of
qualifying dividends received by the Fund for its taxable year. The deduction,
if any, may be reduced or eliminated if Fund shares held by a corporate investor
are treated as debt-financed or are held for fewer than 46 days.
Any long-term capital gain distributions are taxable to shareholders as
long-term capital gains, regardless of the length of time they have held their
shares. Capital gains distributions are not eligible for the dividends-received
deduction referred to in the previous paragraph. Distributions of any ordinary
income and net realized capital gains will be taxable as described above,
whether received in shares or in cash. Shareholders who choose to receive
distributions in the form of additional shares will have a cost basis for
federal income tax purposes in each share so received equal to the net asset
value of a share on the reinvestment date. Distributions are generally taxable
when received. However, distributions declared in October, November, or December
to shareholders of record on a date in such a month and paid the following
January are taxable as if received on December 31. Distributions are includable
in alternative minimum taxable income in computing a shareholder's liability for
the alternative minimum tax.
Under the Code, each Fund will be required to report to the Internal Revenue
Service all distributions of ordinary income and capital gains as well as gross
proceeds from the redemption or exchange of Fund shares, except in the case of
exempt shareholders, which includes most corporations. Pursuant to the backup
withholding provisions of the Code, distributions of any taxable income and
capital gains and proceeds from the redemption of a Fund's shares may be subject
to withholding of federal income tax at the current maximum federal tax rate of
31 percent in the case of non-exempt shareholders who fail to furnish the Fund
with their taxpayer identification numbers and with required certifications
regarding their status under the federal income tax law. If the backup
withholding provisions are applicable, any such distributions and proceeds,
whether taken in cash or reinvested in additional shares, will be reduced by the
amounts required to be withheld. Corporate and other exempt shareholders should
provide the Funds with their taxpayer identification numbers or certify their
exempt status in order to avoid possible erroneous application of backup
withholding. Each Fund reserves the right to refuse to open an account for any
person failing to certify the person's taxpayer identification number.
If more than 50% of the value of a Fund's total assets at the close of the
taxable year consists of stock or securities in foreign corporation, the Fund
may elect to pass through to shareholders the right to take the credit for any
foreign taxes paid by the Fund. If a Fund does not qualify for or does not make
the election, only the Fund and not the shareholder may take the credit.
Generally, a credit for foreign taxes may not exceed the portion of the
shareholder's U.S. federal income tax (determined without regard to the
availability of the credit) attributable to his or her total foreign source
taxable income. For this purpose, the portion of distributions paid by a Fund
from foreign source income will be treated as foreign source income. A Fund's
gains from the sale of securities will generally be treated as derived from U.S.
sources, and certain currency fluctuation gains and losses, including
fluctuation gains from foreign currency denominated debt securities, receivables
and payables will be treated as derived from U.S. sources. The limitation
B-21
<PAGE>
on the foreign tax credit is applied separately to foreign source "passive
income," such as the portion of dividends received from a Fund which qualifies
as foreign source income. In addition, the foreign tax credit is allowed to
offset only 90% of the alternative minimum tax imposed on corporations and
individuals. Because of these limitations, shareholders may be unable to claim a
credit for the full amount of their proportionate shares of foreign income taxes
paid by a Fund even if the Fund is eligible and makes the election to pass
through those credits.
The use of hedging strategies, such as entering into forward contracts, involves
complex rules that will determine the character and timing of recognition of the
income received in connection therewith by a Fund. Income from foreign
currencies (except certain gains therefrom that may be excluded by future
regulations) and income from transactions in forward contracts derived by a Fund
with respect to its business of investing in securities or foreign currencies
will qualify as permissible income under Subchapter M of the Code.
Any security or other position entered into or held by a Fund that substantially
diminishes the Fund's risk of loss from any other position held by the Fund may
constitute a "straddle" for federal income tax purposes. In general, straddles
are subject to certain rules that may affect the amount, character and timing of
a Fund's gains and losses with respect to straddle positions by requiring, among
other things, that the loss realized on disposition of one position of a
straddle be deferred until gain is realized on disposition of the offsetting
position; that a Fund's holding period in certain straddle positions not begin
until the straddle is terminated (possibly resulting in the gain being treated
as short-term capital gain rather than long-term capital gain); and that losses
recognized with respect to certain straddle positions, which would otherwise
constitute short-term capital losses, be treated as long-term capital losses.
Different elections are available to the Funds that may mitigate the effects of
the straddle rules.
Certain forward contracts that are subject to Section 1256 of the Code ("Section
1256 Contracts") and that are held by a Fund at the end of its taxable year
generally will be required to be "marked to market" for federal income tax
purposes, that is, deemed to have been sold at market value. Sixty percent of
any net gain or loss recognized on these deemed sales and 60% of any net gain or
loss realized from any actual sales of Section 1256 Contracts will be treated as
long-term capital gain or loss, and the balance will be treated as short-term
capital gain or loss.
Section 988 of the Code contains special tax rules applicable to certain foreign
currency transactions that may affect the amount, timing and character of
income, gain or loss recognized by a Fund. Under these rules, foreign exchange
gain or loss realized with respect to foreign currency forward contracts is
treated as ordinary income or loss. Some part of a Fund's gain or loss on the
sale or other disposition of shares of a foreign corporation may, because of
changes in foreign currency exchange rates, be treated as ordinary income or
loss under Section 988 of the Code rather than as capital gain or loss. Each
Fund will not be subject to corporate income tax in the State of Delaware as
long as it qualifies as a regulated investment company for federal income tax
purposes. Distributions and the transactions referred to in the preceding
paragraphs may be subject to state and local income taxes, and the tax treatment
thereof may differ from the federal income tax treatment.
B-22
<PAGE>
The foregoing discussion of U.S. federal income tax law relates solely to the
application of that law to U.S. citizens or residents and U.S. domestic
corporations, partnerships, trusts, and estates. Each shareholder who is not a
U.S. person should consider the U.S. and foreign tax consequences of ownership
of shares of a Fund, including the possibility that such a shareholder may be
subject to a U.S. withholding tax at a rate of 30 percent (or at a lower rate
under an applicable income tax treaty) on amounts constituting ordinary income.
In addition, the foregoing discussion of tax law is based on existing provisions
of the Code, existing and proposed regulations thereunder, and current
administrative rulings and court decisions, all of which are subject to change.
Any such charges could affect the validity of this discussion. The discussion
also represents only a general summary of tax law and practice currently
applicable to the Funds and certain shareholders therein, and, as such, is
subject to change. In particular, the consequences of an investment in shares of
a Fund under the laws of any state, local or foreign taxing jurisdictions are
not discussed herein. Each prospective investor should consult his or her own
tax advisor to determine the application of the tax law and practice in his or
her own particular circumstances.
TRUSTEES AND EXECUTIVE OFFICERS
The Trustees of the Trust, who were elected for an indefinite term by the
initial shareholders of the Trust, are responsible for the overall management of
the Trust, including general supervision and review of the investment activities
of the Funds. The Trustees, in turn, elect the officers of the Trust, who are
responsible for administering the day-to-day operations of the Trust and its
separate series. The current Trustees and officers, their dates of birth and
affiliations and principal occupations for the past five years are set forth
below.
[Information on Trustees To Be Supplied By Amendment]
* Indicates an "interested person" of the Trust as defined in the Investment
Company Act.
Disinterested Trustees receive an annual retainer of _________and a fee of
_______for each regularly scheduled meeting. Disinterested Trustees are also
reimbursed for expenses in connection with each Board meeting attended. No other
compensation or retirement benefits are received by any Trustee or officer from
the Funds or any other fund of the Trust.
THE FUNDS' INVESTMENT ADVISOR
As stated in the Prospectus, investment advisory services are provided to the
Funds by Rochdale Investment Management Inc. ("Rochdale" or the "Advisor"),
pursuant to an Investment Advisory Agreement ("Advisory Agreement").
The Advisory Agreement continues in effect after its initial two year term from
year to year so long as such continuation is approved at least annually by (1)
the Board of Trustees of the Trust or the vote of a majority of the outstanding
shares of Funds to which the Advisory Agreement applies, and (2) a majority of
the Trustees who are not interested persons of any party to the
B-23
<PAGE>
Advisory Agreement, in each case cast in person at a meeting called for the
purpose of voting on such approval. The Advisory Agreement may be terminated at
any time, without penalty, by either Fund or Rochdale upon sixty days' written
notice and is automatically terminated in the event of its assignment as defined
in the Investment Company Act.
The Advisor has agreed to reduce fees payable to it or reimburse the Fund's
operating expenses to the extent necessary to limit the Fund's ratio of
operating expenses to average net assets to no more than 2.50% annually. Any
such reduction of fees or payment of expenses may be subject to reimbursement by
the Fund within the following three years provided that the Fund is able to do
so and remain in compliance with applicable expense limitations then in effect.
THE FUNDS' ADMINISTRATOR
[This Information To Be Supplied]
The Funds have entered into an administration services agreement
with------------. It provides administration services to mutual funds with
assets of approximately ------billion. The Administration Agreement provides
that the Administrator will prepare and coordinate reports and other materials
supplied to the Trustees; prepare and/or supervise the preparation and filing of
all securities filings, periodic financial reports, prospectuses, statements of
additional information, tax returns, shareholder reports and other regulatory
reports or filings required of the Funds; prepare all required notice filings
necessary to maintain each Fund's ability to sell shares in all states where the
Funds currently do or intend to do business; coordinate the preparation,
printing and mailing of all materials (e.g., annual reports) required to be sent
to shareholders; coordinate the preparation and payment of Fund-related
expenses; monitor and oversee the activities of the Funds' servicing agents
(e.g., transfer agent, custodian, fund accountants, etc.); review and adjust as
necessary each Fund's daily expense accruals; and perform such additional
services as may be agreed upon by the Funds and the Administrator. For its
services, the Administrator receives from the Funds a total annual fee, paid
monthly, in the amount of---------------.
THE FUNDS' DISTRIBUTOR
Rochdale also acts as the Funds' principal underwriter in a continuous public
offering of the Funds' shares. The Distribution Agreement between the Funds and
Rochdale will continue in effect from year to year if approved at least annually
by (i) the Board of Trustees or the vote of a majority of the outstanding shares
of the Fund to which the Distribution Agreement applies (as defined in the
Investment Company Act) and (ii) a majority of the Trustees who are not
interested persons of any such party, in each case cast in person at a meeting
called for the purpose of voting on such approval. The Distribution Agreement
may be terminated without penalty by the parties thereto upon sixty days'
written notice, and is automatically terminated in the event of its assignment
as defined in the Investment Company Act.
B-24
<PAGE>
The Funds have adopted a Distribution Plan in accordance with Rule 12b-1 under
the Investment Company Act. The Plan provides that each Fund will pay a fee to
the Distributor at the annual rate of up to 0.25% of the average daily net
assets of the Fund. The Trustees have determined that no fees will be payable
under the Plan during the year 2000. The fee is paid to the Distributor as
reimbursement for or in anticipation of, expenses incurred for distribution
related activities. Expenses permitted to be paid by the Funds under their Plan
include: preparation, printing and mailing of prospectuses, shareholder reports
such as semi-annual and annual reports, performance reports and newsletters;
sales literature and other promotional material to prospective investors; direct
mail solicitation; advertising; public relations; compensation of sales
personnel, advisors or other third parties for their assistance with respect to
the distribution of the Fund's shares; payments to financial intermediaries for
shareholder support, administrative and accounting services with respect to the
shareholders of the Funds; and such other expenses as may be approved from time
to time by the Board of Trustees.
The Plan allows excess distribution expenses to be carried forward by the
Distributor and resubmitted for payment by a Fund in a subsequent fiscal year
provided that (i) distribution expenses cannot be carried forward for more than
three years following initial submission; (ii) the Board of Trustees has made a
determination at the time of initial submission that the distribution expenses
are appropriate to be carried forward; and (iii) the Board of Trustees makes a
further determination, at the time any distribution expenses which have been
carried forward are resubmitted for payment, to the effect that payment at the
time is appropriate, consistent with the objectives of the Plan and in the
current best interests of shareholders.
EXECUTION OF FUND TRANSACTIONS
Pursuant to the Advisory Agreement, Rochdale will determine which securities are
to be purchased and sold by each Fund and which broker-dealers are eligible to
execute its fund transactions. Purchases and sales of securities in the
over-the-counter market will generally be executed directly with a
"market-maker" unless, in the opinion of Rochdale, a better price and execution
can otherwise be obtained by using a broker for the transaction.
Purchases of fund securities for each Fund also may be made directly from
issuers or from underwriters. Where possible, purchase and sale transactions
will be made through dealers (including banks) which specialize in the types of
securities which a Fund will be holding, unless better executions are available
elsewhere. Dealers and underwriters usually act as principal for their own
account. Purchases from underwriters will include a concession paid by the
issuer to the underwriter and purchases from dealers will include the spread
between the bid and the asked price. If the execution and price offered by more
than one dealer or underwriter are comparable, the order may be allocated to a
dealer or underwriter that has provided research or other services as discussed
below.
In placing fund transactions, Rochdale will use its best efforts to choose a
broker-dealer capable of providing the services necessary to obtain the most
favorable price and execution available.
B-25
<PAGE>
The full range and quality of services available will be considered in making
these determinations, such as the size of the order, the difficulty of
execution, the operational facilities of the firm involved, the firm's risk in
positioning a block of securities, and other factors. In those instances where
it is reasonably determined that more than one broker-dealer can offer the
services needed to obtain the most favorable price and execution available,
consideration may be given to those broker-dealers which furnish or supply
research and statistical information to Rochdale that it may lawfully and
appropriately use in its investment advisory capacities, as well as provide
other services in addition to execution services. Rochdale considers such
information, which is in addition to and not in lieu of the services required to
be performed by it under its Advisory Agreement with the Funds, to be useful in
varying degrees, but of indeterminable value. Fund transactions may be placed
with broker-dealers who sell shares of a Fund subject to rules adopted by the
National Association of Securities Dealers, Inc.
While it is each Fund's general policy to seek first to obtain the most
favorable price and execution available, in selecting a broker-dealer to execute
fund transactions for a Fund, weight may also be given to the ability of a
broker-dealer to furnish brokerage and research services to the Funds, other
funds of the Trust or to Rochdale, even if the specific services were not
imputed just to the Funds and may be useful to Rochdale in advising other
clients. In negotiating commissions with a broker or evaluating the spread to be
paid to a dealer, a Fund may therefore pay a higher commission or spread than
would be the case if no weight were given to the furnishing of these
supplemental services, provided that the amount of such commission or spread has
been determined in good faith by Rochdale to be reasonable in relation to the
value of the brokerage and/or research services provided by such broker-dealer.
The standard of reasonableness is to be measured in light of Rochdale's overall
responsibilities to a Fund.
Investment decisions for each Fund will be made independently from those of
other client accounts or mutual funds managed or advised by Rochdale.
Nevertheless, it is possible that at times identical securities will be
acceptable for both a Fund and one or more of such client accounts or other
Funds. In such event, the position of the Fund and such client account(s) or
other Funds in the same issuer may vary and the length of time that each may
choose to hold its investment in the same issuer may likewise vary. However, to
the extent any of these client accounts or other Funds seek to acquire the same
security as a Fund at the same time, a Fund may not be able to acquire as large
a portion of such security as is desired, or may have to pay a higher price or
obtain a lower yield for such security. Similarly, a Fund may not be able to
obtain as high a price for, or as large an execution of, an order to sell any
particular security at the same time. If one or more of such client accounts or
other Funds simultaneously purchases or sells the same security that a Fund is
purchasing or selling, each day's transactions in such security will be
allocated between such Fund and all such client accounts or other Funds in a
manner deemed equitable by Rochdale, taking into account the respective sizes of
the accounts and the amount being purchased or sold. It is recognized that in
some cases this system could have a detrimental effect on the price or value of
the security insofar as a Fund is concerned. In other cases, however, it is
believed that the ability of a Fund to participate in volume transactions may
produce better executions for the Fund.
B-26
<PAGE>
The Funds do not place securities transactions through brokers in accordance
with any formula, nor do they effect securities transactions through such
brokers solely for selling shares of the Funds, although the Funds may consider
the sale of shares as a factor in allocating brokerage. However, as stated
above, broker-dealers who execute brokerage transactions may effect purchase of
shares of a Fund for their customers.
Subject to overall requirements of obtaining the best combination of price,
execution and research services on a particular transaction, the Funds may place
eligible fund transactions through their affiliated broker-dealer, Rochdale
Securities Corporation, under procedures adopted by the Board of Trustees
pursuant to the Investment Company Act and related rules.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The information provided below supplements the information contained in the
Funds' Prospectus regarding the purchase and redemption of Fund shares.
HOW TO BUY SHARES
Fund Shares of the Funds can only be purchased by the separate accounts of
Insurance Companies.
The public offering price of Fund shares is the net asset value. Each Fund
receives the net asset value. Shares are purchased at the public offering price
next determined after the Transfer Agent receives the order from the Insurance
Company in proper form as discussed in the Funds' Prospectus. In most cases, in
order to receive that day's public offering price, the Transfer Agent must
receive the order in proper form before the close of regular trading on the New
York Stock Exchange ("NYSE"), normally 4:00 p.m., Eastern time. Orders are in
proper form only after funds are converted to U.S. funds.
The NYSE annually announces the days on which it will not be open for trading.
The most recent announcement indicates that it will not be open on the following
days: New Year's Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
However, the NYSE may close on days not included in that announcement.
If you are considering redeeming, exchanging or transferring shares to another
person shortly after purchase, you should pay for those shares with a certified
check to avoid any delay in redemption, exchange or transfer. Otherwise the
Funds may delay payment until the purchase price of those shares has been
collected or, if you redeem by telephone, until 15 days after the purchase date.
To eliminate the need for safekeeping, the Funds will not issue certificates for
shares.
B-27
<PAGE>
The Trust reserves the right in its sole discretion (i) to suspend the continued
offering of the Funds' shares, (ii) to reject purchase orders in whole or in
part when in the judgment of Rochdale such rejection is in the best interest of
a Fund, and (iii) to reduce or waive the minimum for initial and subsequent
investments for certain fiduciary accounts, for employees of Rochdale or under
circumstances where certain economies can be achieved in sales of a Fund's
shares.
HOW TO SELL SHARES
Fund Shares can be sold only by Insurance Company Separate Accounts.
SIGNATURE GUARANTEES
If you sell shares having a net asset value of ___________or greater, a
signature guarantee is required. Certain other transactions also require a
signature guarantee. The Funds may require additional documentation for the sale
of shares by a corporation, partnership, agent or fiduciary, or a surviving
joint owner. Contact Rochdale for details.
Signature guarantees may be obtained from a bank, broker-dealer, credit union
(if authorized under state law), securities exchange or association, clearing
agency or savings institution. A notary public cannot provide a signature
guarantee.
DELIVERY OF REDEMPTION PROCEEDS
Payments to the Companies for shares of a Fund redeemed directly from the Fund
will be made as promptly as possible but no later than seven days after receipt
by the Fund's Transfer Agent of the written request in proper form, with the
appropriate documentation, except that a Fund may suspend the right of
redemption or postpone the date of payment during any period when (a) trading on
the NYSE is restricted as determined by the SEC or the NYSE is closed for other
than weekends and holidays; (b) an emergency exists as determined by the SEC
making disposal of fund securities or valuation of net assets of a Fund not
reasonably practicable; or (c) for such other period as the SEC may permit for
the protection of a Fund's shareholders. Under unusual circumstances, a Fund may
suspend redemptions, or postpone payment for more than seven days, but only as
authorized by SEC rules.
At various times, a Fund may be requested to redeem shares for which it has not
yet received confirmation of good payment; in this circumstance, the Fund may
delay the redemption until payment for the purchase of such shares has been
collected and confirmed to the Fund.
The value of shares on redemption or repurchase may be more or less than the
investor's cost, depending upon the market value of the Fund's fund securities
at the time of redemption or repurchase.
B-28
<PAGE>
REDEMPTIONS-IN-KIND
Each Fund has reserved the right to pay the redemption price of its shares,
either totally or partially, by a distribution in kind of fund securities
(instead of cash). The securities so distributed would be valued at the same
amount as that assigned to them in calculating the net asset value for the
shares being sold. If a shareholder receives a distribution in kind, the
shareholder could incur brokerage or other charges in converting the securities
to cash. The Trust has filed an election under SEC Rule 18f-1 committing to pay
in cash all redemptions by a shareholder of record up to amounts specified by
the rule (approximately $250,000).
DETERMINATION OF SHARE PRICE
As noted in the Prospectus, the net asset value and offering price of shares of
each Fund will be determined once daily at the close of public trading on the
NYSE, normally 4:00 p.m., Eastern time, on each day the NYSE is open for
trading. It is expected that the NYSE will be closed on Saturdays and Sundays
and on New Year's Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas. Each
Fund does not expect to determine the net asset value of its shares on any day
when the NYSE is not open for trading even if there is sufficient trading in its
fund securities on such days to materially affect the net asset value per share.
However, the net asset value of Fund shares may also be determined on days the
NYSE is closed or at times other than 4:00 p.m. if the Board of Trustees decides
it is necessary.
In valuing each Fund's assets for calculating net asset value, readily
marketable fund securities listed on a national securities exchange or NASDAQ
are valued at the last sale price on the business day as of which such value is
being determined. If there has been no sale on such exchange or on NASDAQ on
such day, the security is valued at the closing bid price on such day.
Readily marketable securities traded only in an over-the-counter market and not
on NASDAQ are valued at the current or last bid price. If no bid is quoted on
such day, the security is valued by such method as the Board of Trustees of the
Trust shall determine in good faith to reflect the security's fair value. All
other assets of the Funds are valued in such manner as the Board of Trustees in
good faith deems appropriate to reflect their fair value.
The net asset value per share of each Fund is calculated as follows: all
liabilities incurred or accrued are deducted from the valuation of total assets,
which includes accrued but undistributed income; the resulting net assets are
divided by the number of shares of the Fund outstanding at the time of the
valuation; and the result (adjusted to the nearest cent) is the net asset value
per share.
B-29
<PAGE>
PERFORMANCE INFORMATION
From time to time, a Fund may state its total return in advertisements and
investor communications. Total return may be stated for any relevant period as
specified in the advertisement or communication. Any statements of total return
will be accompanied by information on the Fund's average annual compounded rates
of return over the most recent year and the period from the Fund's inception of
operations. A Fund may also advertise aggregate and average total return
information over different periods of time. A Fund's average annual compounded
rate of return is determined by reference to a hypothetical $1,000 investment
that includes capital appreciation and depreciation for the stated periods,
according to the following formula:
n
P(1+T) = ERV
Where: P = a hypothetical initial purchase order of $1,000 from which the
maximum sales load is deducted
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1,000 purchase at
the end of the period
Aggregate total return is calculated in a similar manner, except that the
results are not annualized. Each calculation assumes that all dividends and
distributions are reinvested at net asset value on the reinvestment dates during
the period.
A Fund's total return may be compared to relevant domestic and foreign indices,
including those published by Lipper Analytical Services, Inc. From time to time,
evaluations of a Fund's performance by independent sources may also be used in
advertisements and in information furnished to present or prospective investors
in the Fund.
Investors should note that the investment results of the Funds will fluctuate
over time, and any presentation of a Fund's total return for any period should
not be considered as a representation of what an investment may earn or what an
investor's total return may be in any future period.
GENERAL INFORMATION
Investors in a Fund will be informed of the Fund's progress through periodic
reports. Financial statements certified by independent public accountants will
be submitted to shareholders at least annually.
[to be supplied by amendment]_______, actsas Custodian of the securities and
other assets of the Funds.
[to be supplied by amendment]______acts as the Funds' transfer and shareholder
service agent.
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<PAGE>
[to be supplied by amendment], is the independent auditor for the Trust.
Lane Steven Bucklan, Esq., Rochdale Investment Management Inc., 570 Lexington
Avenue, New York, NY 10022, is legal counsel to the Trust.
The Trust was organized as a Delaware business trust on March 2, 2000. The
Agreement and Declaration of Trust permits the Board of Trustees to issue a
limited number of full and fractional shares of beneficial interest, without par
value, which may be issued in any number of series. The Board of Trustees may
from time to time issue other series, the assets and liabilities of which will
be separate and distinct from any other series.
Shares issued by the Funds have no preemptive, conversion, or subscription
rights. Shareholders have equal and exclusive rights as to dividends and
distributions as declared by the Funds and to the net assets of the Funds upon
liquidation or dissolution. Each Fund, as a separate series of the Trust, votes
separately on matters affecting only the Fund (e.g., approval of the Advisory
Agreement); all series of the Trust vote as a single class on matters affecting
all series jointly or the Trust as a whole (e.g., election or removal of
Trustees). Voting rights are not cumulative, so that the holders of more than
50% of the shares voting in any election of Trustees can, if they so choose,
elect all of the Trustees. While the Trust is not required and does not intend
to hold annual meetings of shareholders, such meetings may be called by the
Trustees in their discretion, or upon demand by the holders of 10% or more of
the outstanding shares of the Trust, for the purpose of electing or removing
Trustees.
FINANCIAL STATEMENTS
[TO BE SUPPLIED BY AMENDMENT]
APPENDIX A
CORPORATE BOND RATINGS
MOODY'S INVESTORS SERVICES, INC.
Aaa: Bonds which are rated Aaa are judged to be of the best quality and carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin, and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
Aa: Bonds rated Aa are judged to be high quality by all standards. Together with
the Aaa group, they comprise what are generally known as high-grade bonds. They
are rated lower than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation or
B-31
<PAGE>
protective elements may be of greater amplitude or other elements present which
make the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds rated A possess many favorable investment attributes and are to be
considered as supper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa: Bonds rated Baa are considered medium-grade obligations (i.e., they are
neither highly protected nor poorly secured). Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba: Bonds rated Ba are judged to have speculative elements; their future cannot
be considered well-assured. Often the protection of interest and principal
payments may be very moderate, and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position characterizes bonds in
this class.
B: Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or maintenance of other terms of
the contract over any long period of time may be small.
STANDARD & POOR'S RATINGS GROUP
AAA: Debt rated AAA has the highest rating assigned by S&P to a debt obligation.
Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher-rated issues only in small degree.
A: Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB: Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas, it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in the higher-rated categories.
BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB rating.
B-32
<PAGE>
B: Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB- rating.
APPENDIX B
COMMERCIAL PAPER RATINGS
MOODY'S INVESTORS SERVICE, INC.
Prime-1: Issuers (or related supporting institutions) rated "Prime-1" have a
superior ability for repayment of senior short-term debt obligations. "Prime-1"
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries, high
rates of return on funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad margins in earnings
coverage of fixed financial charges and high internal cash generation, and
well-established access to a range of financial markets and assured sources of
alternate liquidity.
Prime-2: Issuers (or related supporting institutions) rated "Prime-2" have a
strong ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternative liquidity is maintained.
STANDARD & POOR'S RATINGS GROUP
A-1: This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign designation.
A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".
B-33
<PAGE>
ROCHDALE INVESTMENT INSURANCE TRUST
FORM N-1A
PART C
Item 23. Financial Statements and Exhibits.
(a) Statement of Assets and Liabilities
Notes to Financial Statements
(To be filed by Amendment)
(b) Exhibits:
(1) Agreement and Declaration of Trust
(2) By-Laws
(3) Voting Trust Agreement -- Not applicable
(4) Specimen Share Certificate-1
(5) Form of Investment Advisory Agreement
(6) Form of Distribution Agreement
(7) Benefit Plan -- Not applicable
(8) Form of Custodian and Transfer Agent Agreements-1
(9) Form of Administration Agreement-1
(10) Consent and Opinion of Counsel as to legality of shares-1
(11) Consent of Accountants-1
(12) All Financial Statements omitted from Item 23 -- Not
applicable
(13) Letter of Understanding relating to initial capital-1
(14) Model Retirement Plan Documents - Not applicable
(15) Form of Plan pursuant to Rule 12b-1-not applicable
(16) Schedule for Computation of Performance Quotations-1
1 To be filed by Amendment
Item 24. Persons Controlled by or under Common Control with Registrant.
As of the date of this Amendment to the Registration Statement, Rochdale
Investment Management serves as the Investment Advisor for Registrant and this
may be deemed to be under common control.
Item 25. Indemnification
Article VII, Section 2 of the Trust's Declaration of Trust provides as follows:
The Trustees shall not be responsible or liable in any event for any
neglect or wrong-doing of any officer, agent, employee, Investment Adviser or
principal underwriter of the Trust, nor shall any Trustee be responsible for the
act or omission of any other Trustee, and the Trust out of its assets shall
indemnify and hold harmless each and every Trustee from and against any and all
claims and demands whatsoever arising out of or related to each Trustee's
performance of his or her duties as a Trustee of the Trust; provided that
nothing herein contained shall indemnify, hold
<PAGE>
harmless or protect any Trustee from or against any liability to the Trust or
any Shareholder to which he or she would otherwise be subject by reason of
wilful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.
Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever issued, executed or done by or on behalf of
the Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been issued, executed or done only in or with
respect to their or his or her capacity as Trustees or Trustee, and such
Trustees or Trustee shall not be personally liable thereon.
Item 26. Business and Other Connections of Investment Adviser.
With respect to the Investment Adviser, the response to this item is
incorporated by reference to the Adviser's Form ADV as amended, File No.
801-27265.
Item 27. Principal Underwriters.
(a) The Registrant's principal underwriter also acts as principal
underwriter for the following investment companies:
Rochdale Investment Trust
(b) The following information is furnished with respect to the officers and
directors of Rochdale Investment Management, Inc.:
(b) The following information is furnished with respect to the officers and
directors of the Advisor and Underwriter. Each such person's principal business
address is 570 Lexington Avenue, New York, NY 10022.
Position and Offices Position
Name and Principal with Principal and Offices
Business Address Underwriter with registrant
- ---------------- ----------- ---------------
Carl Acebes Chairman and Chief Investment None
Trustee Officer
Garrett R. D'Alessandro President and Chief Executive President,
Secretary Officer & Treasurer
Peter J. McGough Vice President None
Andrew Miranda Vice President & Controller None
(c) Not applicable.
Item 28. Location of Accounts and Records.
The accounts, books, and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
<PAGE>
the rules promulgated thereunder are in the possession [To Be Supplied By
Amendment], except those records relating to portfolio transactions and the
basic organizational and Trust documents of the Registrant (see Subsections (2)
(iii). (4), (5), (6), (7), (9), (10) and (11) of Rule 31a-1(b)), which, with
respect to portfolio transactions are kept by the Fund's Advisor at its address
set forth in the prospectus and statement of additional information and with
respect to trust documents by its administrator at _____________________.
Item 29. Management Services.
There are no management-related service contracts not discussed in Parts A
and B.
Item 30. Undertakings
The registrant undertakes to file a post-effective amendment with unaudited
financial statements within four to six months from the effective date of the
Registration Statement, as such requirement and time periods are interpreted by
the staff of the Division of Investment Management.
The registrant undertakes to furnish to each person to whom a prospectus is
delivered a copy of the Fund's latest annual report to shareholders, upon
request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of New York in the State of New York on March 13, 2000.
ROCHDALE INVESTMENT TRUST
By: /s/ Garrett R. D'Alessandro
---------------------------
Garrett R. D'Alessandro
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
/s/ Lane Bucklan Trustee March 13, 2000
- -----------------------------
Lane Bucklan
/s/ Garrett R. D'Alessandro Principal March 13, 2000
- -----------------------------
Garrett R. D'Alessandro
Principal Financial Officer
Exhibit 1.
AGREEMENT AND DECLARATION OF TRUST
==================================
of
ROCHDALE INVESTMENT INSURANCE TRUST
a Delaware Business Trust
Principal Place of Business:
570 Lexington Ave.
New York, NY 10022-6837
<PAGE>
TABLE OF CONTENTS
-----------------
ROCHDALE INVESTMENT INSURANCE TRUST
AGREEMENT AND DECLARATION OF TRUST
Page
----
ARTICLE I Name and Definitions 1
1. Name 1
2. Definitions 1
(a) Trust 1
(b) Trust Property 1
(c) Trustees 1
(d) Shares 2
(e) Shareholder 2
(f) Person 2
(g) Investment Company Act 2
(h) Commission and Principal Underwriter 2
(i) Declaration of Trust 2
(j) By-Laws 2
(k) Interested Person 2
(l) Investment Adviser 2
(m) Series 2
ARTICLE II Purpose of Trust 2
ARTICLE III Shares 3
1. Division of Beneficial Interest 3
2. Ownership of Shares 3
3. Investments in the Trust 4
4. Status of Shares and Limitation of
Personal Liability 4
5. Power of Board of Trustees to Change
Provisions Relating to Shares 4
6. Establishment and Designation of Series 5
(a) Assets With Respect to a Particular Series 5
(b) Liabilities Held With Respect to a
Particular Series 6
(c) Dividends, Distributions, Redemptions
and Repurchases 6
(d) Voting 6
(e) Equality 6
<PAGE>
(f) Fractions 6
(g) Exchange Privilege 6
(h) Combination of Series 7
(i) Elimination of Series 7
7. Indemnification of Shareholders 7
ARTICLE IV The Board of Trustees 7
1. Number, Election and Tenure 7
2. Effect of Death, Resignation, etc., of a Trustee 8
3. Powers 8
4. Payment of Expenses by the Trust 11
5. Payment of Expenses by Shareholders 11
6. Ownership of Assets of the Trust 11
7. Service Contracts 11
ARTICLE V Shareholders' Voting Powers and Meetings 13
1. Voting Powers 13
2. Voting Power and Meetings 13
3. Quorum and Required Vote 14
4. Action by Written Consent 14
5. Record Dates 14
6. Additional Provisions 15
ARTICLE VI Net Asset Value, Distributions, and Redemptions 15
1. Determination of Net Asset Value, Net
Income and Distributions 15
2. Redemptions and Repurchases 15
3. Redemptions at the Option of the Trust 15
ARTICLE VII Compensation and Limitation of Liability of Trustees 16
1. Compensation 16
2. Indemnification and Limitation of Liability 16
3. Trustee's Good Faith Action, Expert
Advice, No Bond or Surety 16
4. Insurance 17
ARTICLE VIII Miscellaneous 17
1. Liability of Third Persons Dealing with Trustees 17
2. Termination of Trust or Series 17
3. Merger and Consolidation 17
4. Amendments 18
<PAGE>
5. Filing of Copies, References, Headings 18
6. Applicable Law 18
7. Provisions in Conflict with Law or Regulations 18
8. Business Trust Only 19
9. Use of the Identifying Words "Rochdale " and
ROCHDALE INVESTMENT INSURANCE TRUST" 19
<PAGE>
AGREEMENT AND DECLARATION OF TRUST
==================================
OF
ROCHDALE INVESTMENT INSURANCE TRUST
===================================
WHEREAS, THIS AGREEMENT AND DECLARATION OF TRUST is made and entered into
as of the date set forth below by the Trustees named hereunder for the purpose
of forming a Delaware business trust in accordance with the provisions
hereinafter set forth,
NOW, THEREFORE, the Trustees hereby direct that a Certificate of Trust be
filed with Office of the Secretary of State of the State of Delaware and do
hereby declare that the Trustees will hold IN TRUST all cash, securities and
other assets which the Trust now possesses or may hereafter acquire from time to
time in any manner and manage and dispose of the same upon the following terms
and conditions for the pro rata benefit of the holders of Shares in this Trust.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be known as ROCHDALE INVESTMENT INSURANCE
TRUST, and the Trustees shall conduct the business of the Trust under that name
or any other name as they may from time to time determine.
Section 2. Definitions. Whenever used herein, unless otherwise required by
the context or specifically provided:
(a) The "Trust" refers to the Delaware business trust established by this
Agreement and Declaration of Trust, as amended from time to time;
(b) The "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust, including without limitation the rights referenced in Article VIII,
Section 9 hereof;
(c) "Trustees" refers to the persons who have signed this Agreement and
Declaration of Trust, so long as they continue in office in accordance with the
terms hereof, and all other persons who may from time to time be duly elected or
appointed to serve on the Board of Trustees in accordance with the provisions
hereof, and reference herein to a Trustee or the Trustees shall refer to such
person or persons in their capacity as trustees hereunder;
1
<PAGE>
(d) "Shares" means the shares of beneficial interest into which the
beneficial interest in the Trust shall be divided from time to time and includes
fractions of Shares as well as whole Shares;
(e) "Shareholder" means a record owner of outstanding Shares;
(f) "Person" means and includes individuals, corporations, partnerships,
trusts, associations, joint ventures, estates and other entities, whether or not
legal entities, and governments and agencies and political subdivisions thereof,
whether domestic or foreign;
(g) The "Investment Company Act" refers to the Investment Company Act of
1940 and the Rules and Regulations thereunder, all as amended from time to time;
(h) The terms "Commission" and "Principal Underwriter" shall have the
meanings given them in the Investment Company Act;
(i) "Declaration of Trust" shall mean this Agreement and Declaration of
Trust, as amended or restated from time to time;
(j) "By-Laws" shall mean the By-Laws of the Trust as amended from time to
time and incorporated herein by reference;
(k) The term "Interested Person" has the meaning given it in the Investment
Company Act;
(l) "Investment Adviser" or "Manager" means a party furnishing services to
the Trust pursuant to any contract described in Article IV, Section 7(a) hereof;
and
(m) "Series" refers to each Series of Shares established and designated
under or in accordance with the provisions of Article III.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to conduct, operate and carry on the business
of a management investment company registered under the Investment Company Act
through one or more Series investing primarily in securities.
2
<PAGE>
ARTICLE III
Shares
Section 1. Division of Beneficial Interest. The beneficial interest in the
Trust shall at all times be divided into an unlimited number of Shares, with a
par value of $ .01 per Share. The Trustees may authorize the division of Shares
into separate Series and the division of Series into separate classes of Shares.
The different Series shall be established and designated, and the variations in
the relative rights and preferences as between the different Series shall be
fixed and determined, by the Trustees. If only one or no Series (or classes)
shall be established, the Shares shall have the rights and preferences provided
for herein and in this Article III, Section 6 hereof to the extent relevant and
not otherwise provided for herein, and all references to Series (and classes)
shall be construed (as the context may require) to refer to the Trust.
Subject to the provisions of Section 6 of this Article III, each Share
shall have voting rights as provided in Article V hereof, and holders of the
Shares of any Series shall be entitled to receive dividends when, if and as
declared with respect thereto in the manner provided in Article VI, Section 1
hereof. No Share shall have any priority or preference over any other Share of
the same Series with respect to dividends or distributions upon termination of
the Trust or of such Series made pursuant to Article VIII, Section 2 hereof. All
dividends and distributions shall be made ratably among all Shareholders of a
particular class of a particular Series and, if no classes, of a particular
Series from the assets held with respect to such Series according to the number
of Shares of such class of such Series or of such Series held of record by such
Shareholder on the record date for any dividend or distribution or on the date
of termination, as the case may be. Shareholders shall have no preemptive or
other right to subscribe to any additional Shares or other securities issued by
the Trust or any Series. The Trustees may from time to time divide or combine
the Shares of any particular Series into a greater or lesser number of Shares of
that Series without thereby materially changing the proportionate beneficial
interest of the Shares of that Series in the assets held with respect to that
Series or materially affecting the rights of Shares of any other Series.
Section 2. Ownership of Shares. The ownership of Shares shall be recorded
on the books of the Trust or a transfer or similar agent for the Trust, which
books shall be maintained separately for the Shares of each Series (or class of
each Series). No certificates certifying the ownership of Shares shall be issued
except as the Board of Trustees may otherwise determine from time to time. The
Trustees may make such rules as they consider appropriate for the transfer of
Shares of each Series (or class of each Series) and similar matters. The record
books of the Trust as kept by the Trust or any transfer or similar agent, as the
case may be, shall be conclusive as to the identity of the Shareholders of each
Series (or class of each Series) and as to the number of Shares of each Series
(or class) held from time to time by each.
3
<PAGE>
Section 3. Investments in the Trust. Investments may be accepted by the
Trust from such Persons, at such times, on such terms, and for such
consideration as the Trustees from time to time may authorize.
Section 4. Status of Shares and Limitation of Personal Liability. Shares
shall be deemed to be personal property giving only the rights provided in this
instrument. Every Shareholder, by virtue of having become a Shareholder, shall
be held to have expressly assented and agreed to the terms hereof and to have
become a party hereto. The death of a Shareholder during the existence of the
Trust shall not operate to terminate the Trust, nor entitle the representative
of any deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but entitles such representative
only to the rights of said deceased Shareholder under this Trust. Ownership of
Shares shall not entitle the Shareholder to any title in or to the whole or any
part of the Trust Property or right to call for a partition or division of the
same or for an accounting, nor shall the ownership of Shares constitute the
Shareholders as partners. Neither the Trust nor the Trustees, nor any officer,
employee or agent of the Trust shall have any power to bind personally any
Shareholder, nor, except as specifically provided herein, to call upon any
Shareholder for the payment of any sum of money or assessment whatsoever other
than such as the Shareholder may at any time personally agree to pay.
Section 5. Power of Board of Trustees to Change Provisions Relating to
Shares. Notwithstanding any other provision of this Declaration of Trust and
without limiting the power of the Board of Trustees to amend the Declaration of
Trust as provided elsewhere herein, the Board of Trustees shall have the power
to amend this Declaration of Trust, at any time and from time to time, in such
manner as the Board of Trustees may determine in their sole discretion, without
the need for Shareholder action, so as to add to, delete, replace or otherwise
modify any provisions relating to the Shares contained in this Declaration of
Trust, provided that before adopting any such amendment without Shareholder
approval the Board of Trustees shall determine that it is consistent with the
fair and equitable treatment of all Shareholders or that Shareholder approval is
not otherwise required by the Investment Company Act or other applicable law. If
Shares have been issued, Shareholder approval shall be required to adopt any
amendments to this Declaration of Trust that would adversely affect to a
material degree the rights and preferences of the Shares of any Series (or class
of any Series) or to increase or decrease the par value of the Shares of any
Series (or class of any Series).
Subject to the foregoing Paragraph, the Board of Trustees may amend the
Declaration of Trust to amend any of the provisions set forth in paragraphs (a)
through (i) of Section 6 of this Article III.
Section 6. Establishment and Designation of Series. The establishment and
designation of any Series (or class) of Shares shall be effective upon the
resolution by a majority of the then Trustees, adopting a resolution that sets
forth such
4
<PAGE>
establishment and designation and the relative rights and preferences of such
Series (or class). Each such resolution shall be incorporated herein by
reference upon adoption. Shares of each Series (or class) established pursuant
to this Section 6, unless otherwise provided in the resolution establishing such
Series, shall have the following relative rights and preferences:
(a) Assets Held with Respect to a Particular Series. All consideration
received by the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or reinvested,
all income, earnings, profits, and proceeds thereof from whatever source
derived, including, without limitation, any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments derived from
any reinvestment of such proceeds in whatever form the same may be, shall
irrevocably be held with respect to that Series for all purposes, subject only
to the rights of creditors, and shall be so recorded upon the books of account
of the Trust. Such consideration, assets, income, earnings, profits and proceeds
thereof, from whatever source derived, including, without limitation, any
proceeds derived from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds, in whatever
form the same may be, are herein referred to as "assets held with respect to"
that Series. In the event that there are any assets, income, earnings, profits
and proceeds thereof, funds or payments which are not readily identifiable as
assets held with respect to any particular Series (collectively "General
Assets"), the Trustees shall allocate such General Assets to, between or among
any one or more of the Series in such manner and on such basis as the Trustees,
in their sole discretion, deem fair and equitable, and any General Asset so
allocated to a particular Series shall be held with respect to that Series. Each
such allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all Series for all purposes.
(b) Liabilities Held With Respect to a Particular Series. The assets of the
Trust held with respect to each particular Series shall be charged against the
liabilities of the Trust held with respect to that Series and all expenses,
costs, charges and reserves attributable to that Series, and any general
liabilities of the Trust which are not readily identifiable as being held with
respect to any particular Series shall be allocated and charged by the Trustees
to and among any one or more of the Series in such manner and on such basis as
the Trustees in their sole discretion deem fair and equitable. The liabilities,
expenses, costs, charges, and reserves so charged to a Series are herein
referred to as "liabilities held with respect to" that Series. Each allocation
of liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the holders of all Series for all purposes. All
Persons who have extended credit which has been allocated to a particular
Series, or who have a claim or contract which has been allocated to any
particular Series, shall look, and shall be required by contract to look
exclusively, to the assets of that particular Series for payment of such credit,
claim, or contract. In the absence of an express contractual agreement so
limiting the claims of such creditors, claimants and contract providers, each
creditor, claimant and contract provider will be deemed nevertheless to have
impliedly agreed to such limitation unless an express provision to the contrary
has been
5
<PAGE>
incorporated in the written contract or other document establishing the claimant
relationship.
(c) Dividends, Distributions, Redemptions and Repurchases. Notwithstanding
any other provisions of this Declaration of Trust, including, without
limitation, Article VI, no dividend or distribution including, without
limitation, any distribution paid upon termination of the Trust or of any Series
(or class) with respect to, nor any redemption or repurchase of, the Shares of
any Series (or class) shall be effected by the Trust other than from the assets
held with respect to such Series, nor, except as specifically provided in
Section 7 of this Article III, 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 the extent not inconsistent with the Investment Company Act,
to determine which items shall be treated as income and which items as capital;
and each such determination and allocation shall be conclusive and binding upon
the Shareholders.
(d) Voting. All Shares of the Trust entitled to vote on a matter shall vote
separately by Series (and, if applicable, by class): that is, the Shareholders
of each Series (or class) shall have the right to approve or disapprove matters
affecting the Trust and each respective Series (or class) as if the Series (or
classes) were separate companies. There are, however, two exceptions to voting
by separate Series (or classes). First, if the Investment Company Act requires
all Shares of the Trust to be voted in the aggregate without differentiation
between the separate Series (or classes), then all the Trust's Shares shall be
entitled to vote on a one-vote-per-Share basis. Second, if any matter affects
only the interests of some but not all Series (or classes), then only the
Shareholders of such affected Series (or classes) shall be entitled to vote on
the matter.
(e) Equality. All the Shares of each particular Series shall represent an
equal proportionate interest in the assets held with respect to that Series
(subject to the liabilities held with respect to that Series and such rights and
preferences as may have been established and designated with respect to classes
of Shares within such Series), and each Share of any particular Series shall be
equal to each other Share of that Series.
(f) Fractions. Any fractional Share of a Series shall carry proportionately
all the rights and obligations of a whole share of that Series, including rights
with respect to voting, receipt of dividends and distributions, redemption of
Shares and termination of the Trust.
(g) Exchange Privilege. The Trustees shall have the authority to provide
that the holders of Shares of any Series shall have the right to exchange said
Shares for Shares of one or more other Series of Shares in accordance with such
requirements and procedures as may be established by the Trustees.
6
<PAGE>
(h) Combination of Series. The Trustees shall have the authority, without
the approval of the Shareholders of any Series unless otherwise required by
applicable law, to combine the assets and liabilities held with respect to any
two or more Series into assets and liabilities held with respect to a single
Series.
(i) Elimination of Series. At any time that there are no Shares outstanding
of any particular Series (or class) previously established and designated, the
Trustees may by resolution of a majority of the then Trustees abolish that
Series (or class) and rescind the establishment and designation thereof.
Section 7. Indemnification of Shareholders. If any Shareholder or former
Shareholder shall be exposed to liability by reason of a claim or demand
relating to his or her being or having been a Shareholder, and not because of
his or her acts or omissions, the Shareholder or former Shareholder (or his or
her 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 to be held harmless from and indemnified out of the assets of
the applicable Series of the Trust against all loss and expense arising from
such claim or demand.
ARTICLE IV
The Board of Trustees
Section 1. Number, Election and Tenure. The number of Trustees constituting
the Board of Trustees shall be fixed from time to time by a written instrument
signed, or by resolution approved at a duly constituted meeting, by a majority
of the Board of Trustees, provided, however, that the number of Trustees shall
in no event be less than one (1) nor more than fifteen (15). The Board of
Trustees, by action of a majority of the then Trustees at a duly constituted
meeting, may fill vacancies in the Board of Trustees or remove Trustees with or
without cause. Each Trustee shall serve during the continued lifetime of the
Trust until he or she dies, resigns, is declared bankrupt or incompetent by a
court of appropriate jurisdiction, or is removed, or, if sooner, until the next
meeting of Shareholders called for the purpose of electing Trustees and until
the election and qualification of his or her successor. Any Trustee may resign
at any time by written instrument signed by him or her and delivered to any
officer of the Trust or to a meeting of the Trustees. Such resignation shall be
effective upon receipt unless specified to be effective at some other time.
Except to the extent expressly provided in a written agreement with the Trust,
no Trustee resigning and no Trustee removed shall have any right to any
compensation for any period following his or her resignation or removal, or any
right to damages on account of such removal. The Shareholders may fix the number
of Trustees and elect Trustees at any meeting of Shareholders called by the
Trustees for that purpose. Any Trustee may be removed at any meeting of
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Shareholders by a vote of two-thirds of the outstanding Shares of the Trust. A
meeting of Shareholders for the purpose of electing or removing one or more
Trustees may be called (i) by the Trustees upon their own vote, or (ii) upon the
demand of Shareholders owning 10% or more of the Shares of the Trust in the
aggregate.
Section 2. Effect of Death, Resignation, etc. of a Trustee. The death,
declination, resignation, retirement, removal, or incapacity of one or more
Trustees, or all of them, shall not operate to annul the Trust or to revoke any
existing agency created pursuant to the terms of this Declaration of Trust.
Whenever a vacancy in the Board of Trustees shall occur, until such vacancy is
filled as provided in this Article IV, Section l, the Trustees in office,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon the Trustees by this Declaration
of Trust. As conclusive evidence of such vacancy, a written instrument
certifying the existence of such vacancy may be executed by an officer of the
Trust or by a majority of the Board of Trustees. In the event of the death,
declination, resignation, retirement, removal, or incapacity of all the then
Trustees within a short period of time and without the opportunity for at least
one Trustee being able to appoint additional Trustees to fill vacancies, the
Trust's Investment Adviser(s) are empowered to appoint new Trustees subject to
the provisions of Section 16(a) of the Investment Company Act.
Section 3. Powers. Subject to the provisions of this Declaration of Trust,
the business of the Trust shall be managed by the Board of Trustees, and such
Board shall have all powers necessary or convenient to carry out that
responsibility, including the power to engage in securities transactions of all
kinds on behalf of the Trust. Without limiting the foregoing, the Trustees may:
adopt By-Laws not inconsistent with this Declaration of Trust providing for the
regulation and management of the affairs of the Trust and may amend and repeal
them to the extent that such By-Laws do not reserve that right to the
Shareholders; fill vacancies in or remove from their number, and may elect and
remove such officers and appoint and terminate such agents as they consider
appropriate; appoint from their own number and establish and terminate one or
more committees consisting of two or more Trustees, which may exercise the
powers and authority of the Board of Trustees to the extent that the Trustees
determine; employ one or more custodians of the assets of the Trust and may
authorize such custodians to employ subcustodians and to deposit all or any part
of such assets in a system or systems for the central handling of securities or
with a Federal Reserve Bank; retain a transfer agent or a shareholder servicing
agent, or both; provide for the issuance and distribution of Shares by the Trust
directly or through one or more Principal Underwriters or otherwise; redeem,
repurchase and transfer Shares pursuant to applicable law; set record dates for
the determination of Shareholders with respect to various matters; declare and
pay dividends and distributions to Shareholders of each Series from the assets
of such Series; and, in general, delegate such authority as they consider
desirable to any officer of the Trust, to any committee of the Trustees and to
any agent or employee of the Trust or to any such custodian, transfer or
shareholder servicing agent, or Principal Underwriter. Any determination as to
what is in the interests of the
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Trust made by the Trustees in good faith shall be conclusive. In construing the
provisions of this Declaration of Trust, the presumption shall be in favor of a
grant of power to the Trustees. Unless otherwise specified or required by law,
any action by the Board of Trustees shall be deemed effective if approved or
taken by a majority of the Trustees then in office.
Without limiting the foregoing, the Trust shall have power and authority:
(a) To invest and reinvest cash, to hold cash uninvested, and to subscribe
for, invest in, reinvest in, purchase or otherwise acquire, own, hold, pledge,
sell, assign, transfer, exchange, distribute, write options on, lend or
otherwise deal in or dispose of contracts for the future acquisition or delivery
of fixed income or other securities, and securities of every nature and kind,
including, without limitation, all types of bonds, debentures, stocks,
negotiable or non-negotiable instruments, obligations, evidences of
indebtedness, certificates of deposit or indebtedness, commercial paper,
repurchase agreements, bankers' acceptances, and other securities of any kind,
issued, created, guaranteed, or sponsored by any and all Persons, including,
without limitation, states, territories, and possessions of the United States
and the District of Columbia and any political subdivision, agency, or
instrumentality thereof, any foreign government or any political subdivision of
the U.S. Government or any foreign government, or any international
instrumentality, or by any bank or savings institution, or by any corporation or
organization organized under the laws of the United States or of any state,
territory, or possession thereof, or by any corporation or organization
organized under any foreign law, or in "when issued" contracts for any such
securities, to change the investments of the assets of the Trust; and to
exercise any and all rights, powers, and privileges of ownership or interest in
respect of any and all such investments of every kind and description,
including, without limitation, the right to consent and otherwise act with
respect thereto, with power to designate one or more Persons, to exercise any of
said rights, powers, and privileges in respect of any of said instruments;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, lease, or write
options with respect to or otherwise deal in any property rights relating to any
or all of the assets of the Trust or any Series;
(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
proxies or powers of attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power and discretion with
relation to securities or property as the Trustees shall deem proper;
(d) To exercise powers and right of subscription or otherwise which in any
manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form, or in its own name or
in the name of a custodian or subcustodian or a nominee or nominees or
otherwise;
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(f) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer of any security which is
held in the Trust; to consent to any contract, lease, mortgage, purchase or sale
of property by such corporation or issuer; and to pay calls or subscriptions
with respect to any security held in the Trust;
(g) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depositary or
trustee, and to delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the Trustees shall deem
proper, and to agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees shall deem
proper;
(h) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including but not limited to
claims for taxes;
(i) To enter into joint ventures, general or limited partnerships and any
other combinations or associations;
(j) To borrow funds or other property in the name of the Trust exclusively
for Trust purposes;
(k) To endorse or guarantee the payment of any notes or other obligations
of any Person; to make contracts of guaranty or suretyship, or otherwise assume
liability for payment thereof;
(l) To purchase and pay for entirely out of Trust Property such insurance
as the Trustees may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the assets
of the Trust or payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers, principal underwriters, or
independent contractors of the Trust, individually against all claims and
liabilities of every nature arising by reason of holding Shares, holding, being
or having held any such office or position, or by reason of any action alleged
to have been taken or omitted by any such Person as Trustee, officer, employee,
agent, investment adviser, principal underwriter, or independent contractor,
including any action taken or omitted that may be determined to constitute
negligence, whether or not the Trust would have the power to indemnify such
Person against liability; and
(m) To adopt, establish and carry out pension, profit-sharing, share bonus,
share purchase, savings, thrift and other retirement, incentive and benefit
plans, trusts and provisions, including the purchasing of life insurance and
annuity contracts as
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a means of providing such retirement and other benefits, for any or all of the
Trustees, officers, employees and agents of the Trust.
The Trust shall not be limited to investing in obligations maturing before
the possible termination of the Trust or one or more of its Series. The Trust
shall not in any way be bound or limited by any present or future law or custom
in regard to investment by fiduciaries. The Trust shall not be required to
obtain any court order to deal with any assets of the Trust or take any other
action hereunder.
Section 4. Payment of Expenses by the Trust. The Trustees are authorized to
pay or cause to be paid out of the principal or income of the Trust, or partly
out of the principal and partly out of income, as they deem fair, all expenses,
fees, charges, taxes and liabilities incurred or arising in connection with the
Trust, or in connection with the management thereof, including, but not limited
to, the Trustees' compensation and such expenses and charges for the services of
the Trust's officers, employees, investment adviser or manager, principal
underwriter, auditors, counsel, custodian, transfer agent, Shareholder servicing
agent, and such other agents or independent contractors and such other expenses
and charges as the Trustees may deem necessary or proper to incur.
Section 5. Payment of Expenses by Shareholders. The Trustees shall have the
power, as frequently as they may determine, to cause each Shareholder, or each
Shareholder of any particular Series, to pay directly, in advance or arrears,
for charges of the Trust's custodian or transfer, Shareholder servicing or
similar agent, an amount fixed from time to time by the Trustees, by setting off
such charges due from such Shareholder from declared but unpaid dividends owed
such Shareholder and/or by reducing the number of shares in the account of such
Shareholder by that number of full and/or fractional Shares which represents the
outstanding amount of such charges due from such Shareholder.
Section 6. Ownership of Assets of the Trust. Title to all of the assets of
the Trust shall at all times be considered as vested in the Trust, except that
the Trustees shall have power to cause legal title to any Trust Property to be
held by or in the name of one or more of the Trustees, or in the name of the
Trust, or in the name of any other Person as nominee, on such terms as the
Trustees may determine. The right, title and interest of the Trustees in the
Trust Property shall vest automatically in each Person who may hereafter become
a Trustee. Upon the resignation, removal or death of a Trustee, he or she shall
automatically cease to have any right, title or interest in any of the Trust
Property, and the right, title and interest of such Trustee in the Trust
Property shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing documents has
been executed and delivered.
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Section 7. Service Contracts.
(a) Subject to such requirements and restrictions as may be set forth in
the By-Laws, the Trustees may, at any time and from time to time, contract for
exclusive or nonexclusive advisory, management and/or administrative services
for the Trust or for any Series with any corporation, trust, association or
other organization; and any such contract may contain such other terms as the
Trustees may determine, including without limitation, authority for the
Investment Adviser or administrator to determine from time to time without prior
consultation with the Trustees what investments shall be purchased, held, sold
or exchanged and what portion, if any, of the assets of the Trust shall be held
uninvested and to make changes in the Trust's investments, or such other
activities as may specifically be delegated to such party.
(b) The Trustees may also, at any time and from time to time, contract with
any corporation, trust, association or other organization, appointing it
exclusive or nonexclusive distributor or Principal Underwriter for the Shares of
one or more of the Series (or classes) or other securities to be issued by the
Trust. Every such contract shall comply with such requirements and restrictions
as may be set forth in the By-Laws; and any such contract may contain such other
terms as the Trustees may determine.
(c) The Trustees are also empowered, at any time and from time to time, to
contract with any corporations, trusts, associations or other organizations,
appointing it or them the custodian, transfer agent and/or shareholder servicing
agent for the Trust or one or more of its Series. Every such contract shall
comply with such requirements and restrictions as may be set forth in the
By-Laws or stipulated by resolution of the Trustees.
(d) The Trustees are further empowered, at any time and from time to time,
to contract with any entity to provide such other services to the Trust or one
or more of the Series, as the Trustees determine to be in the best interests of
the Trust and the applicable Series.
(e) The fact that:
(i) any of the Shareholders, Trustees, or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, investment
adviser, manager, principal underwriter, distributor, or affiliate or agent
of or for any corporation, trust, association, or other organization, or
for any parent or affiliate of any organization with which an advisory,
management or administration contract, or principal underwriter's or
distributor's contract, or transfer, shareholder servicing or other type of
service contract may have been or may hereafter be made, or that any such
organization, or any parent or affiliate thereof, is a Shareholder or has
an interest in the Trust, or
(ii) any corporation, trust, association or other organization with
which an advisory, management or administration contract or principal
underwriter's or distributor's contract, or transfer, shareholder servicing
or other type of service contract may have been or may hereafter be made
also has an advisory, management or administration contract, or principal
underwriter's or distributor's contract, or transfer, shareholder servicing
or
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other service contract with one or more other corporations, trusts,
associations, or other organizations, or has other business or interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing
the same, or create any liability or accountability to the Trust or its
Shareholders, provided approval of each such contract is made pursuant to
the requirements of the Investment Company Act.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers. Subject to the provisions of Article III, Section
6(d), the Shareholders shall have power to vote only (i) for the election or
removal of Trustees as provided in Article IV, Section 1, and (ii) with respect
to such additional matters relating to the Trust as may be required by this
Declaration of Trust, the By-Laws or any registration of the Trust with the
Commission (or any successor agency) or any state, or as the Trustees may
consider necessary or desirable. As appropriate, voting may be by Series (or
class). Each whole Share shall be entitled to one vote as to any matter on which
it is entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy. A proxy with
respect to Shares held in the name of two or more persons shall be valid if
executed by any one of them unless at or prior to exercise of the proxy the
Trust receives a specific written notice to the contrary from any one of them. A
proxy purporting to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger.
Section 2. Voting Power and Meetings. Meetings of the Shareholders may be
called by the Trustees for the purpose of electing Trustees as provided in
Article IV, Section l and for such other purposes as may be prescribed by law,
by this Declaration of Trust or by the By-Laws. Meetings of the Shareholders may
also be called by the Trustees from time to time for the purpose of taking
action upon any other matter deemed by the Trustees to be necessary or
desirable. A meeting of Shareholders may be held at any place designated by the
Trustees. Written notice of any meeting of Shareholders shall be given or caused
to be given by the Trustees by mailing such notice at least seven (7) days
before such meeting, postage prepaid, stating the time and place of the meeting,
to each Shareholder at the Shareholder's address as it appears on the records of
the Trust. Whenever notice of a meeting is required to be given to a Shareholder
under this Declaration of Trust or the By-Laws, a written waiver thereof,
executed before or after the meeting by such Shareholder or his or her attorney
thereunto authorized and filed with the records of the meeting, shall be deemed
equivalent to such notice.
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Section 3. Quorum and Required Vote. Except when a larger quorum is
required by applicable law, by the By-Laws or by this Declaration of Trust,
forty percent (40%) of the Shares entitled to vote shall constitute a quorum at
a Shareholders' meeting. When any one or more Series (or classes) is to vote as
a single class separate from any other Shares, forty percent (40%) of the Shares
of each such Series (or classes) entitled to vote shall constitute a quorum at a
Shareholder's meeting of that Series. Any meeting of Shareholders may be
adjourned from time to time by a majority of the votes properly cast upon the
question of adjourning a meeting to another date and time, whether or not a
quorum is present, and the meeting may be held as adjourned within a reasonable
time after the date set for the original meeting without further notice. Subject
to the provisions of Article III, Section 6(d), when a quorum is present at any
meeting, a majority of the Shares voted shall decide any questions and a
plurality shall elect a Trustee, except when a larger vote is required by any
provision of this Declaration of Trust or the By-Laws or by applicable law.
Section 4. Action by Written Consent. Any action taken by shareholders may
be taken without a meeting if Shareholders holding a majority of the Shares
entitled to vote on the matter (or such larger proportion thereof as shall be
required by any express provision of this Declaration of Trust or by the By-Laws
or by applicable law) and holding a majority (or such larger proportion as
aforesaid) of the Shares of any Series (or class) entitled to vote separately on
the matter consent to the action in writing and such written consents are filed
with the records of the meetings of Shareholders. Such consent shall be treated
for all purposes as a vote taken at a meeting of Shareholders.
Section 5. Record Dates. For the purpose of determining the Shareholders of
any Series (or class) who are entitled to vote or act at any meeting or any
adjournment thereof, the Trustees may from time to time fix a time, which shall
be not more than ninety (90) days before the date of any meeting of
Shareholders, as the record date for determining the Shareholders of such Series
(or class) having the right to notice of and to vote at such meeting and any
adjournment thereof, and in such case only Shareholders of record on such record
date shall have such right, notwithstanding any transfer of shares on the books
of the Trust after the record date. For the purpose of determining the
Shareholders 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 voting and/or distribution
purposes close the register or transfer books for one or more Series for all or
any part of the period between a record date and a meeting of Shareholders or
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).
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Section 6. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VI
Net Asset Value, Distributions and Redemptions
Section 1. Determination of Net Asset Value, Net Income and Distributions.
Subject to Article III, Section 6 hereof, the Trustees, in their absolute
discretion, may prescribe and shall set forth in the By-laws or in a duly
adopted vote of the Trustees such bases and time for determining the per-Share
net asset value of the Shares of any Series or net income attributable to the
Shares of any Series, or the declaration and payment of dividends and
distributions on the Shares of any Series, as they may deem necessary or
desirable.
Section 2. Redemptions and Repurchases. The Trust shall purchase such
Shares as are offered by any Shareholder for redemption, upon the presentation
of a proper instrument of transfer together with a request directed to the Trust
or a Person designated by the Trust that the Trust purchase such Shares or in
accordance with such other procedures for redemption as the Trustees may from
time to time authorize; and the Trust will pay therefor the net asset value
thereof, in accordance with the By-Laws and applicable law. Payment for said
Shares shall be made by the Trust to the Shareholder within seven days after the
date on which the request is made in proper form. The obligation set forth in
this Section 2 is subject to the provision that in the event that any time the
New York Stock Exchange (the "Exchange") is closed for other than weekends or
holidays, or if permitted by the Rules of the Commission during periods when
trading on the Exchange is restricted or during any emergency which makes it
impracticable for the Trust to dispose of the investments of the applicable
Series or to determine fairly the value of the net assets held with respect to
such Series or during any other period permitted by order of the Commission for
the protection of investors, such obligations may be suspended or postponed by
the Trustees.
The redemption price may in any case or cases be paid wholly or partly in
kind if the Trustees determine that such payment is advisable in the interest of
the remaining Shareholders of the Series for which the Shares are being
redeemed. Subject to the foregoing, the fair value, selection and quantity of
securities or other property so paid or delivered as all or part of the
redemption price may be determined by or under authority of the Trustees. In no
case shall the Trust be liable for any delay of any corporation or other Person
in transferring securities selected for delivery as all or part of any payment
in kind.
Section 3. Redemptions at the Option of the Trust. The Trust shall have the
right, at its option and at any time, to redeem Shares of any Shareholder at the
net asset value thereof as described in Section 1 of this Article VI: (i) if at
such time such Shareholder owns Shares of any Series having an aggregate net
asset value of less
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than an amount determined from time to time by the Trustees prior to the
acquisition of said Shares; or (ii) to the extent that such Shareholder owns
Shares of a particular Series equal to or in excess of a percentage of the
outstanding Shares of that Series determined from time to time by the Trustees;
or (iii) to the extent that such Shareholder owns Shares equal to or in excess
of a percentage, determined from time to time by the Trustees, of the
outstanding Shares of the Trust or of any Series.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
Section 1. Compensation. The Trustees as such shall be entitled to
reasonable compensation from the Trust, and they may fix the amount of such
compensation. Nothing herein shall in any way prevent the employment of any
Trustee for advisory, management, legal, accounting, investment banking or other
services and payment for the same by the Trust.
Section 2. Indemnification and Limitation of Liability. The Trustees shall
not be responsible or liable in any event for any neglect or wrong-doing of any
officer, agent, employee, Investment Adviser or principal underwriter of the
Trust, nor shall any Trustee be responsible for the act or omission of any other
Trustee, and the Trust out of its assets shall indemnify and hold harmless each
and every Trustee from and against any and all claims and demands whatsoever
arising out of or related to each Trustee's performance of his or her duties as
a Trustee of the Trust; provided that nothing herein contained shall indemnify,
hold harmless or protect any Trustee from or against any liability to the Trust
or any Shareholder to which he or she would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.
Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever issued, executed or done by or on behalf of
the Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been issued, executed or done only in or with
respect to their or his or her capacity as Trustees or Trustee, and such
Trustees or Trustee shall not be personally liable thereon.
Section 3. Trustee's Good Faith Action, Expert Advice, No Bond or Surety.
The exercise by the Trustees of their powers and discretion hereunder shall be
binding upon everyone interested. A Trustee shall be liable to the Trust and to
any Shareholder solely for his or her own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee, and shall not be liable for errors of judgment or mistakes of
fact or law. The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust, and shall be
under no liability for any act or omission in
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accordance with such advice nor for failing to follow such advice. The Trustees
shall not be required to give any bond as such, nor any surety if a bond is
required.
Section 4. Insurance. The Trustees shall be entitled and empowered to the
fullest extent permitted by law to purchase with Trust assets insurance for
liability and for all expenses reasonably incurred or paid or expected to be
paid by a Trustee or officer in connection with any claim, action, suit or
proceeding in which he or she becomes involved by virtue of his or her capacity
or former capacity with the Trust.
ARTICLE VIII
Miscellaneous
Section 1. Liability of Third Persons Dealing with Trustees. No Person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
Section 2. Termination of Trust or Series. Unless terminated as provided
herein, the Trust shall continue without limitation of time. The Trust may be
terminated at any time by vote of a majority of the Shares of each Series
entitled to vote, voting separately by Series, or by the Trustees by written
notice to the Shareholders. Any Series may be terminated at any time by vote of
a majority of the Shares of that Series or by the Trustees by written notice to
the Shareholders of that Series.
Upon termination of the Trust (or any Series, as the case may be), after
paying or otherwise providing for all charges, taxes, expenses and liabilities
held, severally, with respect to each Series (or the applicable Series, as the
case may be), whether due or accrued or anticipated as may be determined by the
Trustees, the Trust shall, in accordance with such procedures as the Trustees
consider appropriate, reduce the remaining assets held, severally, with respect
to each Series (or the applicable Series, as the case may be), to distributable
form in cash or shares or other securities, or any combination thereof, and
distribute the proceeds held with respect to each Series (or the applicable
Series, as the case may be), to the Shareholders of that Series, as a Series,
ratably according to the number of Shares of that Series held by the several
Shareholders on the date of termination.
Section 3. Merger and Consolidation. The Trustees may cause (i) the Trust
or one or more of its Series to the extent consistent with applicable law to be
merged into or consolidated with another trust or company, (ii) the Shares of
the Trust or any Series to be converted into beneficial interests in another
business trust (or series thereof) created pursuant to this Section 3 of this
Article VIII, or (iii) the Shares to be exchanged under or pursuant to any state
or federal statute to the extent permitted by law. Such merger or consolidation,
Share conversion or Share exchange must be authorized by vote of a majority of
the outstanding Shares of the Trust, as a whole, or any affected Series, as may
be applicable; provided that in all respects not governed by
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statute or applicable law, the Trustees shall have the power to prescribe the
procedure necessary or appropriate to accomplish a sale of assets, merger or
consolidation including the power to create one or more separate business trusts
to which all or any part of the assets, liabilities, profits or losses of the
Trust may be transferred and to provide for the conversion of Shares of the
Trust or any Series into beneficial interests in such separate business trust or
trusts (or series thereof).
Section 4. Amendments. This Declaration of Trust may be restated and/or
amended at any time by an instrument in writing signed by a majority of the then
Trustees and, if required, by approval of such amendment by Shareholders in
accordance with Article V, Section 3 hereof. Any such restatement and/or
amendment hereto shall be effective immediately upon execution and approval. The
Certificate of Trust of the Trust may be restated and/or amended by a similar
procedure, and any such restatement and/or amendment shall be effective
immediately upon filing with the Office of the Secretary of State of the State
of Delaware or upon such future date as may be stated therein.
Section 5. Filing of Copies, References, Headings. The original or a copy
of this instrument and of each restatement and/or amendment hereto shall be kept
at the office of the Trust where it may be inspected by any Shareholder. Anyone
dealing with the Trust may rely on a certificate by an officer of the Trust as
to whether or not any such restatements and/or amendments have been made and as
to any matters in connection with the Trust hereunder; and, with the same effect
as if it were the original, may rely on a copy certified by an officer of the
Trust to be a copy of this instrument or of any such restatements and/or
amendments. In this instrument and in any such restatements and/or amendment,
references to this instrument, and all expressions like "herein," "hereof" and
"hereunder," shall be deemed to refer to this instrument as amended or affected
by any such restatements and/or amendments. Headings are placed herein for
convenience of reference only and shall not be taken as a part hereof or control
or affect the meaning, construction or effect of this instrument. Whenever the
singular number is used herein, the same shall include the plural; and the
neuter, masculine and feminine genders shall include each other, as applicable.
This instrument may be executed in any number of counterparts each of which
shall be deemed an original.
Section 6. Applicable Law. This Agreement and Declaration of Trust is
created under and is to be governed by and construed and administered according
to the laws of the State of Delaware and the Delaware Business Trust Act, as
amended from time to time (the "Business Trust Act"). The Trust shall be a
Delaware business trust pursuant to such Business Trust Act, and without
limiting the provisions hereof, the Trust may exercise all powers which are
ordinarily exercised by such a business trust.
Section 7. Provisions in Conflict with Law or Regulations.
(a) The provisions of the Declaration of Trust are severable, and if
the Trustees shall determine, with the advice of counsel, that any of such
provisions is
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in conflict with the Investment Company Act, the regulated investment company
provisions of the Internal Revenue Code or with other applicable laws and
regulations, the conflicting provision shall be deemed never to have constituted
a part of the Declaration of Trust; provided, however, that such determination
shall not affect any of the remaining provisions of the Declaration of Trust or
render invalid or improper any action taken or omitted prior to such
determination.
(b) If any provision of the Declaration of Trust shall be held invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of the
Declaration of Trust in any jurisdiction.
Section 8. Business Trust Only. It is the intention of the Trustees to
create a business trust pursuant to the Business Trust Act, and thereby to
create only the relationship of trustee and beneficial owners within the meaning
of such Business Trust Act between the Trustees and each Shareholder. It is not
the intention of the Trustees to create a general partnership, limited
partnership, joint stock association, corporation, bailment, or any form of
legal relationship other than a business trust pursuant to such Act. Nothing in
this Declaration of Trust shall be construed to make the Shareholders, either by
themselves or with the Trustees, partners or members of a joint stock
association.
Section 9. Use of the Identifying Words "Rochdale" and "Rochdale Investment
Insurance Trust." The identifying words "Rochdale" and "Rochdale Investment
Trust" and all rights to the use of such identifying words belong to Rochdale
Investment Management Inc., the proposed Investment Adviser of the Trust's
Shares. Rochdale Investment Management Inc. has licensed the Trust to use the
identifying words "Rochdale" in the Trust's name and to use the identifying word
"Rochdale" in the name of any series of the Trust. In the event that Rochdale
Investment Management Inc. or an affiliate of Rochdale Investment Management
Inc. is not appointed or ceases to be the Investment Adviser of the Trust, the
non-exclusive license may be revoked by Rochdale Investment Management Inc., and
the Trust and any series thereof shall respectively cease using the identifying
words "Rochdale Investment Trust" and "Rochdale" unless otherwise consented to
by Rochdale Investment Management Inc. or any successor to Rochdale Investment
Management Inc.'s interest.
IN WITNESS WHEREOF, the Trustees named below do hereby make and enter into
this Declaration of Trust as of the 2nd day of March, 2000
/s/ Lane Bucklan
- ----------------
Lane Bucklan
Sole Trustee
<PAGE>
CERTIFICATE OF TRUST
--------------------
OF
ROCHDALE INVESTMENT INSURANCE TRUST
-----------------------------------
This Certificate of Trust of Rochdale Investment Insurance Trust, a
business trust (hereafter called the "Business Trust"), executed by the
undersigned trustee and filed under and in accordance with the provisions of the
Delaware Business Trust Act (12 Del. C.ss.ss.3801 et seq.), set for the
following:
FIRST: The name of the Business Trust is Rochdale Investment Insurance
Trust.
SECOND: The principal office of the Business Trust is 570 Lexington Ave.,
New York, NY 10022-6837. The registered agent for service of process on the
Business Trust required by 12 Del. C.ss.3807(b) is The Corporation Trust
Company. The registered office of the Business Trust is 1209 Orange Street,
Wilmington, Delaware 19801.
THIRD: The nature and business or purpose or purposes of the Business Trust
as set forth in its governing instrument is to conduct, operate and carry on the
business of a management investment company registered under the Investment
Company Act of 1940, as amended, through one or more series of shares of
beneficial interest, investing primarily in securities.
FOURTH: All persons who have extended credit which has been allocated to a
particular series or class of shares of beneficial interest in the Business
Trust, or who have a claim or contract which has been allocated to any
particular series or class, shall look, and shall be required by contract to
look exclusively, to the assets of that particular series or class for payment
of such credit, claim or contract. In the absence of an express contractual
agreement so limiting the claims of such creditors, claimants and contract
providers, each creditor, claimant and contract provider will be deemed
nevertheless to have impliedly agreed to such limitation unless an express
provision to the contrary has been incorporated in the written contract or other
document establishing the claimant relationship.
FIFTH: The trustees of the Business Trust, as set forth in its governing
instrument, reserve the right to amend, alter, change or repeal any provision
contained in this Certificate of Trust, in the manner now or hereafter
prescribed by statute.
SIXTH: This Certificate of Trust shall become effective immediately upon
filing with the Office of the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of Rochdale
Investment Insurance Trust, has duly executed this Certificate of Trust as of
this 2nd day of March, 2000.
-------------------------
Lane Bucklan, Trustee
Exhibit 2.
BY-LAWS
for the regulation, except as
otherwise provided by statute or
the Agreement and Declaration of Trust of
Rochdale Investment Insurance Trust
a Delaware Business Trust
(As of March 2, 2000)
<PAGE>
BY-LAWS
OF
Rochdale Investment Insurance Trust
A Delaware Business Trust
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The Board of Trustees shall fix and, from time
to time, may change the location of the principal executive office of the
Rochdale Investment Insurance Trust (the "Trust") at any place within or outside
the State of Delaware.
Section 2. DELAWARE OFFICE. The Board of Trustees shall establish a
registered office in the State of Delaware and shall appoint as the Trust's
registered agent for service of process in the State of Delaware an individual
resident of the State of Delaware or a Delaware corporation or a corporation
authorized to transact business in the State of Delaware; in each case the
business office of such registered agent for service of process shall be
identical with the registered Delaware office of the Trust.
Section 3. OTHER OFFICES. The Board of Trustees may at any time establish
branch or subordinate offices at any place or places where the Trust intends to
do business.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE OF MEETINGS. Meetings of shareholders shall be held at any
place designated by the Board of Trustees. In the absence of any such
designation, shareholders' meetings shall be held at the principal executive
office of the Trust.
Section 2. CALL OF MEETING. A meeting of the shareholders may be called at
any time by the Board of Trustees or by the Chairman of the Board or by the
President.
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Section 3. NOTICE OF SHAREHOLDERS' MEETING. All notices of meetings of
shareholders shall be sent or otherwise given in accordance with Section 4 of
this Article II not less than seven (7) nor more than seventy-five (75) days
before the date of the meeting. The notice shall specify (i) the place, date and
hour of the meeting, and (ii) the general nature of the business to be
transacted. The notice of any meeting at which Trustees are to be elected also
shall include the name of any nominee or nominees whom at the time of the notice
are intended to be presented for election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a Trustee has a direct or indirect financial
interest, (ii) an amendment of the Trust's Agreement and Declaration of Trust,
(iii) a reorganization of the Trust, or (iv) a voluntary dissolution of the
Trust, the notice shall also state the general nature of that proposal.
Section 4. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE. Notice of any
meeting of shareholders shall be given either personally or by first-class mail
or telegraphic or other written communication, charges prepaid, addressed to the
shareholder at the address of that shareholder appearing on the books of the
Trust or its transfer agent or given by the shareholder to the Trust for the
purpose of notice. If no such address appears on the Trust's books or is given,
notice shall be deemed to have been given if sent to that shareholder by
first-class mail or telegraphic or other written communication to the Trust's
principal executive office, or if published at least once in a newspaper of
general circulation in the county where that office is located. Notice shall be
deemed to have been given at the time when delivered personally or deposited in
the mail or sent by telegram or other means of written communication.
If any notice addressed to a shareholder at the address of that shareholder
appearing on the books of the Trust is returned to the Trust by the United
States Postal Service marked to indicate that the Postal Service is unable to
deliver the notice to the shareholder at that address, all future notices or
reports shall be deemed to have been duly given without further mailing if these
shall be available to the shareholder on written demand of the shareholder at
the principal executive office of the Trust for a period of one year from the
date of the giving of the notice.
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An affidavit of the mailing or other means of giving any notice of any
shareholder's meeting shall be executed by the Secretary, Assistant Secretary or
any transfer agent of the Trust giving the notice and shall be filed and
maintained in the minute book of the Trust.
Section 5. ADJOURNED MEETING; NOTICE. Any shareholder's meeting, whether or
not a quorum is present, may be adjourned from time to time by the vote of the
majority of the shares represented at that meeting, either in person or by
proxy.
When any meeting of shareholders is adjourned to another time or place,
notice need not be given of the adjourned meeting at which the adjournment is
taken, unless a new record date of the adjourned meeting is fixed or unless the
adjournment is for more than sixty (60) days from the date set for the original
meeting, in which case the Board of Trustees shall set a new record date. Notice
of any such adjourned meeting shall be given to each shareholder of record
entitled to vote at the adjourned meeting in accordance with the provisions of
Sections 3 and 4 of this Article II. At any adjourned meeting, the Trust may
transact any business which might have been transacted at the original meeting.
Section 6. VOTING. The shareholders entitled to vote at any meeting of
shareholders shall be determined in accordance with the provisions of the
Agreement and Declaration of Trust of the Trust, as in effect at such time. The
shareholders' vote may be by voice vote or by ballot, provided, however, that
any election for Trustees must be by ballot if demanded by any shareholder
before the voting has begun. On any matter other than elections of Trustees, any
shareholder may vote part of the shares in favor of the proposal and refrain
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from voting the remaining shares or vote them against the proposal, but if the
shareholder fails to specify the number of shares which the shareholder is
voting affirmatively, it will be conclusively presumed that the shareholder's
approving vote is with respect to the total shares that the shareholder is
entitled to vote on such proposal.
Section 7. WAIVER OF NOTICE BY CONSENT OF ABSENT SHAREHOLDERS. The
transactions of the meeting of shareholders, however called and noticed and
wherever held, shall be as valid as though had at a meeting duly held after
regular call and notice if a quorum be present either in person or by proxy and
if either before or after the meeting, each person entitled to vote who was not
present in person or by proxy signs a written waiver of notice or a consent to a
holding of the meeting or an approval of the minutes. The waiver of notice or
consent need not specify either the business to be transacted or the purpose of
any meeting of shareholders.
Attendance by a person at a meeting shall also constitute a waiver of
notice of that meeting, except when the person objects at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened and except that attendance at a meeting is not a waiver of
any right to object to the consideration of matters not included in the notice
of the meeting if that objection is expressly made at the beginning of the
meeting.
Section 8. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Any
action which may be taken at any meeting of shareholders may be taken without a
meeting and without prior notice if a consent in writing setting forth the
action so taken is signed by the holders of outstanding shares having not less
than the minimum number of votes that would be necessary to authorize or take
that action at a meeting at which all shares entitled to vote on that action
were present and voted. All such consents shall be filed with the Secretary of
the Trust and shall be maintained in the Trust's records. Any shareholder giving
a written consent or the shareholder's proxy holder or a transferee of the
shares or a personal representative of the shareholder or
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their respective proxy holders may revoke the consent by a writing received by
the Secretary of the Trust before written consents of the number of shares
required to authorize the proposed action have been filed with the Secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing and if the unanimous written consent of all such
shareholders shall not have been received, the Secretary shall give prompt
notice of the action approved by the shareholders without a meeting. This notice
shall be given in the manner specified in Section 4 of this Article II. In the
case of approval of (i) contracts or transactions in which a Trustee has a
direct or indirect financial interest, (ii) indemnification of agents of the
Trust, and (iii) a reorganization of the Trust, the notice shall be given at
least ten (10) days before the consummation of any action authorized by that
approval.
Section 9. RECORD DATE FOR SHAREHOLDER NOTICE, VOTING AND GIVING CONSENTS.
For purposes of determining the shareholders entitled to notice of any meeting
or to vote or entitled to give consent to action without a meeting, the Board of
Trustees may fix in advance a record date which shall not be more than ninety
(90) days nor less than seven (7) days before the date of any such meeting as
provided in the Agreement and Declaration of Trust of the Trust.
If the Board of Trustees does not so fix a record date:
(a) The record date for determining shareholders entitled to notice of
or to vote at a meeting of shareholders shall be at the close of business on the
business day next preceding the day on which notice is given or if notice is
waived, at the close of business on the business day next preceding the day on
which the meeting is held.
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(b) The record date for determining shareholders entitled to give
consent to action in writing without a meeting, (i) when no prior action by the
Board of Trustees has been taken, shall be the day on which the first written
consent is given, or (ii) when prior action of the Board of Trustees has been
taken, shall be at the close of business on the day on which the Board of
Trustees adopt the resolution relating to that action or the seventy-fifth day
before the date of such other action, whichever is later.
Section 10. PROXIES. Every person entitled to vote for Trustees or on any
other matter shall have the right to do so either in person or by one or more
agents authorized by a written proxy signed by the person and filed with the
Secretary of the Trust. A proxy shall be deemed signed if the shareholder's name
is placed on the proxy (whether by manual signature, typewriting, telegraphic
transmission or otherwise) by the shareholder or the shareholder's
attorney-in-fact. A validly executed proxy which does not state that it is
irrevocable shall continue in full force and effect unless (i) revoked by the
person executing it before the vote pursuant to that proxy by a writing
delivered to the Trust stating that the proxy is revoked or by a subsequent
proxy executed by or attendance at the meeting and voting in person by the
person executing that proxy; or (ii) written notice of the death or incapacity
of the maker of that proxy is received by the Trust before the vote pursuant to
that proxy is counted; provided however, that no proxy shall be valid after the
expiration of eleven (11) months from the date of the proxy unless otherwise
provided in the proxy.
Section 11. INSPECTORS OF ELECTION. Before any meeting of shareholders, the
Board of Trustees may appoint any persons other than nominees for office to act
as inspectors of election at the meeting or its adjournment. If no inspectors of
election are so appointed, the chairman of the meeting may and on the request of
any shareholder or a shareholder's proxy shall, appoint inspectors of election
at the meeting. The number of inspectors shall be either one (1) or three (3).
If inspectors are appointed at a meeting on the request of one or more
shareholders or proxies, the holders of a majority of shares or their proxies
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present at the meeting shall determine whether one (1) or three (3) inspectors
are to be appointed. If any person appointed as inspector fails to appear or
fails or refuses to act, the Chairman of the meeting may and on the request of
any shareholder or a shareholder's proxy, shall appoint a person to fill the
vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the voting power of
each, the shares represented at the meeting, the existence of a quorum and the
authenticity, validity and effect of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in any way arising
in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election or
vote with fairness to all shareholders.
ARTICLE III
TRUSTEES
Section 1. POWERS. Subject to the applicable provisions of the Agreement
and Declaration of Trust of the Trust and these By- Laws relating to action
required to be approved by the shareholders or by the outstanding shares, the
business and affairs of the Trust shall be managed and all powers shall be
exercised by or under the direction of the Board of Trustees.
Section 2. NUMBER OF TRUSTEES. The exact number of Trustees within the
limits specified in the Agreement and Declaration of Trust of the Trust shall be
fixed from time to time by a written instrument signed or a resolution approved
at a duly constituted meeting by a majority of the Board of Trustees.
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Section 3. VACANCIES. Vacancies in the Board of Trustees may be filled by a
majority of the remaining Trustees, though less than a quorum, or by a sole
remaining Trustee, unless the Board of Trustees calls a meeting of shareholders
for the purposes of electing Trustees. In the event that at any time less than a
majority of the Trustees holding office at that time were so elected by the
holders of the outstanding voting securities of the Trust, the Board of Trustees
shall forthwith cause to be held as promptly as possible, and in any event
within sixty (60) days, a meeting of such holders for the purpose of electing
Trustees to fill any existing vacancies in the Board of Trustees, unless such
period is extended by order of the United States Securities and Exchange
Commission.
Notwithstanding the above, whenever and for so long as the Trust is a
participant in or otherwise has in effect a Plan under which the Trust may be
deemed to bear expenses of distributing its shares as that practice is described
in Rule 12b-1 under the Investment Company Act of 1940, then the selection and
nomination of the Trustees who are not interested persons of the Trust (as that
term is defined in the Investment Company Act of 1940) shall be, and is,
committed to the discretion of such disinterested Trustees.
Section 4. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE. All meetings of the
Board of Trustees may be held at any place that has been designated from time to
time by resolution of the Board. In the absence of such a designation, regular
meetings shall be held at the principal executive office of the Trust. With the
exception of meetings at which an Investment Management Agreement, Portfolio
Advisory Agreement or any Distribution Plan adopted pursuant to Rule 12b-1 is
approved by the Board, any meeting, regular or special, may be held by
conference telephone or similar communication equipment, so long as all Trustees
participating in the meeting can hear one another and all such Trustees shall be
deemed to be present in person at the meeting.
Section 5. REGULAR MEETINGS. Regular meetings of the Board of Trustees
shall be held without call at such time as shall from time to time be fixed by
the Board of Trustees. Such regular meetings may be held without notice.
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Section 6. SPECIAL MEETINGS. Special meetings of the Board of Trustees for
any purpose or purposes may be called at any time by the Chairman of the Board
or the President or any Vice President or the Secretary or any two (2) Trustees.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each Trustee or sent by first-class mail or
telegram, charges prepaid, addressed to each Trustee at that Trustee's address
as it is shown on the records of the Trust. In case the notice is mailed, it
shall be deposited in the United States mail at least seven (7) calendar days
before the time of the holding of-the meeting. In case the notice is delivered
personally or by telephone or to the telegraph company or by express mail or
similar service, it shall be given at least forty-eight (48) hours before the
time of the holding of the meeting. Any oral notice given personally or by
telephone may be communicated either to the Trustee or to a person at the office
of the Trustee whom the person giving the notice has reason to believe will
promptly communicate it to the Trustee. The notice need not specify the purpose
of the meeting or the place if the meeting is to be held at the principal
executive office of the Trust.
Section 7. QUORUM. A majority of the authorized number of Trustees shall
constitute a quorum for the transaction of business, except to adjourn as
provided in Section 10 of this Article III. Every act or decision done or made
by a majority of the Trustees present at a meeting duly held at which a quorum
is present shall be regarded as the act of the Board of Trustees, subject to the
provisions of the Trust's Agreement and Declaration of Trust. A meeting at which
a quorum is initially present may continue to transact business notwithstanding
the withdrawal of Trustees if any action taken is approved by a least a majority
of the required quorum for that meeting.
Section 8. WAIVER OF NOTICE. Notice of any meeting need not be given
to any Trustee who either before or after the meeting signs a written waiver of
notice, a consent to holding the meeting, or an approval of the minutes. The
waiver of notice or consent need not specify the purpose of the meeting. All
such waivers, consents, and approvals shall be filed with the records of the
Trust or made a part of the minutes of the meeting. Notice of a meeting shall
also be deemed given to any Trustee who attends the meeting without protesting
before or at its commencement the lack of notice to that Trustee.
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Section 9. ADJOURNMENT. A majority of the Trustees present, whether or not
constituting a quorum, may adjourn any meeting to another time and place.
Section 10. NOTICE OF ADJOURNMENT. Notice of the time and place of holding
an adjourned meeting need not be given unless the meeting is adjourned for more
than forty-eight (48) hours, in which case notice of the time and place shall be
given before the time of the adjourned meeting in the manner specified in
Section 6 of this Article III to the Trustees who were present at the time of
the adjournment.
Section 11. ACTION WITHOUT A MEETING. With the exception of the approval of
an investment management agreement, portfolio advisory agreement, or any
distribution plan adopted pursuant to Rule 12b-1, any action required or
permitted to be taken by the Board of Trustees may be taken without a meeting if
a majority of the members of the Board of Trustees shall individually or
collectively consent in writing to that action. Such action by written consent
shall have the same force and effect as a majority vote of the Board of
Trustees. Such written consent or consents shall be filed with the minutes of
the proceedings of the Board of Trustees.
Section 12. FEES AND COMPENSATION OF TRUSTEES. Trustees and members of
committees may receive such compensation, if any, for their services and such
reimbursement of expenses as may be fixed or determined by resolution of the
Board of Trustees. This Section 12 shall not be construed to preclude any
Trustee from serving the Trust in any other capacity as an officer, agent,
employee or otherwise and receiving compensation for those services.
Section 13. DELEGATION OF POWER TO OTHER TRUSTEES. Any Trustee may, by
power of attorney, delegate his or her power for a period not exceeding six (6)
months at any one time to any other Trustee or Trustees; provided that in no
case shall fewer than two (2) Trustees personally exercise the powers granted to
the Trustees under the Trust's Agreement and Declaration of Trust except as
otherwise expressly provided herein or by resolution of the Board of Trustees.
Except where applicable law may require a Trustee to be present in person, a
Trustee represented by another Trustee pursuant to such power of attorney shall
be deemed to be present for purposes of establishing a quorum and satisfying the
required majority vote.
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ARTICLE IV
COMMITTEES
Section 1. COMMITTEES OF TRUSTEES. The Board of Trustees may by resolution
adopted by a majority of the authorized number of Trustees designate one or more
committees, each consisting of one (1) or more Trustees, to serve at the
pleasure of the Board. The Board may designate one or more Trustees as alternate
members of any committee who may replace any absent member at any meeting of the
committee. Any committee to the extent provided in the resolution of the Board,
shall have the authority of the Board, except with respect to:
(a) the approval of any action which under applicable law also
requires shareholders' approval or approval of the outstanding shares, or
requires approval by a majority of the entire Board or certain members of said
Board;
(b) the filling of vacancies on the Board of Trustees or in any
committee;
(c) the fixing of compensation of the Trustees for serving on the
Board of Trustees or on any committee;
(d) the amendment or repeal of the Trust's Agreement and Declaration
of Trust or of the By-Laws or the adoption of new By-Laws;
(e) the amendment or repeal of any resolution of the Board of Trustees
which by its express terms is not so amendable or repealable;
(f) a distribution to the shareholders of the Trust, except at a rate
or in a periodic amount or within a designated range determined by the Board of
Trustees; or
(g) the appointment of any other committees of the Board of Trustees
or the members of these committees.
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Section 2. MEETINGS AND ACTION OF COMMITTEES. Meetings and action of
committees shall be governed by and held and taken in accordance with the
provisions of Article III of these By-Laws, with such changes in the context
thereof as are necessary to substitute the committee and its members for the
Board of Trustees and its members, except that the time of regular meetings of
committees may be determined either by resolution of the Board of Trustees or by
resolution of the committee. Special meetings of committees may also be called
by resolution of the Board of Trustees. Alternate members shall be given notice
of meetings of committees and shall have the right to attend all meetings of
committees. The Board of Trustees may adopt rules for the government of any
committee not inconsistent with the provisions of these By-Laws.
ARTICLE V
OFFICERS
Section 1. OFFICERS. The officers of the Trust shall be a President, a
Secretary and a Treasurer. The Trust may also have, at the discretion of the
Board of Trustees, a Chairman of the Board, one or more Vice Presidents, one or
more Assistant Secretaries, one or more Assistant Treasurers, and such other
officers as may be appointed in accordance with the provisions of Section 3 of
this Article V. Any number of offices may be held by the same person.
Section 2. ELECTION OF OFFICERS. The officers of the Trust, except such
officers as may appointed in accordance with the provisions of Section 3 or
Sections of this Article V, shall be chosen by the Board of Trustees, and each
shall serve at the pleasure of the Board of Trustees, subject to the rights, if
any, of an officer under any contract of employment.
Section 3. SUBORDINATE OFFICERS. The Board of Trustees may appoint and may
empower the President to appoint such other officers as the business of the
Trust may require, each of whom shall hold office for such period, have such
authority and perform such duties as are provided in these By-Laws or as the
Board of Trustees may from time to time determine.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights, if
any, of an officer under any contract of employment, any officer may be removed,
either with or without cause, by the Board of Trustees at any regular or special
meeting of the Board of Trustees or by the principal executive officer or by
such other officer upon whom such power of removal may be conferred by the Board
of Trustees.
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Any officer may resign at any time by giving written notice to the Trust.
Any resignation shall take effect at the date of the receipt of that notice or
at any later time specified in that notice; and unless otherwise specified in
that notice, the acceptance of the resignation shall not be necessary to make it
effective. Any resignation is without prejudice to the rights, if any, of the
Trust under any contract to which the officer is a party.
Section 5. VACANCIES IN OFFICES. A vacancy in any office because of death,
resignation, removal, disqualification or other cause shall be filled in the
manner prescribed in these By-Laws for regular appointment to that office. The
President may make temporary appointments to a vacant office pending action by
the Board of Trustees.
Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if such an
Officer is elected, shall, if present, preside at meetings of the Board of
Trustees, subject to the control of the Board of Trustees, have general
supervision, direction and control of the business and the Officers of the Trust
and exercise and perform such other powers and duties as may be from time to
time assigned to him or her by the Board of Trustees or prescribed by the
By-Laws. The Chairman of the Board shall serve as chief executive officer in the
chief executive officer's absence.
Section 7. PRESIDENT. Subject to such supervisory powers, if any, as may be
given by the Board of Trustees to the Chairman of the Board, if there be such an
officer, the President shall, subject to the control of the Board of Trustees
and the Chairman, have general supervision, direction and control of the
business and the officers of the Trust. He or she shall preside at all meetings
of the shareholders and, in the absence of the Chairman of the Board or if there
be none, at all meetings of the Board of Trustees. He or she shall have the
general powers and duties of management usually vested in the offices of
president, chief executive officer and chief operating officer of a corporation
and shall have such other powers and duties as may be prescribed by the Board of
Trustees or these By-Laws.
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Section 8. VICE PRESIDENTS. In the absence or disability of the President,
the Vice Presidents, if any, in order of their rank as fixed by the Board of
Trustees or if not ranked, the Executive Vice President (who shall be considered
first ranked) and such other Vice Presidents as shall be designated by the Board
of Trustees, shall perform all the duties of the President and, when so acting,
shall have all powers of and be subject to all the restrictions upon the
President. The Vice Presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
Board of Trustees or the President or the Chairman of the Board or by these
By-Laws.
Section 9. SECRETARY. The Secretary shall keep or cause to be kept at the
principal executive office of the Trust or such other place as the Board of
Trustees may direct a book of minutes of all meetings and actions of Trustees,
committees of Trustees and shareholders with the time and place of holding,
whether regular or special, and if special, how authorized, the notice given,
the names of those present at Trustees' meetings or committee meetings, the
number of shares present or represented at shareholders' meetings, and the
proceedings.
The Secretary shall keep or cause to be kept at the principal executive
office of the Trust or at the office of the Trust's transfer agent or registrar,
a share register or a duplicate share register showing the names of all
shareholders and their addresses, the number and classes of shares held by each,
the number and date of certificates issued for the same and the number and date
of cancellation of every certificate surrendered for cancellation.
The Secretary shall give or cause to be given notice of all meetings of the
shareholders and of the Board of Trustees required to be given by these By-Laws
or by applicable law and shall have such other powers and perform such other
duties as may be prescribed by the Board of Trustees or by these By-Laws.
Section 10. TREASURER. The Treasurer shall be the chief financial officer
and chief accounting officer of the Trust and shall keep and maintain or cause
to be kept and maintained adequate and correct books and records of accounts of
the properties and business transactions of the Trust, including accounts of its
assets, liabilities, receipts, disbursements, gains, losses, capital, retained
earnings and shares. The books of account shall at all reasonable times be open
to inspection by any Trustee.
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The Treasurer shall deposit all monies and other valuables in the name and
to the credit of the Trust with such depositaries as may be designated by the
Board of Trustees. The Treasurer shall disburse the funds of the Trust as may be
ordered by the Board of Trustees, shall render to the President and Trustees,
whenever they request it, an account of all of his or her transactions as chief
financial officer and of the financial condition of the Trust and shall have
other powers and perform such other duties as may be prescribed by the Board of
Trustees or these By-Laws.
ARTICLE VI
INDEMNIFICATION OF TRUSTEES OFFICERS
EMPLOYEES AND OTHER AGENTS
Section 1. AGENTS, PROCEEDINGS AND EXPENSES. For the purpose of this
Article VI, "agent" means any person who is or was a Trustee, officer, employee
or other agent of this Trust or is or was serving at the request of this Trust
as a Trustee, director, officer, employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust or other enterprise or
was a Trustee, director, officer, employee or agent of a foreign or domestic
corporation that was a predecessor of another enterprise at the request of such
predecessor entity; "proceeding" means any threatened, pending or completed
action or proceeding, whether civil, criminal, administrative or investigative;
and "expenses" includes, without limitation, attorney's fees and any expenses of
establishing a right to indemnification under this Article VI.
Section 2. ACTIONS OTHER THAN BY TRUST. This Trust shall indemnify any
person who was or is a party or is threatened to be made a party to any
proceeding (other than an action by or in the right of this Trust) by reason of
the fact that such person is or was an agent of this Trust, against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with such proceeding, if it is determined that person acted in
good faith and reasonably believed: (a) in the case of conduct in his or her
official capacity as a Trustee of the Trust, that his or her conduct was in the
Trust's best interests and (b), in all other cases, that his or her conduct was
at least not opposed to the Trust's best interests and (c) in the case of a
criminal proceeding, that he or she had no reasonable cause to believe the
conduct of that person was unlawful. The termination of any proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not of itself create a presumption that the person did not act
in good faith and in a manner which the person reasonably believed to be in the
best interests of this Trust or that the person had reasonable cause to believe
that the person's conduct was unlawful.
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Section 3. ACTIONS BY THE TRUST. This Trust shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action by or in the right of this Trust to procure a judgment in
its favor by reason of the fact that that person is or was an agent of this
Trust, against expenses actually and reasonably incurred by that person in
connection with the defense or settlement of that action if that person acted in
good faith, in a manner that person believed to be in the best interests of this
Trust and with such care, including reasonable inquiry, as an ordinarily prudent
person in a like position would use under similar circumstances.
Section 4. EXCLUSION OF INDEMNIFICATION. Notwithstanding any provision to
the contrary contained herein, there shall be no right to indemnification for
any liability arising by reason of willful misfeasance, bad faith, gross
negligence, or the reckless disregard of the duties involved in the conduct of
the agent's office with this Trust.
No indemnification shall be made under Sections 2 or 3 of this Article VI:
(a) In respect of any claim, issue or matter as to which that person
shall have been adjudged to be liable on the basis that personal benefit was
improperly received by him or her, whether or not the benefit resulted from an
action taken in the person's official capacity; or
(b) In respect of any claim, issue or matter as to which that person
shall have been adjudged to be liable in the performance of that person's duty
to this Trust, unless and only to the extent that the court in which that action
was brought shall determine upon application that in view of all the
circumstances of the case, that person was not liable by reason of the disabling
conduct set forth in the preceding paragraph and is fairly and reasonably
entitled to indemnity for the expenses which the court shall determine; or
(c) Of amounts paid in settling or otherwise disposing of a threatened
or pending action, with or without court approval, or of expenses incurred in
defending a threatened or pending action that is settled or otherwise disposed
of without court approval, unless the required approval set forth in Section 6
of this Article VI is obtained.
Section 5. SUCCESSFUL DEFENSE BY AGENT. To the extent that an agent of this
Trust has been successful on the merits in defense of any proceeding referred to
in Sections 2 or 3 of this Article VI or in defense of any claim, issue or
matter therein, before the court or other body before whom the proceeding was
brought, the agent shall be indemnified against expenses actually and reasonably
incurred by the agent in connection therewith, provided that the Board of
Trustees, including a majority who are disinterested, non-party Trustees, also
determines that, based upon a review of the facts, the agent was not liable by
reason of the disabling conduct referred to in Section 4 of this Article VI.
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Section 6. REQUIRED APPROVAL. Except as provided in Section 5 of this
Article VI, any indemnification under this Article VI shall be made by this
Trust only if authorized in the specific case on a determination that
indemnification of the agent is proper in the circumstances because the agent
has met the applicable standard of conduct set forth in Sections 2 or 3 of this
Article VI and is not prohibited from indemnification because of the disabling
conduct set forth in Section 4 of this Article VI, by:
(a) a majority vote of a quorum consisting of Trustees who are not
parties to the proceeding and are not interested persons of the Trust (as
defined in the Investment Company Act of 1940); or
(b) a written opinion by an independent legal counsel.
Section 7. ADVANCE OF EXPENSES. Expenses incurred in defending any
proceeding may be advanced by this Trust before the final disposition of the
proceeding upon (a) receipt of a written affirmation by the Trustee of his or
her good faith belief that he or she has met the standard of conduct necessary
for indemnification under this Article VI and a written undertaking by or on
behalf of the agent, such undertaking being an unlimited general obligation to
repay the amount of the advance if it is ultimately determined that he has not
met those requirements, and (b) a determination that the facts then known to
those making the determination would not preclude indemnification under this
Article VI. Determinations and authorizations of payments under this Section
must be made in the manner specified in Section 6 of this Article VI for
determining that the indemnification is permissible.
Section 8. OTHER CONTRACTUAL RIGHTS. Nothing contained in this Article VI
shall affect any right to indemnification to which persons other than Trustees
and officers of this Trust or any subsidiary hereof may be entitled by contract
or otherwise.
Section 9. LIMITATIONS. No indemnification or advance shall be made under
this Article VI, except as provided in Sections 5 or 6 in any circumstances
where it appears:
(a) that it would be inconsistent with a provision of the Trust's
Agreement and Declaration of Trust, a resolution of the shareholders of the
Trust, or an agreement in effect at the time of accrual of the alleged cause of
action asserted in the proceeding in which the expenses were incurred or other
amounts were paid which prohibits or otherwise limits indemnification; or
(b) that it would be inconsistent with any condition expressly imposed
by a court in approving a settlement.
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Section 10. INSURANCE. Upon and in the event of a determination by the
Board of Trustees of this Trust to purchase such insurance, this Trust shall
purchase and maintain insurance on behalf of any agent of this Trust against any
liability asserted against or incurred by the agent in such capacity or arising
out of the agent's status as such, but only to the extent that this Trust would
have the power to indemnify the agent against that liability under the
provisions of this Article VI and the Trust's Agreement and Declaration of
Trust.
Section 11. FIDUCIARIES OF EMPLOYEE BENEFIT PLAN. This Article VI does not
apply to any proceeding against any Trustee, investment manager or other
fiduciary of an employee benefit plan in that person's capacity as such, even
though that person may also be an agent of this Trust as defined in Section l of
this Article VI. Nothing contained in this Article VI shall limit any right to
indemnification to which such a Trustee, investment manager, or other fiduciary
may be entitled by contractor, otherwise which shall be enforceable to the
extent permitted by applicable law other than this Article VI.
ARTICLE VII
RECORDS AND REPORTS
Section 1. MAINTENANCE OF SHARE REGISTER. This Trust shall keep at its
principal executive office or at the office of its transfer agent or registrar,
if either be appointed and as determined by resolution of the Board of Trustees,
a record of its shareholders, giving the names and addresses of all shareholders
and the number, series and, where applicable, class of shares held by each
shareholder.
Section 2. MAINTENANCE AND INSPECTION OF BY-LAWS. The Trust shall keep at
its principal executive office the original or a copy of these By-Laws as
amended from time to time, which shall be open to inspection by the shareholders
at all reasonable times during office hours.
Section 3. MAINTENANCE AND INSPECTION OF OTHER RECORDS. The accounting
books and records and minutes of proceedings of the shareholders and the Board
of Trustees and any committee or committees of the Board of Trustees shall be
kept at such place or places designated by the Board of Trustees or in the
absence of such designation, at the principal executive office of the Trust. The
minutes shall be kept in written form, and the accounting books and records
shall be kept either in written form or in any other form capable of being
converted into written form. The minutes and accounting books and records shall
be open to inspection upon the written demand of any shareholder or holder of a
voting trust certificate at any reasonable time during usual business hours of
the Trust for a purpose reasonably related to the holder's interests as a
shareholder or as the holder of a voting trust certificate. The inspection may
be made in person or by an agent or attorney and shall include the right to copy
and make extracts.
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Section 4. INSPECTION BY TRUSTEES. Every Trustee shall have the absolute
right at any reasonable time to inspect all books, records and documents of
every kind as well as the physical properties of the Trust. This inspection by a
Trustee may be made in person or by an agent or attorney, and the right of
inspection includes the right to copy and make extracts of documents.
Section 5. FINANCIAL STATEMENTS. A copy of any financial statements and any
income statement of the Trust for each quarterly period of each fiscal year and
accompanying balance sheet of the Trust as of the end of each such period that
has been prepared by the Trust shall be kept on file in the principal executive
office of the Trust for at least twelve (12) months, and each such statement
shall be exhibited at all reasonable times to any shareholder demanding an
examination of any such statement or a copy shall be mailed to any such
shareholder.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by the report, if any, of any independent
accountants engaged by the Trust or the certificate of an authorized officer of
the Trust that the financial statements were prepared without audit from the
books and records of the Trust.
ARTICLE VIII
GENERAL MATTERS
Section 1. CHECKS, DRAFTS, EVIDENCE OF INDEBTEDNESS. All checks, drafts or
other orders for payment of money, notes or other evidences of indebtedness
issued in the name of or payable to the Trust shall be signed or endorsed in
such manner and by such person or persons as shall be designated from time to
time in accordance with the resolution of the Board of Trustees.
Section 2. CONTRACTS AND INSTRUMENTS; HOW EXECUTED. The Board of Trustees,
except as otherwise provided in these By-Laws, may authorize any officer or
officers, agent or agents, to enter into any contract or execute any instrument
in the name of and on behalf of the Trust and this authority may be general or
confined to specific instances; and unless so authorized or ratified by the
Board of Trustees or within the agency power of an officer, no officer, agent or
employee shall have any power or authority to bind the Trust by any contract or
engagement, to pledge its credit or to render it liable for any purpose or for
any amount.
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Section 3. CERTIFICATES FOR SHARES. In the event the Board of Trustees
determines that certificates certifying ownership of shares shall be issued, a
certificate or certificates for shares of beneficial interest in any series of
the Trust may be issued to a shareholder upon the shareholder's request when
such shares are fully paid. All certificates shall be signed in the name of the
Trust by the Chairman of the Board or the President or Vice President and by the
Treasurer or an Assistant Treasurer or the Secretary or any Assistant Secretary,
certifying the number of shares and the series of shares owned by the
shareholders. Any or all of the signatures on the certificate may be facsimile.
In case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed on a certificate shall have ceased to be
that officer, transfer agent or registrar before that certificate is issued, it
may be issued by the Trust with the same effect as if that person were an
officer, transfer agent or registrar at the date of issue. Notwithstanding the
foregoing, the Trust may adopt and use a system of issuance, recordation and
transfer of its shares by electronic or other means.
Section 4. LOST CERTIFICATES. Except as provided in this Section 4, no new
certificate for shares shall be issued to replace an old certificate unless the
latter is surrendered to the Trust and cancelled at the same time. The Board of
Trustees may in case any share certificate or certificate for any other security
is lost, stolen or destroyed, authorize the issuance of a replacement
certificate on such terms and conditions as the Board of Trustees may require,
including a provision for indemnification of the Trust secured by a bond or
other adequate security sufficient to protect the Trust against any claim that
may be made against it, including any expense or liability on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
Section 5. REPRESENTATION OF SHARES OF OTHER ENTITIES HELD BY TRUST. The
Chairman of the Board, the President, any Vice President or any other person
authorized by resolution of the Board of Trustees or by any of the foregoing
designated officers, is authorized to vote or represent on behalf of the Trust
any and all shares of any corporation, partnership, trusts or other entities,
foreign or domestic, standing in the name of the Trust. The authority granted
may be exercised in person or by a proxy duly executed by such designated
person.
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Section 6. FISCAL YEAR. The fiscal year of the Trust shall be fixed and
refixed or changed from time to time by resolution of the Trustees. The fiscal
year of the Trust shall be the taxable year of each Series of the Trust.
ARTICLE IX
AMENDMENTS
Section l. AMENDMENT BY SHAREHOLDERS. These By-Laws may be amended or
repealed by the affirmative vote or written consent of a majority of the
outstanding shares entitled to vote, except as otherwise provided by applicable
law or by the Trust's Agreement and Declaration of Trust or these By-Laws.
Section 2. AMENDMENT BY TRUSTEES. Subject to the right of shareholders as
provided in Section l of this Article IX to adopt, amend or repeal By-Laws, and
except as otherwise provided by applicable law or by the Trust's Agreement and
Declaration of Trust, these By-Laws may be adopted, amended or repealed by the
Board of Trustees.
Section 3. INCORPORATION BY REFERENCE INTO AGREEMENT AND DECLARATION OF
TRUST OF THE TRUST. These By-Laws and any amendments thereto shall be
incorporated by reference to the Trust's Agreement and Declaration of Trust.
IN WITNESS WHEREOF, the trustees named below do hereby make and adopt these
By-Laws as of the 2nd day of March, 2000.
/s/ Lane Bucklan
- ----------------
Lane Bucklan
Sole Trustee
Exhibit 5.
ROCHDALE INVESTMENT INSURANCE TRUST
INVESTMENT ADVISORY AGREEMENT
[FUND NAME]
THIS INVESTMENT ADVISORY AGREEMENT is made as of the ___ day of
___________, 2000, by and between ROCHDALE INVESTMENT INSURANCE TRUST, a
Delaware business trust (hereinafter called the "Trust"), on behalf of the
following series of the Trust, Rochdale [ ] (the "Fund") and Rochdale Investment
Management Inc. a Delaware corporation (hereinafter called the "Advisor").
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company, registered
as such under the Investment Company Act of 1940, as amended (the "Investment
Company Act"); and
WHEREAS, the Fund is a series of the Trust having separate assets and
liabilities; and
WHEREAS, the Advisor is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and is engaged in the business of
supplying investment advice as an independent contractor; and
WHEREAS, the Trust desires to retain the Advisor to render advice and
services to the Fund pursuant to the terms and provisions of this Agreement, and
the Advisor desires to furnish said advice and services;
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties to this Agreement, intending to be legally
bound hereby, mutually agree as follows:
1. Appointment of Advisor. The Trust hereby employs the Advisor and the
Advisor hereby accepts such employment, to render investment advice and related
services with respect to the assets of the Fund for the period and on the terms
set forth in this Agreement, subject to the supervision and direction of the
Trust's Board of Trustees.
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2. Duties of Advisor.
(a) General Duties. The Advisor shall act as investment adviser to the
Fund and shall supervise investments of the Fund on behalf of the Fund in
accordance with the investment objectives, policies and restrictions of the Fund
as set forth in the Fund's and Trust's governing documents, including, without
limitation, the Trust's Agreement and Declaration of Trust and By-Laws; the
Fund's prospectus, statement of additional information and undertakings; and
such other limitations, policies and procedures as the Trustees may impose from
time to time in writing to the Advisor. In providing such services, the Advisor
shall at all times adhere to the provisions and restrictions contained in the
federal securities laws, applicable state securities laws, the Internal Revenue
Code, the Uniform Commercial Code and other applicable law.
Without limiting the generality of the foregoing, the Advisor shall:
(i) furnish the Funds with advice and recommendations with respect to the
investment of the Fund's assets and the purchase and sale of portfolio
securities for the Fund, including the taking of such steps as may be necessary
to implement such advice and recommendations (i.e., placing the orders); (ii)
manage and oversee the investments of the Funds, subject to the ultimate
supervision and direction of the Trust's Board of Trustees; (iii) vote proxies
for the Fund, file Section 13 ownership reports for the Fund, and take other
actions on behalf of the Fund; (iv) maintain the books and records required to
be maintained by the Fund except to the extent arrangements have been made for
such books and records to be maintained by the administrator or another agent of
the Fund; (v) furnish reports, statements and other data on securities, economic
conditions and other matters related to the investment of the Fund's assets
which the Fund's administrator or distributor or the officers of the Trust may
reasonably request; and (vi) render to the Trust's Board of Trustees such
periodic and special reports with respect to each Fund's investment activities
as the Board may reasonably request, including at least one in-person appearance
annually before the Board of Trustees.
(b) Brokerage. The Advisor shall be responsible for decisions to buy
and sell securities for the Fund, for broker-dealer selection, and for
negotiation of brokerage commission rates, provided that the Advisor shall not
direct order to an affiliated person of the Advisor without general prior
authorization to use such affiliated broker or dealer for the Trust's Board of
Trustees. The Advisor's primary consideration in effecting a securities
transaction will be execution at the most favorable price. In selecting a
broker-dealer to execute each particular transaction, the Advisor may take the
following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the investment performance of the Fund on a continuing
basis. The price to the Fund in any transaction may be less favorable than that
available from another broker-dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
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Subject to such policies as the Board of Trustees of the Trust may determine,
the Advisor shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of its having
caused the Fund to pay a broker or dealer that provides (directly or indirectly)
brokerage or research services to the Advisor an amount of commission for
effecting a portfolio transaction in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction, if the
Advisor determines in good faith that such amount of commission was reasonable
in relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
Advisor's overall responsibilities with respect to the Trust. The Advisor is
further authorized to allocate the orders placed by it on behalf of the Fund to
such brokers or dealers who also provide research or statistical material, or
other services, to the Trust, the Advisor, or any affiliate of either. Such
allocation shall be in such amounts and proportions as the Advisor shall
determine, and the Advisor shall report on such allocations regularly to the
Trust, indicating the broker-dealers to whom such allocations have been made and
the basis therefore. The Advisor is also authorized to consider sales of shares
as a factor in the selection of brokers or dealers to execute portfolio
transactions, subject to the requirements of best execution, i.e., that such
brokers or dealers are able to execute the order promptly and at the best
obtainable securities price.
On occasions when the Advisor deems the purchase or sale of a security to
be in the best interest of one or more of the Fund as well as of other clients,
the Advisor, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and the most efficient execution.
In such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Advisor in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Funds and to such other clients.
3. Representations of the Advisor.
(a) The Advisor shall use its best judgment and efforts in rendering
the advice and services to the Funds as contemplated by this Agreement.
(b) The Advisor shall maintain all licenses and registrations
necessary to perform its duties hereunder in good order.
(c) The Advisor shall conduct its operations at all times in
conformance with the Investment Advisers Act of 1940, the Investment Company Act
of 1940, and any other applicable state and/or self-regulatory organization
regulations.
(d) The Advisor shall maintain errors and omissions insurance in an
amount at least equal to $_____________, with a deductible not to exceed
$___________, throughout the term of this Agreement.
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4. Independent Contractor. The Advisor shall, for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent the
Trust or the Fund in any way, or in any way be deemed an agent for the Trust or
for the Fund. It is expressly understood and agreed that the services to be
rendered by the Advisor to the Funds under the provisions of this Agreement are
not to be deemed exclusive, and the Advisor shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. Advisor's Personnel. The Advisor shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Advisor shall be
deemed to include persons employed or retained by the Advisor to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Advisor or the Trust's Board of Trustees may desire and reasonably request.
6. Expenses.
(a) With respect to the operation of the Fund, the Advisor shall be
responsible for (i) providing the personnel, office space and equipment
reasonably necessary for the operation of the Fund, (ii) the expenses of
printing and distributing extra copies of the Fund's prospectus, statement of
additional information, and sales and advertising materials (but not the legal,
auditing or accounting fees attendant thereto) to prospective investors (but not
to existing shareholders), and (iii) the costs of any special Board of Trustees
meetings or shareholder meetings convened for the primary benefit of the
Advisor. If the Advisor has agreed to limit the operating expenses of the Fund,
the Advisor shall also be responsible on a monthly basis for any operating
expenses that exceed the agreed upon expense limit.
(b) The Fund is responsible for and has assumed the obligation for
payment of all of its expenses, other than as stated in Subparagraph 6(a) above,
including but not limited to: fees and expenses incurred in connection with the
issuance, registration and transfer of its shares; brokerage and commission
expenses; all expenses of transfer, receipt, safekeeping, servicing and
accounting for the cash, securities and other property of the Trust for the
benefit of the Fund including all fees and expenses of its custodian,
shareholder services agent and accounting services agent; interest charges on
any borrowings; costs and expenses of pricing and alculating its daily net asset
value and of maintaining its books of account required under the Investment
Company Act; taxes, if any; a pro rata portion of expenditures in connection
with meetings of the Fund's shareholders and the Trust's Board of Trustees that
are properly payable by the Fund; salaries and expenses of officers and fees and
expenses of members of the Trust's Board of Trustees or members of any advisory
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board or committee who are not members of, affiliated with or interested persons
of the Advisor; insurance premiums on property or personnel of each Fund which
inure to its benefit, including liability and fidelity bond insurance; the cost
of preparing and printing reports, proxy statements, prospectuses and statements
of additional information of the Fund or other communications for distribution
to existing shareholders; legal, auditing and accounting fees; trade association
dues; fees and expenses (including legal fees) of registering and maintaining
registration of its shares for sale under federal and applicable state and
foreign securities laws; all expenses of maintaining and servicing shareholder
accounts, including all charges for transfer, shareholder recordkeeping,
dividend disbursing, redemption, and other agents for the benefit of the Funds,
if any; and all other charges and costs of its operation plus any extraordinary
and non-recurring expenses, except as herein otherwise prescribed.
(c) The Advisor may voluntarily absorb certain Fund expenses or waive
the Advisor's own advisory fee.
(d) To the extent the Advisor incurs any costs by assuming expenses
which are an obligation of a Fund as set forth herein, the Fund shall promptly
reimburse the Advisor for such costs and expenses, except to the extent the
Advisor has otherwise agreed to bear such expenses. To the extent the services
for which a Fund is obligated to pay are performed by the Advisor, the Advisor
shall be entitled to recover from such Fund to the extent of the Advisor's
actual costs for providing such services. In determining the Advisor's actual
costs, the Advisor may take into account an allocated portion of the salaries
and overhead of personnel performing such services.
7. Investment Advisory and Management Fee.
(a) The Fund shall pay to the Advisor, and the Advisor agrees to
accept, as full compensation for all investment management and advisory services
furnished or provided to such Fund pursuant to this Agreement, an annual
management fee equal to 1.00% of the Fund's daily net assets, computed on the
value of the net assets of the Fund as of the close of business each day.
(b) The management fee shall be accrued daily by each Fund and paid to
the Advisor on or before the tenth business day of the succeeding month.
(c) The initial fee under this Agreement shall be payable on or before
the tenth business day of the first month following the effective date of this
Agreement and shall be prorated as set forth below. If this Agreement is
terminated prior to the end of any month, the fee to the Advisor shall be
prorated for the portion of any month in which this Agreement is in effect which
is not a complete month according to the proportion which the number of calendar
days in the month during which the Agreement is in effect bears to the number of
calendar days in the month, and shall be payable within ten (10) days after the
date of termination.
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(d) The fee payable to the Advisor under this Agreement will be
reduced to the extent of any receivable owed by the Advisor to the Fund and as
required under any expense limitation applicable to a Fund.
(e) The Advisor voluntarily may reduce any portion of the compensation
or reimbursement of expenses due to it pursuant to this Agreement and may agree
to make payments to limit the expenses which are the responsibility of a Fund
under this Agreement. Any such reduction or payment shall be applicable only to
such specific reduction or payment and shall not constitute an agreement to
reduce any future compensation or reimbursement due to the Advisor hereunder or
to continue future payments. Any such reduction will be agreed to prior to
accrual of the related expense or fee and will be estimated daily and reconciled
and paid on a monthly basis.
(f) Any fee withheld or voluntarily reduced and any Fund expense
absorbed by the Advisor voluntarily or pursuant to an agreed upon expense cap
shall be reimbursed by the Fund to the Advisor, if so requested by the Advisor,
in the first, second or third (or any combination thereof) fiscal year next
succeeding the fiscal year of the withholding, reduction or absorption if the
aggregate amount actually paid by the Fund toward the operating expenses for
such fiscal year (taking into account the reimbursement) do not exceed the
applicable limitation on Fund expenses. Such reimbursement may be paid prior to
the Fund's payment of current expenses if so requested by the Advisor even if
such practice may require the Advisor to waive, reduce or absorb current Fund
expenses.
(g) The Advisor may agree not to require payment of any portion of the
compensation or reimbursement of expenses otherwise due to it pursuant to this
Agreement. Any such agreement shall be applicable only with respect to the
specific items covered thereby and shall not constitute an agreement not to
require payment of any future compensation or reimbursement due to the Advisor
hereunder.
8. No Shorting; No Borrowing. The Advisor agrees that neither it nor any of
its officers or employees shall take any short position in the shares of the
Funds. This prohibition shall not prevent the purchase of such shares by any of
the officers or employees of the Advisor or any trust, pension, profit-sharing
or other benefit plan for such persons or affiliates thereof, at a price not
less than the net asset value thereof at the time of purchase, as allowed
pursuant to rules promulgated under the Investment Company Act. The Advisor
agrees that neither it nor any of its officers or employees shall borrow from
the Fund or pledge or use the Fund's assets in connection with any borrowing not
directly for the Fund's benefit. For this purpose, failure to pay any amount due
and payable to the Fund for a period of more than thirty (30) days shall
constitute a borrowing.
9. Conflicts with Trust's Governing Documents and Applicable Laws. Nothing
herein contained shall be deemed to require the Trust or the Fund to take any
action contrary to the Trust's Agreement and Declaration of Trust, By-Laws, or
any applicable statute or regulation, or to relieve or deprive the Board of
Trustees of the
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Trust of its responsibility for and control of the conduct of the affairs of the
Trust and Funds. In this connection, the Advisor acknowledges that the Trustees
retain ultimate plenary authority over the Fund and may take any and all actions
necessary and reasonable to protect the interests of shareholders.
10. Reports and Access. The Advisor agrees to supply such information to
the Fund's administrator and to permit such compliance inspections by the Fund's
administrator as shall be reasonably necessary to permit the administrator to
satisfy its obligations and respond to the reasonable requests of the Trustees.
11. Advisor's Liabilities and Indemnification.
(a) The Advisor shall have responsibility for the accuracy and
completeness (and liability for the lack thereof) of the statements in the
Fund's offering materials (including the prospectus, the statement of additional
information, advertising and sales materials), except for information supplied
by the administrator or the Trust or another third party for inclusion therein.
(b) The Advisor shall be liable to the Fund for any loss (including
brokerage charges) incurred by the Fund as a result of any improper investment
made by the Advisor.
(c) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on the
part of the Advisor, the Advisor shall not be subject to liability to the Trust
or the Fund or to any shareholder of the Fund for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security by the
Funds.
(d) Each party to this Agreement shall indemnify and hold harmless the
other party and the shareholders, directors, officers and employees of the other
party (any such person, an "Indemnified Party") against any loss, liability,
claim, damage or expense (including the reasonable cost of investigating and
defending any alleged loss, liability, claim, damage or expenses and reasonable
counsel fees incurred in connection therewith) arising out of the Indemnified
Party's performance or non-performance of any duties under this Agreement
provided, however, that nothing herein shall be deemed to protect any
Indemnified Party against any liability to which such Indemnified Party would
otherwise be subject by reason of willful misfeasance, bad faith or negligence
in the performance of duties hereunder or by reason of reckless disregard of
obligations and duties under this Agreement.
(e) No provision of this Agreement shall be construed to protect any
Trustee or officer of the Trust, or officer of the Advisor, from liability in
violation of Sections 17(h) and (i) of the Investment Company Act.
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12. Non-Exclusivity; Trading for Advisor's Own Account. The Trust's
employment of the Advisor is not an exclusive arrangement. The Trust may from
time to time employ other individuals or entities to furnish it with the
services provided for herein. Likewise, the Advisor may act as investment
adviser for any other person, and shall not in any way be limited or restricted
from buying, selling or trading any securities for its or their own accounts or
the accounts of others for whom it or they may be acting, provided, however,
that the Advisor expressly represents that it will undertake no activities which
will adversely affect the performance of its obligations to the Fund under this
Agreement; and provided further that the Advisor will adhere to a code of ethics
governing employee trading and trading for proprietary accounts that conforms to
the requirements of the Investment Company Act and the Investment Advisers Act
of 1940 and has been approved by the Trust' Board of Trustees.
13. Term.
(a) This Agreement shall become effective at the time the Fund
commences operations pursuant to an effective amendment to the Trust's
Registration Statement under the Securities Act of 1933 and shall remain in
effect for a period of two (2) years, unless sooner terminated as hereinafter
provided. This Agreement shall continue in effect thereafter for additional
periods not exceeding one (l) year so long as such continuation is approved for
the Fund at least annually by (i) the Board of Trustees of the Trust or by the
vote of a majority of the outstanding voting securities of each Fund and (ii)
the vote of a majority of the Trustees of the Trust who are not parties to this
Agreement nor interested persons thereof, cast in person at a meeting called for
the purpose of voting on such approval. The terms "majority of the outstanding
voting securities" and "interested persons" shall have the meanings as set forth
in the Investment Company Act.
(b) The Fund may use the name "The [ ] Fund" or any name derived
from or using the name "[ ]" only for so long as this Agreement or any
extension, renewal or amendment hereof remains in effect Within sixty (60) days
from such time as this Agreement shall no longer be in effect, the Fund shall
cease to use such a name or any other name connected with the Advisor.
14. Termination; No Assignment.
(a) This Agreement may be terminated by the Trust on behalf of the
Fund at any time without payment of any penalty, by the Board of Trustees of the
Trust or by vote of a majority of the outstanding voting securities of a Fund,
upon sixty (60) days' written notice to the Advisor, and by the Advisor upon
sixty (60) days' written notice to a Fund. In the event of a termination, the
Advisor shall cooperate in the orderly transfer of the Fund's affairs and, at
the request of the Board of Trustees, transfer any and all books and records of
the Fund maintained by the Advisor on behalf of the Fund.
(b) This Agreement shall terminate automatically in the event of any
transfer or assignment thereof, as defined in the Investment Company Act.
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<PAGE>
15. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute or rule, or shall be otherwise rendered
invalid, the remainder of this Agreement shall not be affected thereby.
16. Notice of Declaration of Trust. The Advisor agrees that the Trust's
obligations under this Agreement shall be limited to the Funds and to their
assets, and that the Advisor shall not seek satisfaction of any such obligation
from the shareholders of the Funds nor from any trustee, officer, employee or
agent of the Trust or the Funds.
17. Captions. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
18. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware without giving effect to the
conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the Investment Company Act and the Investment Advisors Act of
1940 and any rules and regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all on the day and year first
above written.
ROCHDALE INVESTMENT INSURANCE TRUST ROCDHALE INVESTMENT
on behalf of Rochdale [ ] Fund MANAGEMENT, INC.
By: By:
9
Exhibit 6.
ROCHDALE INVESTMENT INSURANCE TRUST
DISTRIBUTION AGREEMENT
This Agreement, made as of the __th day of _______, 2000 between ROCHDALE
INVESTMENT INSURANCE TRUST, a Delaware business trust (the "Trust"), and
ROCHDALE INVESTMENT MANAGEMENT, INC., a Delaware corporation (the
"Distributor").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act of
l940 (the "1940 Act"), and it is in the interest of the Trust to offer its class
of shares entitled the ROCHDALE [ ] FUND (the "Fund") for sale continuously; and
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of l934 (the "1934 Act") and is a member in good
standing of the National Association of Securities Dealers, Inc. (the "NASD");
and
WHEREAS, the Trust and the Distributor wish to enter into an agreement with
each other with respect to the continuous offering of the shares of beneficial
interest of the Fund (the "Shares"), to commence after the effectiveness of
amendment to the registration statement filed pursuant to the Securities Act of
1933 (the "1933 Act") and the 1940 Act relating to the Fund.
NOW, THEREFORE, the parties agree as follows:
l. Appointment of Distributor. The Trust hereby appoints the Distributor as
its exclusive agent to sell and to arrange for the sale of the Shares, on the
terms and for the period set forth in this Agreement, and the Distributor hereby
accepts such appointment and agrees to act hereunder directly and/or through the
Trust's transfer agent in the manner set forth in the Prospectuses (as defined
below). It is understood and agreed that the services of the Distributor
hereunder are not exclusive, and the Distributor may act as principal
underwriter for the shares of any other registered investment company.
2. Services and Duties of the Distributor
(a) The Distributor agrees to sell the Shares, as agent for the Trust, from
time to time during the term of this Agreement upon the terms described in the
Fund's Prospectus. As used in this Agreement, the term "Prospectus" shall mean
the prospectus and statement of additional information of the Fund included as
part of the Trust's
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Registration Statement, as such prospectus and statement of additional
information may be amended or supplemented from time to time, andthe term
"Registration Statement" shall mean the Registration Statement most recently
filed from time to time by the Trust with the Securities and Exchange Commission
and effective under the 1933 Act and the 1940 Act, as such Registration
Statement is amended by any amendments thereto at the time in effect. The
Distributor shall not be obligated to sell any certain number of Shares.
(b) Upon commencement of the Fund's operations, the Distributor will hold
itself available to receive orders, satisfactory to the Distributor, for the
purchase of the Shares and will accept such orders and will transmit such orders
and funds received by it in payment for such Shares as are so accepted to the
Trust's transfer agent or custodian, as appropriate, as promptly as practicable.
Purchase orders shall be deemed effective at the time and in the manner set
forth in the Prospectus. The Distributor shall not make any short sales of
Shares.
(c) The offering price of the Shares shall be the net asset value per share
of the Shares (as defined in the Declaration of Trust), plus the sales charge,
if any, (determined as set forth in the prospectus). The Trust shall furnish the
Distributor, with all possible promptness, an advice of each computation of net
asset value and offering price.
3. Duties of the Trust.
(a) Maintenance of Federal Registration. The Trust shall, at its expense,
take, from time to time, all necessary action and such steps, including payment
of the related filing fees, as may be necessary to register and maintain
registration of a sufficient number of Shares under the 1933 Act. The Trust
agrees to file from time to time such amendments, reports and other documents as
may be necessary in order that there may be no untrue statement of a material
fact in a registration statement or prospectus, or necessary in order that there
may be no omission to state a material fact in the registration statement or
prospectus which omission would make the statements therein misleading.
(b) Maintenance of "Blue Sky" Qualifications. The Trust shall, at its
expense, use its best efforts to qualify and maintain the qualification of an
appropriate number of Shares for sale under the securities laws of such states
as the Distributor and the Trust may approve, and, if necessary or appropriate
in connection therewith, to qualify and maintain the qualification of the Trust
as a broker or dealer in such states; provided that the Trust shall not be
required to amend its Declaration of Trust or By-Laws to comply with the laws of
any state, to maintain an office in any state, to change the terms of the
offering of the Shares in any state, to change the terms of the offering of the
Shares in any state from the terms set forth in its Prospectuses, to qualify as
a foreign corporation in any state or to consent to service of process in any
state other than with respect to claims arising out of the offering and sale of
the Shares. The Distributor shall
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<PAGE>
furnish such information and other material relating to its affairs and
activities as may be required by the Trust in connection with such
qualifications.
(c) Copies of Reports and Prospectuses. The Trust shall, at its expense,
keep the Distributor fully informed with regard to its affairs and in connection
therewith shall furnish to the Distributor copies of all information, financial
statements and other papers which the Distributor may reasonably request for use
in connection with the distribution of Shares, including such reasonable number
of copies of its Prospectuses and annual and interim reports as the Distributor
may request and shall cooperate fully in the efforts of the Distributor to sell
and arrange for the sale of the Shares and in the performance of the Distributor
under this Agreement.
4. Conformity with Applicable Law and Rules. The Distributor agrees that in
selling Shares hereunder it shall conform in all respects with the laws of the
United States and of any state in which Shares may be offered, and with
applicable rules and regulations of the NASD.
5. Independent Contractor. In performing its duties hereunder, the
Distributor shall be an independent contractor and neither the Distributor, nor
any of its officers, directors, employees, or representatives is or shall be an
employee of the Trust in the performance of the Distributor's duties hereunder.
The Distributor shall be responsible for its own conduct and the employment,
control, and conduct of its agents and employees and for injury to such agents
or employees or to others through its agents or employees. The Distributor
assumes full responsibility for its agents and employees under applicable
statutes and agrees to pay all employee taxes thereunder.
6. Indemnification.
(a) Indemnification of Trust. The Distributor agrees to indemnify and hold
harmless the Trust and each of its present or former trustees, officers,
employees, representatives and each person, if any, who controls or previously
controlled the Trust within the meaning of Section l5 of the 1933 Act against
any and all losses, liabilities, damages, claims or expenses (including the
reasonable costs of investigating or defending any alleged loss, liability,
damage, claims or expense and reasonable legal counsel fees incurred in
connection therewith) to which the Trust or any such person may become subject
under the 1933 Act, under any other statute, at common law, or otherwise,
arising out of the acquisition of any Shares by any person which (i) may be
based upon any wrongful act by the Distributor or any of the Distributor's
directors, officers, employees or representatives, or (ii) may be based upon any
untrue statement or alleged untrue statement of a material fact contained in a
registration statement, prospectus, shareholder report or other information
covering Shares filed or made public by the Trust or any amendment thereof or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in reliance upon
information furnished to the Trust by the Distributor. In no case (i) is the
Distributor's indemnity in favor of the Trust, or any person indemnified to
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<PAGE>
be deemed to protect the Trust or such indemnified person against any liability
to which the Trust or such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his
duties or by reason of his reckless disregard of his obligations and duties
under this Agreement or (ii) is the Distributor to be liable under its indemnity
agreement contained in this Paragraph with respect to any claim made against the
Trust or any person indemnified unless the Trust or such person, as the case may
be, shall have notified the Distributor in writing of the claim within a
reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon the Trust or
upon such person (or after the Trust or such person shall have received notice
to such service on any designated agent). However, failure to notify the
Distributor of any such claim shall not relieve the Distributor from any
liability which the Distributor may have to the Trust or any person against whom
such action is brought otherwise than on account of the Distributor's indemnity
agreement contained in this Paragraph.
The Distributor shall be entitled to participate, at its own expense, in
the defense, or, if the Distributor so elects, to assume the defense of any suit
brought to enforce any such claim, but, if the Distributor elects to assume the
defense, such defense shall be conducted by legal counsel chosen by the
Distributor and satisfactory to the Trust, to the persons indemnified defendant
or defendants, in the suit. In the event that the Distributor elects to assume
the defense of any such suit and retain such legal counsel, the Trust, the
persons indemnified defendant or defendants in the suit, shall bear the fees and
expenses of any additional legal counsel retained by them. If the Distributor
does not elect to assume the defense of any such suit, the Distributor will
reimburse the Trust and the persons indemnified defendant or defendants in such
suit for the reasonable fees and expenses of any legal counsel retained by them.
The Distributor agrees to promptly notify the Trust of the commencement of any
litigation of proceedings against it or any of its officers, employees or
representatives in connection with the issue or sale of any Shares.
(b) Indemnification of the Distributor. The Trust agrees to indemnify and
hold harmless the Distributor and each of its present or former directors,
officers, employees, representatives and each person, if any, who controls or
previously controlled the Distributor within the meaning of Section l5 of the
1933 Act against any and all losses, liabilities, damages, claims or expenses
(including the reasonable costs of investigating or defending any alleged loss,
liability, damage, claim or expense and reasonable legal counsel fees incurred
in connection therewith) to which the Distributor or any such person may become
subject under the 1933 Act, under any other statute, at common law, or
otherwise, arising out of the acquisition of any Shares by any person which (i)
may be based upon any wrongful act by the Trust or any of the Trust's trustees,
officers, employees or representatives, or (ii) may be based upon any untrue
statement or alleged untrue statement of a material fact contained in a
registration statement, prospectus, shareholder report or other information
covering Shares filed or made public by the Trust or any amendment thereof or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading unless such statement or
4
<PAGE>
omission was made in reliance upon information furnished to the Trust by the
Distributor. In no case (i) is the Trust's indemnity in favor of the
Distributor, or any person indemnified to be deemed to protect the Distributor
or such indemnified person against any liability to which the Distributor or
such person would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of his duties or by reason of his
reckless disregard of his obligations and duties under this Agreement, or (ii)
is the Trust to be liable under its indemnity agreement contained in this
Paragraph with respect to any claim made against Distributor, or person
indemnified unless the Distributor, or such person, as the case may be, shall
have notified the Trust in writing of the claim within a reasonable time after
the summons or other first written notification giving information of the nature
of the claim shall have been served upon the Distributor or upon such person (or
after the Distributor or such person shall have received notice of such service
on any designated agent). However, failure to notify the Trust of any such claim
shall not relieve the Trust from any liability which the Trust may have to the
Distributor or any person against whom such action is brought otherwise than on
account of the Trust's indemnity agreement contained in this Paragraph.
The Trust shall be entitled to participate, at its own expense, in the
defense, or, if the Trust so elects, to assume the defense of any suit brought
to enforce any such claim, but if the Trust elects to assume the defense, such
defense shall be conducted by legal counsel chosen by the Trust and satisfactory
to the Distributor, to the persons indemnified defendant or defendants, in the
suit. In the event that the Trust elects to assume the defense of any such suit
and retain such legal counsel, the Distributor, the persons indemnified
defendant or defendants in the suit, shall bear the fees and expenses of any
additional legal counsel retained by them. If the Trust does not elect to assume
the defense of any such suit, the Trust will reimburse the Distributor and the
persons indemnified defendant or defendants in such suit for the reasonable fees
and expenses of any legal counsel retained by them. The Trust agrees to promptly
notify the Distributor of the commencement of any litigation or proceedings
against it or any of its trustees, officers, employees or representatives in
connection with the issue or sale of any Shares.
7. Authorized Representations. The Distributor is not authorized by the
Trust to give on behalf of the Trust any information or to make any
representations in connection with the sale of Shares other than the information
and representations contained in a registration statement or prospectus filed
with the Securities and Exchange Commission ("SEC") under the 1933 Act and/or
the 1940 Act, covering Shares, as such registration statement and prospectus may
be amended or supplemented from time to time, or contained in shareholder
reports or other material that may be prepared by or on behalf of the Trust for
the Distributor's use. This shall not be construed to prevent the Distributor
from preparing and distributing tombstone ads and sales literature or other
material as it may deem appropriate. No person other than the Distributor is
authorized to act as principal underwriter (as such term is defined in the 1940
Act) for the Fund.
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<PAGE>
8. Term of Agreement. The term of this Agreement shall begin on the date
first above written, and unless sooner terminated as hereinafter provided, this
Agreement shall remain in effect for a period of two years from the date first
above written. Thereafter, this Agreement shall continue in effect from year to
year, subject to the termination provisions and all other terms and conditions
thereof, so long as such continuation shall be specifically approved at least
annually by the Board of Trustees or by vote of a majority of the outstanding
voting securities of the Fund and, concurrently with such approval by the Board
of Trustees or prior to such approval by the holders of the outstanding voting
securities of the Fund, as the case may be, by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of the
trustees of the Trust who are not parties to this Agreement or interested
persons of any such party. The Distributor shall furnish to the Trust, promptly
upon its request, such information as may reasonably be necessary to evaluate
the terms of this Agreement or any extension, renewal or amendment hereof.
9. Amendment or Assignment of Agreement. This Agreement may not be amended
or assigned except as permitted by the 1940 Act, and this Agreement shall
automatically and immediately terminate in the event of its assignment.
10. Termination of Agreement. This Agreement may be terminated by either
party hereto, without the payment of any penalty, on not more than upon 60 days'
nor less than 30 days' prior notice in writing to the other party; provided,
that in the case of termination by the Trust such action shall have been
authorized by resolution of a majority of the trustees of the Trust who are not
parties to this Agreement or interested persons of any such party, or by vote of
a majority of the outstanding voting securities of the Fund.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Nothing herein contained shall be deemed to require the Trust to take any
action contrary to its Declaration of Trust or By-Laws, or any applicable
statutory or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Board of Trustees of the Trust of
responsibility for and control of the conduct of the affairs of the Trust.
12. Definition of Terms. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretation thereof, if any, by the United
States courts or, in the absence of any controlling decision of any such court,
by rules, regulations or orders of the Securities
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<PAGE>
and Exchange Commission validly issued pursuant to the 1940 Act. Specifically,
the terms "vote of a majority of the outstanding voting securities", "interested
persons", "assignment", and "affiliated person", as used in Paragraphs 8, 9 and
10 hereof, shall have the meanings assigned to them by Section 2(a) of the 1940
Act. In addition, where the effect of a requirement of the 1940 Act reflected in
any provision of this Agreement is relaxed by a rule, regulation or order of the
Securities and Exchange Commission, whether of special or of general
application, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
13. Compliance with Securities Laws. The Trust represents that it is
registered as an open-end management investment company under the 1940 Act, and
agrees that it will comply with all the provisions of the 1940 Act and of the
rules and regulations thereunder. The Trust and the Distributor each agree to
comply with all of the applicable terms and provisions of the 1940 Act, the 1933
Act and, subject to the provisions of Section 4(d), all applicable "Blue Sky"
laws. The Distributor agrees to comply with all of the applicable terms and
provisions of the Securities Exchange Act of 1934.
14. Notices. Any notice required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by registered mail, postage
prepaid, to the Distributor at 4455 E. Camelback Rd., Ste. 261-E, Phoenix, AZ
85018 or to the Fund on behalf of the Trust at 570 Lexington Ave., New York, NY
10022- 6837.
15. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York.
16. No Shareholder Liability. The Distributor understands that the
obligations of this Agreement are not binding upon any shareholder of the Trust
personally, but bind only the Trust's property; the Distributor represents that
it has notice of the provisions of the Declaration of Trust disclaiming
shareholder liability for acts or obligations of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized representatives and their respective corporate
seals to be hereunto affixed, as of the day and year first above written.
ROCHDALE INVESTMENT INSURANCE TRUST
By:
Attest:
ROCHDALE INVESTMENT MANAGEMENT, INC.
By: _____________________________
Attest:
