As filed with the Securities and Exchange Commission on July 24, 1997
Securities Act File No. 33-37458
Investment Company Act File No. 811-6199
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 30 |X|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 31 |X|
THE NOTTINGHAM INVESTMENT TRUST II
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
Telephone (919) 972-9922
AGENT FOR SERVICE:
C. Frank Watson III
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
Telephone (919) 972-9922 Ext 212
With copies to:
M. Guy Brooks, III, Esq.
Poyner & Spruill, L.L.P.
3600 Glenwood Avenue
Raleigh, North Carolina 27612
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<S> <C> <C> <C> <C> <C> <C>
It is proposed that this filing will become effective:
| | Immediately upon filing pursuant |_| on , 1997 pursuant
to Rule 485(b), or to Rule 485(b), or
|_| 60 days after filing pursuant |_| on , 1997 pursuant
to Rule 485(a)(1), to Rule 485(a)(1), or
|X| 75 days after filing pursuant |_| on , 1997 pursuant
to Rule 485(a)(2) to Rule 485(a)(2), or
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The issuer has previously registered an indefinite number of shares of Seven
classes: Capital Value Fund, Investek Fixed Income Trust, ZSA Social Conscience
Fund, ZSA Asset Allocation Fund, The Brown Capital ManagementEquity Fund, The
Brown Capital Management Balanced Fund and The Brown Capital Management Small
Company Fund, under the Securities Act of 1933, as amended, pursuant to Rule
24f-2 under the Investment Company Act of 1940, as amended. The Rule 24f-2
Notice for the year ended March 31, 1997 was filed on May 29, 1997.
This filing includes the Prospectuses and Statements of Additional Information
of The Brown Capital Management Equity Fund, The Brown Capital Management
Balanced Fund and The Brown Capital Management Small Company Fund, which are
incorporated herein by reference to Post-Effective Amendment No. 28 to the
Registrant's Registration Statement on Form N-1A filed with the Commission on
July 12, 1996.
The Prospectus for the Capital Value Fund, Investek Fixed Income Trust and ZSA
Asset Allocation Fund and the Statement of Additional Information for each Fund
included as part of Post Effective Amendment No. 29 to the Registration
Statement on Form N-1A filed with the Securities and Exchange Commission on
August 1, 1996, is also hereby incorporated by reference as if set forth in full
herein .
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PART A
WST Growth & Income Fund Cusip Number 66976M8xx
PROSPECTUS
WST GROWTH & INCOME FUND
INSTITUTIONAL CLASS
The investment objective of the WST Growth & Income Fund (the "Fund") is to
provide its shareholders with a maximum total return consisting of any
combination of capital appreciation, both realized and unrealized, and income.
The Fund will seek to achieve this objective by investing primarily in a
flexible portfolio of equity securities, fixed income securities and money
market instruments. While there is no assurance that the Fund will achieve its
particular investment objective, it endeavors to do so by following the
investment policies described herein.
This Prospectus relates to shares ("Institutional Shares") representing
interests in the Fund. The Institutional Shares are offered to the general
public. See "Prospectus Summary - Offering Price."
INVESTMENT ADVISOR
Wilbanks, Smith & Thomas Asset Management, Inc.
One Commercial Place, Suite 1450
Norfolk, Virginia 23510
The Fund is a diversified series of The Nottingham Investment Trust II (the
"Trust"), a registered open-end management investment company. This Prospectus
sets forth concisely the information about the Fund that a prospective investor
should know before investing. Investors should read this Prospectus and retain
it for future reference. Additional information about the Fund has been filed
with the Securities and Exchange Commission ( the "SEC") and is available upon
request and without charge. You may request the Statement of Additional
Information, as amended from time to time, which is incorporated in this
Prospectus by reference, by writing the Fund at 107 North Washington Street,
Post Office Box 4365, Rocky Mount, North Carolina 27803-0365, or by calling
1-800-525-FUND. The SEC also maintains an Internet Web site (http://www.sec.gov)
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding the Fund.
Investment in the Fund involves risks, including the possible loss of principal.
Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any financial institution, and such shares are not federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus and the Statement of Additional Information is
October **, 1997.
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TABLE OF CONTENTS
PROSPECTUS SUMMARY..................................................... 2
FEE TABLE.............................................................. 3
INVESTMENT OBJECTIVE AND POLICIES...................................... 4
RISK FACTORS........................................................... 9
INVESTMENT LIMITATIONS................................................ 10
FEDERAL INCOME TAXES.................................................. 11
DIVIDENDS AND DISTRIBUTIONS........................................... 11
HOW SHARES ARE VALUED................................................. 12
HOW SHARES MAY BE PURCHASED........................................... 12
HOW SHARES MAY BE REDEEMED............................................ 17
MANAGEMENT OF THE FUND................................................ 18
OTHER INFORMATION..................................................... 20
This Prospectus is not an offering of the securities herein described in any
state in which the offering is unauthorized. No sales representative, dealer or
other person is authorized to give any information or make any representations
other than those contained in this Prospectus.
The Fund reserves the right in its sole discretion to withdraw all or any part
of the offering made by this Prospectus or to reject purchase orders. All orders
to purchase shares are subject to acceptance by the Fund and are not binding
until confirmed or accepted in writing.
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PROSPECTUS SUMMARY
The Fund. The WST Growth & Income Fund (the "Fund") is a diversified series of
The Nottingham Investment Trust II (the "Trust"), a registered open-end
management investment company organized as a Massachusetts business trust. This
Prospectus relates to Institutional Shares of the Fund. See "Other Information -
Description of Shares."
Offering Price. The Institutional Shares of the Fund are offered to the general
public at net asset value. The minimum initial investment is $5,000 ($2,000 for
IRAs and Keogh Plans). The minimum subsequent investment is $500. See "How
Shares May be Purchased."
Investment Objective. The investment objective of the Fund is to provide its
shareholders with a maximum total return consisting of any combination of
capital appreciation, both realized and unrealized, and income. The Fund will
seek to achieve this objective by investing primarily in a flexible portfolio of
equity securities, fixed income securities, and money market instruments. Fixed
income securities and money market instruments will generally comprise not less
than 10% and not more than 30% of the portfolio. See "Investment Objective and
Policies."
Risk Considerations. The Fund is not intended to be a complete investment
program, and there can be no assurance that the Fund will achieve its investment
objective. While the Fund will invest primarily in common stocks traded in U.S.
securities markets, some of the Fund's investments may include foreign
securities traded domestically in U.S. securities markets, illiquid securities,
and securities purchased subject to a repurchase agreement or on a "when-issued"
basis, which involve certain risks. The Fund may also engage in options
transactions, which present special risks. A portion of the Fund will be
invested in fixed income securities, which will be subject to risks associated
with movements in interest rates. The Fund may borrow only under certain limited
conditions (included to meet redemption requests) and not to purchase
securities. It is not the intent of the Fund to borrow except for temporary cash
requirements . Borrowing, if done, would tend to exaggerate the effects of
market and interest rate fluctuations on the Fund's net asset value until
repaid. See "Risk Factors"
Manager. Subject to the general supervision of the Trust's Board of Trustees and
in accordance with the Fund's investment policies, Wilbanks, Smith & Thomas
Asset Management, Inc. of Norfolk, Virginia (the "Advisor"), manages the Fund's
investments. The Advisor currently manages approximately $450 million in assets.
For its advisory services, the Advisor receives a monthly fee, based on the
Fund's daily net assets, at the annual rate of 0.75% of the first $250 million
of net assets and 0.65% of all assets over $250 million. See "Management of the
Fund - The Advisor."
Dividends. Income dividends, if any, are paid quarterly; capital gains, if any,
are generally distributed at least once each year. Dividends and capital gains
distributions are automatically reinvested in additional shares of the same
Class at net asset value unless the shareholder elects to receive cash. See
"Dividends and Distributions."
Distributor. Capital Investment Group, Inc. (the "Distributor") serves as
distributor of shares of the Fund. See "How Shares May Be Purchased -
Distributor."
Redemption of Shares. There is no charge for redemptions other than possible
charges for wiring redemption proceeds. Shares may be redeemed at any time at
the net asset value next determined after receipt of a redemption request by a
Fund. A shareholder that submits appropriate written authorization may redeem
shares by telephone. See "How Shares May Be Redeemed."
<PAGE>
FEE TABLE
The following table sets forth certain information in connection with the
expenses of the Institutional Shares of the Fund anticipated for the current
fiscal year. The information is intended to assist the investor in understanding
the various costs and expenses borne by the Institutional Shares of the Fund,
and therefore indirectly by its investors, the payment of which will reduce an
investor's return on an annual basis.
Shareholder Transaction Expenses for Institutional Shares
Maximum sales load imposed on purchases
(as a percentage of offering price)..............................None
Maximum sales load imposed on reinvested dividends.................None
Maximum deferred sales load........................................None
Redemption fees*...................................................None
Exchange fee.......................................................None
* The Fund in its discretion may choose to pass through to redeeming
shareholders any charges imposed by the Custodian for wiring redemption
proceeds. The Custodian currently charges the Fund $7.00 per
transaction for wiring redemption proceeds.
Annual Fund Operating Expenses
for Institutional Shares
(as a percentage of average net assets)
Management Fees......................................................0.75%1
12b-1 Fees............................................................None
Total Other Expenses.................................................0.75%1
Total Fund Operating Expenses........................................1.50%1
EXAMPLE: You would pay the following expenses on a $1,000 investment in
Institutional Shares of the Fund, whether or not you redeem at the end of the
period, and assuming a 5% annual return:
1 year 3 years
-------- --------
$15 $46
THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
1 The "Total Fund Operating Expenses" shown above are based upon contractual
amounts and other operating expenses estimated to be incurred by the Fund
for the current fiscal year. The Advisor has voluntarily agreed to a
reduction in the fees payable to it and to reimburse expenses of the Fund,
if necessary, in an amount that limits Total Fund Operating Expenses
(exclusive of interest, taxes, brokerage fees and commissions, sales
charges, and extraordinary expenses) to not more than 1.50% of the
Institutional Shares' average daily net assets. There can be no assurance
that the Advisor's voluntary fee waivers and expense reimbursements will
continue in the future.
See "How Shares May Be Purchased" and "Management of the Fund" below for more
information about the fees and costs of operating the Fund. The assumed 5%
annual return in the example is required by the Securities and Exchange
Commission. The hypothetical rate of return is not intended to be representative
of past or future performance of the Fund; the actual rate of return for the
Fund may be greater or less than 5%. Further information about the performance
of the Fund will be contained in the Annual Report of the Fund, a copy of which,
when available, may be obtained at no charge by calling the Fund
INVESTMENT OBJECTIVE AND POLICIES
Investment Objective. The investment objective of the Fund is to provide its
shareholders with a maximum total return consisting of any combination of
capital appreciation, both realized and unrealized, and income. The Fund's
investment objective and fundamental investment limitations described herein may
not be altered without the prior approval of a majority of the Fund's
shareholders.
Investment Policies
The Fund will seek to achieve its investment objective by investing primarily in
a flexible portfolio of equity The Advisor will vary the percentage of Fund
assets invested in equities, fixed income securities, and money market
instruments according to the Advisor's judgment of market and economic
conditions, and based on the Advisor's view of which asset class can best
achieve the Fund's objectives. The percentage invested in fixed income
securities and money market instruments will generally comprise not less than
10% and not more than 30% of the portfolio.
Selection of equity securities will be based primarily on the expected capital
appreciation potential. The expected income potential of those equity securities
is of secondary importance. Selection of fixed income securities will be
primarily for income. The capital appreciation potential of those fixed income
securities is of secondary importance.
The Advisor is considered a "core" bond manager, allocating approximately 50% of
the fixed income portion of the Fund to duration strategies using U.S. Treasury
securities. The remaining 50% of fixed income securities are selected based upon
investment analysis by the Advisor, attempting to identify securities that are
undervalued. Fixed income securities are identified as undervalued in
circumstances, for instance, where the Advisor believes the credit rating of the
company is subject to an increase, which has the potential to reduce the price
spread to a comparable maturity U.S. Treasury security, and in turn increase in
price. Fixed income securities may also be identified as undervalued if the
spread for a particular security is too large relative to similar fixed income
securities within similar maturities and similar credit quality.
The strategy of attempting to identify undervalued fixed income securities may
result, if successful, in a larger component of total return being the result of
capital gains than may be typical for fixed income investment strategies.
The Advisor will continually review the macroeconomic environment and
alternative expected rates of return between fixed income securities and equity
securities in determining the asset allocation of the Fund. In structuring the
fixed income portion of the Fund, the Advisor examines spread relationships
between quality grades in determining the quality distribution, and assesses the
expected trends in inflation and interest rates in structuring the maturity
distribution. Not more than 50% of the total fixed income portion of the
portfolio (not more than 15% of the entire Fund) will be invested in fixed
income securities rated below BBB or Baa by the nationally recognized
statistical rating organizations described in the Statement of Additional
Information.
The equity portion of the Fund's portfolio will be generally comprised of common
stocks, convertible preferred stocks, participating preferred stocks, preferred
equity redemption cumulative stocks, preferred stocks and convertible bonds
traded on domestic securities exchanges or on the over-the-counter markets.
Foreign securities will be limited to those available on domestic U.S. exchanges
and denominated in U.S. currency.
The Advisor utilizes a 'top down' approach to equity selection. Macroeconomic
analysis and projected trends of four primary areas, including market interest
rates, Federal Reserve policy, inflation, and economic growth (as typically
measured by gross domestic product), sector analysis of those sectors within the
Russell 1000, and industry analysis within each sector are all performed in
narrowing of the security research universe. From an initial research universe
of approximately 5,400 companies, a 'screen' is performed to identify securities
with a projected earnings per share growth rate of 12% or more, market
capitalization of not less than $750 million, price earnings' ratios within
appropriate relative ranges compared to comparable sector and industry
companies, and a projection of increasing earnings estimates.
The Advisor utilizes a philosophy known as "GARP", growth at reasonable price,
as its underlying equity investment selection philosophy. The screens referred
to in the paragraph above results in approximately 400 companies, which then
receive active research by the Advisor's Investment Committee. From this group
the Advisor reduces the equity universe to approximately 75 companies which,
depending upon the then current price in the equities markets for that company,
are eligible for inclusion in the Fund. The Advisor will base security selection
on the following factors: financial history of the firm, consistency of
earnings, return on equity, cash flow, strength of management, ratios such as
price/earnings, price/book value, price/sales, and price/cash flow, all compared
to historical valuations and future prospects of the company as judged by the
Advisor. Depending upon the timing of cash flows into the Fund and the relative
attractiveness of each company as that attractiveness may vary (given daily
fluctuations in market prices), a portfolio of 25-45 companies will generally be
included in the Fund portfolio at any given point in time.
The Advisor performs rigorous research on individual companies in the final
equity universe through direct contact with senior management in addition to
Wall Street research analysis. The Advisor's research analysts construct
financial models based upon the data gathered from various sources, to assist in
each securities' qualification under the Advisor's security selection criteria.
The Fund may invest up to 10% of its total assets in options on equity
securities, options on equity indices, and options on equity industry sector
indices. These options may be utilized to hedge certain market risks which the
Advisor may determine, from time to time, exist in the equity markets or in
individual equity issues, or may be used to provide a viable substitute for
direct investment in, and/or short sales of, specific equity securities.
Investments in call and put options are considered speculative, due to the time
premium imputed in the daily value of options, a premium which declines with
time, independent of the change and/or stability of the underlying equity
security, market index or industry sector index.
A call option gives the holder (buyer) the right to purchase a security at a
specified price (the exercise price) at any time before a certain date (the
expiration date). The writer receives a premium (less a commission) for writing
the option. This premium would partially or completely offset any decline in
price. A put gives the holder (buyer) the right to sell a security to the writer
(seller) at a predetermined price (the exercise price) on or before a set date
(the expiration date). The buyer pays a premium to the writer for the right to
sell the underlying shares at the exercise price instead of at the then
prevailing market price. A stock index option generally operates like an option
covering specific securities, except that delivery of cash rather than the
underlying securities is made. A stock index option obligates the seller
(writer) to deliver, and gives the holder (buyer) the right to take delivery of,
cash upon exercise of the option in an amount equal to the difference between
the exercise settlement value of the underlying index on the day the option is
exercised and the exercise price of the option, multiplied by the specified
index "multiplier". The stock index will fluctuate based on changes in the
market values of the stocks included in the index. The Fund will set aside
permissible liquid assets in a segregated account to secure its potential
obligations under its options positions, and such account will include only
cash, U.S. Government Securities, and other liquid high-grade debt securities.
The Fund's ability to use index options transactions successfully depends upon
the degree of correlation between the index on which the option is written and
the securities that the Fund owns or the market position that it intends to
acquire; the liquidity of the market for options, which cannot be assured; and
the Advisor's skill in predicting the movement of stock indices and implementing
options transactions in furtherance of the Fund's investment objectives.
Successful use by the Fund of stock index options will depend primarily on the
Advisor's ability to correctly predict movements in the direction of the stock
markets. This skill is different from the skills and expertise needed to predict
changes in the prices of individual stocks. If the Advisor forecasts incorrectly
the movement of interest rates, market values and other economic factors, the
Fund would be better off without using this hedging technique. The Fund will
write (sell) stock index options for hedging purposes or to close out positions
in stock index options that the Fund has purchased. The Fund may only write
(sell) "covered" options. Risks associated with options transactions generally
include possible loss of the entire premium and the inability to effect closing
transactions at favorable prices. Brokerage commissions associated with buying
and selling options are proportionately higher than those associated with
general securities transactions.
While portfolio securities are generally acquired for the long term, they may be
sold under some of the following circumstances when the Advisor believes that:
(a) the anticipated price appreciation has been achieved or is no longer
probable; (b) alternative investments offer superior total return prospects; or
(c) fundamentals change adversely.
Money market instruments will typically represent a portion of the Fund's
portfolio, as funds awaiting investment, to accumulate cash for anticipated
purchases of portfolio securities and to provide for shareholder redemptions and
operating expenses of the Fund.
Under normal market conditions the portfolio allocation range for the Fund will
generally be:
% of Total Assets
Equity securities 70 - 90%
Money market instruments
and fixed income securities 10 - 30%
Under certain conditions, the Advisor may choose to temporarily invest up to
100% of the Fund's assets in cash and cash equivalents, investment grade bonds,
U.S. Government Securities, repurchase agreements, or money market instruments
as a temporary defensive position, when the Advisor determines that market
conditions warrant such investments. When the Fund invests in these investments
as a temporary defensive measure, it is not pursuing its stated investment
objective.
Money Market Instruments. Money market instruments may be purchased when the
Advisor believes interest rates are rising, the prospect for capital
appreciation in the equity and longer term fixed income securities' markets are
not attractive, or when the "yield curve" favors short term fixed income
instruments versus longer term fixed income instruments. Money market
instruments may be purchased for temporary defensive purposes, to accumulate
cash for anticipated purchases of portfolio securities and to provide for
shareholder redemptions and operating expenses of the Fund. Money market
instruments mature in thirteen months or less from the date of purchase and may
include U.S. Government Securities, corporate debt securities (including those
subject to repurchase agreements), bankers acceptances and certificates of
deposit of domestic branches of U.S. banks, and commercial paper (including
variable amount demand master notes). In addition, such securities must be rated
in one of the two highest rating categories by any of the nationally recognized
statistical rating organizations or if not rated, of equivalent quality in the
Advisor's opinion.
U.S. Government Securities. The Fund may invest a portion of its portfolio in
U.S. Government Securities, defined to be U.S. Government obligations such as
U.S. Treasury notes, U.S. Treasury bonds, and U.S. Treasury bills, obligations
guaranteed by the U.S. Government such as Government National Mortgage
Association ("GNMA") as well as obligations of U.S. Government authorities,
agencies and instrumentalities such as Federal National Mortgage Association
("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Home
Administration ("FHA"), Federal Farm Credit Bank "FFCB"), Federal Home Loan Bank
("FHLB"), Student Loan Marketing Association ("SLMA"), and The Tennessee Valley
Authority. U.S. Government Securities may be acquired subject to repurchase
agreements. While obligations of some U.S. Government sponsored entities are
supported by the full faith and credit of the U.S. Government (e.g. GNMA),
several are supported by the right of the issuer to borrow from the U.S.
Government (e.g. FNMA, FHLMC), and still others are supported only by the credit
of the issuer itself (e.g. SLMA, FFCB). No assurance can be given that the U.S.
Government will provide financial support to U.S. Government agencies or
instrumentalities in the future, other than as set forth above, since it is not
obligated to do so by law. The guarantee of the U.S. Government does not extend
to the yield or value of the Fund's shares.
Securities issued by the U.S. Government may be acquired by the Fund in the form
of custodial receipts that evidence ownership of future interest payments,
principal payments or both on certain U.S. Treasury notes or bonds. Such notes
and bonds are held in custody by a bank on behalf of the owners. These custodial
receipts are known by various names, including "Treasury Receipts," "Treasury
Investment Growth Receipts" ("TIGRs"), and "Certificates of Accrual on Treasury
Securities" ("CATS"). The Fund may also invest in separately traded principal
and interest components of securities issued or guaranteed by the U.S. Treasury.
The principal and interest components of selected securities are traded
independently under the Separate Trading of Registered Interest and Principal of
Securities program ("STRIPS"). Under the STRIPS program, the principal and
interest components are individually numbered and separately issued by the U.S.
Treasury at the request of depository financial institutions, which then trade
the component parts independently.
Corporate Debt Securities. The Fund may invest in U.S. dollar denominated
corporate debt securities of domestic issuers limited to corporate debt
securities (corporate bonds, debentures, notes and other similar corporate debt
instruments) that meet the minimum ratings criteria set forth for the Fund, or,
if unrated, are in the Advisor's opinion comparable in quality to corporate debt
securities in that the Fund may invest. The Fund may invest in convertible bonds
of domestic issuers meeting such quality requirements and other corporate debt
securities generally in the form of money market instruments as described above.
Up to 15% of the Fund could be invested in fixed income securities rated below
"investment grade."
Foreign Debt Securities. The Fund may invest in foreign denominated debt traded
on domestic U.S. exchanges, or traded over-the-counter by U.S. based securities
dealers. In some cases these debt securities may be denominated in the native
currency of the issuer. In the event such securities are denominated in foreign
securities those securities will not only be subject the risks associated with
companies domiciled in foreign countries (as described herein under "Foreign
Securities"), but will also be subject to the volatility and risk associated
with changes in currency exchange rates. Because of this additional risk and
volatility, the Advisor does not anticipate holding more than 5% of the Fund in
foreign denominated debt securities.
Repurchase Agreements. The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when the Fund acquires a security and
simultaneously resells it to the vendor (normally a member bank of the Federal
Reserve or a registered Government Securities dealer) for delivery on an agreed
upon future date. The repurchase price exceeds the purchase price by an amount
that reflects an agreed upon market interest rate earned by the Fund effective
for the period of time during which the repurchase agreement is in effect.
Delivery pursuant to the resale typically will occur within one to seven days of
the purchase. The Fund will not enter into any repurchase agreement that will
cause more than 10% of its net assets to be invested in repurchase agreements
that extend beyond seven days. In the event of the bankruptcy of the other party
to a repurchase agreement, the Fund could experience delays in recovering its
cash or the securities lent. To the extent that in the interim the value of the
securities purchased may have declined, the Fund could experience a loss. In all
cases, the creditworthiness of the other party to a transaction is reviewed and
found satisfactory by the Advisor. Repurchase agreements are, in effect, loans
of Fund assets. The Fund will not engage in reverse repurchase transactions,
which are considered to be borrowings under the 1940 Act.
Foreign Securities. The Fund may invest in the securities of foreign private
issuers. The same factors would be considered in selecting foreign securities as
with domestic securities. Foreign securities investment presents special
consideration not typically associated with investment in domestic securities.
Foreign taxes may reduce income. Currency exchange rates and regulations may
cause fluctuations in the value of foreign securities. Foreign securities are
subject to different regulatory environments than in the United States and,
compared to the United States, there may be a lack of uniform accounting,
auditing and financial reporting standards, less volume and liquidity and more
volatility, less public information, and less regulation of foreign issuers.
Countries have been known to expropriate or nationalize assets, and foreign
investments may be subject to political, financial, or social instability, or
adverse diplomatic developments. There may be difficulties in obtaining service
of process on foreign issuers and difficulties in enforcing judgments with
respect to claims under the U.S. Securities laws against such issuers. Favorable
or unfavorable differences between U.S. and foreign economies could affect
foreign securities values. The U.S. Government has, in the past, discouraged
certain foreign investments by U.S. investors through taxation or other
restrictions and it is possible that such restrictions could be imposed again.
The Fund will limit foreign equity investments to those traded domestically on
U.S. securities exchanges and denominated in U.S. currency. The prices of such
securities are denominated in U.S. dollars while the underlying company may
maintains its records in a foreign currency. Such a disparity may result in
greater volatility than would be expected with equities of domestic U.S.
companies.
Investment Companies. In order to achieve its investment objective, the Fund may
invest up to 10% of the value of its total assets in securities of other
investment companies whose investment objectives are consistent with the Fund's
investment objective. The Fund will not acquire securities of any one investment
company if, immediately thereafter, the Fund would own more than 3% of such
company's total outstanding voting securities, securities issued by such company
would have an aggregate value in excess of 5% of the Fund's assets, or
securities issued by such company and securities held by the Fund issued by
other investment companies would have an aggregate value in excess of 10% of the
Fund's assets. To the extent a Fund invests in other investment companies, the
shareholders of the Fund would indirectly pay a portion of the operating costs
of the underlying investment companies. These costs include management,
brokerage, shareholder servicing and other operational expenses. Shareholders of
the Fund would then indirectly pay higher operational costs than if they owned
shares of the underlying investment companies directly.
Real Estate Securities. The Fund will not invest in real estate (including
mortgage loans and limited partnership interests), but may invest in readily
marketable securities issued by companies that invest in real estate or
interests therein. The Fund may also invest in readily marketable interests in
real estate investment trusts ("REITs"). REITs are generally publicly traded on
the national stock exchanges and in the over-the-counter market and have varying
degrees of liquidity. Although the Fund is not limited in the amount of these
types of real estate securities they may acquire, it is not presently expected
that within the next 12 months the Fund will have in excess of 10% of its assets
in real estate securities.
RISK FACTORS
Investment Policies and Techniques. Reference should be made to "Investment
Objective and Policies" above for a description of special risks presented by
the investment policies of the Fund and the specific securities and investment
techniques that may be employed by the Fund, including the risks associated with
corporate and foreign debt securities, options transactions, repurchase
agreements, and foreign securities. A more complete discussion of certain of
these securities and investment techniques and their associated risks is
contained in the Statement of Additional Information.
Fluctuations in Value. To the extent that the major portion of the Fund'
portfolios consists of common stocks, it may be expected that its net asset
value will be subject to greater fluctuation than a portfolio containing mostly
fixed income securities. The fixed income securities in which the Fund will
invest are also subject to fluctuation in value. Such fluctuations may be based
on movements in interest rates or from changes in the creditworthiness of the
issuers, which may result from adverse business and economic developments or
proposed corporate transactions, such as a leveraged buy-out or recapitalization
of the issuer. The value of the Fund's fixed income securities will generally
vary inversely with the direction of prevailing interest rate movements. Should
interest rates increase or the creditworthiness of an issuer deteriorates the
value of the Fund's fixed income securities would decrease in value, which would
have a depressing influence on the Fund's net asset value. The Fund may also
invest up to 15% of its total assets in fixed income securities rated below BBB
or Baa by the nationally recognized statistical rating organizations described
in the Statement of Additional Information. Securities rated below these
"investment grade" levels are often called "junk bonds" and are considered
speculative. Although certain of the U.S. Government Securities in which the
Fund may invest are guaranteed as to timely payment of principal and interest,
the market value of the securities, upon which the Fund's net asset value is
based, will fluctuate due to the interest rate risks described above.
Additionally, not all U.S. Government Securities are backed by the full faith
and credit of the U.S. Government. Because there is risk in any investment,
there can be no assurance that the Fund will achieve its investment objective.
Portfolio Turnover. The Fund may sell portfolio securities without regard to the
length of time they have been held in order to take advantage of new investment
opportunities. Portfolio turnover generally involves some expense to the Fund,
including brokerage commissions or dealer mark-ups and other transaction costs
on the sale of securities and the reinvestment in other securities. Portfolio
turnover may also have capital gains tax consequences. Portfolio turnover is not
expected to exceed 100% per year.
Illiquid Investments. The Fund may invest up to 10% of its net assets in
illiquid securities. Illiquid securities are those that may not be sold or
disposed of in the ordinary course of business within seven days at
approximately the price at which they are valued. Under the supervision of the
Board of Trustees, the Advisor determines the liquidity of the Fund's
investments. The absence of a trading market can make it difficult to ascertain
a market value for illiquid investments. Disposing of illiquid securities before
maturity may be time consuming and expensive, and it may be difficult or
impossible for the Fund to sell illiquid investments promptly at an acceptable
price. The Fund may not invest in restricted securities, which are securities
that cannot be sold to the public without registration under the federal
securities laws.
Borrowing. The Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and 15% of its total assets to meet redemption requests
which might otherwise require untimely disposition of portfolio holdings. To the
extent the Fund borrows for these purposes, the effects of market price
fluctuations on the portfolio's net asset value will be exaggerated. If, while
such borrowing is in effect, the value of the Fund's assets declines, the Fund
could be forced to liquidate portfolio securities when it is disadvantageous to
do so. The Fund would incur interest and other transaction costs in connection
with borrowing. The Fund will borrow only from a bank. The Fund will not make
any further investments if the borrowing exceeds 5% of its total assets until
such time as repayment has been made to bring the total borrowing below 5% of
its total assets.
Forward Commitments and When-Issued Securities. The Fund may purchase
when-issued securities and commit to purchase securities for a fixed price at a
future date beyond customary settlement time. The Fund is required to hold and
maintain in a segregated account until the settlement date, cash, U.S.
Government Securities or high-grade debt obligations in an amount sufficient to
meet the purchase price. Purchasing securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in addition to
the risk of decline in value of the Fund's other assets. In addition, no income
accrues to the purchaser of when-issued securities during the period prior to
issuance. Although a Fund would generally purchase securities on a when-issued
or forward commitment basis with the intention of acquiring securities for its
portfolio, the Fund may dispose of a when-issued security or forward commitment
prior to settlement if the Advisor deems it appropriate to do so.
The Fund may realize short-term gains or losses upon such sales.
INVESTMENT LIMITATIONS
To limit the Fund's exposure to risk, the Fund has adopted certain investment
limitations. Some of these restrictions are that the Fund will not: (1) issue
senior securities, borrow money or pledge its assets, except that it may borrow
from banks as a temporary measure (a) for extraordinary or emergency purposes,
in amounts not exceeding 5% of the Fund's total assets, or (b) to meet
redemption requests, which might otherwise require untimely disposition of
portfolio securities in amounts not exceeding 15% of its total assets (the Fund
will not make any investments if borrowing exceeds 5% of its total assets); (2)
make loans of money or securities, except that the Fund may invest in repurchase
agreements (but repurchase agreements having a maturity of longer than seven
days, together with other not readily marketable securities, are limited to 10%
of the Fund's net assets), money market instruments and other debt securities;
(3) invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of bonds,
guarantors), if more than 5% of its total assets would be invested in such
securities; (4) purchase foreign securities, except that the Fund may purchase
foreign securities traded on domestic U.S. exchanges without limit; and (5) with
respect to 75% of its total assets, invest more than 5% of its total assets at
cost in the securities of any one issuer nor hold more than 10% of the voting
stock of any issuer. Investment restrictions (1) and (5) are fundamental
investment limitations that cannot be altered without the prior approval of a
majority of the Fund's shareholders. The other investment restrictions listed
above are non-fundamental and can be changed without shareholder approval. See
"Investment Limitations" in the Fund's Statement of Additional Information for a
complete list of investment limitations.
If the Board of Trustees of the Trust determines that the Fund's investment
objectives can best be achieved by a substantive change in a non-fundamental
investment limitation, the Board can make such change without shareholder
approval and will disclose any such material changes in the then current
Prospectus. Any limitation that is not specified in the Fund's Prospectus, or in
the Statement of Additional Information, as being fundamental, is
non-fundamental. If a percentage limitation is satisfied at the time of
investment, a later increase or decrease in such percentage resulting from a
change in the value of the Fund's portfolio securities will not constitute a
violation of such limitation.
FEDERAL INCOME TAXES
Taxation of the Fund. The Internal Revenue Code of 1986, as amended (the
"Code"), treats each series in the Trust as a separate regulated investment
company. Each series of the Trust (the Fund) intends to qualify or remain
qualified as a regulated investment company under the Code by distributing
substantially all of its "net investment income" to shareholders and meeting
other requirements of the Code. For the purpose of calculating dividends, net
investment income consists of income accrued on portfolio assets, less accrued
expenses. Upon qualification, the Fund will not be liable for federal income
taxes to the extent earnings are distributed. The Board of Trustees retains the
right for any series of the Trust to determine for any particular year if it is
advantageous not to qualify as a regulated investment company. Regulated
investment companies, such as each series of the Trust, are subject to a
non-deductible 4% excise tax to the extent they do not distribute the
statutorily required amount of investment income, determined on a calendar year
basis, and capital gain net income, using an October 31 year end measuring
period. The intends to declare or distribute dividends during the calendar year
in an amount sufficient to prevent imposition of the 4% excise tax.
Taxation of Shareholders. For federal income tax purposes, any dividends and
distributions from short-term capital gains that a shareholder receives in cash
from the Fund or which are re-invested in additional shares will be taxable
ordinary income. If a shareholder is not required to pay a tax on income, he
will not be required to pay federal income taxes on the amounts distributed to
him. A dividend declared in October, November or December of a year and paid in
January of the following year will be considered to be paid on December 31 of
the year of declaration.
Distributions paid by the Fund from long-term capital gains, whether received in
cash or reinvested in additional shares, are taxable as long-term capital gains,
regardless of the length of time an investor has owned shares in the Fund.
Capital gain distributions are made when the Fund realizes net capital gains on
sales of portfolio securities during the year. Dividends and capital gain
distributions paid by the Fund shortly after shares have been purchased,
although in effect a return of investment, are subject to federal income
taxation.
The sale of shares of the Fund is a taxable event and may result in a capital
gain or loss. Capital gain or loss may be realized from an ordinary redemption
of shares or an exchange of shares between two mutual funds (or two series of a
mutual funds).
The Trust will inform shareholders of the Fund of the source of its dividends
and capital gains distributions at the time they are paid and, promptly after
the close of each calendar year, will issue an information return to advise
shareholders of the federal tax status of such distributions and dividends.
Dividends and distributions may also be subject to state and local taxes.
Shareholders should consult their tax advisors regarding specific questions as
to federal, state or local taxes.
Federal income tax law requires investors to certify that the social security
number or taxpayer identification number provided to the Fund is correct and
that the investor is not subject to 31% withholding for previous under-reporting
to the Internal Revenue Service (the "IRS"). Investors will be asked to make the
appropriate certification on their application to purchase shares. If a
shareholder of the Fund has not complied with the applicable statutory and IRS
requirements, the Fund is generally required by federal law to withhold and
remit to the IRS 31% of reportable payments (which may include dividends and
redemption amounts).
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute substantially all of its net investment income,
if any, in the form of dividends. The Fund will generally pay income dividends,
if any, quarterly, and will generally distribute net realized capital gains, if
any, at least annually.
Unless a shareholder elects to receive cash, dividends and capital gains will be
automatically reinvested in additional full and fractional shares of the same
Class of the Fund at the net asset value per share next determined. Reinvested
dividends and capital gains are exempt from any sales load. Shareholders wishing
to receive their dividends or capital gains in cash may make their request in
writing to the Fund at 107 North Washington Street, Post Office Box 4365, Rocky
Mount, North Carolina 27803-0365. That request must be received by the Fund
prior to the record date to be effective as to the next dividend. If cash
payment is requested, checks will be mailed within five business days after the
last day of each quarter or the Fund's fiscal year end, as applicable. Each
shareholder of the Fund will receive a quarterly summary of his or her account,
including information as to reinvested dividends from the Fund. Tax consequences
to shareholders of dividends and distributions are the same if received in cash
or in additional shares of the Fund.
In order to satisfy certain requirements of the Code, the Fund may declare
special year-end dividend and capital gains distribution during December. Such
distributions, if received by shareholders by January 31, are deemed to have
been paid by the Fund and received by shareholders on December 31 of the prior
year.
There is no fixed dividend rate, and there can be no assurance as to the payment
of any dividends or the realization of any gains. The Fund's net investment
income available for distribution to holders of Institutional Shares will be
reduced by the amount of any expenses allocated to the Institutional Shares.
HOW SHARES ARE VALUED
Net asset value for each Class of Shares of the Fund is determined at 4:00 p.m.,
New York time, Monday through Friday, except on business holidays when the New
York Stock Exchange is closed. The net asset value of the shares of the Fund for
purposes of pricing sales and redemptions is equal to the total market value of
its investments, and other assets, less all of its liabilities, divided by the
number of its outstanding shares. Net asset value is determined separately for
each Class of Shares of a Fund and reflects any liabilities allocated to a
particular Class as well as the general liabilities of the Fund.
Securities that are listed on a securities exchange are valued at the last
quoted sales price at the time the valuation is made. Price information on
listed securities is taken from the exchange where the security is primarily
traded by the Fund. Securities that are listed on an exchange and which are not
traded on the valuation date are valued at the mean of the bid and asked prices.
Unlisted securities for which market quotations are readily available are valued
at the latest quoted sales price, if available, at the time of valuation,
otherwise, at the latest quoted bid price. Temporary cash investments with
maturities of 60 days or less will be valued at amortized cost, which
approximates market value. Securities for which no current quotations are
readily available are valued at fair value as determined in good faith using
methods approved by the Board of Trustees of the Trust. Securities may be valued
on the basis of prices provided by a pricing service when such prices are
believed to reflect the fair market value of such securities.
Fixed income securities will ordinarily be traded on the over-the-counter
market. When market quotations are not readily available, fixed income
securities may be valued based on prices provided by a pricing service. The
prices provided by the pricing service are generally determined with
consideration given to institutional bid and last sale prices and take into
account securities prices, yields, maturities, call features, ratings,
institutional trading in similar groups of securities, and developments related
to specific securities. Such fixed income securities may also be priced based
upon a matrix system of pricing similar bonds and other fixed income securities.
Such matrix system may be based upon the considerations described above used by
other pricing services and information obtained by the pricing agent from the
Advisor and other pricing sources deemed relevant by the pricing agent.
HOW SHARES MAY BE PURCHASED
Assistance in opening accounts and a purchase application may be obtained from
the Fund by calling 1-800-525-FUND, or by writing to the Fund at the address
shown below for purchases by mail. Assistance is also available through any
broker-dealer authorized to sell shares in the Fund. Payment for shares
purchased may also be made through your account at the broker-dealer processing
your application and order to purchase. Your investment will purchase shares at
the Fund's public offering price next determined after your order is received by
the Fund in proper form as indicated herein.
The minimum initial investment is $5,000 ($2,000 for IRAs and Keogh Plans). The
minimum subsequent investment is $500. The Fund may, in the Advisor's sole
discretion, accept certain accounts with less than the stated minimum initial
investment. You may invest in the following ways:
Regular Mail Orders. Please complete and sign the Fund Shares Application
accompanying this Prospectus and mail it, with your check made payable to the
Fund, to:
WST Growth & Income Fund
Institutional Shares
c/o North Carolina Shareholder Services
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
Applications must contain social security and Taxpayer Identification Numbers
("TINs"). If you have applied for a social security or TIN at the time of
completing your account application, the application should so indicate. Taxes
are not withheld from distributions to U.S. investors if certain IRS
requirements regarding TINs are met.
Bank Wire Orders. Investments can be made directly by bank wire. To establish a
new account or to add to an existing account by wire, please call the Fund at
1-800-525-3863, before wiring funds, to advise it of the investment, the dollar
amount of the investment, and the account identification number. This
notification will ensure prompt and accurate handling of your investment. Please
have your bank use the following wire instructions to purchase by wire:
First Union National Bank of North Carolina
ABA # 053000219
Further Credit Acct # 1028783753
Attn: Custody For The WST Growth & Income Fund
Institutional Shares
For further credit to (shareholder's name and SS# or EIN#)
It is important that the wire message contain all the relevant information and
that the Fund receive prior telephone notification to ensure proper credit. Upon
opening an account by wire order, you must, as soon as possible, complete and
mail your Fund Shares Application to the Fund as described under "Regular Mail
Orders" above. Investors should be aware that some banks might impose a wire
service fee.
General. All purchases of shares are subject to acceptance and are not binding
until accepted. The Fund reserves the right to reject any application or
investment. Orders become effective, and shares are purchased at, the next
determined public offering price per share after an investment has been received
by a Fund, which is as of 4:00 p.m., New York time, Monday through Friday,
exclusive of business holidays. Orders received by a Fund and effective prior to
such 4:00 p.m. time will purchase shares at the public offering price determined
at that time. Otherwise, your order will purchase shares as of such 4:00 p.m.
time on the next business day. For orders placed through a qualified
broker-dealer, such firm is responsible for promptly transmitting purchase
orders to the Fund. Investors may be charged a fee if they effect transactions
in Fund shares through a broker or agent.
If checks are returned unpaid due to insufficient funds, stop payment or other
reasons, the Trust will charge $20. To recover any such loss or charge, the
Trust reserves the right, without further notice, to redeem shares of any fund
of the Trust already owned by any purchaser whose order is cancelled, and such a
purchaser may be prohibited from placing further orders unless investments are
accompanied by full payment by wire or cashier's check.
Payment must be made by check or money order drawn on a U.S. bank and payable in
U.S. dollars. Under certain circumstances the Fund, at its sole discretion, may
allow payment in kind for Fund shares purchased by accepting securities in lieu
of cash. Any securities so accepted would be valued on the date received and
included in the calculation of the net asset value of the Fund. See the
Statement of Additional Information for additional information on purchases in
kind.
The Fund is required by federal law to withhold and remit to the IRS 31% of the
dividends, capital gains distributions and, in certain cases, proceeds of
redemptions paid to any shareholder who fails to furnish the Fund with a correct
taxpayer identification number, who under-reports dividend or interest income or
who fails to provide certification of tax identification number. Instructions to
exchange or transfer shares held in established accounts will be refused until
the certification has been provided. In order to avoid this withholding
requirement, you must certify on your application, or on a separate W-9 Form
supplied by the Fund, that your taxpayer identification number is correct and
that you are not currently subject to backup withholding or you are exempt from
backup withholding. For individuals, your taxpayer identification number is your
social security number.
Distributor. Capital Investment Group, Inc., Post Office Box 32249, Raleigh,
North Carolina 27622 (the "Distributor"), is the national distributor for the
Fund under a Distribution Agreement with the Trust. The Distributor may sell
Fund shares to or through qualified securities dealers or others.
The Distributor, at its expense, may provide additional compensation to dealers
in connection with sales of shares of the Fund. Compensation may include
financial assistance to dealers in connection with conferences, sales or
training programs for their employees, seminars for the public, advertising
campaigns regarding the Fund, and/or other dealer-sponsored special events. In
some instances, this compensation may be made available only to certain dealers
whose representatives have sold or are expected to sell a significant amount of
such shares. Compensation may include payment for travel expenses, including
lodging, incurred in connection with trips taken by invited registered
representatives and members of their families to locations within or outside of
the United States for meetings or seminars of a business nature. Dealers may not
use sales of the Fund shares to qualify for this compensation to the extent such
may be prohibited by the laws of any state or any self-regulatory agency, such
as the National Association of Securities Dealers, Inc. None of the
aforementioned compensation is paid for by the Fund or its shareholders.
Exchange Feature. Investors will have the privilege of exchanging shares of a
Fund for shares of another Fund or shares of any other series of the Trust
established by the Advisor. An exchange is a taxable transaction that involves
the simultaneous redemption of shares of one series and purchase of shares of
another series at the respective closing net asset value next determined after a
request for redemption has been received plus applicable sales charge. Each
series of the Trust will have a different investment objective, which may be of
interest to investors in each series. Shares of a Fund may be exchanged for
shares of another Fund or shares of any other series of the Trust affiliated
with the Advisor at the net asset value plus the percentage difference between
that series' sales charge and any sales charge previously paid in connection
with the shares being exchanged. For example, if a 2% sales charge were paid on
shares that are exchanged into a series with a 3% sales charge, there would be
an additional sales charge of 1% on the exchange. Investors in states where
shares of the other series are qualified for sale may only make exchanges. An
investor may direct a Fund to exchange his shares by writing to the Fund at its
principal office. The request must be signed exactly as the investor's name
appears on the account, and it must also provide the account number, number of
shares to be exchanged, the name of the Fund or other series to which the
exchange will take place and a statement as to whether the exchange is a full or
partial redemption of existing shares. Notwithstanding the foregoing, exchanges
of shares may only be within the same class or type of class of shares involved.
For example, Institutional Shares may not be exchanged for any other Class of
Shares of the Fund.
A pattern of frequent exchange transactions may be deemed by the Advisor to be
an abusive practice that is not in the best interests of the shareholders of the
Fund. Such a pattern may, at the discretion of the Advisor, be limited by a
Fund's refusal to accept further purchase and/or exchange orders from an
investor, after providing the investor with 60 days prior notice. The Advisor
will consider all factors it deems relevant in determining whether a pattern of
frequent purchases, redemptions and/or exchanges by a particular investor is
abusive and not in the best interests of a Fund or its other shareholders.
A shareholder should consider the investment objectives and policies of any
other Fund or series into which the shareholder will be making an exchange, as
described in the prospectus for that other Fund or series. The Board of Trustees
of the Trust reserves the right to suspend or terminate, or amend the terms of,
the exchange privilege upon 60 days written notice to the shareholders.
Automatic Investment Plan. The automatic investment plan enables shareholders to
make regular monthly or quarterly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Fund will automatically charge the checking account for the amount
specified ($100 minimum), which will be automatically invested in shares at the
public offering price on or about the 21st day of the month. The shareholder may
change the amount of the investment or discontinue the plan at any time by
writing to the Fund.
Stock Certificates. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
that will show the number of shares owned.
HOW SHARES MAY BE REDEEMED
Shares of the Fund may be redeemed (the Fund will repurchase them from
shareholders) by mail or telephone. Any redemption may be more or less than the
purchase price of your shares depending on the market value of the Fund's
portfolio securities. All redemption orders received in proper form, as
indicated herein, by the Fund, whether by mail or telephone, prior to 4:00 p.m.
New York time, Monday through Friday, except for business holidays, will redeem
shares at the net asset value determined at that time. Otherwise, your order
will redeem shares as of such 4:00 p.m. time on the next business day. There is
no charge for redemptions from the Fund other than possible charges for wiring
redemption proceeds. You may also redeem your shares through a broker-dealer or
other institution, which may charge you a fee for its services.
The Board of Trustees reserves the right to involuntarily redeem any account
having a net asset value of less than $1,000 (due to redemptions, exchanges or
transfers, and not due to market action) upon 30 days written notice. If the
shareholder brings his account net asset value up to $1,000 or more during the
notice period, the account will not be redeemed. Redemptions from retirement
plans may be subject to tax withholding.
If you are uncertain of the requirements for redemption, please contact the
Fund, at 1-800-525-FUND, or write to the address shown below.
Regular Mail Redemptions. Your request should be addressed to The WST Growth &
Income Fund, Institutional Shares, 107 North Washington Street, Post Office Box
4365, Rocky Mount, North Carolina 27803-0365. Your request for redemption must
include:
1) Your letter of instruction specifying the Fund, the account number, and the
number of shares or dollar amount to be redeemed. This request must be
signed by all registered shareholders in the exact names in which they are
registered;
2) Any required signature guarantees (see "Signature Guarantees" below); and
3) Other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.
Your redemption proceeds will be sent to you within seven days after receipt of
your redemption request. However, the Fund may delay forwarding a redemption
check for recently purchased shares while it determines whether the purchase
payment will be honored. Such delay (which may take up to 15 days from the date
of purchase) may be reduced or avoided if the purchase is made by certified
check or wire transfer. In all cases the net asset value next determined after
the receipt of the request for redemption will be used in processing the
redemption. The Fund may suspend redemption privileges or postpone the date of
payment (i) during any period that the New York Stock Exchange is closed, or
trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission (the "Commission"), (ii) during any period
when an emergency exists as defined by the rules of the Commission as a result
of which it is not reasonably practicable for a Fund to dispose of securities
owned by it, or to fairly determine the value of its assets, and (iii) for such
other periods as the Commission may permit.
Telephone and Bank Wire Redemptions. The Fund offers shareholders the option of
redeeming shares by telephone under certain limited conditions. A Fund will
redeem shares when requested by the shareholder if, and only if, the shareholder
confirms redemption instructions in writing.
A Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 919-972-1908). The confirmation instructions must include:
1) Designation of the Fund name;
2) Shareholder names and account number;
3) Number of shares or dollar amount to be redeemed;
4) Instructions for transmittal of redemption funds to the shareholder; and
5) Shareholder signature as it appears on the application then on file with
the Fund.
The net asset value used in processing the redemption will be the net asset
value next determined after the telephone request is received. Redemption
proceeds will not be distributed until written confirmation of the redemption
request is received, per the instructions above. You can choose to have
redemption proceeds mailed to you at your address of record, your bank, or to
any other authorized person, or you can have the proceeds sent by bank wire to
your bank ($5,000 minimum). Shares of the Fund may not be redeemed by wire on
days on which your bank is not open for business. You can change your redemption
instructions anytime you wish by filing a letter including your new redemption
instructions with the Fund. (See "Signature Guarantees" below). The Fund
reserves the right to restrict or cancel telephone and bank wire redemption
privileges for shareholders, without notice, if the Fund believes it to be in
the best interest of the shareholders to do so. During drastic economic and
market conditions, telephone redemption privileges may be difficult to
implement.
The Fund in its discretion may choose to pass through to redeeming shareholders
any charges by the Custodian for wire redemptions. The Custodian currently
charges $7.00 per transaction for wiring redemption proceeds. If this cost is
passed through to redeeming shareholders by the Fund, the charge will be
deducted automatically from the shareholder's account by redemption of shares in
the account. The shareholder's bank or brokerage firm may also impose a charge
for processing the wire. If wire transfer of funds is impossible or impractical,
the redemption proceeds will be sent by mail to the designated address of
record.
You may redeem shares, subject to the procedures outlined above, by calling the
Fund at 1-800-525-FUND. Redemption proceeds will only be sent to the bank
account or person named in your Fund Shares Application currently on file with
the Fund. Telephone redemption privileges authorize the Fund to act on telephone
instructions from any person representing him or herself to be the investor and
reasonably believed by the Fund to be genuine. The Fund will employ reasonable
procedures, such as requiring a form of personal identification, to confirm that
instructions are genuine, and, if it does not follow such procedures, the Fund
will be liable for any losses due to fraudulent or unauthorized instructions.
The Fund will not be liable for following telephone instructions reasonably
believed to be genuine.
Systematic Withdrawal Plan. A shareholder who owns shares of a Fund valued at
$5,000 or more at current net asset value may establish a Systematic Withdrawal
Plan to receive a monthly or quarterly check in a stated amount not less than
$100. Each month or quarter as specified, the Fund will automatically redeem
sufficient shares from your account to meet the specified withdrawal amount.
Call or write the Fund for an application form. See the Statement of Additional
Information for further details.
Signature Guarantees. To protect your account and the Fund from fraud, signature
guarantees are required to be sure that you are the person who has authorized a
change in registration, or standing instructions, for your account. Signature
guarantees are required for (1) change of registration requests, (2) requests to
establish or change exchange privileges or telephone redemption service other
than through your initial account application, and (3) requests for redemptions
in excess of $50,000. Signature guarantees are acceptable from a member bank of
the Federal Reserve System, a savings and loan institution, credit union (if
authorized under state law), registered broker-dealer, securities exchange or
association clearing agency, and must appear on the written request for
redemption, establishment or change in exchange privileges, or change of
registration.
MANAGEMENT OF THE FUND
Trustees and Officers. The Fund is a diversified series of The Nottingham
Investment Trust II (the "Trust"), an investment company organized as a
Massachusetts business trust on October 25, 1990. The Board of Trustees of the
Trust is responsible for the management of the business and affairs of the
Trust. The Trustees and executive officers of the Trust and their principal
occupations for the last five years are set forth in the Statement of Additional
Information under "Management of the Fund - Trustees and Officers." The Board of
Trustees of the Trust is primarily responsible for overseeing the conduct of the
Trust's business. The Board of Trustees elects the officers of the Trust who are
responsible for its and the Fund's day-to-day operations.
The Advisor. Subject to the authority of the Board of Trustees, Wilbanks, Smith
& Thomas Asset Management, Inc. (the "Advisor") provides the Fund with a
continuous program of supervision of the Fund's assets, including the
composition of its portfolio, and furnishes advice and recommendations with
respect to investments, investment policies and the purchase and sale of
securities, pursuant to an Investment Advisory Agreement (the "Advisory
Agreement") with the Trust.
The Advisor is registered under the Investment Advisors Act of 1940, as amended.
Registration of the Advisor does not involve any supervision of management or
investment practices or policies by the Securities and Exchange Commission. The
Advisor, established as a Virginia corporation in 1990, is controlled by Wayne
F. Wilbanks, CFA; L. Norfleet Smith, Jr.; and Norwood A. Thomas, Jr. The Advisor
currently serves as investment advisor to approximately $450 million in assets.
The Advisor has been rendering investment counsel, utilizing investment
strategies substantially similar to that of the Fund, to individuals, banks and
thrift institutions, pension and profit sharing plans, trusts, estates,
charitable organizations and corporations since its formation. The Advisor's
address is One Commercial Place, Suite 1450, Norfolk, Virginia 23510.
Compensation of the Advisor with regard to the Fund, based upon the Fund's daily
average net assets, is at the annual rate of 0.75% of the first $250 million of
net assets and 0.65% of all assets over $250 million. The Advisor may
periodically voluntarily waive or reduce its advisory fee to increase the net
income of each Class of the Fund.
The Advisor supervises and implements the investment activities of the Fund,
including the making of specific decisions as to the purchase and sale of
portfolio investments. Among the responsibilities of the Advisor under the
Advisory Agreement is the selection of brokers and dealers through whom
transactions in the Fund's portfolio investments will be effected. The Advisor
attempts to obtain the best execution for all such transactions. If it is
believed that more than one broker is able to provide the best execution, the
Advisor will consider the receipt of quotations and other market services and of
research, statistical and other data and the sale of shares of the Fund in
selecting a broker. The Advisor may also utilize a brokerage firm affiliated
with the Trust or the Advisor if it believes it can obtain the best execution of
transactions from such broker. Research services obtained through Fund brokerage
transactions may be used by the Advisor for its other clients and, conversely,
the Fund may benefit from research services obtained through the brokerage
transactions of the Advisor's other clients. For further information, see
"Investment Objective and Policies Investment Transactions" in the Statement of
Additional Information.
The Investment Committee of the Advisor, composed of Wayne F. Wilbanks, CFA; L.
Norfleet Smith, Jr.; and Norwood A. Thomas, Jr. (all control persons of the
Advisor), is responsible for day-to-day management of the Fund's portfolio. Mr.
Thomas serves as executive officer of the Trust and will represent the Advisor
at Board of Trustee meetings.
Administrator. The Nottingham Company (the "Administrator") serves as the Fund's
administrator. The Administrator, subject to the authority of the Board of
Trustees, provides administrative services to and is generally responsible for
the overall management and day-to-day administrative operations of the Fund,
pursuant to an administration agreement with the Trust.
The Administrator, which was established as a North Carolina corporation in
1988, has been operating (with affiliates) as a financial services firm since
1985. Frank P. Meadows III is the firm's Managing Director and controlling
shareholder.
The Administrator, whose address is 105 North Washington Street, Post Office
Drawer 69, Rocky Mount, North Carolina 27802-0069, provides the Fund with office
space and facilities; provides certain executive personnel to the Fund;
maintains the Fund's accounting records; computes daily the Fund's net asset
value; supervises the preparation of tax returns, financial reports,
prospectuses, and proxy statements; and monitors compliance with certain
recordkeeping and regulatory requirements.
Compensation of the Administrator, based upon the average daily net assets of
the Fund, is at the following annual rates: On the first $50 million of the
Fund's net assets, 0.175%; on the next $50 million, 0.15%; on all assets over
$100 million, 0.125%. In addition, the Administrator currently receives a
monthly fee of $2,000 for the first class of the Fund and $750 for each
additional class of the Fund for accounting and recordkeeping services for the
Fund. The Administrator also charges the Fund for certain costs involved with
the daily valuation of investment securities and is reimbursed for out-of-pocket
expenses. The Administrator charges a minimum fee of $3,000 per month for all of
its fees taken in the aggregate, analyzed monthly.
Transfer Agent. NC Shareholder Services, LLC (the "Transfer Agent") serves as
the Fund's transfer, dividend paying, and shareholder servicing agent. The
Transfer Agent, subject to the authority of the Board of Trustees, provides
transfer agency services pursuant to an agreement with the Administrator, which
has been approved by the Trust.
The Transfer Agent, whose address is 107 North Washington Street, Post Office
Box 4365, Rocky Mount, North Carolina 27803-0365, was established as a North
Carolina limited liability company in 1997. John D. Marriott, Jr., is the firm's
controlling member.
The Transfer Agent maintains the records of each shareholder's account, answers
shareholder inquiries concerning accounts, processes purchases and redemptions
of the Fund's shares, acts as dividend and distribution disbursing agent, and
performs other shareholder servicing functions. The Transfer Agent is
compensated for its services by the Administrator and not directly by the Fund.
Custodian. The custodian of the Fund's assets is First Union National Bank of
North Carolina (the "Custodian"). The Custodian's mailing address is Two First
Union Center, Charlotte, North Carolina 28288-1151. The Advisor, Administrator,
Transfer Agent, Distributor, or interested persons thereof, may have banking
relationships with the Custodian.
Other Expenses. The Fund is responsible for the payment of its expenses. These
include, for example, the fees payable to the Advisor, or expenses otherwise
incurred in connection with the management of the investment of the Fund's
assets, the fees and expenses of the Custodian, the fees and expenses of the
Administrator, the fees and expenses of Trustees, outside auditing and legal
expenses, all taxes and corporate fees payable by the Fund, Securities and
Exchange Commission fees, state securities qualification fees, costs of
preparing and printing prospectuses for regulatory purposes and for distribution
to shareholders, costs of shareholder reports and shareholder meetings, and any
extraordinary expenses. The Fund also pays for brokerage commissions and
transfer taxes (if any) in connection with the purchase and sale of portfolio
securities. Expenses attributable to a particular series of the Trust, including
the Fund, will be charged to that series, and expenses not readily identifiable
as belonging to a particular series will be allocated by or under procedures
approved by the Board of Trustees among one or more series in such a manner as
it deems fair and equitable. Any expenses relating only to a particular Class of
Shares of the Fund will be borne solely by such Class.
OTHER INFORMATION
Description of Shares. The Trust was organized as a Massachusetts business trust
on October 25, 1990 under a Declaration of Trust. The Declaration of Trust
permits the Board of Trustees to issue an unlimited number of full and
fractional shares and to create an unlimited number of series of shares. The
Board of Trustees may also classify and reclassify any unissued shares into one
or more classes of shares. The Trust currently has the number of authorized
series of shares, including the Fund, and classes of shares, described in the
Statement of Additional Information under "Description of the Trust." Pursuant
to its authority under the Declaration of Trust, the Board of Trustees has
authorized the issuance of an unlimited number of shares in each of two Classes
("Institutional Shares" and "Institutional Shares") representing equal pro rata
interests in the Fund, except that the Classes bear different expenses that
reflect the differences in services provided to them. Investor Shares are sold
with a sale charge and bear potential distribution expenses and service fees.
Institutional Shares are sold without a sales charge and bear no shareholder
servicing or distribution fees. As a result of different charges, fees, and
expenses between the Classes, the total return on the Fund's Investor Shares
will generally be lower than the total return on the Institutional Shares.
Standardized total return quotations will be computed separately for each Class
of Shares of the Fund.
THIS PROSPECTUS RELATES TO THE FUND'S INSTITUTIONAL SHARES AND DESCRIBES ONLY
THE POLICIES, OPERATIONS, CONTRACTS, AND OTHER MATTERS PERTAINING TO THE
INSTITUTIONAL SHARES. THE FUND ALSO ISSUES A CLASS OF INVESTOR SHARES. SUCH
OTHER CLASS MAY HAVE DIFFERENT SALES CHARGES AND EXPENSES, WHICH MAY AFFECT
PERFORMANCE. INVESTORS MAY CALL THE FUND AT 1-800-525-FUND TO OBTAIN MORE
INFORMATION CONCERNING OTHER CLASSES AVAILABLE TO THEM THROUGH THEIR SALES
REPRESENTATIVE. INVESTORS MAY OBTAIN INFORMATION CONCERNING THOSE CLASSES FROM
THEIR SALES REPRESENTATIVE, THE DISTRIBUTOR, THE FUND, OR ANY OTHER PERSON WHICH
IS OFFERING OR MAKING AVAILABLE TO THEM THE SECURITIES OFFERED IN THIS
PROSPECTUS.
When issued, the shares of each series of the Trust, including the Fund, and
each class of shares, will be fully paid, nonassessable and redeemable. The
Trust does not intend to hold annual shareholder meetings; it may, however, hold
special shareholder meetings for purposes such as changing fundamental policies
or electing Trustees. The Board of Trustees shall promptly call a meeting for
the purpose of electing or removing Trustees when requested in writing to do so
by the record holders of a least 10% of the outstanding shares of the Trust. The
term of office of each Trustee is of unlimited duration. The holders of at least
two-thirds of the outstanding shares of the Trust may remove a Trustee from that
position either by declaration in writing filed with the Custodian or by votes
cast in person or by proxy at a meeting called for that purpose.
The Trust's shareholders will vote in the aggregate and not by series (fund) or
class, except where otherwise required by law or when the Board of Trustees
determines that the matter to be voted on affects only the interests of the
shareholders of a particular series or class. Matters affecting an individual
series, such as the Fund, include, but are not limited to, the investment
objectives, policies and restrictions of that series. Shares have no
subscription, preemptive or conversion rights. Share certificates will not be
issued. Each share is entitled to one vote (and fractional shares are entitled
to proportionate fractional votes) on all matters submitted for a vote, and
shares have equal voting rights except that only shares of a particular series
or class are entitled to vote on matters affecting only that series or class.
Shares do not have cumulative voting rights. Therefore, the holders of more than
50% of the aggregate number of shares of all series of the Trust may elect all
the Trustees.
Under Massachusetts's law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
trust. The Declaration of Trust, therefore, contains provisions that are
intended to mitigate such liability. See "Description of the Trust" in the
Statement of Additional Information for further information about the Trust and
its shares.
Reporting to Shareholders. The Fund will send to its shareholders Annual and
Semi-Annual Reports; the financial statements appearing in Annual Reports for
the Fund will be audited by independent accountants. In addition, the Fund will
send to each shareholder having an account directly with the Fund a quarterly
statement showing transactions in the account, the total number of shares owned
and any dividends or distributions paid. Inquiries regarding the Fund may be
directed in writing to 107 North Washington Street, Post Office Box 4365, Rocky
Mount, North Carolina 27803-0365 or by calling 1-800-525-FUND.
Calculation of Performance Data. From time to time the Fund may advertise its
average annual total return for each Class of Shares. The "average annual total
return" refers to the average annual compounded rates of return over 1-, 5- and
10- year periods that would equate an initial amount invested at the beginning
of a stated period to the ending redeemable value of the investment. The
calculation assumes the reinvestment of all dividends and distributions,
includes all recurring fees that are charged to all shareholder accounts and
deducts all nonrecurring charges at the end of each period. The calculation
further assumes the maximum sales load is deducted from the initial payment. If
a Fund has been operating less than 1-, 5- or 10- years, the time period during
which the Fund has been operating is substituted.
In addition, the Fund may advertise other total return performance data other
than average annual total return for each Class of Shares. This data shows as a
percentage rate of return encompassing all elements of return (i.e. income and
capital appreciation or depreciation); it assumes reinvestment of all dividends
and capital gain distributions. Such other total return data may be quoted for
the same or different periods as those for which average annual total return is
quoted. This data may consist of a cumulative percentage rate of return, actual
year-by-year rates or any combination thereof. Cumulative total return
represents the cumulative change in value of an investment in a Fund for various
periods.
The total return of a Fund could be increased to the extent the Advisor may
waive all or a portion of its fees or may reimburse all or a portion of the
Fund's expenses. Total return figures are based on the historical performance of
the Fund, show the performance of a hypothetical investment, and are not
intended to indicate future performance. The Fund's quotations may from time to
time be used in advertisements, sales literature, shareholder reports, or other
communications. For further information, see "Additional Information on
Performance" in the Statement of Additional Information.
<PAGE>
WST GROWTH & INCOME FUND
INSTITUTIONAL CLASS
PROSPECTUS
October *, 1997
WST Growth & Income Fund
107 North Washington Street
Post Office Drawer 4365
Rocky Mount, North Carolina 27803-0365
1-800-525-FUND
Investment Advisor
Wilbanks, Smith & Thomas Asset Management, Inc.
One Commercial Place, Suite 1450
Norfolk, Virginia 23510
Administrator
The Nottingham Company
105 North Washington Street
Post Office Box 69
Rocky Mount, North Carolina 27803-0365
1-800-525-FUND
Transfer Agent and Shareholder Servicing Agent
NC Shareholder Services, L.L.C.
107 North Washington Street
Post Office Drawer 4365
Rocky Mount, North Carolina 27803-0365
1-800-525-FUND
Custodian
First Union National Bank of North Carolina
Two First Union Center
Charlotte, North Carolina 28288-1151
Distributor
Capital Investment Group, Inc.
Post Office Box 32249
Raleigh, North Carolina 27622
<PAGE>
WST Growth & Income Fund Cusip Number 66976M8xx
PROSPECTUS
WST GROWTH & INCOME FUND
INVESTOR CLASS
The investment objective of the WST Growth & Income Fund (the "Fund") is to
provide its shareholders with a maximum total return consisting of any
combination of capital appreciation, both realized and unrealized, and income.
The Fund will seek to achieve this objective by investing primarily in a
flexible portfolio of equity securities, fixed income securities and money
market instruments. While there is no assurance that the Fund will achieve its
particular investment objective, it endeavors to do so by following the
investment policies described herein.
This Prospectus relates to shares ("Investor Shares") representing interests in
the Fund. The Investor Shares are offered to the general public. See "Prospectus
Summary - Offering Price."
INVESTMENT ADVISOR
Wilbanks, Smith & Thomas Asset Management, Inc.
One Commercial Place, Suite 1450
Norfolk, Virginia 23510
The Fund is a diversified series of The Nottingham Investment Trust II (the
"Trust"), a registered open-end management investment company. This Prospectus
sets forth concisely the information about the Fund that a prospective investor
should know before investing. Investors should read this Prospectus and retain
it for future reference. Additional information about the Fund has been filed
with the Securities and Exchange Commission ( the "SEC") and is available upon
request and without charge. You may request the Statement of Additional
Information, as amended from time to time, which is incorporated in this
Prospectus by reference, by writing the Fund at 107 North Washington Street,
Post Office Box 4365, Rocky Mount, North Carolina 27803-0365, or by calling
1-800-525-FUND. The SEC also maintains an Internet Web site (http://www.sec.gov)
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding the Fund.
Investment in the Fund involves risks, including the possible loss of principal.
Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any financial institution, and such shares are not federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus and the Statement of Additional Information is
October **, 1997.
<PAGE>
TABLE OF CONTENTS
PROSPECTUS SUMMARY.................................................... 2
FEE TABLE............................................................. 3
INVESTMENT OBJECTIVE AND POLICIES..................................... 4
RISK FACTORS.......................................................... 9
INVESTMENT LIMITATIONS............................................... 10
FEDERAL INCOME TAXES................................................. 11
DIVIDENDS AND DISTRIBUTIONS.......................................... 11
HOW SHARES ARE VALUED................................................ 12
HOW SHARES MAY BE PURCHASED.......................................... 12
HOW SHARES MAY BE REDEEMED........................................... 17
MANAGEMENT OF THE FUND............................................... 18
OTHER INFORMATION.................................................... 20
This Prospectus is not an offering of the securities herein described in any
state in which the offering is unauthorized. No sales representative, dealer or
other person is authorized to give any information or make any representations
other than those contained in this Prospectus.
The Fund reserves the right in its sole discretion to withdraw all or any part
of the offering made by this Prospectus or to reject purchase orders. All orders
to purchase shares are subject to acceptance by the Fund and are not binding
until confirmed or accepted in writing.
<PAGE>
PROSPECTUS SUMMARY
The Fund. The WST Growth & Income Fund (the "Fund") is a diversified series of
The Nottingham Investment Trust II (the "Trust"), a registered open-end
management investment company organized as a Massachusetts business trust. This
Prospectus relates to Investor Shares of the Fund. See "Other Information -
Description of Shares."
Offering Price. The Investor Shares of the Fund are offered to the general
public at net asset value plus a 3.75% sales charge, which is reduced or
eliminated on purchases involving larger amounts. The Investor Shares are also
subject to a 12b-1 distribution fee of up to 0.50% of the Investor Shares'
average net assets annually. See "Distributor and Distribution Fee" below. The
minimum initial investment is $5,000 ($2,000 for IRAs and Keogh Plans). The
minimum subsequent investment is $500. See "How Shares May be Purchased."
Investment Objective. The investment objective of the Fund is to provide its
shareholders with a maximum total return consisting of any combination of
capital appreciation, both realized and unrealized, and income. The Fund will
seek to achieve this objective by investing primarily in a flexible portfolio of
equity securities, fixed income securities, and money market instruments. Fixed
income securities and money market instruments will generally comprise not less
than 10% and not more than 30% of the portfolio. See "Investment Objective and
Policies."
Risk Considerations. The Fund is not intended to be a complete investment
program, and there can be no assurance that the Fund will achieve its investment
objective. While the Fund will invest primarily in common stocks traded in U.S.
securities markets, some of the Fund's investments may include foreign
securities traded domestically in U.S. securities markets, illiquid securities,
and securities purchased subject to a repurchase agreement or on a "when-issued"
basis, which involve certain risks. The Fund mat also engage in options
transactions, which present special risks. A portion of the Fund will be
invested in fixed income securities, which will be subject to risks associated
with movements in interest rates. The Fund may borrow only under certain limited
conditions (included to meet redemption requests) and not to purchase
securities. It is not the intent of the Fund to borrow except for temporary cash
requirements . Borrowing, if done, would tend to exaggerate the effects of
market and interest rate fluctuations on the Fund's net asset value until
repaid. See "Risk Factors"
Manager. Subject to the general supervision of the Trust's Board of Trustees and
in accordance with the Fund's investment policies, Wilbanks, Smith & Thomas
Asset Management, Inc. of Norfolk, Virginia (the "Advisor"), manages the Fund's
investments. The Advisor currently manages approximately $450 million in assets.
For its advisory services, the Advisor receives a monthly fee, based on the
Fund's daily net assets, at the annual rate of 0.75% of the first $250 million
of net assets and 0.65% of all assets over $250 million. See "Management of the
Fund - The Advisor."
Dividends. Income dividends, if any, are paid quarterly; capital gains, if any,
are generally distributed at least once each year. Dividends and capital gains
distributions are automatically reinvested in additional shares of the same
Class at net asset value unless the shareholder elects to receive cash. See
"Dividends and Distributions."
Distributor. Capital Investment Group, Inc. (the "Distributor") serves as
distributor of shares of the Fund. See "How Shares May Be Purchased -
Distributor."
Distribution Plan. Under the Fund's Distribution Plan with respect to the
Investor Shares, expenditures by the Fund for distribution activities and
service fees may not exceed 0.50% of the Investor Shares' average net assets
annually. See "How Shares May Be Purchased - Sales Charges" and "- Distribution
Plan."
Redemption of Shares. There is no charge for redemptions other than possible
charges for wiring redemption proceeds. Shares may be redeemed at any time at
the net asset value next determined after receipt of a redemption request by a
Fund. A shareholder that submits appropriate written authorization may redeem
shares by telephone. See "How Shares May Be Redeemed."
<PAGE>
FEE TABLE
The following table set forth certain information in connection with the
expenses of the Investor Shares of the Fund anticipated for the current fiscal
year. The information is intended to assist the investor in understanding the
various costs and expenses borne by the Investor Shares of the Fund, and
therefore indirectly by its investors, the payment of which will reduce an
investor's return on an annual basis.
Shareholder Transaction Expenses for Investor Shares
Maximum sales load imposed on purchases
(as a percentage of offering price)..............................3.75%1
Maximum sales load imposed on reinvested dividends...................None
Maximum deferred sales load..........................................None
Redemption fees*.....................................................None
Exchange fee.........................................................None
* The Fund in its discretion may choose to pass through to redeeming
shareholders any charges imposed by the Custodian for wiring redemption
proceeds. The Custodian currently charges the Fund $7.00 per
transaction for wiring redemption proceeds.
Annual Fund Operating Expenses
for Investor Shares
(as a percentage of average net assets)
Management Fees........................................................0.75%3
12b-1 Fees.............................................................0.50%2
Total Other Expenses...................................................0.75%3
Total Fund Operating Expenses..........................................2.00%3
EXAMPLE: You would pay the following expenses (including the maximum initial
sales charge) on a $1,000 investment in Investor Shares of the Fund, whether or
not you redeem at the end of the period, and assuming a 5% annual return:
1 year 3 years
-------- --------
$57 $98
THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
1 Reduced for larger purchases. See "How to Purchase Shares - Sales Charges."
2 The Fund, with respect to the Investor Shares, has adopted a Distribution
and Service Plan pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended (the "1940 Act"), which provides that the Investor Shares
may pay distribution and service fees up to 0.50% of average net assets of
the Investor Shares annually. See "Management of the Fund - Distribution
Plan" below. Long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales charge permitted by the National
Association of Securities Dealers.
3 The "Total Fund Operating Expenses" shown above are based upon contractual
amounts and other operating expenses estimated to be incurred by the Fund
for the current fiscal year. The Advisor has voluntarily agreed to a
reduction in the fees payable to it and to reimburse expenses of the Fund,
if necessary, in an amount that limits Total Fund Operating Expenses
(exclusive of interest, taxes, brokerage fees and commissions, sales
charges, and extraordinary expenses) to not more than 2.00% of the Investor
Shares' average daily net assets. There can be no assurance that the
Advisor's voluntary fee waivers and expense reimbursements will continue in
the future.
See "How Shares May Be Purchased" and "Management of the Fund" below for more
information about the fees and costs of operating the Fund. The assumed 5%
annual return in the example is required by the Securities and Exchange
Commission. The hypothetical rate of return is not intended to be representative
of past or future performance of the Fund; the actual rate of return for the
fund may be greater or less than 5%. Further information about the performance
of the Fund will be contained in the Annual Report of the Fund, a copy of which,
when available, may be obtained at no charge by calling the Fund.
INVESTMENT OBJECTIVE AND POLICIES
Investment Objective. The investment objective of the Fund is to provide its
shareholders with a maximum total return consisting of any combination of
capital appreciation, both realized and unrealized, and income. The Fund's
investment objective and fundamental investment limitations described herein may
not be altered without the prior approval of a majority of the Fund's
shareholders.
Investment Policies
The Fund will seek to achieve its investment objective by investing primarily in
a flexible portfolio of equity The Advisor will vary the percentage of Fund
assets invested in equities, fixed income securities, and money market
instruments according to the Advisor's judgment of market and economic
conditions, and based on the Advisor's view of which asset class can best
achieve the Fund's objectives. The percentage invested in fixed income
securities and money market instruments will generally comprise not less than
10% and not more than 30% of the portfolio.
Selection of equity securities will be based primarily on the expected capital
appreciation potential. The expected income potential of those equity securities
is of secondary importance. Selection of fixed income securities will be
primarily for income. The capital appreciation potential of those fixed income
securities is of secondary importance.
The Advisor is considered a "core" bond manager, allocating approximately 50% of
the fixed income portion of the Fund to duration strategies using U.S. Treasury
securities. The remaining 50% of fixed income securities are selected based upon
investment analysis by the Advisor, attempting to identify securities that are
undervalued. Fixed income securities are identified as undervalued in
circumstances, for instance, where the Advisor believes the credit rating of the
company is subject to an increase, which has the potential to reduce the price
spread to a comparable maturity U.S. Treasury security, and in turn increase in
price. Fixed income securities may also be identified as undervalued if the
spread for a particular security is too large relative to similar fixed income
securities within similar maturities and similar credit quality.
The strategy of attempting to identify undervalued fixed income securities may
result, if successful, in a larger component of total return being the result of
capital gains than may be typical for fixed income investment strategies.
The Advisor will continually review the macroeconomic environment and
alternative expected rates of return between fixed income securities and equity
securities in determining the asset allocation of the Fund. In structuring the
fixed income portion of the Fund, the Advisor examines spread relationships
between quality grades in determining the quality distribution, and assesses the
expected trends in inflation and interest rates in structuring the maturity
distribution. Not more than 50% of the total fixed income portion of the
portfolio (not more than 15% of the entire Fund) will be invested in fixed
income securities rated below BBB or Baa by the nationally recognized
statistical rating organizations described in the Statement of Additional
Information.
The equity portion of the Fund's portfolio will be generally comprised of common
stocks, convertible preferred stocks, participating preferred stocks, preferred
equity redemption cumulative stocks, preferred stocks and convertible bonds
traded on domestic securities exchanges or on the over-the-counter markets.
Foreign securities will be limited to those available on domestic U.S. exchanges
and denominated in U.S. currency.
The Advisor utilizes a 'top down' approach to equity selection. Macroeconomic
analysis and projected trends of four primary areas, including market interest
rates, Federal Reserve policy, inflation, and economic growth (as typically
measured by gross domestic product), sector analysis of those sectors within the
Russell 1000, and industry analysis within each sector are all performed in
narrowing of the security research universe. From an initial research universe
of approximately 5,400 companies, a 'screen' is performed to identify securities
with a projected earnings per share growth rate of 12% or more, market
capitalization of not less than $750 million, price earnings' ratios within
appropriate relative ranges compared to comparable sector and industry
companies, and a projection of increasing earnings estimates.
The Advisor utilizes a philosophy known as "GARP", growth at reasonable price,
as its underlying equity investment selection philosophy. The screens referred
to in the paragraph above results in approximately 400 companies, which then
receive active research by the Advisor's Investment Committee. From this group
the Advisor reduces the equity universe to approximately 75 companies which,
depending upon the then current price in the equities markets for that company,
are eligible for inclusion in the Fund. The Advisor will base security selection
on the following factors: financial history of the firm, consistency of
earnings, return on equity, cash flow, strength of management, ratios such as
price/earnings, price/book value, price/sales, and price/cash flow, all compared
to historical valuations and future prospects of the company as judged by the
Advisor. Depending upon the timing of cash flows into the Fund and the relative
attractiveness of each company as that attractiveness may vary (given daily
fluctuations in market prices), a portfolio of 25-45 companies will generally be
included in the Fund portfolio at any given point in time.
The Advisor performs rigorous research on individual companies in the final
equity universe through direct contact with senior management in addition to
Wall Street research analysis. The Advisor's research analysts construct
financial models based upon the data gathered from various sources, to assist in
each securities' qualification under the Advisor's security selection criteria.
The Fund may invest up to 10% of its total assets in options on equity
securities, options on equity indices, and options on equity industry sector
indices. These options may be utilized to hedge certain market risks which the
Advisor may determine, from time to time, exist in the equity markets or in
individual equity issues, or may be used to provide a viable substitute for
direct investment in, and/or short sales of, specific equity securities.
Investments in call and put options are considered speculative, due to the time
premium imputed in the daily value of options, a premium which declines with
time, independent of the change and/or stability of the underlying equity
security, market index or industry sector index.
A call option gives the holder (buyer) the right to purchase a security at a
specified price (the exercise price) at any time before a certain date (the
expiration date). The writer receives a premium (less a commission) for writing
the option. This premium would partially or completely offset any decline in
price. A put gives the holder (buyer) the right to sell a security to the writer
(seller) at a predetermined price (the exercise price) on or before a set date
(the expiration date). The buyer pays a premium to the writer for the right to
sell the underlying shares at the exercise price instead of at the then
prevailing market price. A stock index option generally operates like an option
covering specific securities, except that delivery of cash rather than the
underlying securities is made. A stock index option obligates the seller
(writer) to deliver, and gives the holder (buyer) the right to take delivery of,
cash upon exercise of the option in an amount equal to the difference between
the exercise settlement value of the underlying index on the day the option is
exercised and the exercise price of the option, multiplied by the specified
index "multiplier". The stock index will fluctuate based on changes in the
market values of the stocks included in the index. The Fund will set aside
permissible liquid assets in a segregated account to secure its potential
obligations under its options positions, and such account will include only
cash, U.S. Government Securities, and other liquid high-grade debt securities.
The Fund's ability to use index options transactions successfully depends upon
the degree of correlation between the index on which the option is written and
the securities that the Fund owns or the market position that it intends to
acquire; the liquidity of the market for options, which cannot be assured; and
the Advisor's skill in predicting the movement of stock indices and implementing
options transactions in furtherance of the Fund's investment objectives.
Successful use by the Fund of stock index options will depend primarily on the
Advisor's ability to correctly predict movements in the direction of the stock
markets. This skill is different from the skills and expertise needed to predict
changes in the prices of individual stocks. If the Advisor forecasts incorrectly
the movement of interest rates, market values and other economic factors, the
Fund would be better off without using this hedging technique. The Fund will
write (sell) stock index options for hedging purposes or to close out positions
in stock index options that the Fund has purchased. The Fund may only write
(sell) "covered" options. Risks associated with options transactions generally
include possible loss of the entire premium and the inability to effect closing
transactions at favorable prices. Brokerage commissions associated with buying
and selling options are proportionately higher than those associated with
general securities transactions.
While portfolio securities are generally acquired for the long term, they may be
sold under some of the following circumstances when the Advisor believes that:
(a) the anticipated price appreciation has been achieved or is no longer
probable; (b) alternative investments offer superior total return prospects; or
(c) fundamentals change adversely.
Money market instruments will typically represent a portion of the Fund's
portfolio, as funds awaiting investment, to accumulate cash for anticipated
purchases of portfolio securities and to provide for shareholder redemptions and
operating expenses of the Fund.
Under normal market conditions the portfolio allocation range for the Fund will
generally be:
% of Total Assets
Equity securities 70 - 90%
Money market instruments
and fixed income securities 10 - 30%
Under certain conditions, the Advisor may choose to temporarily invest up to
100% of the Fund's assets in cash and cash equivalents, investment grade bonds,
U.S. Government Securities, repurchase agreements, or money market instruments
as a temporary defensive position, when the Advisor determines that market
conditions warrant such investments. When the Fund invests in these investments
as a temporary defensive measure, it is not pursuing its stated investment
objective.
Money Market Instruments. Money market instruments may be purchased when the
Advisor believes interest rates are rising, the prospect for capital
appreciation in the equity and longer term fixed income securities' markets are
not attractive, or when the "yield curve" favors short term fixed income
instruments versus longer term fixed income instruments. Money market
instruments may be purchased for temporary defensive purposes, to accumulate
cash for anticipated purchases of portfolio securities and to provide for
shareholder redemptions and operating expenses of the Fund. Money market
instruments mature in thirteen months or less from the date of purchase and may
include U.S. Government Securities, corporate debt securities (including those
subject to repurchase agreements), bankers acceptances and certificates of
deposit of domestic branches of U.S. banks, and commercial paper (including
variable amount demand master notes). In addition, such securities must be rated
in one of the two highest rating categories by any of the nationally recognized
statistical rating organizations or if not rated, of equivalent quality in the
Advisor's opinion.
U.S. Government Securities. The Fund may invest a portion of its portfolio in
U.S. Government Securities, defined to be U.S. Government obligations such as
U.S. Treasury notes, U.S. Treasury bonds, and U.S. Treasury bills, obligations
guaranteed by the U.S. Government such as Government National Mortgage
Association ("GNMA") as well as obligations of U.S. Government authorities,
agencies and instrumentalities such as Federal National Mortgage Association
("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Home
Administration ("FHA"), Federal Farm Credit Bank "FFCB"), Federal Home Loan Bank
("FHLB"), Student Loan Marketing Association ("SLMA"), and The Tennessee Valley
Authority. U.S. Government Securities may be acquired subject to repurchase
agreements. While obligations of some U.S. Government sponsored entities are
supported by the full faith and credit of the U.S. Government (e.g. GNMA),
several are supported by the right of the issuer to borrow from the U.S.
Government (e.g. FNMA, FHLMC), and still others are supported only by the credit
of the issuer itself (e.g. SLMA, FFCB). No assurance can be given that the U.S.
Government will provide financial support to U.S. Government agencies or
instrumentalities in the future, other than as set forth above, since it is not
obligated to do so by law. The guarantee of the U.S. Government does not extend
to the yield or value of the Fund's shares.
Securities issued by the U.S. Government may be acquired by the Fund in the form
of custodial receipts that evidence ownership of future interest payments,
principal payments or both on certain U.S. Treasury notes or bonds. Such notes
and bonds are held in custody by a bank on behalf of the owners. These custodial
receipts are known by various names, including "Treasury Receipts," "Treasury
Investment Growth Receipts" ("TIGRs"), and "Certificates of Accrual on Treasury
Securities" ("CATS"). The Fund may also invest in separately traded principal
and interest components of securities issued or guaranteed by the U.S. Treasury.
The principal and interest components of selected securities are traded
independently under the Separate Trading of Registered Interest and Principal of
Securities program ("STRIPS"). Under the STRIPS program, the principal and
interest components are individually numbered and separately issued by the U.S.
Treasury at the request of depository financial institutions, which then trade
the component parts independently.
Corporate Debt Securities. The Fund may invest in U.S. dollar denominated
corporate debt securities of domestic issuers limited to corporate debt
securities (corporate bonds, debentures, notes and other similar corporate debt
instruments) that meet the minimum ratings criteria set forth for the Fund, or,
if unrated, are in the Advisor's opinion comparable in quality to corporate debt
securities in that the Fund may invest. The Fund may invest in convertible bonds
of domestic issuers meeting such quality requirements and other corporate debt
securities generally in the form of money market instruments as described above.
Up to 15% of the Fund could be invested in fixed income securities rated below
"investment grade."
Foreign Debt Securities. The Fund may invest in foreign denominated debt traded
on domestic U.S. exchanges, or traded over-the-counter by U.S. based securities
dealers. In some cases these debt securities may be denominated in the native
currency of the issuer. In the event such securities are denominated in foreign
securities those securities will not only be subject the risks associated with
companies domiciled in foreign countries (as described herein under "Foreign
Securities"), but will also be subject to the volatility and risk associated
with changes in currency exchange rates. Because of this additional risk and
volatility, the Advisor does not anticipate holding more than 5% of the Fund in
foreign denominated debt securities.
Repurchase Agreements. The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when the Fund acquires a security and
simultaneously resells it to the vendor (normally a member bank of the Federal
Reserve or a registered Government Securities dealer) for delivery on an agreed
upon future date. The repurchase price exceeds the purchase price by an amount
that reflects an agreed upon market interest rate earned by the Fund effective
for the period of time during which the repurchase agreement is in effect.
Delivery pursuant to the resale typically will occur within one to seven days of
the purchase. The Fund will not enter into any repurchase agreement that will
cause more than 10% of its net assets to be invested in repurchase agreements
that extend beyond seven days. In the event of the bankruptcy of the other party
to a repurchase agreement, the Fund could experience delays in recovering its
cash or the securities lent. To the extent that in the interim the value of the
securities purchased may have declined, the Fund could experience a loss. In all
cases, the creditworthiness of the other party to a transaction is reviewed and
found satisfactory by the Advisor. Repurchase agreements are, in effect, loans
of Fund assets. The Fund will not engage in reverse repurchase transactions,
which are considered to be borrowings under the 1940 Act.
Foreign Securities. The Fund may invest in the securities of foreign private
issuers. The same factors would be considered in selecting foreign securities as
with domestic securities. Foreign securities investment presents special
consideration not typically associated with investment in domestic securities.
Foreign taxes may reduce income. Currency exchange rates and regulations may
cause fluctuations in the value of foreign securities. Foreign securities are
subject to different regulatory environments than in the United States and,
compared to the United States, there may be a lack of uniform accounting,
auditing and financial reporting standards, less volume and liquidity and more
volatility, less public information, and less regulation of foreign issuers.
Countries have been known to expropriate or nationalize assets, and foreign
investments may be subject to political, financial, or social instability, or
adverse diplomatic developments. There may be difficulties in obtaining service
of process on foreign issuers and difficulties in enforcing judgments with
respect to claims under the U.S. Securities laws against such issuers. Favorable
or unfavorable differences between U.S. and foreign economies could affect
foreign securities values. The U.S. Government has, in the past, discouraged
certain foreign investments by U.S. investors through taxation or other
restrictions and it is possible that such restrictions could be imposed again.
The Fund will limit foreign equity investments to those traded domestically on
U.S. securities exchanges and denominated in U.S. currency. The prices of such
securities are denominated in U.S. dollars while the underlying company may
maintains its records in a foreign currency. Such a disparity may result in
greater volatility than would be expected with equities of domestic U.S.
companies.
Investment Companies. In order to achieve its investment objective, the Fund may
invest up to 10% of the value of its total assets in securities of other
investment companies whose investment objectives are consistent with the Fund's
investment objective. The Fund will not acquire securities of any one investment
company if, immediately thereafter, the Fund would own more than 3% of such
company's total outstanding voting securities, securities issued by such company
would have an aggregate value in excess of 5% of the Fund's assets, or
securities issued by such company and securities held by the Fund issued by
other investment companies would have an aggregate value in excess of 10% of the
Fund's assets. To the extent a Fund invests in other investment companies, the
shareholders of the Fund would indirectly pay a portion of the operating costs
of the underlying investment companies. These costs include management,
brokerage, shareholder servicing and other operational expenses. Shareholders of
the Fund would then indirectly pay higher operational costs than if they owned
shares of the underlying investment companies directly.
Real Estate Securities. The Fund will not invest in real estate (including
mortgage loans and limited partnership interests), but may invest in readily
marketable securities issued by companies that invest in real estate or
interests therein. The Fund may also invest in readily marketable interests in
real estate investment trusts ("REITs"). REITs are generally publicly traded on
the national stock exchanges and in the over-the-counter market and have varying
degrees of liquidity. Although the Fund is not limited in the amount of these
types of real estate securities they may acquire, it is not presently expected
that within the next 12 months the Fund will have in excess of 10% of its assets
in real estate securities.
RISK FACTORS
Investment Policies and Techniques. Reference should be made to "Investment
Objective and Policies" above for a description of special risks presented by
the investment policies of the Fund and the specific securities and investment
techniques that may be employed by the Fund, including the risks associated with
corporate and foreign debt securities, options transactions, repurchase
agreements, and foreign securities. A more complete discussion of certain of
these securities and investment techniques and their associated risks is
contained in the Statement of Additional Information.
Fluctuations in Value. To the extent that the major portion of the Fund'
portfolios consists of common stocks, it may be expected that its net asset
value will be subject to greater fluctuation than a portfolio containing mostly
fixed income securities. The fixed income securities in which the Fund will
invest are also subject to fluctuation in value. Such fluctuations may be based
on movements in interest rates or from changes in the creditworthiness of the
issuers, which may result from adverse business and economic developments or
proposed corporate transactions, such as a leveraged buy-out or recapitalization
of the issuer. The value of the Fund's fixed income securities will generally
vary inversely with the direction of prevailing interest rate movements. Should
interest rates increase or the creditworthiness of an issuer deteriorates the
value of the Fund's fixed income securities would decrease in value, which would
have a depressing influence on the Fund's net asset value. The Fund may also
invest up to 15% of its total assets in fixed income securities rated below BBB
or Baa by the nationally recognized statistical rating organizations described
in the Statement of Additional Information. Securities rated below these
"investment grade" levels are often called "junk bonds" and are considered
speculative. Although certain of the U.S. Government Securities in which the
Fund may invest are guaranteed as to timely payment of principal and interest,
the market value of the securities, upon which the Fund's net asset value is
based, will fluctuate due to the interest rate risks described above.
Additionally, not all U.S. Government Securities are backed by the full faith
and credit of the U.S. Government. Because there is risk in any investment,
there can be no assurance that the Fund will achieve its investment objective.
Portfolio Turnover. The Fund may sell portfolio securities without regard to the
length of time they have been held in order to take advantage of new investment
opportunities. Portfolio turnover generally involves some expense to the Fund,
including brokerage commissions or dealer mark-ups and other transaction costs
on the sale of securities and the reinvestment in other securities. Portfolio
turnover may also have capital gains tax consequences. Portfolio turnover is not
expected to exceed 100% per year.
Illiquid Investments. The Fund may invest up to 10% of its net assets in
illiquid securities. Illiquid securities are those that may not be sold or
disposed of in the ordinary course of business within seven days at
approximately the price at which they are valued. Under the supervision of the
Board of Trustees, the Advisor determines the liquidity of the Fund's
investments. The absence of a trading market can make it difficult to ascertain
a market value for illiquid investments. Disposing of illiquid securities before
maturity may be time consuming and expensive, and it may be difficult or
impossible for the Fund to sell illiquid investments promptly at an acceptable
price. The Fund may not invest in restricted securities, which are securities
that cannot be sold to the public without registration under the federal
securities laws.
Borrowing. The Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and 15% of its total assets to meet redemption requests
which might otherwise require untimely disposition of portfolio holdings. To the
extent the Fund borrows for these purposes, the effects of market price
fluctuations on the portfolio's net asset value will be exaggerated. If, while
such borrowing is in effect, the value of the Fund's assets declines, the Fund
could be forced to liquidate portfolio securities when it is disadvantageous to
do so. The Fund would incur interest and other transaction costs in connection
with borrowing. The Fund will borrow only from a bank. The Fund will not make
any further investments if the borrowing exceeds 5% of its total assets until
such time as repayment has been made to bring the total borrowing below 5% of
its total assets.
Forward Commitments and When-Issued Securities. The Fund may purchase
when-issued securities and commit to purchase securities for a fixed price at a
future date beyond customary settlement time. The Fund is required to hold and
maintain in a segregated account until the settlement date, cash, U.S.
Government Securities or high-grade debt obligations in an amount sufficient to
meet the purchase price. Purchasing securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in addition to
the risk of decline in value of the Fund's other assets. In addition, no income
accrues to the purchaser of when-issued securities during the period prior to
issuance. Although a Fund would generally purchase securities on a when-issued
or forward commitment basis with the intention of acquiring securities for its
portfolio, the Fund may dispose of a when-issued security or forward commitment
prior to settlement if the Advisor deems it appropriate to do so.
The Fund may realize short-term gains or losses upon such sales.
INVESTMENT LIMITATIONS
To limit the Fund's exposure to risk, the Fund has adopted certain investment
limitations. Some of these restrictions are that the Fund will not: (1) issue
senior securities, borrow money or pledge its assets, except that it may borrow
from banks as a temporary measure (a) for extraordinary or emergency purposes,
in amounts not exceeding 5% of the Fund's total assets, or (b) to meet
redemption requests, which might otherwise require untimely disposition of
portfolio securities in amounts not exceeding 15% of its total assets (the Fund
will not make any investments if borrowing exceeds 5% of its total assets); (2)
make loans of money or securities, except that the Fund may invest in repurchase
agreements (but repurchase agreements having a maturity of longer than seven
days, together with other not readily marketable securities, are limited to 10%
of the Fund's net assets), money market instruments and other debt securities;
(3) invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of bonds,
guarantors), if more than 5% of its total assets would be invested in such
securities; (4) purchase foreign securities, except that the Fund may purchase
foreign securities traded on domestic U.S. exchanges without limit; and (5) with
respect to 75% of its total assets, invest more than 5% of its total assets at
cost in the securities of any one issuer nor hold more than 10% of the voting
stock of any issuer. Investment restrictions (1) and (5) are fundamental
investment limitations that cannot be altered without the prior approval of a
majority of the Fund's shareholders. The other investment restrictions listed
above are non-fundamental and can be changed without shareholder approval. See
"Investment Limitations" in the Fund's Statement of Additional Information for a
complete list of investment limitations.
If the Board of Trustees of the Trust determines that the Fund's investment
objectives can best be achieved by a substantive change in a non-fundamental
investment limitation, the Board can make such change without shareholder
approval and will disclose any such material changes in the then current
Prospectus. Any limitation that is not specified in the Fund's Prospectus, or in
the Statement of Additional Information, as being fundamental, is
non-fundamental. If a percentage limitation is satisfied at the time of
investment, a later increase or decrease in such percentage resulting from a
change in the value of the Fund's portfolio securities will not constitute a
violation of such limitation. In order to permit the sale of the Fund's shares
in certain states, the Fund may make commitments that are more restrictive than
the investment policies and limitations described above and in the Statement of
Additional Information. Such commitments may have an effect on the investment
performance of the Fund. Should the Fund determine that any such commitment is
no longer in the best interests of the Fund, they may revoke the commitment and
terminate sales of its shares in the state involved.
FEDERAL INCOME TAXES
Taxation of the Fund. The Internal Revenue Code of 1986, as amended (the
"Code"), treats each series in the Trust as a separate regulated investment
company. Each series of the Trust (the Fund) intends to qualify or remain
qualified as a regulated investment company under the Code by distributing
substantially all of its "net investment income" to shareholders and meeting
other requirements of the Code. For the purpose of calculating dividends, net
investment income consists of income accrued on portfolio assets, less accrued
expenses. Upon qualification, the Fund will not be liable for federal income
taxes to the extent earnings are distributed. The Board of Trustees retains the
right for any series of the Trust to determine for any particular year if it is
advantageous not to qualify as a regulated investment company. Regulated
investment companies, such as each series of the Trust, are subject to a
non-deductible 4% excise tax to the extent they do not distribute the
statutorily required amount of investment income, determined on a calendar year
basis, and capital gain net income, using an October 31 year end measuring
period. The intends to declare or distribute dividends during the calendar year
in an amount sufficient to prevent imposition of the 4% excise tax.
Taxation of Shareholders. For federal income tax purposes, any dividends and
distributions from short-term capital gains that a shareholder receives in cash
from the Fund or which are re-invested in additional shares will be taxable
ordinary income. If a shareholder is not required to pay a tax on income, he
will not be required to pay federal income taxes on the amounts distributed to
him. A dividend declared in October, November or December of a year and paid in
January of the following year will be considered to be paid on December 31 of
the year of declaration.
Distributions paid by the Fund from long-term capital gains, whether received in
cash or reinvested in additional shares, are taxable as long-term capital gains,
regardless of the length of time an investor has owned shares in the Fund.
Capital gain distributions are made when the Fund realizes net capital gains on
sales of portfolio securities during the year. Dividends and capital gain
distributions paid by the Fund shortly after shares have been purchased,
although in effect a return of investment, are subject to federal income
taxation.
The sale of shares of the Fund is a taxable event and may result in a capital
gain or loss. Capital gain or loss may be realized from an ordinary redemption
of shares or an exchange of shares between two mutual funds (or two series of a
mutual funds).
The Trust will inform shareholders of the Fund of the source of its dividends
and capital gains distributions at the time they are paid and, promptly after
the close of each calendar year, will issue an information return to advise
shareholders of the federal tax status of such distributions and dividends.
Dividends and distributions may also be subject to state and local taxes.
Shareholders should consult their tax advisors regarding specific questions as
to federal, state or local taxes.
Federal income tax law requires investors to certify that the social security
number or taxpayer identification number provided to the Fund is correct and
that the investor is not subject to 31% withholding for previous under-reporting
to the Internal Revenue Service (the "IRS"). Investors will be asked to make the
appropriate certification on their application to purchase shares. If a
shareholder of the Fund has not complied with the applicable statutory and IRS
requirements, the Fund is generally required by federal law to withhold and
remit to the IRS 31% of reportable payments (which may include dividends and
redemption amounts).
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute substantially all of its net investment income,
if any, in the form of dividends. The Fund will generally pay income dividends,
if any, quarterly, and will generally distribute net realized capital gains, if
any, at least annually.
Unless a shareholder elects to receive cash, dividends and capital gains will be
automatically reinvested in additional full and fractional shares of the same
Class of the Fund at the net asset value per share next determined. Reinvested
dividends and capital gains are exempt from any sales load. Shareholders wishing
to receive their dividends or capital gains in cash may make their request in
writing to the Fund at 107 North Washington Street, Post Office Box 4365, Rocky
Mount, North Carolina 27803-0365. That request must be received by the Fund
prior to the record date to be effective as to the next dividend. If cash
payment is requested, checks will be mailed within five business days after the
last day of each quarter or the Fund's fiscal year end, as applicable. Each
shareholder of the Fund will receive a quarterly summary of his or her account,
including information as to reinvested dividends from the Fund. Tax consequences
to shareholders of dividends and distributions are the same if received in cash
or in additional shares of the Fund.
In order to satisfy certain requirements of the Code, the Fund may declare
special year-end dividend and capital gains distribution during December. Such
distributions, if received by shareholders by January 31, are deemed to have
been paid by the Fund and received by shareholders on December 31 of the prior
year.
There is no fixed dividend rate, and there can be no assurance as to the payment
of any dividends or the realization of any gains. The Fund's net investment
income available for distribution to holders of Investor Shares will be reduced
by the amount of any expenses allocated to the Investor Shares including
distribution and service fees under the Fund's distribution plan.
HOW SHARES ARE VALUED
Net asset value for each Class of Shares of the Fund is determined at 4:00 p.m.,
New York time, Monday through Friday, except on business holidays when the New
York Stock Exchange is closed. The net asset value of the shares of the Fund for
purposes of pricing sales and redemptions is equal to the total market value of
its investments and other assets, less all of its liabilities, divided by the
number of its outstanding shares. Net asset value is determined separately for
each Class of Shares of a Fund and reflects any liabilities allocated to a
particular Class as well as the general liabilities of the Fund.
Securities that are listed on a securities exchange are valued at the last
quoted sales price at the time the valuation is made. Price information on
listed securities is taken from the exchange where the security is primarily
traded by the Fund. Securities that are listed on an exchange and which are not
traded on the valuation date are valued at the mean of the bid and asked prices.
Unlisted securities for which market quotations are readily available are valued
at the latest quoted sales price, if available, at the time of valuation,
otherwise, at the latest quoted bid price. Temporary cash investments with
maturities of 60 days or less will be valued at amortized cost, which
approximates market value. Securities for which no current quotations are
readily available are valued at fair value as determined in good faith using
methods approved by the Board of Trustees of the Trust. Securities may be valued
on the basis of prices provided by a pricing service when such prices are
believed to reflect the fair market value of such securities.
Fixed income securities will ordinarily be traded on the over-the-counter
market. When market quotations are not readily available, fixed income
securities may be valued based on prices provided by a pricing service. The
prices provided by the pricing service are generally determined with
consideration given to institutional bid and last sale prices and take into
account securities prices, yields, maturities, call features, ratings,
institutional trading in similar groups of securities, and developments related
to specific securities. Such fixed income securities may also be priced based
upon a matrix system of pricing similar bonds and other fixed income securities.
Such matrix system may be based upon the considerations described above used by
other pricing services and information obtained by the pricing agent from the
Advisor and other pricing sources deemed relevant by the pricing agent.
HOW SHARES MAY BE PURCHASED
Assistance in opening accounts and a purchase application may be obtained from
the Fund by calling 1-800-525-FUND, or by writing to the Fund at the address
shown below for purchases by mail. Assistance is also available through any
broker-dealer authorized to sell shares in the Fund. Payment for shares
purchased may also be made through your account at the broker-dealer processing
your application and order to purchase. Your investment will purchase shares at
the Fund's public offering price next determined after your order is received by
the Fund in proper form as indicated herein.
The minimum initial investment is $5,000 ($2,000 for IRAs and Keogh Plans). The
minimum subsequent investment is $500. The Fund may, in the Advisor's sole
discretion, accept certain accounts with less than the stated minimum initial
investment. You may invest in the following ways:
Regular Mail Orders. Please complete and sign the Fund Shares Application
accompanying this Prospectus and mail it, with your check made payable to the
Fund, to:
WST Growth & Income Fund
Investor Shares
c/o North Carolina Shareholder Services
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
Applications must contain social security and Taxpayer Identification Numbers
("TINs"). If you have applied for a social security or TIN at the time of
completing your account application, the application should so indicate. Taxes
are not withheld from distributions to U.S. investors if certain IRS
requirements regarding TINs are met.
Bank Wire Orders. Investments can be made directly by bank wire. To establish a
new account or to add to an existing account by wire, please call the Fund at
1-800-525-3863, before wiring funds, to advise it of the investment, the dollar
amount of the investment, and the account identification number. This
notification will ensure prompt and accurate handling of your investment. Please
have your bank use the following wire instructions to purchase by wire:
First Union National Bank of North Carolina
ABA # 053000219
Further Credit Acct#1028783753
Attn: Custody For the WST Growth & Income Fund
Investor Shares
For further credit to (shareholder's name and SS# or EIN#)
It is important that the wire message contain all the relevant information and
that the Fund receive prior telephone notification to ensure proper credit. Upon
opening an account by wire order, you must, as soon as possible, complete and
mail your Fund Shares Application to the Fund as described under "Regular Mail
Orders" above. Investors should be aware that some banks might impose a wire
service fee.
General. All purchases of shares are subject to acceptance and are not binding
until accepted. The Fund reserves the right to reject any application or
investment. Orders become effective, and shares are purchased at, the next
determined public offering price per share after an investment has been received
by a Fund, which is as of 4:00 p.m., New York time, Monday through Friday,
exclusive of business holidays. Orders received by a Fund and effective prior to
such 4:00 p.m. time will purchase shares at the public offering price determined
at that time. Otherwise, your order will purchase shares as of such 4:00 p.m.
time on the next business day. For orders placed through a qualified
broker-dealer, such firm is responsible for promptly transmitting purchase
orders to the Fund. Investors may be charged a fee if they effect transactions
in Fund shares through a broker or agent.
If checks are returned unpaid due to insufficient funds, stop payment or other
reasons, the Trust will charge $20. To recover any such loss or charge, the
Trust reserves the right, without further notice, to redeem shares of any fund
of the Trust already owned by any purchaser whose order is cancelled, and such a
purchaser may be prohibited from placing further orders unless investments are
accompanied by full payment by wire or cashier's check.
Payment must be made by check or money order drawn on a U.S. bank and payable in
U.S. dollars. Under certain circumstances the Fund, at its sole discretion, may
allow payment in kind for Fund shares purchased by accepting securities in lieu
of cash. Any securities so accepted would be valued on the date received and
included in the calculation of the net asset value of the Fund. See the
Statement of Additional Information for additional information on purchases in
kind.
The Fund is required by federal law to withhold and remit to the IRS 31% of the
dividends, capital gains distributions and, in certain cases, proceeds of
redemptions paid to any shareholder who fails to furnish the Fund with a correct
taxpayer identification number, who under-reports dividend or interest income or
who fails to provide certification of tax identification number. Instructions to
exchange or transfer shares held in established accounts will be refused until
the certification has been provided. In order to avoid this withholding
requirement, you must certify on your application, or on a separate W-9 Form
supplied by the Fund, that your taxpayer identification number is correct and
that you are not currently subject to backup withholding or you are exempt from
backup withholding. For individuals, your taxpayer identification number is your
social security number.
Sales Charges. The public offering price of Investor Shares of the Fund equals
net asset value plus a sales charge. Capital Investment Group, Inc. (the
"Distributor") receives this sales charge as Distributor and may reallow it in
the form of dealer discounts and brokerage commissions as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Sales Sales
Charge As Charge As Dealers Discounts
% of Net % of Public and Brokerage
Amount of Transaction Amount Offering Commissions as % of
At Public Offering Price Invested Price Public Offering Price
Less than $250,000........................... 3.93% 3.75% 3.50%
$250,000 but less than $500,000.............. 3.63% 3.50% 3.25%
$500,000 but less than $1,000,000............ 3.09% 3.00% 2.75%
$1,000,000 or more........................... 2.04% 2.00% 1.75%
</TABLE>
At times the Distributor may reallow the entire sales charge to dealers. From
time to time dealers who receive dealer discounts and brokerage commissions from
the Distributor may reallow all or a portion of such dealer discounts and
brokerage commissions to other dealers or brokers. Pursuant to the terms of the
Distribution Agreement, the sales charge payable to the Distributor and the
dealer discounts may be suspended, terminated or amended. Dealers who receive
90% or more of the sales charge may be deemed to be "underwriters" under the
Securities Act of 1933, as amended.
The dealer discounts and brokerage commissions schedule above applies to all
dealers who have agreements with the Distributor. The Distributor, at its
expense, may also provide additional compensation to dealers in connection with
sales of shares of the Fund. Compensation may include financial assistance to
dealers in connection with conferences, sales or training programs for its
employees, seminars for the public, advertising campaigns regarding the Fund,
and/or other dealer-sponsored special events. In some instances, this
compensation may be made available only to certain dealers whose representatives
have sold or are expected to sell a significant amount of such shares.
Compensation may include payment for travel expenses, including lodging,
incurred in connection with trips taken by invited registered representatives
and members of their families to locations within or outside of the United
States for meetings or seminars of a business nature. Dealers may not use sales
of the Fund shares to qualify for this compensation to the extent such may be
prohibited by the laws of any state or any self-regulatory agency, such as the
National Association of Securities Dealers, Inc. None of the aforementioned
compensation is paid for by the Fund or its shareholders.
Reduced Sales Charges
Rights of Accumulation. Pursuant to the right of accumulation,
investors are permitted to purchase shares at the public offering price
applicable to the total of (a) the total public offering price of the Investor
Shares of the Fund then being purchased plus (b) an amount equal to the then
current net asset value of the purchaser's combined holdings of the shares of
all of the Fund and any other series of the Trust affiliated with the Advisor
and sold with a sales charge. To receive the applicable public offering price
pursuant to the right of accumulation, investors must, at the time of purchase,
provide sufficient information to permit confirmation of qualification, and
confirmation of the purchase is subject to such verification. This right of
accumulation may be modified or eliminated at any time or from time to time by
the Trust without notice.
Letters of Intent. Investors may qualify for a lower sales charge for
Investor Shares by executing a letter of intent. A letter of intent allows an
investor to purchase Investor Shares of the Fund over a 13-month period at
reduced sales charges based on the total amount intended to be purchased plus an
amount equal to the then current net asset value of the purchaser's combined
holdings of the shares of all of the Fund and any other series of the Trust
affiliated with the Advisor and sold with a sales charge. Thus, a letter of
intent permits an investor to establish a total investment goal to be achieved
by any number of purchases over a 13-month period. Each investment made during
the period receives the reduced sales charge applicable to the total amount of
the intended investment.
The letter of intent does not obligate the investor to purchase, or the Fund to
sell, the indicated amount. If such amount is not invested within the period,
the investor must pay the difference between the sales charge applicable to the
purchases made and the charges previously paid. If such difference is not paid
by the investor, the Distributor is authorized by the investor to liquidate a
sufficient number of shares held by the investor to pay the amount due. On the
initial purchase of shares, if required (or subsequent purchases, if necessary)
shares equal to at least five percent of the amount indicated in the letter of
intent will be held in escrow during the 13-month period (while remaining
registered in the name of the investor) for this purpose. The value of any
shares redeemed or otherwise disposed of by the investor prior to termination or
completion of the letter of intent will be deducted from the total purchases
made under such letter of intent.
A 90-day backdating period can be used to include earlier purchases at the
investor's cost (without a retroactive downward adjustment of the sales charge);
the 13-month period would then begin on the date of the first purchase during
the 90-day period. No retroactive adjustment will be made if purchases exceed
the amount indicated in the letter of intent. Investors must notify the
Administrator or the Distributor whenever a purchase is being made pursuant to a
letter of intent.
Investors electing to purchase shares pursuant to a letter of intent should
carefully read the letter of intent, which is included in the Fund Shares
Application accompanying this Prospectus or is otherwise available from the
Administrator or the Distributor. This letter of intent option may be modified
or eliminated at any time or from time to time by the Trust without notice.
Reinvestments. Investors may reinvest, without a sales charge, proceeds
from a redemption of Investor Shares of the Fund in Investor Shares of the Fund
or in shares of another series of the Trust affiliated with the Advisor and sold
with a sales charge, within 90 days after the redemption. If the other class
charges a sales charge higher than the sales charge the investor paid in
connection with the shares redeemed, the investor must pay the difference. In
addition, the shares of the class to be acquired must be registered for sale in
the investor's state of residence. The amount that may be so reinvested may not
exceed the amount of the redemption proceeds, and the Fund or the Distributor
must receive a written order for the purchase of such shares within 90 days
after the effective date of the redemption.
If an investor realizes a gain on the redemption, the reinvestment will not
affect the amount of any federal capital gains tax payable on the gain. If an
investor realizes a loss on the redemption, the reinvestment may cause some or
all of the loss to be disallowed as a tax deduction, depending on the number of
shares purchased by reinvestment and the period of time that has elapsed after
the redemption, although for tax purposes, the amount disallowed is added to the
cost of the shares acquired upon the reinvestment.
Purchases by Related Parties and Groups. Reductions in sales charges
apply to purchases by a single "person," including an individual, members of a
family unit, consisting of a husband, wife and children under the age of 21
purchasing securities for their own account, or a trustee or other fiduciary
purchasing for a single fiduciary account or single trust estate.
Reductions in sales charges also apply to purchases by individual members of a
"qualified group." The reductions are based on the aggregate dollar value of
shares purchased by all members of the qualified group and still owned by the
group plus the shares currently being purchased. For purposes of this paragraph,
a qualified group consists of a "company," as defined in the 1940 Act, which has
been in existence for more than six months and which has a primary purpose other
than acquiring shares of the Fund at a reduced sales charge, and the "related
parties" of such company. For purposes of this paragraph, a "related party" of a
company is: (i) any individual or other company who directly or indirectly owns,
controls, or has the power to vote five percent or more of the outstanding
voting securities of such company; (ii) any other company of which such company
directly or indirectly owns, controls, or has the power to vote five percent of
more of its outstanding voting securities; (iii) any other company under common
control with such company; (iv) any executive officer, director or partner of
such company or of a related party; and (v) any partnership of which such
company is a partner.
Sales at Net Asset Value. The Fund may sell shares at a purchase price
equal to the net asset value of such shares, without a sales charge, to
Trustees, officers, and employees of the Trust, the Fund, and the Advisor, and
to employees and principals of related organizations and their families and
certain parties related thereto, including clients and related accounts of the
Advisor and other investment advisors registered under the Investment Advisors
Act of 1940. The public offering price of shares of the Fund may also be reduced
to net asset value per share in connection with the acquisition of the assets of
or merger or consolidation with a personal holding company or a public or
private investment company.
Distribution Plan. Capital Investment Group, Inc., Post Office Box 32249,
Raleigh, North Carolina 27622 (the "Distributor"), is the national distributor
for the Fund under a Distribution Agreement with the Trust. The Distributor may
sell Fund shares to or through qualified securities dealers or others. Richard
K. Bryant, a Trustee of the Trust and an officer of another series of the Trust,
and Elmer O. Edgerton, Jr., an officer of another series of the Trust, control
the Distributor. Messrs. Bryant and Edgerton are not officers of the Fund.
The Trust has adopted a Distribution Plan (the "Plan") for the Investor Shares
of the Fund pursuant to Rule 12b-1 under the 1940 Act. Under the Plan the Fund
may reimburse any expenditures to finance any activity primarily intended to
result in sale of the Investor Shares of the Fund or the servicing of
shareholder accounts, including, but not limited to, the following: (i) payments
to the Distributor, securities dealers, and others for the sale of Investor
Shares of the Fund; (ii) payment of compensation to and expenses of personnel
who engage in or support distribution of Investor Shares of the Fund or who
render shareholder support services not otherwise provided by the Administrator
or Custodian; and (iii) formulation and implementation of marketing and
promotional activities. The Board of Trustees of the Trust approves the
categories of expenses for which reimbursement is made. Expenditures by the Fund
pursuant to the Plan are accrued based on the Investor Shares' average daily net
assets and may not exceed 0.50% of the Investor Shares' average net assets for
each year elapsed subsequent to adoption of the Plan. Such expenditures paid as
service fees to any person who sells Fund shares may not exceed 0.25% of the
Investor Shares' average annual net asset value of such shares.
The Plan for the Fund may not be amended to increase materially the amount to be
spent under the Plan without shareholder approval. The Board of Trustees must
approve the continuation of the Plan annually. At least quarterly the Board of
Trustees must review a written report of amounts expended pursuant to the Plan
and the purposes for which such expenditures were made.
Exchange Feature. Investors will have the privilege of exchanging shares of a
Fund for shares of another Fund or shares of any other series of the Trust
established by the Advisor. An exchange is a taxable transaction that involves
the simultaneous redemption of shares of one series and purchase of shares of
another series at the respective closing net asset value next determined after a
request for redemption has been received plus applicable sales charge. Each
series of the Trust will have a different investment objective, which may be of
interest to investors in each series. Shares of a Fund may be exchanged for
shares of another Fund or shares of any other series of the Trust affiliated
with the Advisor at the net asset value plus the percentage difference between
that series' sales charge and any sales charge previously paid in connection
with the shares being exchanged. For example, if a 2% sales charge were paid on
shares that are exchanged into a series with a 3% sales charge, there would be
an additional sales charge of 1% on the exchange. Investors in states where
shares of the other series are qualified for sale may only make exchanges. An
investor may direct a Fund to exchange his shares by writing to the Fund at its
principal office. The request must be signed exactly as the investor's name
appears on the account, and it must also provide the account number, number of
shares to be exchanged, the name of the Fund or other series to which the
exchange will take place and a statement as to whether the exchange is a full or
partial redemption of existing shares. Notwithstanding the foregoing, exchanges
of shares may only be within the same class or type of class of shares involved.
For example, Investor Shares may not be exchanged for any other Class of Shares
of the Fund.
A pattern of frequent exchange transactions may be deemed by the Advisor to be
an abusive practice that is not in the best interests of the shareholders of the
Fund. Such a pattern may, at the discretion of the Advisor, be limited by a
Fund's refusal to accept further purchase and/or exchange orders from an
investor, after providing the investor with 60 days prior notice. The Advisor
will consider all factors it deems relevant in determining whether a pattern of
frequent purchases, redemptions and/or exchanges by a particular investor is
abusive and not in the best interests of a Fund or its other shareholders.
A shareholder should consider the investment objectives and policies of any
other Fund or series into which the shareholder will be making an exchange, as
described in the prospectus for that other Fund or series. The Board of Trustees
of the Trust reserves the right to suspend or terminate, or amend the terms of,
the exchange privilege upon 60 days written notice to the shareholders.
Automatic Investment Plan. The automatic investment plan enables shareholders to
make regular monthly or quarterly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Fund will automatically charge the checking account for the amount
specified ($100 minimum), which will be automatically invested in shares at the
public offering price on or about the 21st day of the month. The shareholder may
change the amount of the investment or discontinue the plan at any time by
writing to the Fund.
Stock Certificates. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
that will show the number of shares owned.
HOW SHARES MAY BE REDEEMED
Shares of the Fund may be redeemed (the Fund will repurchase them from
shareholders) by mail or telephone. Any redemption may be more or less than the
purchase price of your shares depending on the market value of the Fund's
portfolio securities. All redemption orders received in proper form, as
indicated herein, by the Fund, whether by mail or telephone, prior to 4:00 p.m.
New York time, Monday through Friday, except for business holidays, will redeem
shares at the net asset value determined at that time. Otherwise, your order
will redeem shares as of such 4:00 p.m. time on the next business day. There is
no charge for redemptions from the Fund other than possible charges for wiring
redemption proceeds. You may also redeem your shares through a broker-dealer or
other institution, which may charge you a fee for its services.
The Board of Trustees reserves the right to involuntarily redeem any account
having a net asset value of less than $1,000 (due to redemptions, exchanges or
transfers, and not due to market action) upon 30 days written notice. If the
shareholder brings his account net asset value up to $1,000 or more during the
notice period, the account will not be redeemed. Redemptions from retirement
plans may be subject to tax withholding.
If you are uncertain of the requirements for redemption, please contact the
Fund, at 1-800-525-FUND, or write to the address shown below.
Regular Mail Redemptions. Your request should be addressed to the WST Growth &
Income Fund, Investor Shares, 107 North Washington Street, Post Office Box 4365,
Rocky Mount, North Carolina 27803-0365. Your request for redemption must
include:
1) Your letter of instruction specifying the Fund, the account number, and the
number of shares or dollar amount to be redeemed. This request must be
signed by all registered shareholders in the exact names in which they are
registered;
2) Any required signature guarantees (see "Signature Guarantees" below); and
3) Other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.
Your redemption proceeds will be sent to you within seven days after receipt of
your redemption request. However, the Fund may delay forwarding a redemption
check for recently purchased shares while it determines whether the purchase
payment will be honored. Such delay (which may take up to 15 days from the date
of purchase) may be reduced or avoided if the purchase is made by certified
check or wire transfer. In all cases the net asset value next determined after
the receipt of the request for redemption will be used in processing the
redemption. The Fund may suspend redemption privileges or postpone the date of
payment (i) during any period that the New York Stock Exchange is closed, or
trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission (the "Commission"), (ii) during any period
when an emergency exists as defined by the rules of the Commission as a result
of which it is not reasonably practicable for a Fund to dispose of securities
owned by it, or to fairly determine the value of its assets, and (iii) for such
other periods as the Commission may permit.
Telephone and Bank Wire Redemptions. The Fund offers shareholders the option of
redeeming shares by telephone under certain limited conditions. A Fund will
redeem shares when requested by the shareholder if, and only if, the shareholder
confirms redemption instructions in writing.
A Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 919-972-1908). The confirmation instructions must include:
1) Designation of the Fund name;
2) Shareholder names and account number;
3) Number of shares or dollar amount to be redeemed;
4) Instructions for transmittal of redemption funds to the shareholder; and
5) Shareholder signature as it appears on the application then on file with
the Fund.
The net asset value used in processing the redemption will be the net asset
value next determined after the telephone request is received. Redemption
proceeds will not be distributed until written confirmation of the redemption
request is received, per the instructions above. You can choose to have
redemption proceeds mailed to you at your address of record, your bank, or to
any other authorized person, or you can have the proceeds sent by bank wire to
your bank ($5,000 minimum). Shares of the Fund may not be redeemed by wire on
days on which your bank is not open for business. You can change your redemption
instructions anytime you wish by filing a letter including your new redemption
instructions with the Fund. (See "Signature Guarantees" below). The Fund
reserves the right to restrict or cancel telephone and bank wire redemption
privileges for shareholders, without notice, if the Fund believes it to be in
the best interest of the shareholders to do so. During drastic economic and
market conditions, telephone redemption privileges may be difficult to
implement.
The Fund in its discretion may choose to pass through to redeeming shareholders
any charges by the Custodian for wire redemptions. The Custodian currently
charges $7.00 per transaction for wiring redemption proceeds. If this cost is
passed through to redeeming shareholders by the Fund, the charge will be
deducted automatically from the shareholder's account by redemption of shares in
the account. The shareholder's bank or brokerage firm may also impose a charge
for processing the wire. If wire transfer of funds is impossible or impractical,
the redemption proceeds will be sent by mail to the designated address of
record.
You may redeem shares, subject to the procedures outlined above, by calling the
Fund at 1-800-525-FUND. Redemption proceeds will only be sent to the bank
account or person named in your Fund Shares Application currently on file with
the Fund. Telephone redemption privileges authorize the Fund to act on telephone
instructions from any person representing him or herself to be the investor and
reasonably believed by the Fund to be genuine. The Fund will employ reasonable
procedures, such as requiring a form of personal identification, to confirm that
instructions are genuine, and, if it does not follow such procedures, the Fund
will be liable for any losses due to fraudulent or unauthorized instructions.
The Fund will not be liable for following telephone instructions reasonably
believed to be genuine.
Systematic Withdrawal Plan. A shareholder who owns shares of a Fund valued at
$5,000 or more at current net asset value may establish a Systematic Withdrawal
Plan to receive a monthly or quarterly check in a stated amount not less than
$100. Each month or quarter as specified, the Fund will automatically redeem
sufficient shares from your account to meet the specified withdrawal amount.
Call or write the Fund for an application form. See the Statement of Additional
Information for further details.
Signature Guarantees. To protect your account and the Fund from fraud, signature
guarantees are required to be sure that you are the person who has authorized a
change in registration, or standing instructions, for your account. Signature
guarantees are required for (1) change of registration requests, (2) requests to
establish or change exchange privileges or telephone redemption service other
than through your initial account application, and (3) requests for redemptions
in excess of $50,000. Signature guarantees are acceptable from a member bank of
the Federal Reserve System, a savings and loan institution, credit union (if
authorized under state law), registered broker-dealer, securities exchange or
association clearing agency, and must appear on the written request for
redemption, establishment or change in exchange privileges, or change of
registration.
MANAGEMENT OF THE FUND
Trustees and Officers. The Fund is a diversified series of The Nottingham
Investment Trust II (the "Trust"), an investment company organized as a
Massachusetts business trust on October 25, 1990. The Board of Trustees of the
Trust is responsible for the management of the business and affairs of the
Trust. The Trustees and executive officers of the Trust and their principal
occupations for the last five years are set forth in the Statement of Additional
Information under "Management of the Fund - Trustees and Officers." The Board of
Trustees of the Trust is primarily responsible for overseeing the conduct of the
Trust's business. The Board of Trustees elects the officers of the Trust who are
responsible for its and the Fund's day-to-day operations.
The Advisor. Subject to the authority of the Board of Trustees, Wilbanks, Smith
& Thomas Asset Management, Inc. (the "Advisor") provides the Fund with a
continuous program of supervision of the Fund's assets, including the
composition of its portfolio, and furnishes advice and recommendations with
respect to investments, investment policies and the purchase and sale of
securities, pursuant to an Investment Advisory Agreement (the "Advisory
Agreement") with the Trust.
The Advisor is registered under the Investment Advisors Act of 1940, as amended.
Registration of the Advisor does not involve any supervision of management or
investment practices or policies by the Securities and Exchange Commission. The
Advisor, established as a Virginia corporation in 1990, is controlled by Wayne
F. Wilbanks, CFA; L. Norfleet Smith, Jr.; and Norwood A. Thomas, Jr. The Advisor
currently serves as investment advisor to approximately $450 million in assets.
The Advisor has been rendering investment counsel, utilizing investment
strategies substantially similar to that of the Fund, to individuals, banks and
thrift institutions, pension and profit sharing plans, trusts, estates,
charitable organizations and corporations since its formation. The Advisor's
address is One Commercial Place, Suite 1450, Norfolk, Virginia 23510.
Compensation of the Advisor with regard to the Fund, based upon the Fund's daily
average net assets, is at the annual rate of 0.75% of the first $250 million of
net assets and 0.65% of all assets over $250 million. The Advisor may
periodically voluntarily waive or reduce its advisory fee to increase the net
income of each Class of the Fund.
The Advisor supervises and implements the investment activities of the Fund,
including the making of specific decisions as to the purchase and sale of
portfolio investments. Among the responsibilities of the Advisor under the
Advisory Agreement is the selection of brokers and dealers through whom
transactions in the Fund's portfolio investments will be effected. The Advisor
attempts to obtain the best execution for all such transactions. If it is
believed that more than one broker is able to provide the best execution, the
Advisor will consider the receipt of quotations and other market services and of
research, statistical and other data and the sale of shares of the Fund in
selecting a broker. The Advisor may also utilize a brokerage firm affiliated
with the Trust or the Advisor if it believes it can obtain the best execution of
transactions from such broker. Research services obtained through Fund brokerage
transactions may be used by the Advisor for its other clients and, conversely,
the Fund may benefit from research services obtained through the brokerage
transactions of the Advisor's other clients. For further information, see
"Investment Objective and Policies Investment Transactions" in the Statement of
Additional Information.
The Investment Committee of the Advisor, composed of Wayne F. Wilbanks, CFA; L.
Norfleet Smith, Jr.; and Norwood A. Thomas, Jr. (all control persons of the
Advisor) is responsible for day-to-day management of the Fund's portfolio. Mr.
Thomas serves as executive officer of the Trust and will represent the Advisor
at Board of Trustee meetings.
Administrator. The Nottingham Company (the "Administrator") serves as the Fund's
administrator. The Administrator, subject to the authority of the Board of
Trustees, provides administrative services to and is generally responsible for
the overall management and day-to-day administrative operations of the Fund,
pursuant to an administration agreement with the Trust.
The Administrator, which was established as a North Carolina corporation in
1988, has been operating (with affiliates) as a financial services firm since
1985. Frank P. Meadows III is the firm's Managing Director and controlling
shareholder.
The Administrator, whose address is 105 North Washington Street, Post Office
Drawer 69, Rocky Mount, North Carolina 27802-0069, provides the Fund with office
space and facilities; provides certain executive personnel to the Fund;
maintains the Fund's accounting records; computes daily the Fund's net asset
value; supervises the preparation of tax returns, financial reports,
prospectuses, and proxy statements; and monitors compliance with certain
recordkeeping and regulatory requirements.
Compensation of the Administrator, based upon the average daily net assets of
the Fund, is at the following annual rates: On the first $50 million of the
Fund's net assets, 0.175%; on the next $50 million, 0.15%; on all assets over
$100 million, 0.125%. In addition, the Administrator currently receives a
monthly fee of $2,000 for the first class of the Fund and $750 for each
additional class of the Fund for accounting and recordkeeping services for the
Fund. The Administrator also charges the Fund for certain costs involved with
the daily valuation of investment securities and is reimbursed for out-of-pocket
expenses. The Administrator charges a minimum fee of $3,000 per month for all of
its fees taken in the aggregate, analyzed monthly.
Transfer Agent. NC Shareholder Services, LLC (the "Transfer Agent") serves as
the Fund's transfer, dividend paying, and shareholder servicing agent. The
Transfer Agent, subject to the authority of the Board of Trustees, provides
transfer agency services pursuant to an agreement with the Administrator, which
has been approved by the Trust.
The Transfer Agent, whose address is 107 North Washington Street, Post Office
Box 4365, Rocky Mount, North Carolina 27803-0365, was established as a North
Carolina limited liability company in 1997. John D. Marriott, Jr., is the firm's
controlling member.
The Transfer Agent maintains the records of each shareholder's account, answers
shareholder inquiries concerning accounts, processes purchases and redemptions
of the Fund's shares, acts as dividend and distribution disbursing agent, and
performs other shareholder servicing functions. The Transfer Agent is
compensated for its services by the Administrator and not directly by the Fund.
Custodian. The custodian of the Fund's assets is First Union National Bank of
North Carolina (the "Custodian"). The Custodian's mailing address is Two First
Union Center, Charlotte, North Carolina 28288-1151. The Advisor, Administrator,
Transfer Agent, Distributor, or interested persons thereof, may have banking
relationships with the Custodian.
Other Expenses. The Fund is responsible for the payment of its expenses. These
include, for example, the fees payable to the Advisor, or expenses otherwise
incurred in connection with the management of the investment of the Fund's
assets, the fees and expenses of the Custodian, the fees and expenses of the
Administrator, the fees and expenses of Trustees, outside auditing and legal
expenses, all taxes and corporate fees payable by the Fund, Securities and
Exchange Commission fees, state securities qualification fees, costs of
preparing and printing prospectuses for regulatory purposes and for distribution
to shareholders, costs of shareholder reports and shareholder meetings, and any
extraordinary expenses. The Fund also pays for brokerage commissions and
transfer taxes (if any) in connection with the purchase and sale of portfolio
securities. Expenses attributable to a particular series of the Trust, including
the Fund, will be charged to that series, and expenses not readily identifiable
as belonging to a particular series will be allocated by or under procedures
approved by the Board of Trustees among one or more series in such a manner as
it deems fair and equitable. Any expenses relating only to a particular Class of
Shares of the Fund will be borne solely by such Class.
OTHER INFORMATION
Description of Shares. The Trust was organized as a Massachusetts business trust
on October 25, 1990 under a Declaration of Trust. The Declaration of Trust
permits the Board of Trustees to issue an unlimited number of full and
fractional shares and to create an unlimited number of series of shares. The
Board of Trustees may also classify and reclassify any unissued shares into one
or more classes of shares. The Trust currently has the number of authorized
series of shares, including the Fund, and classes of shares, described in the
Statement of Additional Information under "Description of the Trust." Pursuant
to its authority under the Declaration of Trust, the Board of Trustees has
authorized the issuance of an unlimited number of shares in each of two Classes
("Investor Shares" and "Institutional Shares") representing equal pro rata
interests in the Fund, except that the Classes bear different expenses that
reflect the differences in services provided to them. Investor Shares are sold
with a sale charge and bear potential distribution expenses and service fees.
Institutional Shares are sold without a sales charge and bear no shareholder
servicing or distribution fees. As a result of different charges, fees, and
expenses between the Classes, the total return on the Fund's Investor Shares
will generally be lower than the total return on the Institutional Shares.
Standardized total return quotations will be computed separately for each Class
of Shares of the Fund.
THIS PROSPECTUS RELATES TO THE FUND'S INVESTOR SHARES AND DESCRIBES ONLY THE
POLICIES, OPERATIONS, CONTRACTS, AND OTHER MATTERS PERTAINING TO THE INVESTOR
SHARES. THE FUND ALSO ISSUES A CLASS OF INSTITUTIONAL SHARES. SUCH OTHER CLASS
MAY HAVE DIFFERENT SALES CHARGES AND EXPENSES, WHICH MAY AFFECT PERFORMANCE.
INVESTORS MAY CALL THE FUND AT 1-800-525-FUND TO OBTAIN MORE INFORMATION
CONCERNING OTHER CLASSES AVAILABLE TO THEM THROUGH THEIR SALES REPRESENTATIVE.
INVESTORS MAY OBTAIN INFORMATION CONCERNING THOSE CLASSES FROM THEIR SALES
REPRESENTATIVE, THE DISTRIBUTOR, THE FUND, OR ANY OTHER PERSON WHICH IS OFFERING
OR MAKING AVAILABLE TO THEM THE SECURITIES OFFERED IN THIS PROSPECTUS.
When issued, the shares of each series of the Trust, including the Fund, and
each class of shares, will be fully paid, nonassessable and redeemable. The
Trust does not intend to hold annual shareholder meetings; it may, however, hold
special shareholder meetings for purposes such as changing fundamental policies
or electing Trustees. The Board of Trustees shall promptly call a meeting for
the purpose of electing or removing Trustees when requested in writing to do so
by the record holders of a least 10% of the outstanding shares of the Trust. The
term of office of each Trustee is of unlimited duration. The holders of at least
two-thirds of the outstanding shares of the Trust may remove a Trustee from that
position either by declaration in writing filed with the Custodian or by votes
cast in person or by proxy at a meeting called for that purpose.
The Trust's shareholders will vote in the aggregate and not by series (fund) or
class, except where otherwise required by law or when the Board of Trustees
determines that the matter to be voted on affects only the interests of the
shareholders of a particular series or class. Matters affecting an individual
series, such as the Fund, include, but are not limited to, the investment
objectives, policies and restrictions of that series. Shares have no
subscription, preemptive or conversion rights. Share certificates will not be
issued. Each share is entitled to one vote (and fractional shares are entitled
to proportionate fractional votes) on all matters submitted for a vote, and
shares have equal voting rights except that only shares of a particular series
or class are entitled to vote on matters affecting only that series or class.
Shares do not have cumulative voting rights. Therefore, the holders of more than
50% of the aggregate number of shares of all series of the Trust may elect all
the Trustees.
Under Massachusetts's law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
trust. The Declaration of Trust, therefore, contains provisions that are
intended to mitigate such liability. See "Description of the Trust" in the
Statement of Additional Information for further information about the Trust and
its shares.
Reporting to Shareholders. The Fund will send to its shareholders Annual and
Semi-Annual Reports; the financial statements appearing in Annual Reports for
the Fund will be audited by independent accountants. In addition, the Fund, as
transfer agent, will send to each shareholder having an account directly with
the Fund a quarterly statement showing transactions in the account, the total
number of shares owned and any dividends or distributions paid. Inquiries
regarding the Fund may be directed in writing to 107 North Washington Street,
Post Office Box 4365, Rocky Mount, North Carolina 27803-0365 or by calling
1-800-525-FUND.
Calculation of Performance Data. From time to time the Fund may advertise its
average annual total return for each Class of Shares. The "average annual total
return" refers to the average annual compounded rates of return over 1-, 5- and
10- year periods that would equate an initial amount invested at the beginning
of a stated period to the ending redeemable value of the investment. The
calculation assumes the reinvestment of all dividends and distributions,
includes all recurring fees that are charged to all shareholder accounts and
deducts all nonrecurring charges at the end of each period. The calculation
further assumes the maximum sales load is deducted from the initial payment. If
a Fund has been operating less than 1-, 5- or 10- years, the time period during
which the Fund has been operating is substituted.
In addition, the Fund may advertise other total return performance data other
than average annual total return for each Class of Shares. This data shows as a
percentage rate of return encompassing all elements of return (i.e. income and
capital appreciation or depreciation); it assumes reinvestment of all dividends
and capital gain distributions. Such other total return data may be quoted for
the same or different periods as those for which average annual total return is
quoted. This data may consist of a cumulative percentage rate of return, actual
year-by-year rates or any combination thereof. Cumulative total return
represents the cumulative change in value of an investment in a Fund for various
periods.
The total return of a Fund could be increased to the extent the Advisor may
waive all or a portion of its fees or may reimburse all or a portion of the
Fund's expenses. Total return figures are based on the historical performance of
the Fund, show the performance of a hypothetical investment, and are not
intended to indicate future performance. The Fund's quotations may from time to
time be used in advertisements, sales literature, shareholder reports, or other
communications. For further information, see "Additional Information on
Performance" in the Statement of Additional Information.
<PAGE>
WST GROWTH & INCOME FUND
INVESTOR CLASS
PROSPECTUS
October *, 1997
WST Growth & Income Fund
107 North Washington Street
Post Office Drawer 4365
Rocky Mount, North Carolina 27803-0365
1-800-525-FUND
Investment Advisor
Wilbanks, Smith & Thomas Asset Management, Inc.
One Commercial Place, Suite 1450
Norfolk, Virginia 23510
Administrator
The Nottingham Company
105 North Washington Street
Post Office Box 69
Rocky Mount, North Carolina 27803-0365
1-800-525-FUND
Transfer Agent and Shareholder Servicing Agent
NC Shareholder Services, L.L.C.
107 North Washington Street
Post Office Drawer 4365
Rocky Mount, North Carolina 27803-0365
1-800-525-FUND
Custodian
First Union National Bank of North Carolina
Two First Union Center
Charlotte, North Carolina 28288-1151
Distributor
Capital Investment Group, Inc.
Post Office Box 32249
Raleigh, North Carolina 27622
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
WST GROWTH & INCOME FUND
October **, 1997
A Series of
THE NOTTINGHAM INVESTMENT TRUST II
107 North Washington Street, Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
Telephone 1-800-525-3863
Table of Contents
INVESTMENT OBJECTIVE AND POLICIES..................................... 2
INVESTMENT LIMITATIONS................................................ 5
NET ASSET VALUE....................................................... 6
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION........................ 7
DESCRIPTION OF THE TRUST.............................................. 8
ADDITIONAL INFORMATION CONCERNING TAXES............................... 9
MANAGEMENT OF THE FUND................................................ 10
SPECIAL SHAREHOLDER SERVICES.......................................... 15
ADDITIONAL INFORMATION ON PERFORMANCE................................. 16
APPENDIX A - DESCRIPTION OF RATINGS................................... 18
This Statement of Additional Information (the "Additional Statement") is meant
to be read in conjunction with the Prospectus dated October **, 1997 for the WST
Growth & Income Fund (the "Fund") relating to the Fund's Investor Shares and
Institutional Shares, as each Prospectus may be amended or supplemented from
time to time, and is incorporated by reference in its entirety into each
Prospectus. Because this Additional Statement is not itself a prospectus, no
investment in shares of the Fund should be made solely upon the information
contained herein. Copies of the Fund's Prospectus may be obtained at no charge
by writing or calling the Fund at the address and phone number shown above. This
Additional Statement is not a prospectus but is incorporated by reference in
each Prospectus in its entirety. Capitalized terms used but not defined herein
have the same meanings as in the Prospectus.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The following policies supplement the Fund's investment objective and policies
as set forth in the Prospectus for each Class of Shares of the Fund. The Fund
has no prior operating history.
Additional Information on Fund Instruments. Attached to this Additional
Statement is Appendix A, which contains descriptions of the rating symbols used
by Rating Agencies for securities in which the Fund may invest.
Investment Transactions. Subject to the general supervision of the Trust's Board
of Trustees, the Advisor is responsible for, makes decisions with respect to,
and places orders for all purchases and sales of portfolio securities for the
Fund.
The annualized portfolio turnover rate for the Fund is calculated by dividing
the lesser of purchases or sales of portfolio securities for the reporting
period by the monthly average value of the portfolio securities owned during the
reporting period. The calculation excludes all securities whose maturities or
expiration dates at the time of acquisition are one year or less. Portfolio
turnover of the Fund may vary greatly from year to year as well as within a
particular year, and may be affected by cash requirements for redemption of
shares and by requirements that enable the Fund to receive favorable tax
treatment. Portfolio turnover will not be a limiting factor in making Fund
decisions, and the Fund may engage in short term trading to achieve its
investment objectives.
Purchases of money market instruments by the Fund are made from dealers,
underwriters and issuers. The Fund currently does not expect to incur any
brokerage commission expense on such transactions because money market
instruments are generally traded on a "net" basis by a dealer acting as
principal for its own account without a stated commission. The price of the
security, however, usually includes a profit to the dealer. Securities purchased
in underwritten offerings include a fixed amount of compensation to the
underwriter, generally referred to as the underwriter's concession or discount.
When securities are purchased directly from or sold directly to an issuer, no
commissions or discounts are paid.
Transactions on U.S. stock exchanges involve the payment of negotiated brokerage
commissions. On exchanges on which commissions are negotiated, the cost of
transactions may vary among different brokers. Transactions in the
over-the-counter market are generally on a net basis (i.e., without commission)
through dealers, or otherwise involve transactions directly with the issuer of
an instrument. The Fund's fixed income portfolio transactions will normally be
principal transactions executed in over-the-counter markets and will be executed
on a "net" basis, which may include a dealer markup. With respect to securities
traded only in the over-the-counter market, orders will be executed on a
principal basis with primary market makers in such securities except where
better prices or executions may be obtained on an agency basis or by dealing
with other than a primary market maker.
The Fund may participate, if and when practicable, in bidding for the purchase
of Fund securities directly from an issuer in order to take advantage of the
lower purchase price available to members of a bidding group. The Fund will
engage in this practice, however, only when the Advisor, in its sole discretion,
believes such practice to be otherwise in the Fund's interest.
In executing Fund transactions and selecting brokers or dealers, the Advisor
will seek to obtain the best overall terms available for the Fund. In assessing
the best overall terms available for any transaction, the Advisor shall consider
factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the spread or commission, if
any, both for the specific transaction and on a continuing basis. The sale of
Fund shares may be considered when determining the firms that are to execute
brokerage transactions for the Fund. In addition, the Advisor is authorized to
cause the Fund to pay a broker-dealer which furnishes brokerage and research
services a higher spread or commission than that which might be charged by
another broker-dealer for effecting the same transaction, provided that the
Advisor determines in good faith that such spread or commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either the particular transaction or the
overall responsibilities of the Advisor to the Fund. Such brokerage and research
services might consist of reports and statistics relating to specific companies
or industries, general summaries of groups of stocks or bonds and their
comparative earnings and yields, or broad overviews of the stock, bond and
government securities markets and the economy.
<PAGE>
Supplementary research information so received is in addition to, and not in
lieu of, services required to be performed by the Advisor and does not reduce
the advisory fees payable by the Fund. The Trustees will periodically review any
spread or commissions paid by the Fund to consider whether the spread or
commissions paid over representative periods of time appear to be reasonable in
relation to the benefits inuring to the Fund. It is possible that certain of the
supplementary research or other services received will primarily benefit one or
more other investment companies or other accounts for which the Advisor
exercises investment discretion. Conversely, the Fund may be the primary
beneficiary of the research or services received as a result of securities
transactions effected for such other account or investment company.
The Advisor may also utilize a brokerage firm affiliated with the Trust or the
Advisor (including the Distributor, an affiliate of the Advisor) if it believes
it can obtain the best execution of transactions from such broker. The Fund will
not execute portfolio transactions through, acquire securities issued by, make
savings deposits in or enter into repurchase agreements with the Advisor or an
affiliated person of the Advisor (as such term is defined in the 1940 Act)
acting as principal, except to the extent permitted by the Securities and
Exchange Commission ("SEC"). In addition, the Fund will not purchase securities
during the existence of any underwriting or selling group relating thereto of
which the Advisor, or an affiliated person of the Advisor, is a member, except
to the extent permitted by the SEC. Under certain circumstances, the Fund may be
at a disadvantage because of these limitations in comparison with other
investment companies that have similar investment objectives but are not subject
to such limitations.
Investment decisions for the Fund will be made independently from those for any
other series of the Trust, if any, and for any other investment companies and
accounts advised or managed by the Advisor. Such other investment companies and
accounts may also invest in the same securities as the Fund. To the extent
permitted by law, the Advisor may aggregate the securities to be sold or
purchased for the Fund with those to be sold or purchased for other investment
companies or accounts in executing transactions. When a purchase or sale of the
same security is made at substantially the same time on behalf of the Fund and
another investment company or account, the transaction will be averaged as to
price and available investments allocated as to amount, in a manner which the
Advisor believes to be equitable to the Fund and such other investment company
or account. In some instances, this investment procedure may adversely affect
the price paid or received by the Fund or the size of the position obtained or
sold by the Fund.
Repurchase Agreements. The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
transaction occurs when, at the time the Fund purchases a security (normally a
U.S. Treasury obligation), it also resell it to the vendor (normally a member
bank of the Federal Reserve or a registered Government Securities dealer) and
must deliver the security (and/or securities substituted for them under the
repurchase agreement) to the vendor on an agreed upon date in the future. The
repurchase price exceeds the purchase price by an amount which reflects an
agreed upon market interest rate effective for the period of time during which
the repurchase agreement is in effect. Delivery pursuant to the resale will
occur within one to five days of the purchase.
Repurchase agreements are considered "loans" under the Investment Company Act of
1940, as amended (the "1940 Act"), collateralized by the underlying security.
The Trust will implement procedures to monitor on a continuous basis the value
of the collateral serving as security for repurchase obligations. Additionally,
the Advisor to the Fund will consider the creditworthiness of the vendor. If the
vendor fails to pay the agreed upon resale price on the delivery date, the Fund
will retain or attempt to dispose of the collateral. The Fund's risk is that
such default may include any decline in value of the collateral to an amount
which is less than 100% of the repurchase price, any costs of disposing of such
collateral, and any loss resulting from any delay in foreclosing on the
collateral. The Fund will not enter into any repurchase agreement, which will
cause more than 10% of its net assets to be invested in repurchase agreements,
which extend beyond seven days.
Description of Money Market Instruments. Money market instruments may include
U.S. Government Securities or corporate debt securities (including those subject
to repurchase agreements), provided that they mature in thirteen months or less
from the date of acquisition and are otherwise eligible for purchase by the
Fund. Money market instruments also may include Banker's Acceptances and
Certificates of Deposit of domestic branches of U.S. banks, Commercial Paper and
Variable Amount Demand Master Notes ("Master Notes"). Banker's Acceptances are
time drafts drawn on and "accepted" by a bank. When a bank "accepts" such a time
draft, it assumes liability for its payment. When the Fund acquires a Banker's
Acceptance the bank which "accepted" the time draft is liable for payment of
interest and principal when due. The Banker's Acceptance carries the full faith
and credit of such bank. A Certificate of Deposit ("CD") is an unsecured
interest bearing debt obligation of a bank. Commercial Paper is an unsecured,
short-term debt obligation of a bank, corporation or other borrower. Commercial
Paper maturity generally ranges from two to 270 days and is usually sold on a
discounted basis rather than as an interest-bearing instrument. The Fund will
invest in Commercial Paper only if it is rated one of the top two rating
categories by Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Ratings Group ("S&P"), Fitch Investors Service, Inc. ("Fitch") or Duff & Phelps
("D&P") or, if not rated, of equivalent quality in the Advisor's opinion.
Commercial Paper may include Master Notes of the same quality. Master Notes are
unsecured obligations which are redeemable upon demand of the holder and which
permit the investment of fluctuating amounts at varying rates of interest.
Master Notes are acquired by the Fund only through the Master Note program of
the Fund's custodian bank, acting as administrator thereof. The Advisor will
monitor, on a continuous basis, the earnings power, cash flow and other
liquidity ratios of the issuer of a Master Note held by the Fund.
Illiquid Investments. The Fund may invest up to 10% of its net assets in
illiquid securities, which are investments that cannot be sold or disposed of in
the ordinary course of business within seven days at approximately the prices at
which they are valued. Under the supervision of the Board of Trustees, the
Advisor determines the liquidity of the Fund's investments and, through reports
from the Advisor, the Board monitors investments in illiquid instruments. In
determining the liquidity of the Fund's investments, the Advisor may consider
various factors including (1) the frequency of trades and quotations, (2) the
number of dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including any
demand or tender features) and (5) the nature of the marketplace for trades
(including the ability to assign or offset the Fund's rights and obligations
relating to the investment). Investments currently considered by the Fund to be
illiquid include repurchase agreements not entitling the holder to payment of
principal and interest within seven days. If through a change in values, net
assets or other circumstances, the Fund were in a position where more than 10%
of its net assets were invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity. The Fund may not purchase restricted
securities, which are securities that cannot be sold to the public without
registration under the federal securities laws.
Restricted Securities. Within its limitation on investment in illiquid
securities, the Fund may purchase restricted securities that generally can be
sold in privately negotiated transactions, pursuant to an exemption from
registration under the federal securities laws, or in a registered public
offering. Where registration is required, the Fund may be obligated to pay all
or part of the registration expense and a considerable period may elapse between
the time it decides to seek registration and the time the Fund may be permitted
to sell a security under an effective registration statement. If during such a
period, adverse market conditions were to develop, the Fund might obtain a less
favorable price than prevailed when it decided to seek registration of the
security.
Options Trading. The Fund may also purchase or sell put and call options for
hedging purposes. This is a highly specialized activity that entails greater
than ordinary investment risks. Regardless of how much the market price of the
underlying security increases or decreases, the option buyer's risk is limited
to the amount of the original investment for the purchase of the option.
However, options may be more volatile than the underlying securities, and
therefore, on a percentage basis, an investment in options may be subject to
greater fluctuation than an investment in the underlying securities. A listed
call option gives the purchaser of the option the right to buy from a clearing
corporation, and a writer has the obligation to sell to the clearing
corporation, the underlying security at the stated exercise price at any time
prior to the expiration of the option, regardless of the market price of the
security. The premium paid to the writer is in consideration for undertaking the
obligations under the option contract. A listed put option gives the purchaser
the right to sell to a clearing corporation the underlying security at the
stated exercise price at any time prior to the expiration date of the option,
regardless of the market price of the security. Put and call options purchased
by the Fund will be valued at the last sale price or, in the absence of such a
price, at the mean between bid and asked prices.
The obligation of the Fund to sell a security subject to a covered call option
written by it, or to purchase a security subject to a secured put option written
by it, may be terminated prior to the expiration date of the option by the Fund
executing a closing purchase transaction, which is effected by purchasing on an
exchange an option of the same series (i.e., same underlying security, exercise
price and expiration date) as the option previously written. Such a purchase
does not result in the ownership of an option. A closing purchase transaction
will ordinarily be effected to realize a profit on an outstanding option, to
prevent an underlying security from being called, to permit the sale of the
underlying security or to permit the writing of a new option containing
different terms on such underlying security. The cost of such a liquidation
purchase plus transaction costs may be greater than the premium received upon
the original option, in which event the Fund will have incurred a loss in the
transaction. An option position may be closed out only on an exchange that
provides a secondary market for an option of the same series. There is no
assurance that a liquid secondary market on an exchange will exist for any
particular option. A covered call option writer, unable to effect a closing
purchase transaction, will not be able to sell the underlying security until the
option expires or the underlying security is delivered upon exercise with the
result that the writer in such circumstances will be subject to the risk of
market decline in the underlying security during such period. The Fund will
write an option on a particular security only if the Advisor believes that a
liquid secondary market will exist on an exchange for options of the same series
which will permit the Fund to make a closing purchase transaction in order to
close out its position.
When the Fund writes a covered call option, an amount equal to the net premium
(the premium less the commission) received by the Fund is included in the
liability section of the Fund's statement of assets and liabilities as a
deferred credit. The amount of the deferred credit will be subsequently
marked-to-market to reflect the current value of the option written. The current
value of the traded option is the last sale price or, in the absence of a sale,
the average of the closing bid and asked prices. If an option expires on the
stipulated expiration date or if the Fund enters into a closing purchase
transaction, it will realize a gain (or loss if the cost of a closing purchase
transaction exceeds the net premium received when the option is sold), and the
deferred credit related to such option will be eliminated. Any gain on a covered
call option may be offset by a decline in the market price of the underlying
security during the option period. If a covered call option is exercised, the
Fund may deliver the underlying security held by it or purchase the underlying
security in the open market. In either event, the proceeds of the sale will be
increased by the net premium originally received, and the Fund will realize a
gain or loss. If a secured put option is exercised, the amount paid by the Fund
for the underlying security will be partially offset by the amount of the
premium previously paid to the Fund. Premiums from expired options written by
the Fund and net gains from closing purchase transactions are treated as
short-term capital gains for federal income tax purposes, and losses on closing
purchase transactions are short-term capital losses.
Stock Index Options. The Fund may purchase or sell put and call stock index
options for hedging purposes. Stock index options are put options and call
options on various stock indexes. In most respects, they are identical to listed
options on common stocks. The primary difference between stock options and index
options occurs when index options are exercised. In the case of stock options,
the underlying security, common stock, is delivered. However, upon the exercise
of an index option, settlement does not occur by delivery of the securities
comprising the index. The option holder who exercises the index option receives
an amount of cash if the closing level of the stock index upon which the option
is based is greater than, in the case of a call, or less than, in the case of a
put, the exercise price of the option. This amount of cash is equal to the
difference between the closing price of the stock index and the exercise price
of the option expressed in dollars times a specified multiple. A stock index
fluctuates with changes in the market values of the stocks included in the
index.
The Fund may purchase call and put stock index options in an attempt to either
hedge against the risk of unfavorable price movements adversely affecting the
value of the Fund's securities, or securities the Fund intends to buy, or
otherwise in furtherance of the Fund's investment objectives. The Fund will sell
(write) stock index options for hedging purposes or in order to close out
positions in stock index options which the Fund has purchased.
The Fund's use of stock index options is subject to certain risks. Successful
use by the Fund of options on stock indexes will be subject to the ability of
the Advisor to correctly predict movements in the directions of the stock
market. This requires different skills and techniques than predicting changes in
the prices of individual securities. In addition, the Fund's ability to
effectively hedge all or a portion of the securities in its portfolio, in
anticipation of or during a market decline through transactions in put options
on stock indexes, depends on the degree to which price movements in the
underlying index correlate with the price movements in the Fund's portfolio
securities. Inasmuch as the Fund's portfolio securities will not duplicate the
components of an index, the correlation will not be perfect. Consequently, the
Fund will bear the risk that the prices of its portfolio securities being hedged
will not move in the same amount as the prices of the Fund's put options on the
stock indexes. It is also possible that there may be a negative correlation
between the index and the Fund's portfolio securities that would result in a
loss on both such portfolio securities and the options on stock indexes acquired
by the Fund.
INVESTMENT LIMITATIONS
The Fund has adopted the following investment limitations, which cannot be
changed without approval by holders of a majority of the outstanding voting
shares of the Fund. A "majority" for this purpose means the lesser of (i) 67% of
the Fund's outstanding shares represented in person or by proxy at a meeting at
which more than 50% of its outstanding shares are represented, or (ii) more than
50% of its outstanding shares. Unless otherwise indicated, percentage
limitations apply at the time of purchase.
As a matter of fundamental policy, the Fund may not:
1. Issue senior securities, borrow money, or pledge its assets, except that it
may borrow from banks as a temporary measure (a) for extraordinary or
emergency purposes, in amounts not exceeding 5% of its total assets or (b)
to meet redemption requests in amounts not exceeding 15% of its total
assets. The Fund will not make any investments if borrowing exceeds 5% of
its total assets until such time as total borrowing represents less than 5%
of Fund assets;
2. With respect to 75% of its total assets, invest more than 5% of the value
of its total assets in the securities of any one issuer or purchase more
than 10% of the outstanding voting securities of any class of securities of
any one issuer (except that securities of the U.S. government, its
agencies, and instrumentalities are not subject to this limitation);
3. Invest 25% or more of the value of its total assets in any one industry or
group of industries (except that securities of the U.S. Government, its
agencies, and instrumentalities are not subject to this limitation);
4. Invest for the purpose of exercising control or management of another
issuer;
5. Purchase or sell commodities or commodities contracts; real estate
(including limited partnership interests, but excluding readily marketable
interests in real estate investment trusts or other securities secured by
real estate or interests therein or readily marketable securities issued by
companies that invest in real estate or interests therein); or interests in
oil, gas, or other mineral exploration or development programs or leases
(although it may invest in readily marketable securities of issuers that
invest in or sponsor such programs or leases);
6. Underwrite securities issued by others except to the extent that the
disposition of portfolio securities, either directly from an issuer or from
an underwriter for an issuer, may be deemed to be an underwriting under the
federal securities laws;
7. Participate on a joint or joint and several basis in any trading account in
securities;
8. Invest its assets in the securities of one or more investment companies
except to the extent permitted by the 1940 Act; or
9. Write, purchase, or sell puts, calls, straddles, spreads, or combinations
thereof or futures contracts or related options.
The following investment limitations are not fundamental and may be changed
without shareholder approval. As a matter of non-fundamental policy, the Fund
may not:
1. Invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of
bonds, guarantors) if more than 5% of its total assets would be invested in
such securities;
2. Invest more than 10% of its net assets in illiquid securities. For this
purpose, illiquid securities include, among others, (a) securities for
which no readily available market exists or which have legal or contractual
restrictions on resale, (b) fixed-time deposits that are subject to
withdrawal penalties and have maturities of more than seven days, and (c)
repurchase agreements not terminable within seven days;
3. Invest in the securities of any issuer if those officers or Trustees of the
Trust and those officers and directors of the Advisor who individually own
more than 1/2 of 1% of the outstanding securities of such issuer together
own more than 5% of such issuer's securities;
4. Make loans of money or securities, except that the Fund may invest in
repurchase agreements, money market instruments, and other debt securities;
5. Make short sales of securities or maintain a short position, except short
sales "against the box." (A short sale is made by selling a security the
Fund does not own. A short sale is "against the box" to the extent that the
Fund contemporaneously owns or has the right to obtain at no additional
cost securities identical to those sold short.) While the Fund has reserved
the right to make short sales "against the box," the Advisor has no present
intention of engaging in such transactions at this time or during the
coming year; or
6. Purchase foreign securities other than those traded on domestic U.S.
exchanges.
NET ASSET VALUE
The net asset value per share of each Class of Shares of the Fund is determined
at 4:00 p.m., New York time, Monday through Friday, except on business holidays
when the New York Stock Exchange is closed. The New York Stock Exchange
recognizes the following holidays: New Year's Day, President's Day, Good Friday,
Memorial Day, Fourth of July, Labor Day, Thanksgiving Day, and Christmas Day.
Any other holiday recognized by the New York Stock Exchange will be considered a
business holiday on which the net asset value of each Class of Shares of the
Fund will not be calculated.
The net asset value per share of each Class of the Fund is calculated separately
by adding the value of the Fund's securities and other assets belonging to the
Fund and attributable to that Class, subtracting the liabilities charged to the
Fund and to that Class, and dividing the result by the number of outstanding
shares of such Class. "Assets belonging to" the Fund consist of the
consideration received upon the issuance of shares of the Fund together with all
net investment income, realized gains/losses and proceeds derived from the
investment thereof, including any proceeds from the sale of such investments,
any funds or payments derived from any reinvestment of such proceeds, and a
portion of any general assets of the Trust not belonging to a particular
investment Fund. Income, realized and unrealized capital gains and losses, and
any expenses of the Fund not allocated to a particular Class of the Fund will be
allocated to each Class of the Fund on the basis of the net asset value of that
Class in relation to the net asset value of the Fund. Assets belonging to the
Fund are charged with the direct liabilities of the Fund and with a share of the
general liabilities of the Trust, which are normally allocated in proportion to
the number of or the relative net asset values of all of the Trust's series at
the time of allocation or in accordance with other allocation methods approved
by the Board of Trustees. Certain expenses attributable to a particular Class of
shares (such as the distribution and service fees attributable to Investor
Shares) will be charged against that Class of shares. Certain other expenses
attributable to a particular Class of shares (such as registration fees,
professional fees, and certain printing and postage expenses) may be charged
against that Class of shares if such expenses are actually incurred in a
different amount by that Class or if the Class receives services of a different
kind or to a different degree than other Classes, and the Board of Trustees
approves such allocation. Subject to the provisions of the Declaration of Trust,
determinations by the Board of Trustees as to the direct and allocable
liabilities, and the allocable portion of any general assets, with respect to
the Fund and the Classes of the Fund are conclusive.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Purchases. Shares of the Fund are offered and sold on a continuous basis and may
be purchased through authorized investment dealers or directly by contacting the
Distributor or the Fund. Selling dealers have the responsibility of transmitting
orders promptly to the Fund. The public offering price of shares of the Fund
equals net asset value, plus a sales charge for Investor Shares of the Fund.
Capital Investment Group, Inc. (the "Distributor"), an affiliate of the Advisor,
receives this sales charge as Distributor and may reallow it in the form of
dealer discounts and brokerage commissions. The current schedule of sales
charges and related dealer discounts and brokerage commissions is set forth in
the Prospectus for the Investor Shares, along with the information on current
purchases, rights of accumulation, and letters of intent. See "How Shares May Be
Purchased" in the Prospectus.
Plan Under Rule 12b-1. The Trust has adopted a Plan of Distribution (the "Plan")
for the Investor Shares of the Fund pursuant to Rule 12b-1 under the 1940 Act
(see "How Shares May Be Purchased - Distribution Plan" in the Prospectus). Under
the Plan the Fund may expend up to 0.50% of the Investor Shares' average net
assets annually to finance any activity which is primarily intended to result in
the sale of Investor Shares of the Fund and the servicing of shareholder
accounts, provided the Trust's Board of Trustees has approved the category of
expenses for which payment is being made. Such expenditures paid as service fees
to any person who sells Investor Shares of the Fund may not exceed 0.25% of the
average annual net asset value of such shares. Potential benefits of the Plan to
the Fund include improved shareholder servicing, savings to the Fund in transfer
agency costs, benefits to the investment process from growth and stability of
assets and maintenance of a financially healthy management organization.
All of the distribution expenses incurred by the Distributor and others, such as
broker-dealers, in excess of the amount paid by the Fund will be borne by such
persons without any reimbursement from the Fund. Subject to seeking best price
and execution, the Fund may, from time to time, buy or sell portfolio securities
from or to firms, which receive payments under the Plan.
From time to time the Distributor may pay additional amounts from its own
resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.
The Plan and the Distribution Agreement with the Distributor have been approved
by the Board of Trustees of the Trust, including a majority of the Trustees who
are not "interested persons" (as defined in the 1940 Act) of the Trust and who
have no direct or indirect financial interest in the Plan or any related
agreements, by vote cast in person or at a meeting duly called for
<PAGE>
the purpose of voting on the Plan and such Agreement. Continuation of the Plan
and the Distribution Agreement must be approved annually by the Board of
Trustees in the same manner as specified above.
Each year the Trustees must determine whether continuation of the Plan is in the
best interest of shareholders of the Fund and that there is a reasonable
likelihood of its providing a benefit to the Fund, and the Board of Trustees has
made such a determination for the current year of operations under the Plan. The
Plan and the Distribution Agreement may be terminated at any time without
penalty by a majority of those trustees who are not "interested persons" or by a
majority vote of the Fund's outstanding Investor Shares. Any amendment
materially increasing the maximum percentage payable under the Plan must
likewise be approved by a majority vote of the Investor Shares' outstanding
voting stock, as well as by a majority vote of those trustees who are not
"interested persons." Also, any other material amendment to the Plan must be
approved by a majority vote of the trustees including a majority of the
independent Trustees of the Trust having no interest in the Plan. In addition,
in order for the Plan to remain effective, the selection and nomination of
Trustees who are not "interested persons" of the Trust must be effected by the
Trustees who themselves are not "interested persons" and who have no direct or
indirect financial interest in the Plan. Persons authorized to make payments
under the Plan must provide written reports at least quarterly to the Board of
Trustees for their review.
Redemptions. Under the 1940 Act, the Fund may suspend the right of redemption or
postpone the date of payment for shares during any period when (a) trading on
the New York Stock Exchange is restricted by applicable rules and regulations of
the SEC; (b) the Exchange is closed for other than customary weekend and holiday
closings; (c) the SEC has by order permitted such suspension; or (d) an
emergency exists as determined by the SEC. The Fund may also suspend or postpone
the recordation of the transfer of shares upon the occurrence of any of the
foregoing conditions.
In addition to the situations described in the Prospectus under "How Shares May
Be Redeemed," the Fund may redeem shares involuntarily to reimburse the Fund for
any loss sustained by reason of the failure of a shareholder to make full
payment for shares purchased by the shareholder or to collect any charge
relating to a transaction effected for the benefit of a shareholder which is
applicable to Fund shares as provided in the Prospectus from time to time.
DESCRIPTION OF THE TRUST
The Trust is an unincorporated business trust organized under Massachusetts's
law on October 25, 1990. The Trust's Declaration of Trust authorizes the Board
of Trustees to divide shares into series, each series relating to a separate
portfolio of investments, and to classify and reclassify any unissued shares
into one or more classes of shares of each such series. The Declaration of Trust
currently provides for the shares of eight series, as follows: WST Growth &
Income Fund managed by Wilbanks, Smith & Thomas Asset Management, Inc. of
Norfolk, Virginia; Capital Value Fund managed by Capital Investment Counsel,
Inc. of Raleigh, North Carolina; ZSA Asset Allocation Fund and ZSA Social
Conscience Fund managed by Zaske, Sarafa & Associates, Inc. of Birmingham,
Michigan; Investek Fixed Income Trust managed by Investek Capital Management of
Jackson, Mississippi; and The Brown Capital Management Equity Fund, The Brown
Capital Management Balanced Fund and The Brown Capital Management Small Company
Fund managed by Brown Capital Management of Baltimore, Maryland. The Board of
Trustees has authorized the classification of shares of all such series except
the ZSA Funds. The number of shares of each series shall be unlimited. The Trust
does not intend to issue share certificates.
In the event of a liquidation or dissolution of the Trust or an individual
series, such as the Fund, shareholders of a particular series would be entitled
to receive the assets available for distribution belonging to such series.
Shareholders of a series are entitled to participate equally in the net
distributable assets of the particular series involved on liquidation, based on
the number of shares of the series that are held by each shareholder. If there
are any assets, income, earnings, proceeds, funds or payments, that are not
readily identifiable as belonging to any particular series, the Trustees shall
allocate them among any one or more of the series as they, in their sole
discretion, deem fair and equitable.
Shareholders of all of the series of the Trust, including the Fund, will vote
together and not separately on a series-by-series or class-by-class basis,
except as otherwise required by law or when the Board of Trustees determines
that the matter to be voted upon affects only the interests of the shareholders
of a particular series or class. Rule 18f-2 under the 1940 Act provides that any
matter required to be submitted to the holders of the outstanding voting
securities of an investment company such as the Trust shall not be deemed to
have been effectively acted upon unless approved by the holders of a majority of
the outstanding shares of each series or class affected by the matter. A matter
affects a series or class unless it is clear that the interests of each series
or class in the matter are substantially identical or that the matter does not
affect any interest of the series or class. Under Rule 18f-2, the approval of an
investment advisory agreement or any change in a fundamental investment policy
would be effectively acted upon with respect to a series only if approved by a
majority of the outstanding shares of such series. However, the Rule also
provides that the ratification of the appointment of independent accountants,
the approval of principal underwriting contracts and the election of Trustees
may be effectively acted upon by shareholders of the Trust voting together,
without regard to a particular series or class.
When used in the Prospectus or this Additional Statement, a "majority" of
shareholders means the vote of the lesser of (1) 67% of the shares of the Trust
or the applicable series or class present at a meeting if the holders of more
than 50% of the outstanding shares are present in person or by proxy, or (2)
more than 50% of the outstanding shares of the Trust or the applicable series or
class.
When issued for payment as described in the Prospectus and this Additional
Statement, shares of the Fund will be fully paid and non-assessable.
The Declaration of Trust provides that the Trustees of the Trust will not be
liable in any event in connection with the affairs of the Trust, except as such
liability may arise from his or her own bad faith, willful misfeasance, gross
negligence, or reckless disregard of duties. It also provides that all third
parties shall look solely to the Trust property for satisfaction of claims
arising in connection with the affairs of the Trust. With the exceptions stated,
the Declaration of Trust provides that a Trustee or officer is entitled to be
indemnified against all liability in connection with the affairs of the Trust.
ADDITIONAL INFORMATION CONCERNING TAXES
The following summarizes certain additional tax considerations generally
affecting the Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders, and the discussion here and in the
Prospectus is not intended as a substitute for careful tax planning and is based
on tax laws and regulations that are in effect on the date hereof; such laws and
regulations may be changed by legislative, judicial, or administrative action.
Investors are advised to consult their tax advisors with specific reference to
their own tax situations.
Each series of the Trust, including the Fund, will be treated as a separate
corporate entity under the Code and intends to qualify or remain qualified as a
regulated investment company. In order to so qualify, each series must elect to
be a regulated investment company or have made such an election for a previous
year and must satisfy, in addition to the distribution requirement described in
the Prospectus, certain requirements with respect to the source of its income
for a taxable year. At least 90% of the gross income of each series must be
derived from dividends, interest, payments with respect to securities loans,
gains from the sale or other disposition of stocks, securities or foreign
currencies, and other income derived with respect to the series' business of
investing in such stock, securities or currencies. Any income derived by a
series from a partnership or trust is treated as derived with respect to the
series' business of investing in stock, securities or currencies only to the
extent that such income is attributable to items of income that would have been
qualifying income if realized by the series in the same manner as by the
partnership or trust.
Another requirement for qualification as a regulated investment company under
the Code is that less than 30% of a series' gross income for a taxable year must
be derived from gains realized on the sale or other disposition of the following
investments held for less than three months: (l) stock and securities (as
defined in Section 2(a) (36) of the 1940 Act); (2) options, futures and forward
contracts other than those on foreign currencies; or (3) foreign currencies (or
options, futures or forward contracts on foreign currencies) that are not
directly related to a series' principal business of investing in stocks or
securities (or options and futures with respect to stocks or securities).
Interest (including original issue discount and, with respect to certain debt
securities, accrued market discount) received by a series upon maturity or
disposition of a security held for less than three months will not be treated as
gross income derived from the sale or other disposition of such security within
the meaning of this requirement. However, any other income, which is
attributable to realized market appreciation will be, treated as gross income
from the sale or other disposition of securities for this purpose.
<PAGE>
An investment company may not qualify as a regulated investment company for any
taxable year unless it satisfies certain requirements with respect to the
diversification of its investments at the close of each quarter of the taxable
year. In general, at least 50% of the value of its total assets must be
represented by cash, cash items, government securities, securities of other
regulated investment companies and other securities which, with respect to any
one issuer, do not represent more than 5% of the total assets of the investment
company nor more than 10% of the outstanding voting securities of such issuer.
In addition, not more than 25% of the value of the investment company's total
assets may be invested in the securities (other than government securities or
the securities of other regulated investment companies) of any one issuer. The
Fund intends to satisfy all requirements on an ongoing basis for continued
qualification as a regulated investment company.
Each series of the Trust, including the Fund, will designate any distribution of
long term capital gains as a capital gain dividend in a written notice mailed to
shareholders within 60 days after the close of the series' taxable year.
Shareholders should note that, upon the sale or exchange of series shares, if
the shareholder has not held such shares for at least six months, any loss on
the sale or exchange of those shares will be treated as long term capital loss
to the extent of the capital gain dividends received with respect to the shares.
A 4% nondeductible excise tax is imposed on regulated investment companies that
fail to currently distribute an amount equal to specified percentages of their
ordinary taxable income and capital gain net income (excess of capital gains
over capital losses). Each series of the Trust, including the Fund, intends to
make sufficient distributions or deemed distributions of its ordinary taxable
income and any capital gain net income prior to the end of each calendar year to
avoid liability for this excise tax.
If for any taxable year a series does not qualify for the special federal income
tax treatment afforded regulated investment companies, all of its taxable income
will be subject to federal income tax at regular corporate rates (without any
deduction for distributions to its shareholders). In such event, dividend
distributions (whether or not derived from interest on tax-exempt securities)
would be taxable as ordinary income to shareholders to the extent of the series'
current and accumulated earnings and profits, and would be eligible for the
dividends received deduction for corporations.
Each series of the Trust, including the Fund, will be required in certain cases
to withhold and remit to the U.S. Treasury 31% of taxable dividends or 31% of
gross proceeds realized upon sale paid to shareholders who have failed to
provide a correct tax identification number in the manner required, or who are
subject to withholding by the Internal Revenue Service for failure properly to
include on their return payments of taxable interest or dividends, or who have
failed to certify to the Fund that they are not subject to backup withholding
when required to do so or that they are "exempt recipients."
Depending upon the extent of the Fund's activities in states and localities in
which its offices are maintained, in which its agents or independent contractors
are located or in which it is otherwise deemed to be conducting business, the
Fund may be subject to the tax laws of such states or localities. In addition,
in those states and localities that have income tax laws, the treatment of the
Fund and its shareholders under such laws may differ from their treatment under
federal income tax laws.
MANAGEMENT OF THE FUND
Trustees and Officers. The Trustees and executive officers of the Trust, their
ages, and their principal occupations for the last five years are as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Name, Age, Position(s) Principal Occupation(s)
and Address During Past 5 Years
Jack E. Brinson, 64 President, Brinson Investment Co.
Trustee and Chairman President, Brinson Chevrolet, Inc.
1105 Panola Street Tarboro, North Carolina
Tarboro, North Carolina 27886
Eddie C. Brown, 55 President
Trustee* Brown Capital Management, Inc.
President Baltimore, Maryland
The Brown Capital Management Funds
809 Cathedral Street
Baltimore, Maryland 21201
Richard K. Bryant, 38 President
Trustee* Capital Investment Group
President Raleigh, North Carolina
Capital Value Fund Vice President
Post Office Box 32249 Capital Investment Counsel
Raleigh, North Carolina 27622 Raleigh, North Carolina
Elmer O. Edgerton, Jr., 55 President
Vice President Capital Investment Counsel
Capital Value Fund Raleigh, North Carolina
Post Office Box 32249 Vice President
Raleigh, North Carolina 27622 Capital Investment Group
Raleigh, North Carolina
Timothy L. Ellis, 41 Vice President
Trustee* Investek Capital Management
Vice President Jackson, Mississippi
Investek Fixed Income Trust
317 East Capitol
Jackson, Mississippi 39201
R. Mark Fields, 44 Vice President
Vice President Investek Capital Management
Investek Fixed Income Trust Jackson, Mississippi
317 East Capitol
Jackson, Mississippi 39201
John M. Friedman, 53 Vice President
Vice President Investek Capital Management
Investek Fixed Income Trust Jackson, Mississippi
317 East Capitol
Jackson, Mississippi 39201
Keith A. Lee, 36 Vice President
Vice President Brown Capital Management, Inc.
The Brown Capital Management Funds Baltimore, Maryland
309 Cathedral Street
Baltimore, Maryland 21201
Michael T. McRee, 53 President
President Investek Capital Management, Inc.
Investek Fixed Income Trust Jackson, Mississippi
317 East Capitol
Jackson, Mississippi 39201
J. Hope Reese, 36 Comptroller
Treasurer The Nottingham Company
105 North Washington Street Rocky Mount, North Carolina
Rocky Mount, North Carolina 27802 since 1995; previously
Cash Manager
Law Companies Group
Atlanta, Georgia
since 1993; previously
Financial Manager
MGR Food Services
Atlanta, Georgia
Anmar K. Sarafa, 36 President
Vice President Zaske, Sarafa & Associates, Inc.
The ZSA Funds Birmingham, Michigan
Suite 200
355 South Woodward Avenue
Birmingham, Michigan 48009
Thomas W. Steed, 39 Senior Corporate Attorney
Trustee Hardee's Food Systems
101 Bristol Court Rocky Mount, North Carolina
Rocky Mount, North Carolina 27802
J. Buckley Strandberg, 37 Vice President
Trustee Standard Insurance and Realty
Post Office Box 1375 Rocky Mount, North Carolina
Rocky Mount, North Carolina 27802
Norwood A. Thomas, 64 Vice President
Executive Vice President Wilbanks, Smith & Thomas Asset Management
WST Growth & Income Fund Norfolk, Virginia, since 1995; previously
One Commercial Place, Suite 1450 Executive Vice President & Trust Officer
Norfolk, Virginia 23510 Central Carolina Bank,
Durham, North Carolina
C. Frank Watson III, 26 Vice President
Secretary The Nottingham Company
105 North Washington Street Rocky Mount, North Carolina
Rocky Mount, North Carolina 27802
Wayne F. Wilbanks, 37 President
President Wilbanks, Smith & Thomas Asset Management
WST Growth & Income Fund Norfolk, Virginia
One Commercial Place, Suite 1450
Norfolk, Virginia 23510
Arthur E. Zaske, 49 Chairman and Chief Investment Officer
Trustee* Zaske, Sarafa, & Associates, Inc.
President Birmingham, Michigan
The ZSA Funds
Suite 200
355 South Woodward Avenue
Birmingham, Michigan 48009
- -------------------------------
</TABLE>
* Indicates that Trustee is an "interested person" of the Trust for purposes of
the 1940 Act because of his position with one of the investment advisors to the
Trust.
The officers of the Trust will not receive compensation from the Trust for
performing the duties of their offices. Each Trustee who is not an "interested
person" of the Trust receives a fee of $2,000 each year plus $250 per series of
the Trust per meeting attended in person and $100 per series of the Trust per
meeting attended by telephone. All Trustees are reimbursed for any out-of-pocket
expenses incurred in connection with attendance at meetings.
Compensation Table*
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Pension
Retirement Total
Aggregate Benefits Estimated Compensation
Compensation Accrued As Annual from the Trust
Name of Person, from the Part of Fund Benefits Upon Paid to
Position Trust Expenses Retirement Trustees
Jack E. Brinson $9,700 None None $9,700
Trustee
Eddie C. Brown None None None None
Trustee
Richard K. Bryant None None None None
Trustee
Timothy L. Ellis None None None None
Trustee
Thomas W. Steed $9,700 None None $9,700
Trustee
J. Buckley Strandberg $9,700 None None $9,700
Trustee
Arthur E. Zaske None None None None
Trustee
*Figures are for the fiscal year ended March 31, 1997.
</TABLE>
Investment Advisor. Information about Wilbanks, Smith & Thomas Asset Management,
Inc. (the "Advisor") and its duties and compensation as Advisor are contained in
the Prospectus.
The Advisor will receive a monthly management fee equal to an annual rate of
0.75% of the first $500 million of the average daily net assets of the Fund and
0.65% on assets over $500 million.
Under the Advisory Agreement, the Advisor is not liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the performance of such Agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the Advisor in the performance of its duties or from its reckless
disregard of its duties and obligations under the Agreement.
Administrator and Transfer Agent. The Trust has entered into a Fund Accounting,
Dividend Disbursing & Transfer Agent and Administration Agreement with The
Nottingham Company (the "Administrator"), 105 North Washington Street, Post
Office Drawer 69, Rocky Mount, North Carolina 27802-0069, pursuant to which the
Administrator receives a fee at the annual rate of 0.175% of the average daily
net assets of the Fund on the first $50 million; 0.15% of the next $50 million;
0.125% on the next $50 million; and 0.10% of its average daily net assets in
excess of $150 million. In addition, the Administrator currently receives a base
monthly fee of $2,000 for accounting and recordkeeping services for the Fund and
$750 for each Class of Shares beyond the initial Class. The Administrator also
charges the Fund for certain costs involved with the daily valuation of
investment securities and is reimbursed for out-of-pocket expenses. The
Administrator charges a minimum fee of $3,000 per month for all of its fees
taken in the aggregate, analyzed monthly.
The Administrator will perform the following services for the Fund: (1)
coordinate with the Custodian and monitor the services it provides to the Fund;
(2) coordinate with and monitor any other third parties furnishing services to
the Fund; (3) provide the Fund with necessary office space, telephones and other
communications facilities and personnel competent to perform administrative and
clerical functions for the Fund; (4) supervise the maintenance by third parties
of such books and records of the Fund as may be required by applicable federal
or state law; (5) prepare or supervise the preparation by third parties of all
federal, state and local tax returns and reports of the Fund required by
applicable law; (6) prepare and, after approval by the Trust, file and arrange
for the distribution of proxy materials and periodic reports to shareholders of
the Fund as required by applicable law; (7) prepare and, after approval by the
Trust, arrange for the filing of such registration statements and other
documents with the Securities and Exchange Commission and other federal and
state regulatory authorities as may be required by applicable law; (8) review
and submit to the officers of the Trust for their approval invoices or other
requests for payment of Fund expenses and instruct the Custodian to issue checks
in payment thereof; and (9) take such other action with respect to the Fund as
may be necessary in the opinion of the Administrator to perform its duties under
the agreement. The Administrator will also provide certain accounting and
pricing services for the Fund.
With the approval of the Trust, the Administrator has contracted with North
Carolina Shareholder Services, LLC (the "Transfer Agent"), a North Carolina
limited liability company, to serve as transfer, dividend paying, and
shareholder servicing agent for the Fund. The Transfer Agent is compensated for
its services by the Administrator and not directly by the Fund. The address of
the Transfer Agent is 107 North Washington Street, Post Office Box 4365, Rocky
Mount, North Carolina 27803-0365.
Distributor. Capital Investment Group, Inc. (the "Distributor"), Post Office Box
32249, Raleigh, North Carolina 27622, acts as an underwriter and distributor of
the Fund's shares for the purpose of facilitating the registration of shares of
the Fund under state securities laws and to assist in sales of Fund shares
pursuant to a Distribution Agreement (the "Distribution Agreement") approved by
the Board of Trustees of the Trust. The Distributor is an affiliate of the
Advisor.
In this regard, the Distributor has agreed at its own expense to qualify as a
broker-dealer under all applicable federal or state laws in those states which
the Fund shall from time to time identify to the Distributor as states in which
it wishes to offer its shares for sale, in order that state registrations may be
maintained for the Fund.
The Distributor is a broker-dealer registered with the Securities and Exchange
Commission and a member in good standing of the National Association of
Securities Dealers, Inc.
Either party upon 60 days prior written notice to the other party may terminate
the Distribution Agreement.
Custodian. First Union National Bank of North Carolina (the "Custodian") serves
as custodian for the Fund's assets. The Custodian's mailing address is Two First
Union Center, Charlotte, North Carolina 28288. The Custodian acts as the
depository for the Fund, safekeeps its portfolio securities, collects all income
and other payments with respect to portfolio securities, disburses monies at the
Fund's request and maintains records in connection with its duties as Custodian.
For its services as Custodian, the Custodian is entitled to receive from the
Fund an annual fee based on the average net assets of the Fund held by the
Custodian.
Independent Auditors. The firm of Deloitte & Touche, LLP, 2500 One PPG Place,
Pittsburgh, Pennsylvania 15222-5401, serves as independent auditors for the
Fund, and will audit the annual financial statements of the Fund and prepare the
Fund's federal and state tax returns.
SPECIAL SHAREHOLDER SERVICES
The Fund offers the following shareholder services:
Regular Account. The regular account allows for voluntary investments to be made
at any time. Available to individuals, custodians, corporations, trusts,
estates, corporate retirement plans and others, investors are free to make
additions and withdrawals to or from their account as often as they wish. When
an investor makes an initial investment in the Fund, a shareholder account is
opened in accordance with the investor's registration instructions. Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a confirmation statement showing the current transaction and all
prior transactions in the shareholder account during the calendar year to date,
along with a summary of the status of the account as of the transaction date. As
stated in the Prospectus, share certificates are not issued.
Automatic Investment Plan. The automatic investment plan enables shareholders to
make regular monthly or quarterly investment in shares through automatic charges
to their checking account. With shareholder authorization and bank approval, the
Administrator will automatically charge the checking account for the amount
specified ($100 minimum) which will be automatically invested in shares at the
public offering price on or about the 21st day of the month. The shareholder may
change the amount of the investment or discontinue the plan at any time by
writing to the Fund.
Systematic Withdrawal Plan. Shareholders owning shares with a value of $5,000 or
more may establish a Systematic Withdrawal Plan. A shareholder may receive
monthly or quarterly payments, in amounts of not less than $100 per payment, by
authorizing the Fund to redeem the necessary number of shares periodically (each
month, or quarterly in the months of March, June, September and December) in
order to make the payments requested. The Fund has the capacity of
electronically depositing the proceeds of the systematic withdrawal directly to
the shareholder's personal bank account ($5,000 minimum per bank wire).
Instructions for establishing this service are included in the Fund Shares
Application, enclosed in the Prospectus, or available by calling the Fund. If
the shareholder prefers to receive his systematic withdrawal proceeds in cash,
or if such proceeds are less than the $5,000 minimum for a bank wire, checks
will be made payable to the designated recipient and mailed within 7 days of the
valuation date. If the designated recipient is other than the registered
shareholder, the signature of each shareholder must be guaranteed on the
application (see "Signature Guarantees" in the Prospectus). A corporation (or
partnership) must also submit a "Corporate Resolution" (or "Certification of
Partnership") indicating the names, titles and required number of signatures
authorized to act on its behalf. The application must be signed by a duly
authorized officer(s) and the corporate seal affixed. No redemption fees are
charged to shareholders under this plan. Costs in conjunction with the
administration of the plan are borne by the Fund. Shareholders should be aware
that such systematic withdrawals may deplete or use up entirely their initial
investment and may result in realized long-term or short-term capital gains or
losses. The Systematic Withdrawal Plan may be terminated at any time by the Fund
upon sixty days written notice or by a shareholder upon written notice to the
Fund. Applications and further details may be obtained by calling the Fund at
1-800-525-3863, or by writing to:
WST Growth & Income Fund
[Investor Shares] or [Institutional Shares]
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
Purchases in Kind. The Fund may accept securities in lieu of cash in payment for
the purchase of shares in the Fund. The acceptance of such securities is at the
sole discretion of the Advisor based upon the suitability of the securities
accepted for inclusion as a long term investment of the Fund, the marketability
of such securities, and other factors which the Advisor may deem appropriate. If
accepted, the securities will be valued using the same criteria and methods as
described in "How Shares are Valued" in the Prospectus
Redemptions in Kind. The Fund does not intend, under normal circumstances, to
redeem its securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the Trustees,
make it undesirable for the Fund to pay for all redemptions in cash. In such
case, the Board of Trustees may authorize payment to be made in readily
marketable portfolio securities of the Fund. Securities delivered in payment of
redemptions would be valued at the same value assigned to them in computing the
net asset value per share. Shareholders receiving them would incur brokerage
costs when these securities are sold. An irrevocable election has been filed
under Rule 18f-1 of the 1940 Act, wherein the Fund committed itself to pay
redemptions in cash, rather than in kind, to any shareholder of record of the
Fund who redeems during any ninety-day period, the lesser of (a) $250,000 or (b)
one percent (1%) of the Fund's net asset value at the beginning of such period.
Transfer of Registration. To transfer shares to another owner, send a written
request to the Fund at the address shown herein. Your request should include the
following: (1) the Fund name and existing account registration; (2) signature(s)
of the registered owner(s) exactly as the signature(s) appear(s) on the account
registration; (3) the new account registration, address, social security or
taxpayer identification number and how dividends and capital gains are to be
distributed; (4) signature guarantees (See the Prospectus under the heading
"Signature Guarantees"); and (5) any additional documents which are required for
transfer by corporations, administrators, executors, trustees, guardians, etc.
If you have any questions about transferring shares, call or write the Fund.
ADDITIONAL INFORMATION ON PERFORMANCE
From time to time, the total return of each Class of the Fund may be quoted in
advertisements, sales literature, shareholder reports or other communications to
shareholders. The Fund computes the "average annual total return" of each Class
of the Fund by determining the average annual compounded rates of return during
specified periods that equate the initial amount invested to the ending
redeemable value of such investment. This is done by determining the ending
redeemable value of a hypothetical $1,000 initial payment. This calculation is
as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
P(1+T)n = ERV
Where: T = average annual total return.
ERV = ending redeemable value at the end of the period
covered by the computation of a hypothetical $1,000
payment made at the beginning of the period.
P = hypothetical initial payment of $1,000 from which the maximum sales load is deducted.
n = period covered by the computation, expressed in terms of years.
</TABLE>
The Fund may also compute the aggregate total return of each Class of the Fund,
which is calculated in a similar manner, except that the results are not
annualized.
The calculation of average annual total return and aggregate total return assume
that the maximum sales load is deducted from the initial $1,000 investment at
the time it is made and that there is a reinvestment of all dividends and
capital gain distributions on the reinvestment dates during the period. The
ending redeemable value is determined by assuming complete redemption of the
hypothetical investment and the deduction of all nonrecurring charges at the end
of the period covered by the computations. The Fund may also quote other total
return information that does not reflect the effects of the sales load.
The Fund's performance may be compared in advertisements, sales literature,
shareholder reports, and other communications to the performance of other mutual
funds having similar objectives or to standardized indices or other measures of
investment performance. In particular, the Fund may compare its performance to
the S&P 500 Index, the Lehman Aggregate Bond Index, or a combination of such
indices. Comparative performance may also be expressed by reference to a ranking
prepared by a mutual fund monitoring service or by one or more newspapers,
newsletters or financial periodicals. The Fund may also occasionally cite
statistics to reflect its volatility and risk.
The Fund's performance fluctuates on a daily basis largely because net earnings
and net asset value per share fluctuate daily. Both net earnings and net asset
value per share are factors in the computation of total return as described
above.
As indicated, from time to time, the Fund may advertise its performance compared
to similar funds or portfolios using certain indices, reporting services, and
financial publications. These may include the following:
o Lipper Analytical Services, Inc. ranks funds in various fund categories
by making comparative calculations using total return. Total return
assumes the reinvestment of all capital gains distributions and income
dividends and takes into account any change in net asset value over a
specific period of time.
o Morningstar, Inc., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
Investors may use such indices in addition to the Fund's Prospectus to obtain a
more complete view of the Fund's performance before investing. Of course, when
comparing the Fund's performance to any index, factors such as composition of
the index and prevailing market conditions should be considered in assessing the
significance of such comparisons. When comparing funds using reporting services,
or total return, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price. Advertisements and
other sales literature for the Fund may quote total returns that are calculated
on non-standardized base periods. The total returns represent the historic
change in the value of an investment in the Fund based on monthly reinvestment
of dividends over a specified period of time.
From time to time the Fund may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the reflects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation. The Fund may also disclose from time to
time information about its portfolio allocation and holdings at a particular
date (including ratings of securities assigned by independent rating services
such as S&P and Moody's). The Fund may also depict the historical performance of
the securities in which the Fund may invest over periods reflecting a variety of
market or economic conditions either alone or in comparison with alternative
investments, performance indices of those investments, or economic indicators.
The Fund may also include in advertisements and in materials furnished to
present and prospective shareholders statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
to meet specific financial goals, such as saving for retirement, children's
education, or other future needs.
<PAGE>
APPENDIX A
DESCRIPTION OF RATINGS
The Fund may acquire from time to time fixed income securities that meet the
following minimum rating criteria ("Investment-Grade Debt Securities") (or if
not rated, of equivalent quality as determined by the Advisor). Not more than
50% of the total fixed income portion of the portfolio (not more than 15% of the
entire Fund) will be invested in fixed income securities that are not
Investment-Grade Debt Securities. The various ratings used by the nationally
recognized securities rating services are described below.
A rating by a rating service represents the service's opinion as to the credit
quality of the security being rated. However, the ratings are general and are
not absolute standards of quality or guarantees as to the creditworthiness of an
issuer. Consequently, the Advisor believes that the quality of fixed income
securities in which the Fund may invest should be continuously reviewed and that
individual analysts give different weightings to the various factors involved in
credit analysis. A rating is not a recommendation to purchase, sell or hold a
security, because it does not take into account market value or suitability for
a particular investor. When a security has received a rating from more than one
service, each rating is evaluated independently. Ratings are based on current
information furnished by the issuer or obtained by the rating services from
other sources that they consider reliable. Ratings may be changed, suspended or
withdrawn as a result of changes in or unavailability of such information, or
for other reasons.
Standard & Poor's Ratings Group. The following summarizes the highest four
ratings used by Standard & Poor's Ratings Group ("S&P") for bonds that are
deemed to be "Investment-Grade Debt Securities" by the Advisor:
AAA - This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay interest and repay
principal.
AA - Debt rated AA is considered to have a very strong capacity to pay
interest and repay principal and differs from AAA issues only in a 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 bonds in this category than for debt in
higher rated categories.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
Bonds rated BB, B, CCC, CC and C are not considered by the Advisor to be
"Investment-Grade Debt Securities" and are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While such
bonds may have some quality and protective characteristics, these are outweighed
by large uncertainties or major risk exposures to adverse conditions.
Commercial paper rated A-1 by S&P indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted A-1+. Capacity for timely payment on
commercial paper rated A-2 is satisfactory, but the relative degree of safety is
not as high as for issues designated A-1.
The rating SP-1 is the highest rating assigned by S&P to municipal notes and
indicates very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics are given a
plus (+) designation.
Moody's Investors Service, Inc. The following summarizes the highest four
ratings used by Moody's Investors Service, Inc. ("Moody's") for bonds that are
deemed to be "Investment-Grade Debt Securities" by the Advisor:
Aaa - Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred
to as "gilt edge." 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 that are rated Aa are judged to be of 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 of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A - Debt that is rated A possesses many favorable investment attributes
and is to be considered as an upper medium grade obligation. 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 - Debt, which is rated Baa, is considered as a medium grade
obligation, i.e., it is 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 debt
lacks outstanding investment characteristics and in fact has speculative
characteristics as well.
Moody's applies numerical modifiers (l, 2 and 3) with respect to bonds rated Aa,
A and Baa. The modifier 1 indicates that the bond being rated ranks in the
higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the bond ranks in the lower end of
its generic rating category.
Bonds, which are rated Ba, B, Caa, Ca or C by Moody's, are not considered
"Investment-Grade Debt Securities" by the Advisor. Bonds rated Ba are judged to
have speculative elements because their future cannot be considered as well
assured. Uncertainty of position characterizes bonds in this class, because the
protection of interest and principal payments often may be very moderate and not
well safeguarded.
Bonds, which are rated B generally, lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the security over any long period for time may be small. Bonds,
which are rated Caa, are of poor standing. Such securities may be in default or
there may be present elements of danger with respect to principal or interest.
Bonds, which are rated Ca, represent obligations, which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
Bonds which are rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Issuers rated Prime-1 (or related supporting institutions) are considered to
have a superior capacity for repayment of short-term promissory obligations.
Issuers rated Prime-2 (or related supporting institutions) are considered to
have a strong capacity for repayment of short-term promissory obligations. This
will normally be evidenced by many of the characteristics of issuers rated
Prime-1 but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics, while
still appropriated may be more affected by external conditions. Ample alternate
liquidity is maintained.
The following summarizes the highest rating used by Moody's for short-term notes
and variable rate demand obligations:
MIG-l; VMIG-l - Obligations bearing these designations are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
Duff & Phelps Credit Rating Co. The following summarizes the highest four
ratings used by Duff & Phelps Credit Rating Co. ("D&P") for bonds, which are
deemed to be "Investment-Grade Debt Securities" by the Advisor:
AAA - Bonds that are rated AAA are of the highest credit quality. The
risk factors are considered to be negligible, being only slightly more
than for risk-free U.S. Treasury debt.
AA - Bonds that are rated AA are of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to
time because of economic conditions.
A - Bonds rated A have average but adequate protection factors. The risk
factors are more variable and greater in periods of economic stress.
BBB - Bonds rated BBB have below average protection factors but are still
considered sufficient for prudent investment. There is considerable
variability in risk during economic cycles.
Bonds rated BB, B and CCC by D&P are not considered "Investment-Grade Debt
Securities" and are regarded, on balance, as predominantly speculative with
respect to the issuer's ability to pay interest and make principal payments in
accordance with the terms of the obligations. BB indicates the lowest degree of
speculation and CCC the highest degree of speculation.
The rating Duff l is the highest rating assigned by D&P for short-term debt,
including commercial paper. D&P employs three designations, Duff l+, Duff 1 and
Duff 1- within the highest rating category. Duff l+ indicates highest certainty
of timely payment. Short-term liquidity, including internal operating factors
and/or access to alternative sources of funds, is judged to be "outstanding, and
safety is just below risk-free U.S. Treasury short-term obligations." Duff 1
indicates very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
considered to be minor. Duff 1- indicates high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors. Risk factors are very small.
Fitch Investors Service, Inc. The following summarizes the highest four ratings
used by Fitch Investors Service, Inc. ("Fitch") for bonds which are deemed to be
"Investment-Grade Debt Securities" by the Advisor:
AAA - Bonds are considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA - Bonds are considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A - Bonds that are rated A are considered to be investment grade and of
high credit quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more vulnerable to
adverse changes in economic conditions and circumstances than bonds with
higher ratings.
BBB - Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have adverse
impact on these bonds, and therefore impair timely payment. The
likelihood that the ratings of these bonds will fall below investment
grade is higher than for bonds with higher ratings.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within a rating category.
Bonds rated BB, B and CCC by Fitch are not considered "Investment-Grade Debt
Securities" and are regarded, on balance, as predominantly speculative with
respect to the issuer's ability to pay interest and make principal payments in
accordance with the terms of the obligations. BB indicates the lowest degree of
speculation and CCC the highest degree of speculation.
The following summarizes the three highest ratings used by Fitch for short-term
notes, municipal notes, variable rate demand instruments and commercial paper:
F-1+ - Instruments assigned this rating are regarded as having the
strongest degree of assurance for timely payment.
F-1 - Instruments assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-1+
F-2 - Instruments assigned this rating have satisfactory degree of
assurance for timely payment, but the margin of safety is not as great as
for issues assigned F-1+ and F-1 ratings.
PART C
THE NOTTINGHAM INVESTMENT TRUST II
FORM N1-A
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
a) Financial Statements:
Financial Highlights are incorporated by reference to Post-Effective
Amendments 28 and 29. Annual Report for the fiscal year ended March
31, 1996 for each series of the Registrant is incorporated by
reference to Post-Effective Amendments 29 and 29 under Part B. The
financial statements for the WST Growth & Income Fund will be filed
by amendment
b) Exhibits
(1) Declaration of Trust - Amended and Restated Declaration of Trust;
Incorporated by reference; filed 6/2/95
(2) By-Laws - Amended and Restated By-Laws; Incorporated by reference; filed
6/2/95
(3) Not Applicable
(4) Not Applicable - the series of the Registrant do not issue certificates
(5) (a) Investment Advisory Agreement for the Capital Value Fund -
Incorporated by reference; filed on 10/29/90; Amendment to the
Investment Advisory Agreement - Incorporated by reference; filed
on 8/1/95
(b) Investment Advisory Agreement for Investek Fixed Income Trust -
Incorporated by reference; filed on 9/20/91
(c) Investment Advisory Agreement for ZSA Social Conscience Fund -
Incorporated by reference; filed on 4/26/94
(d) Investment Advisory Agreement for ZSA Equity Fund - Incorporated by
reference; filed on 5/22/92; Amended and Restated Investment Advisory
Agreement - Incorporated by reference; filed 6/2/95
(e) Investment Advisory Agreement for ZSA Asset Allocation Fund -
Incorporated by reference; filed on 5/22/92; Amendment to the Advisory
Agreement - Incorporated by reference; filed 6/2/95
(f) Investment Advisory Agreement for The Brown Capital Management Equity
Fund - Incorporated by reference; filed on 5/27/92
(g) Investment Advisory Agreement for The Brown Capital Management
Balanced Fund - Incorporated by reference; filed on 5/27/92
(h) Investment Advisory Agreement for The Brown Capital Management Small
Company Fund - Incorporated by reference; filed on 5/27/92
(i) Investment Advisory Agreement for the WST Growth & Income Fund -
Enlcosed Exhibit 5
(6) (a) Distribution Agreement for Capital Value Fund - Incorporated by
reference; filed on 8/1/95
(b) Distribution Agreement for Investek Fixed Income Trust - Incorporated
by reference; filed 7/12/96
(c) Distribution Agreement for ZSA Social Conscience Fund - Incorporated
by reference; filed on 4/26/94
(d) Distribution Agreement for ZSA Equity Fund - Incorporated by
reference; filed on 7/29/94
(e) Distribution Agreement for ZSA Asset Allocation Fund - Incorporated by
reference; filed on 7/29/94
(f) Distribution Agreement for The Brown Capital Management Equity Fund -
Incorporated by reference; filed 6/2/95
(g) Distribution Agreement for The Brown Capital Management Balanced Fund
- Incorporated by reference; filed 6/2/95
(h) Distribution Agreement for The Brown Capital Management Small Company
Fund - Incorporated by reference; filed 6/2/95
(i) Distribution Agreement for The Nottingham Investment Trust II -
Incorporated by reference; filed 7/12/96
(7) Not Applicable
(8) Custodian Agreement - Enclosed Exhibit 8
(9) (a) Fund Accounting, Dividend Disbursing & Transfer Agent and
Administration Agreement - Incorporated by reference; filed on 7/30/93
(b) Amendment to Fund Accounting, Dividend Disbursing & Transfer Agent
Administration Agreement Incorporated by reference; filed on 4/26/94
(c) Amendment to Fund Accounting, Dividend Disbursing & Transfer Agent
Administration Agreement Incorporated by reference - Incorporated by
reference; filed on 10/7/94
(d) Amendment to Fund Accounting, Dividend Disbursing & Transfer Agent
Administration Agreement Incorporated by reference - Incorporated by
reference; filed 6/2/95
(10) Opinion and Consent of Counsel - Incorporated by reference; filed 5/30/96
(11) Consent of Auditors - Incorporated by reference; filed on 7/12/96 and
8/1/96
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) (a) Plan of Distribution under Rule 12b-1 for Capital Value Fund -
Incorporated by reference; filed on 8/1/95
(b) Plan of Distribution under Rule 12b-1 for Investek Fixed Income Trust
- Incorporated by reference; filed on 7/12/96
(c) Plan of Distribution under Rule 12b-1 for ZSA Social Conscience Fund -
Incorporated by reference; filed on 4/26/94
(d) Plan of Distribution under Rule 12b-1 for ZSA Equity Fund -
Incorporated by reference; filed 7/29/94
(e) Plan of Distribution under Rule 12b-1 for ZSA Asset Allocation Fund -
Incorporated by reference; filed on 7/29/94
(f) Plan of Distribution under Rule 12b-1 for The Brown Capital Management
Equity Fund - Incorporated by reference; filed 6/2/95
(g) Plan of Distribution under Rule 12b-1 for The Brown Capital Management
Balanced Fund - Incorporated by reference; filed 6/2/95
(h) Plan of Distribution under Rule 12b-1 for The Brown Capital Management
Small Company Fund - Incorporated by reference; filed 6/2/95
(i) Plan of Distribution under Rule 12b-1 for the WST Growth & Income Fund
- Enclosed Exhibit 15
(16) Computation of Performance - Incorporated by reference; filed on 7/12/96
and 8/1/96
(17) (a) Copies of Powers of Attorney - Incorporated by reference; filed on
10/29/90 and on 4/26/94 (b) Financial Data Schedules - Incorporated by
reference; filed on 7/12/96 and 8/1/96
(18) Plan Pursuant to Rule 18f-3 under the 1940 Act - Enclosed Exhibit 18
ITEM 25. Persons Controlled by or Under Common Control with Registrant
No person is controlled by or under common control with Registrant.
ITEM 26. Number of Record Holders of Securities
As of July 14, 1997, the number of record holders of each class of securities of
Registrant was as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Number of
Title of Class Record Holders
- --------------------------------------------------------------------------------------------------------
Capital Value Fund............................................................ 222
Investek Fixed Income Trust................................................... 66
ZSA Asset Allocation Fund..................................................... 126
The Brown Capital Management Equity Fund - Institutional Shares............... 95
The Brown Capital Management Balanced Fund - Institutional Shares............. 51
The Brown Capital Management Small Company Fund - Institutional Shares........ 190
WST Growth & Income Fund - Institutional Shares...........................
WST Growth & Income Fund - Investor Shares................................
</TABLE>
ITEM 27. Indemnification
Reference is hereby made to the following sections of the following
documents filed or included by reference as exhibits hereto:
Article VIII, Sections 8.4 through 8.6 of the Registrant's
Declaration of Trust, Section 8(b), Section 8(b) of the
Registrant's Investment Advisory Agreements, Section 8(b) of the
Registrant's Administration Agreement, and Section (6) of the
Registrant's Distribution Agreements.
The Trustees and officers of the Registrant and the personnel of
the Registrant's administrator are insured under an errors and
omissions liability insurance policy. The Registrant and its
officers are also insured under the fidelity bond required by Rule
17g-1 under the Investment Company Act of 1940.
ITEM 28. Business and other Connections of Investment Advisor
See the Statement of Additional Information section entitled
"Trustees and Officers" for the activities and affiliations of the
officers and directors of the Investment Advisors of the
Registrant. Except as so provided, to the knowledge of Registrant,
none of the directors or executive officers of the Investment
Advisors is or has been at any time during the past two fiscal
years engaged in any other business, profession, vocation or
employment of a substantial nature. The Investment Advisors
currently serve as investment advisors to numerous institutional
and individual clients.
ITEM 29. Principal Underwriter
(a) Capital Investment Group, Inc. is underwriter and distributor for
The Chesapeake Growth Fund, The Chesapeake Fund, Capital Value
Fund, ZSA Asset Allocation Fund, The Brown Capital Management
Equity Fund, The Brown Capital Management Balanced Fund, The Brown
Capital Management Small Company Fund, GrandView Realty Growth Fund
and GrandView REIT Index Fund.
(b)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------
Name and Principal Position(s) and Offices Position(s) and Offices
Business Address with Underwriter with
Registrant
-------------------------------------------------------------------------------------------------------------
Richard K. Bryant President Trustee and officer of Trust; President of
17 Glenwood Ave. Capital Value Fund; no position with other
Raleigh, NC series of Trust
E.O. Edgerton, Jr. Vice President Vice President of Capital Value Fund; no position
17 Glenwood Ave. with other series of Trust
Raleigh, NC
(c) Not applicable
</TABLE>
ITEM 30. Location of Accounts and Records
All account books and records not normally held by First Union
National Bank of North Carolina, the Custodian to the Registrant, are
held by the Registrant, in the offices of The Nottingham Company, Fund
Accountant and Administrator, NC Shareholder Services, Transfer Agent
to the Registrant, or by the Advisor to the Registrant.
The address of The Nottingham Company is 105 North Washington Street,
P.O. Drawer 69, Rocky Mount, North Carolina 27802-0069. The address of
NC Shareholder Services is 107 North Washington Street. Post Office
Box 4365, Rocky Mount, North Carolina 27803-0365. The address of First
Union National Bank of North Carolina is Two First Union Center,
Charlotte, North Carolina 28288-1151. The address of Capital
Investment Counsel, Inc., Advisor to the Capital Value Fund, is
Glenwood Avenue, Raleigh, North Carolina 27622. The address of
Investek Capital Management, Inc., Advisor to Investek Fixed Income
Trust, is 317 East Capitol Street, Jackson, Mississippi 39207. The
address of Zaske, Sarafa, & Associates, Inc., Advisor to the ZSA Asset
Allocation Fund, is 355 South Woodard Avenue, Birmingham, Michigan
48009. The address of Brown Capital Management, Inc., Advisor to The
Brown Capital Management Equity Fund, The Brown Capital Management
Balanced Fund and The Brown Capital Management Small Company Fund, is
809 Catherdral Street, Baltimore, Maryland 21201.
ITEM 31. Management Services
The substantive provisions of the Fund Accounting, Dividend Disbursing
& Transfer Agent and Administration Agreement, as amended, between the
Registrant and The Nottingham Company are discussed in Part B hereof.
ITEM 32. Undertakings
Registrant undertakes to furnish each person to whom a Prospectus is
delivered with a copy of the latest annual report of each series of
Registrant to shareholders upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Amendment to Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Rocky Mount, State of North
Carolina on the 24th day of July, 1997.
THE NOTTINGHAM INVESTMENT TRUST II
By: /s/ C. FRANK WATSON III
C. Frank Watson III
Secretary
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
* Trustee
Jack E. Brinson
* Trustee
Eddie C. Brown
* Trustee
Richard K. Bryant
* Trustee
Timothy L. Ellis
* Trustee
Thomas W. Steed, III
* Trustee
J. Buckley Strandberg
* Trustee
Arthur E. Zaske
* By:/s/ C. FRANK WATSON III
C. Frank Watson III
Attorney-in-Fact Dated: July 24, 1997
<PAGE>
THE NOTTINGHAM INVESTMENT TRUST II
EXHIBIT INDEX
- --------------------------------------------------------------------------------
EXHIBIT NUMBER DESCRIPTION
- --------------------------------------------------------------------------------
EXHIBIT 5 ............................. INVESTMENT ADVISORY AGREEMENT
EXHIBIT 8 ............................. CUSTODY AGREEMENT
EXHIBIT 15 ............................ PLAN OF DISTRIBUTION
EXHIBIT 18 ............................ 18F-3 PLAN
EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, entered into as of the date the registration statement of the
the WST GROWTH & INCOME FUND of the The Nottingham Investment Trust II becomes
effective with the Securities and Exchange Commission, by and between THE
NOTTINGHAM INVESTMENT TRUST II (the "Trust"), a Massachusetts Business Trust,
and WILBANKS, SMITH & THOMAS ASSET MANAGEMENT, INC., a Virginia corporation (the
"Advisor"), registered as an investment advisor under the Investment Advisors
Act of 1940, as amended (the "Advisors Act").
WHEREAS, the Trust is registered as a diversified, open-end management
investment company of the series type under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, the Trust desires to retain the Advisor to furnish investment advisory
and administrative services to the WST GROWTH & INCOME FUND series of the Trust,
and the Advisor is willing to so furnish such services;
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. Appointment. The Trust hereby appoints the Advisor to act as Investment
Advisor to the WST GROWTH & INCOME FUND (the "Fund") series of the Trust
for the period and on the terms set forth in this Agreement. The Advisor
accepts such appointment and agrees to furnish the services herein set
forth, for the compensation herein provided.
2. Delivery of Documents. The Trust has furnished the Investment Advisor with
copies properly certified or authenticated of each of the following:
(a) The Trust's Declaration of Trust, as filed with the State of
Massachusetts (such Declaration, as presently in effect and as it
shall from time to time be amended, is herein called the
"Declaration");
(b) The Trust's By-Laws (such By-Laws, as presently in effect and as they
shall from time to time be amended, are herein called the "By-Laws");
(c) Resolutions of the Trust's Board of Trustees and the resolution
approved by a majority of the outstanding shares of the Fund
authorizing the appointment of the Advisor and approving this
Agreement;
(d) The Trust's Registration Statement on Form N-1A under the 1940 Act and
under the Securities Act of 1933 as amended, (the "1933 Act"),
relating to shares of beneficial interest of the Fund (herein called
the "Shares") as filed with the Securities and Exchange Commission
("SEC") and all amendments thereto;
(e) The Fund's Prospectus (such Prospectus, as presently in effect and all
amendments and supplements thereto are herein called the
"Prospectus").
The Trust will furnish the Advisor from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing at the same time as such documents are required to be filed with
the SEC.
3. Management. Subject to the supervision of the Trust's Board of Trustees,
the Advisor will provide a continuous investment program for the Fund,
including investment research and management with respect to all
securities, investments, cash and cash equivalents in the Fund. The Advisor
will determine from time to time what securities and other investments will
be purchased, retained or sold by the Fund. The Advisor will provide the
services under this Agreement in accordance with the Fund's investment
objectives, policies and restrictions as stated in its Prospectus. The
Advisor further agrees that it:
(a) Will conform its activities to all applicable Rules and Regulations of
the Securities and Exchange Commission and will, in addition, conduct
its activities under this Agreement in accordance with regulations of
any other Federal and State agencies which may now or in the future
have jurisdiction over its activities under this Agreement;
(b) Will place orders pursuant to its investment determinations for the
Fund either directly with the issuer or with any broker or dealer. In
placing orders with brokers or dealers, the Advisor will attempt to
obtain the best net price and the most favorable execution of its
orders. Consistent with this obligation, when the Advisor believes two
or more brokers or dealers are comparable in price and execution, the
Advisor may prefer: (i) brokers and dealers who provide the Fund with
research advice and other services, or who recommend or sell Trust
shares, and (ii) brokers who are affiliated with the Fund or its
Advisor; provided, however, that in no instance will portfolio
securities be purchased from or sold to the Advisor or any affiliated
person of the Advisor in principal transactions;
(c) Will provide certain executive personnel for the Fund as may be
mutually agreed upon from time to time with the Board of Trustees, the
salaries and expenses of such personnel to be borne by the Advisor
unless otherwise mutually agreed upon; and
(d) Will provide, at its own cost, all office space, facilities and
equipment necessary for the conduct of its advisory activities on
behalf of the Fund.
4. Services Not Exclusive. The advisory services furnished by the Advisor
hereunder are not to be deemed exclusive, and the Advisor shall be free to
furnish similar services to others so long as its services under this
Agreement are not impaired thereby; provided, however, that without the
written consent of the Trustees, the Advisor will not serve as investment
advisor to any other investment company having a similar investment
objective to that of the Fund.
5. Books and Records. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Advisor hereby agrees that all records which it maintains
for the benefit of the Fund are the property of the Fund and further agrees
to surrender promptly to the Fund any of such records upon the Fund's
request. The Advisor further agrees to preserve for the periods prescribed
by Rule 31a-2 under the 1940 Act the records required to be maintained by
it pursuant to Rule 31a-1 under the 1940 Act that are not maintained by
others on behalf of the Fund.
6. Expenses. During the term of this Agreement, the Advisor will pay all
expenses incurred by it in connection with its investment advisory services
pertaining to the Fund. In the event that there is no distribution plan
under Rule 12b-1 of the 1940 Act in effect for the Fund, the Advisor will
pay, out of the Advisor's resources generated from sources other than fees
received from the Fund, the entire cost of the promotion and sale of Trust
shares.
Notwithstanding the foregoing, the Fund shall pay the expenses and costs of
the following:
(a) Taxes, interest charges and extraordinary expenses;
(b) Brokerage fees and commissions with regard to portfolio transactions
of the Fund;
(c) Fees and expenses of the custodian of the Fund's portfolio securities;
(d) Fees and expenses of the Fund's administrator, transfer and dividend
disbursing agent and the Fund's fund accounting agent or, if the Fund
performs any such services without an agent, the costs of the same;
(e) Auditing and legal expenses;
(f) Cost of maintenance of the Fund's existence as a legal entity;
(g) Compensation of trustees who are not interested persons of the Advisor
as law defines that term;
(h) Costs of Trust meetings;
(i) Federal and State registration or qualification fees and expenses;
(j) Costs of setting in type, printing and mailing Prospectuses, reports
and notices to existing shareholders;
(k) The investment advisory fee payable to the Advisor, as provided in
paragraph 7 herein; and
(l) Plan of Distribution expenses, but only in accordance with the Plan of
Distribution as approved by the shareholders of the Fund.
7. Compensation. The Trust will pay the Advisor and the Advisor will accept as
full compensation an investment advisory fee, based upon the daily average
net assets of each Fund, computed at the end of each month and payable
within five (5) business days thereafter, based upon the schedule attached
hereto as Exhibit A.
8.(a)Limitation of Liability. The Advisor shall not be liable for any error of
judgment, mistake of law or for any other loss whatsoever suffered by the
Fund in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Advisor in the performance of
its duties or from reckless disregard by it of its obligations and duties
under this Agreement.
8.(b)Indemnification of Advisor. Subject to the limitations set forth in this
Subsection 8(b), the Fund shall indemnify, defend and hold harmless (from
the assets of the Trust or Trusts to which the conduct in question relates)
the Advisor against all loss, damage and liability, including but not
limited to amounts paid in satisfaction of judgments, in compromise or as
fines and penalties, and expenses, including reasonable accountants' and
counsel fees, incurred by the Advisor in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or
criminal, before any court or administrative or legislative body, related
to or resulting from this Agreement or the performance of services
hereunder, except with respect to any matter as to which it has been
determined that the loss, damage or liability is a direct result of (i) a
breach of fiduciary duty with respect to the receipt of compensation for
services; or (ii) willful misfeasance, bad faith or gross negligence on the
part of the Advisor in the performance of its duties or from reckless
disregard by it of its duties under this Agreement (either and both of the
conduct described in clauses (i) and (ii) above being referred to
hereinafter as "Disabling Conduct"). A determination that the Advisor is
entitled to indemnification may be made by (i) a final decision on the
merits by a court or other body before whom the proceeding was brought that
the Advisor was not liable by reason of Disabling Conduct, (ii) dismissal
of a court action or an administrative proceeding against the Advisor for
insufficiency of evidence of Disabling Conduct, or (iii) a reasonable
determination, based upon a review of the facts, that the Advisor was not
liable by reason of Disabling Conduct by, (a) vote of a majority of a
quorum of Trustees who are neither "interested persons" of the Fund as the
quoted phrase is defined in Section 2(a)(19) of the 1940 Act nor parties to
the action, suit or other proceeding on the same or similar grounds that is
then or has been pending or threatened (such quorum of such Trustees being
referred to hereinafter as the "Independent Trustees"), or (b) an
independent legal counsel in a written opinion. Expenses, including
accountants' and counsel fees so incurred by the Advisor (but excluding
amounts paid in satisfaction of judgments, in compromise or as fines or
penalties), may be paid from time to time by the Fund or Trust to which the
conduct in question related in advance of the final disposition of any such
action, suit or proceeding; provided, that the Advisor shall have
undertaken to repay the amounts so paid if it is ultimately determined that
indemnification of such expenses is not authorized under this Subsection
8(b) and if (i) the Advisor shall have provided security for such
undertaking, (ii) the Fund shall be insured against losses arising by
reason of any lawful advances, or (iii) a majority of the Independent
Trustees, or an independent legal counsel in a written opinion, shall have
determined, based on a review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to believe that the Advisor
ultimately will be entitled to indemnification hereunder.
As to any matter disposed of by a compromise payment by the Advisor
referred to in this Subsection 8(b), pursuant to a consent decree or
otherwise, no such indemnification either for said payment or for any other
expenses shall be provided unless such indemnification shall be approved
(i) by a majority of the Independent Trustees or (ii) by an independent
legal counsel in a written opinion. Approval by the Independent Trustees
pursuant to clause (i) shall not prevent the recovery from the Advisor of
any amount paid to the Advisor in accordance with either of such clauses as
indemnification of the Advisor is subsequently adjudicated by a court of
competent jurisdiction not to have acted in good faith in the reasonable
belief that the Advisor's action was in or not opposed to the best interest
of the Fund or to have been liable to the Fund or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in its conduct under the Agreement.
The right of indemnification provided by this Subsection 8(b) shall not be
exclusive of or affect any of the rights to which the Advisor may be
entitled. Nothing contained in this Subsection 8(b) shall affect any rights
to indemnification to which Trustees, officers or other personnel of the
Fund, and other persons may be entitled by contract or otherwise under law,
nor the power of the Fund to purchase and maintain liability insurance on
behalf of any such person.
The Board of Trustees of the Trust shall take all such action as may be
necessary and appropriate to authorize the Fund hereunder to pay the
indemnification required by this Subsection 8(b) including, without
limitation, to the extent needed, to determine whether the Advisor is
entitled to indemnification hereunder and the reasonable amount of any
indemnity due it hereunder, or employ independent legal counsel for that
purpose.
8.(c)The provisions contained in Section 8 shall survive the expiration or
other termination of this Agreement, shall be deemed to include and protect
the Advisor and its directors, officers, employees and agents and shall
inure to the benefit of its/their respective successors, assigns and
personal representatives.
9. Duration and Termination. This Agreement shall become effective upon the
date the registration statement of the Trust containing the Fund's
Prospectus is declared effective by the Securities and Exchange Commission
and, unless sooner terminated as provided herein, shall continue in effect
for two years. Thereafter, this Agreement shall be renewable for successive
periods of one year each, provided such continuance is specifically
approved annually:
(a) By the vote of a majority of those members of the Board of Trustees
who are not parties to this Agreement or interested persons of any
such party (as that term is defined in the 1940 Act), cast in person
at a meeting called for the purpose of voting on such approval; and
(b) By vote of either the Board of Trustees or a majority (as that term is
defined in the 1940 Act) of the outstanding voting securities of the
Fund.
Notwithstanding the foregoing, this Agreement may be terminated by the Fund
or by the Advisor at any time on sixty (60) days' written notice, without
the payment of any penalty, provided that termination by the Fund must be
authorized either by vote of the Board of Trustees or by vote of a majority
of the outstanding voting securities of the Fund. This Agreement will
automatically terminate in the event of its assignment (as that term is
defined in the 1940 Act).
10. Amendment of this Agreement. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by a written instrument
signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No material amendment of this Agreement
shall be effective until approved by vote of the holders of a majority of
the Fund's outstanding voting securities (as defined in the 1940 Act).
11. Miscellaneous. 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. If any provision
of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of the Agreement shall not be
affected thereby. This Agreement shall be binding and shall inure to the
benefit of the parties hereto and their respective successors.
12. Applicable Law. This Agreement shall be construed in accordance with, and
governed by, the laws of the State of North Carolina.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
ATTEST: THE NOTTINGHAM INVESTMENT TRUST II
By: By:
Title: Title:
ATTEST: WILBANKS, SMITH & THOMAS ASSET MANAGEMENT, INC.
By: By:
Title: Title:
<PAGE>
EXHIBIT A
INVESTMENT ADVISOR'S COMPENSATION SCHEDULE
For the services delineated in the INVESTMENT ADVISORY AGREEMENT, the Investment
Advisor shall be compensated monthly, as of the last day of each month, within
five business days of the month end, a fee based upon net assets according to
the following schedule.
Annual
Net Assets Fee
---------- ---
On the first $250 million 0.75%
On all assets over $250 million 0.65%
EXHIBIT 8
CUSTODY AGREEMENT
(Mutual Funds)
THIS AGREEMENT is made as of __________________, 199__, by and between THE
NOTTINGHAM INVESTMENT TRUST II (the "Trust"), a Massachusetts business trust,
with respect to its existing series as of the date of this Agreement, and such
other series as shall be designated from time to time by the Trust (the "Fund"
or "Funds"), and FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a national banking
association (the "Custodian").
The Trust desires that its securities and funds shall be hereafter held and
administered by the Custodian pursuant to the terms of this Agreement, and,
pursuant to a separate agreement, The Nottingham Company, Inc., a North Carolina
corporation ("Nottingham"), has agreed to perform the duties of Transfer Agent,
Accounting Services Agent, Dividend Disbursing Agent and Administrator for the
Fund.
In consideration of the mutual agreements herein, the Trust and the Custodian
agree as follows:
1. DEFINITIONS.
As used herein, the following words and phrases shall have the meanings
shown in this Section 1:
"Securities" includes stocks, shares, bonds, debentures, bills, notes,
mortgages, certificates of deposit, bank time deposits, bankers'
acceptances, commercial paper, scrip, warrants, participation certificates,
evidences of indebtedness, or other obligations and any certificates,
receipts, warrants or other instruments representing rights to receive,
purchase, or subscribe for the same, or evidencing or representing any
other rights or interests therein, or in any property or assets.
"Oral Instructions" shall mean an authorization, instruction, approval,
item or set of data, or information of any kind transmitted to the
Custodian in person or by telephone, telegram, telecopy or other mechanical
or documentary means lacking original signature, by an officer or employee
of the Trust or an employee of Nottingham in its capacity as Transfer
Agent, Accounting Services Agent, Administrator and Dividend Disbursing
Agent who has been authorized by a resolution of the Board of Trustees of
the Trust or the Board of Directors of Nottingham, as the case may be, to
give Written Instructions on behalf of the Trust.
"Written Instructions" shall mean an authorization, instruction, approval,
item or set of data, or information of any kind transmitted to the
Custodian containing original signatures or a copy of such document
transmitted by telecopy including transmission of such signature,
reasonably believed by the Custodian to be the signature of an officer or
employee of the Trust or an employee of Nottingham in its capacity as
Transfer Agent, Accounting Services Agent, Administrator or Dividend
Disbursing Agent who has been authorized by a resolution of the Board of
Trustees of the Trust or Board of Directors of Nottingham, as the case may
be, to give Written Instructions on behalf of the Trust.
"Securities Depository" shall mean a system for the central handling of
securities where all securities of any particular class or series of any
issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of
securities.
"Officers' Certificate" shall mean a direction, instruction or
certification in writing signed in the name of the Trust by the President,
Secretary or Assistant Secretary, or the Treasurer or Assistant Treasurer
of the Trust, or any other persons duly authorized to sign by the Board of
Trustees or the Executive Committee of the Trust.
"Book-Entry Securities" shall mean securities issued by the Treasury of the
United States of America and federal agencies of the United States of
America which are maintained in the book-entry system as provided in
Subpart O of Treasury Circular No. 300, 31 CFR 306, Subpart B of 31 CFR
Part 350, and the book-entry regulations of federal agencies substantially
in the form of Subpart O, and the term Book-Entry Account shall mean an
account maintained by a Federal Reserve Bank in accordance with the
aforesaid Circular and regulations.
2. DOCUMENTS TO BE FILED BY TRUST.
The Trust shall from time to time file with the Custodian a certified copy
of each resolution of its Board of Trustees authorizing execution of
Written Instructions and the number of signatories required, together with
certified signatures of the officers and other signatories authorized to
sign, which shall constitute conclusive evidence of the authority of the
officers and other signatories designated therein to act, and shall be
considered in full force and effect and the Custodian shall be fully
protected in acting in reliance thereon until it receives a new certified
copy of a resolution adding or deleting a person or persons with authority
to give Written Instructions. If the certifying officer is authorized to
sign Written Instructions, the certification shall also be signed by a
second officer of the Trust. The Trust also agrees that the Custodian may
rely on Written Instructions received from Nottingham as Agent for the
Trust if those Written Instructions are given by persons having authority
pursuant to resolutions of the Board of Trustees of the Trust.
The Trust shall from time to time file with the Custodian a certified copy
of each resolution of the Board of Trustees authorizing the transmittal of
Oral Instructions and specifying the person or persons authorized to give
Oral Instructions in accordance with this Agreement. The Trust agrees that
the Custodian may rely on Oral Instructions received from Nottingham, as
agent for the Trust, if those instructions are given by persons reasonably
believed by the Custodian to have such authority. Any resolution so filed
with the Custodian shall be considered in full force and effect and the
Custodian shall be fully protected in acting in reliance thereon until it
actually receives a new certified copy of a resolution adding or deleting a
person or persons with authority to give Oral Instructions. If the
certifying officer is authorized to give Oral Instructions, the
certification shall also be signed by a second officer of the Trust.
3. RECEIPT AND DISBURSEMENT OF FUNDS.
(a) The Custodian shall open and maintain a separate account or accounts
in the name of each Fund of the Trust, subject only to draft or order
by the Custodian acting pursuant to the terms of this Agreement. The
Custodian shall hold in safekeeping in such account or accounts,
subject to the provisions hereof, all funds received by it from or for
the account of the Trust. The Trust will deliver or cause to be
delivered to the Custodian all funds owned by the Trust, including
cash received for the issuance of its shares during the period of this
Agreement. The Custodian shall make payments of funds to, or for the
account of, the Trust from such funds only:
(i) for the purchase of securities for the portfolio of the Trust upon the
delivery of such securities to the Custodian (or to any bank, banking
firm or trust company doing business in the United States and
designated by the Custodian as its sub-custodian or agent for this
purpose or any foreign bank qualified under Rule 17f-5 of the
Investment Company Act of 1940 and acting as sub-custodian),
registered (if registerable) in the name of the Trust or of the
nominee of the Custodian referred to in Section 8 or in proper form
for transfer, or, in the case of repurchase agreements entered into
between the Trust and the Custodian or other bank or broker dealer (A)
against delivery of the securities either in certificate form or
through an entity crediting the Custodian's account at the Federal
Reserve Bank with such securities or (B) upon delivery of the receipt
evidencing purchase by the Trust of securities owned by the Custodian
along with written evidence of the agreement by the Custodian bank to
repurchase such securities from the Trust;
(ii) for the payment of interest, dividends, taxes, management or
supervisory fees, or operating expenses (including, without
limitation, Board of Trustees' fees and expenses, and fees for legal,
accounting and auditing services) and for redemption or repurchase of
shares of the Trust;
(iii)for payments in connection with the conversion, exchange or surrender
of securities owned or subscribed to by the Trust held by or to be
delivered to the Custodian;
(iv) for the payment to any bank of interest on all or any portion of the
principal of any loan made by such bank to the Trust;
(v) for the payment to any person, firm or corporation who has borrowed
the Trust's portfolio securities the amount deposited with the
Custodian as collateral for such borrowing upon the delivery of such
securities to the Custodian, registered (if registerable) in the name
of the Trust or of the nominee of the Custodian referred to in Section
8 or in proper form for transfer; or
(vi) for other proper purposes of the Trust.
Before making any such payment the Custodian shall receive (and may
rely upon) Written Instructions or Oral Instructions directing such
payment and stating that it is for a purpose permitted under the terms
of this subsection (a). In respect of item (vi), the Custodian will
take such action only upon receipt of an Officers' Certificate and a
certified copy of a resolution of the Board of Trustees or the
Executive Committee of the Trust signed by an officer of the Trust and
certified by the Secretary or an Assistant Secretary, specifying the
amount of such payment, setting forth the purpose for which such
payment is to be made. In respect of item (v), the Custodian shall
make payment to the borrower of securities loaned by the Trust of part
of the collateral deposited with the Custodian upon receipt of Written
Instructions from the Trust or Nottingham stating that the market
value of the securities loaned has declined and specifying the amount
to be paid by the Custodian without receipt or return of any of the
securities loaned by the Trust. In respect of item (i), in the case of
repurchase agreements entered into with a bank which is a member of
the Federal Reserve System, the Custodian may transfer funds to the
account of such bank, which may be itself, prior to receipt of written
evidence that the securities subject to such repurchase agreement have
been transferred by book-entry to the Custodian's non-proprietary
account at the Federal Reserve Bank, or in the case of repurchase
agreements entered into with the Custodian, of the safekeeping receipt
and repurchase agreement, provided that such securities have in fact
been so transferred by book-entry, or in the case of repurchase
agreements entered into with the Custodian, the safekeeping receipt is
received prior to the close of business on the same day.
(b) Notwithstanding anything herein to the contrary, the Custodian may at
any time or times with the written approval of the Board of Trustees,
appoint (and may at any time remove without the written approval of
the Trust) any other bank or trust company as its sub-custodian or
agent to carry out such of the provisions of Subsection (a) of this
Section 3 as instructions from the Trust may from time to time
request; provided, however, that the appointment of such sub-custodian
or agent shall not relieve the Custodian of any of its
responsibilities hereunder; and provided, further, that the Custodian
shall not enter into any arrangement with any subcustodian unless such
sub-custodian meets the requirements of Section 26 of the Investment
Company Act of 1940 and Rule 17f-5 thereunder, if applicable.
(c) The Custodian is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received by the
Custodian for the accounts of the Trust.
4. RECEIPT OF SECURITIES.
(a) The Custodian shall hold in safekeeping in a separate account, and
physically segregated at all times from those of any other persons,
firms, corporations or trusts or any other series of the Trust,
pursuant to the provisions hereof, all securities received by it from
or for the account of each series of the Trust, and the Trust will
deliver or cause to be delivered to the Custodian all securities owned
by the Trust. All such securities are to be held or disposed of by the
Custodian under, and subject at all times to the instructions pursuant
to, the terms of this Agreement. The Custodian shall have no power or
authority to assign, hypothecate, pledge, lend or otherwise dispose of
any such securities and investments, except pursuant to instructions
and only for the account of the Trust as set forth in Section 5 of
this Agreement.
(b) Notwithstanding anything herein to the contrary, the Custodian may at
any time or times with the written approval of the Board of Trustees,
appoint (and may at any time without the written approval of such
Board of Trustees remove) any other bank or trust company as its
sub-custodian or agent to carry out such of the provisions of
Subsection (a) of this Section 4 and of Section 5 of this Agreement,
as instructions may from time to time request, provided, however, that
the appointment of such sub-custodian or agent shall not relieve the
Custodian of any of its responsibilities hereunder, and provided,
further, that the Custodian shall not enter into arrangement with any
sub-custodian unless such sub-custodian meets the requirements of
Section 26 of the Investment Company Act of 1940 or Rule 17f-5
thereunder, if applicable.
5. TRANSFER, EXCHANGE, REDELIVERY, ETC. OF SECURITIES.
The Custodian shall have sole power to release or deliver any Securities of the
Trust held by it pursuant to this Agreement. The Custodian agrees to transfer,
exchange or deliver Securities held by it on behalf of the Trust hereunder only:
(a) for sales of such Securities for the account of the Trust upon receipt
by the Custodian of Payment therefor;
(b) when such securities mature or are called, redeemed or retired or
otherwise become payable;
(c) for examination by any broker selling any such securities in
accordance with "street delivery" custom;
(d) in exchange for or upon conversion into other Securities alone or
other securities and cash whether pursuant to any plan of merger,
consolidation, reorganization, recapitalization or readjustment, or
otherwise;
(e) upon conversion of such Securities pursuant to their terms into other
Securities;
(f) upon exercise of subscription, purchase or other similar rights
represented by such Securities;
(g) for the purpose of exchanging interim receipts for temporary
Securities for definitive securities;
(h) for the purpose of effecting a loan of the portfolio Securities to any
person, firm, corporation or trust upon the receipt by the Custodian
of cash or cash equivalent collateral at least equal to the market
value of the securities loaned;
(i) to any bank for the purpose of collateralizing the obligation of the
Trust to repay any moneys borrowed by the Trust from such bank;
provided, however, that the Custodian may at the option of such
lending bank keep such collateral in its possession, subject to the
rights of such bank given to it by virtue of any promissory note or
agreement executed and delivered by the Trust to such bank; or
(j) for other proper purposes of the Trust.
As to any deliveries made by the Custodian pursuant to items (a), (b), (c),
(d), (e), (f), (g) and (h), Securities or funds receivable in exchange
therefor shall be deliverable to the Custodian. Before making any such
transfer, exchange or delivery, the Custodian shall receive (and may rely
upon) instructions requesting such transfer, exchange, or delivery and
stating that it is for a purpose permitted under the terms (a), (b), (c),
(d), (e), (f), (g), (h), or (i) of this Section 5, and, in respect of item
(j), upon receipt of instructions of a certified copy of a resolution of
the Board of Trustees of the Trust, signed by an officer of the Trust and
certified by its Secretary or an Assistant Secretary, specifying the
Securities to be delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be a proper purpose of
the Trust, and naming the person or persons to whom delivery of such
Securities shall be made. In respect of item (h), the instructions shall
state the market value of the Securities to be loaned and the corresponding
amount of collateral to be deposited with the Custodian; thereafter, upon
receipt of instructions stating that the market value of the Securities
loaned has increased and specifying the amount of increase, the Custodian
shall collect from the borrower additional cash collateral in such amount.
6. FEDERAL RESERVE BOOK-ENTRY SYSTEM.
Notwithstanding any other provisions of this Agreement, it is expressly
understood and agreed that the Custodian is authorized in the performance
of its duties hereunder to deposit in the book-entry deposit system
operated by the Federal Reserve Bank (the "System"), United States
government, instrumentality and agency securities and any other Securities
deposited in the System and to use the facilities of the System, as
permitted by Rule 17f-4 under the Investment Company Act of 1940, in
accordance with the following terms and provisions:
(a) The Custodian may keep Securities of the Trust in the System provided
that such Securities are represented in an account ("Account") of the
Custodian's in the System which shall not include any assets of the
Custodian other than assets held in a fiduciary or custodian capacity.
(b) The records of the Custodian with respect to the participation in the
System through the Custodian shall identify by Book-Entry Securities
belonging to the Trust which are included with other Securities
deposited in the Account and shall at all times during the regular
business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Trust and employees
and agents of the Securities and Exchange Commission.
(c) The Custodian shall pay for Securities purchased for the account of
the Trust upon:
(i) receipt of advice from the System that such Securities have been
transferred to the Account; and
(ii) the making of an entry on the records of the Custodian to reflect
such payment and transfer for the account of the Trust. The
Custodian shall transfer Securities sold for the account of the
Trust upon:
(1) receipt of advice from the System that payment for such
Securities has been transferred to the Account; and
(2) the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the
Trust. The Custodian shall send the Trust a confirmation of
any transfers to or from the account of the Trust.
(d) The Custodian will provide the Trust with any report obtained by the
Custodian on the System's accounting system, internal accounting
control and procedures for safeguarding Securities deposited in the
System. The Custodian will provide the Trust with reports by
independent public accountants on the accounting system, internal
accounting control and procedures for safeguarding Securities,
including Securities deposited in the System relating to the services
provided by the Custodian under this Agreement; such reports shall
detail material inadequacies disclosed by such examination, and, if
there are no such inadequacies, shall so state, and shall be of such
scope and in such detail as the Trust may reasonably require and shall
be of sufficient scope to provide reasonable assurance that any
material inadequacies would be disclosed.
7. USE OF CLEARING FACILITIES.
Notwithstanding any other provisions of the Agreement, the Custodian may,
in connection with transactions in portfolio Securities by the Trust, use
the facilities of the Depository Trust Company ("DTC"), and the
Participants Trust Company ("PTC"), as permitted by Rule 17f-4 under the
Investment Company Act of 1940, if such facilities have been approved by
the Board of Trustees of the Trust in accordance with the following:
(a) DTC and PTC may be used to receive and hold eligible Securities owned
by the Trust;
(b) payment for Securities purchased may be made through the clearing
medium employed by DTC and PTC for transactions of participants acting
through them;
(c) Securities of the Trust deposited in DTC and PTC will at all times be
segregated from any assets and cash controlled by the Custodian in
other than a fiduciary or custodian capacity but may be commingled
with other assets held in such capacities. Subject to the provisions
of the Agreement with regard to instructions, the Custodian will pay
out money only upon receipt of Securities or notification thereof and
will deliver Securities only upon the receipt of money or notification
thereof;
(d) all books and records maintained by the Custodian which relate to the
participation in DTC and PTC shall identify by Book-Entry Securities
belonging to the Trust which are deposited in DTC and PTC and shall at
all times during the Custodian's regular business hours be open to
inspection by the duly authorized officers, employees, agents and
auditors, and the Trust will be furnished with all the information in
respect of the services rendered to it as it may require;
(e) the Custodian will make available to the Trust copies of any internal
control reports concerning DTC and PTC delivered to it by either
internal or external auditors within ten days after receipt of such a
report by the Custodian; and
(f) confirmations of transactions using the facilities of DTC and PTC
shall be provided as set forth in Rule 17f-4 of the Investment Company
Act of 1940.
8. CUSTODIAN'S ACTS WITHOUT INSTRUCTIONS.
Unless and until the Custodian receives instructions to the contrary, the
Custodian shall on behalf of the Trust:
(a) Present for payment all coupons and other income items held by it for
the account of the Trust which call for payment upon presentation and
hold the funds received by it upon such payment for the Trust;
(b) collect interest and cash dividends received, with notice to the
Trust, for the accounts of the Trust;
(c) hold for the accounts of the Trust hereunder all stock dividends,
rights and similar Securities issued with respect to any securities
held by it hereunder;
(d) execute as agent on behalf of the Trust all necessary ownership
certificates required by the Internal Revenue Code or the Income Tax
Regulations of the United States Treasury Department or under the laws
of any state now or hereafter in effect, inserting the name of such
certificates as the owner of the Securities covered thereby, to the
extent it may lawfully do so;
(e) transmit promptly to the Trust all reports, notices and other written
information received by the Custodian from or concerning issuers of
the portfolio Securities; and
(f) collect from the borrower the Securities loaned and delivered by the
Custodian pursuant to item (h) of Section 5 hereof, any interest or
cash dividends paid on such Securities, and all stock dividends,
rights and similar Securities issued with respect to any such loaned
Securities.
With respect to Securities of foreign issuers, it is expected that the
Custodian will use its best efforts to effect collection of dividends,
interest and other income, and to notify the Trust of any call for
redemption, offer of exchange, right of subscription, reorganization, or
other proceedings affecting such Securities, or any default in payments due
thereon. It is understood, however, that the Custodian shall be under no
responsibility for any failure or delay in effecting such collections or
giving such notice with respect to Securities of foreign issuers,
regardless of whether or not the relevant information is published in any
financial service available to it unless (a) such failure or delay is due
to the Custodians' or any sub-custodians' negligence or (b) any relevant
sub-custodian has acted in accordance with established industry practices.
Collections of income in foreign currency are, to the extent possible, to
be converted into United States dollars unless otherwise instructed in
writing, and in effecting such conversion the Custodian may use such
methods or agencies as it may see fit, including the facilities of its own
foreign division at customary rates. All risk and expenses incident to such
collection and conversion is for the accounts of the Trust and the
Custodian shall have no responsibility for fluctuations in exchange rates
affecting any such conversion.
9. REGISTRATION OF SECURITIES.
Except as otherwise directed by instructions, the Custodian shall register
all Securities, except such as are in bearer form, in the name of a
registered nominee of the Custodian, as defined in the Internal Revenue
Code and any Regulation of the Treasury Department issued thereunder or in
any provision of any subsequent Federal tax law exempting such transaction
from liability for stock transfer taxes, and shall execute and deliver all
such certificates in connection therewith as may be required by such laws
or Regulations or under the laws of any State. The Custodian shall use its
best efforts to the end that the specific securities held by it hereunder
shall be at all times identifiable in its records.
The Trust or Nottingham shall from time to time furnish to the Custodian
appropriate instruments to enable the Custodian to hold or deliver in
proper form for transfer, or to register in the name of its registered
nominee, any securities which it may hold for the accounts of the Trust and
which may from time to time be registered in the name of the Trust.
10. SEGREGATED ACCOUNT.
The Custodian shall upon receipt of written instructions from the Trust or
Nottingham establish and maintain a segregated account or accounts for and
on behalf of the Trust, into which account or accounts may be transferred
cash and/or Securities, including Securities maintained in an account by
the Custodian pursuant to Section 4 hereof,
(i) in accordance with the provisions of any agreement among the Trust,
the Custodian and a broker-dealer registered under the Securities and
Exchange Act of 1934 and a member of the NASD (or any futures
commission merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or the
commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Trust;
(ii) for purposes of segregating cash or government securities in
connection with options purchased, sold or written by the Trust or
commodity futures contracts or options thereon purchased or sold by
the Trust;
(iii)for the purposes of compliance by the Trust with the procedures
required by the Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by
registered investment companies; and
(iv) for other proper corporate purposes, but only, in the case of clause
(iv), upon receipt of, in addition to an Officer's Certificate, a
certified copy of a resolution of the Board of Trustees signed by an
officer of the Trust and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper corporate purposes.
11. VOTING AND OTHER ACTIONS.
Neither the Custodian nor any nominee of the Custodian shall vote any of
the Securities held hereunder by or for the accounts of the Trust, except
in accordance with instructions. The Custodian shall execute and deliver,
or cause to be executed and delivered, to the appropriate investment
advisor of each series of the Trust, all notices, proxies and proxy
soliciting materials with relation to such Securities (excluding any
Securities loaned and delivered by the Custodian pursuant to item (h) of
Section 5 hereof), such proxies to be executed by the registered holder of
such Securities (if registered otherwise than in the name of the Trust),
but without indicating the manner in which such proxies are to be voted.
Such proxies shall be delivered by regular mail to the appropriate
investment advisor of each series of the Trust.
12. TRANSFER TAX AND OTHER DISBURSEMENTS.
The Trust shall pay or reimburse the Custodian from time to time for any
transfer taxes payable upon transfers of securities made hereunder and for
all other necessary and proper disbursements and expenses made or incurred
by the Custodian in the performance of this Agreement. The Custodian shall
execute and deliver such certificates in connection with Securities
delivered to it or by it under this Agreement as may be required under the
provisions of the Internal Revenue Code and any Regulations of the Treasury
Department issued thereunder, or under the laws of any State, to exempt
from taxation any exemptible transfers and/or deliveries of any such
securities.
13. CONCERNING THE CUSTODIAN.
(a) The Custodian's compensation shall be paid by the Trust. The Custodian
shall not be liable for any action taken in good faith upon receipt of
instructions as herein defined or a certified copy of any resolution
of the Board of Trustees, and may rely on the genuineness of any such
document which it may in good faith believe to have been validly
executed.
(b) The Custodian shall not be liable for any loss or damage, resulting
from its action or omission to act or otherwise, except for any such
loss or damage arising out of its own negligence or willful misconduct
and except that the Custodian shall be responsible for the acts of any
sub-custodian, or agent appointed hereunder and approved by the Board
of Trustees of the Trust. At any time, the Custodian may seek advice
from legal counsel for the Trust whose legal fees shall be paid at the
sole expense of the Trust, with respect to any matter arising in
connection with this Agreement, and it shall not be liable for any
action taken or not taken or suffered by it in good faith in
accordance with the opinion of counsel for the Trust. The Trust and
not the Custodian shall be responsible for any fee or charges by
counsel for the Trust in connection with any such opinion rendered to
the Custodian.
(c) Without limiting the generality of the foregoing, the Custodian shall
be under no duty or obligation to inquire into, and shall not be
liable for:
(i) The validity of the issue of any Securities purchased by or for
the Trust, the legality of the purchase thereof, or the propriety
of the amount paid therefor;
(ii) The legality of the issue or sale of any Securities by or for the
Trust, or the propriety of the amount for which the same are
sold;
(iii)The legality of the issue or sale of any shares of the Trust, or
the sufficiency of the amount to be received therefor;
(iv) The legality of the redemption of any shares of the Trust, or the
propriety of the amount to be paid therefor;
(v) The legality of the declaration of any dividend or distribution
by the Trust, or the legality of the issue of any Securities of
the Trust in payment of any dividend or distribution in shares;
(vi) The legality of the delivery of any Securities held for the Trust
for the purpose of collateralizing the obligation of the Trust to
repay any moneys borrowed by the Trust; or
(vii)The legality of the delivery of any Securities held for the
Trust for the purpose of lending said securities to any person,
firm or corporation.
(d) The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount, if the Securities upon which such
amount is payable are in default, or if payment is refused after due
demand or presentation by the Custodian on behalf of the Trust, unless
and until
(i) the Custodian shall be directed to take such action by written
instructions signed in the name of the Trust on behalf of the
Trust by one of its executive officers; and
(ii) the Custodian shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection with any
such action.
(e) The Custodian shall not be under any duty or obligation to ascertain
whether any securities at any time delivered to or held by it for the
account of the Trust, are such as may properly be held by the Trust
under the provisions of the Trust's Declaration of Trust or By-Laws as
amended from time to time.
(f) The Trust agrees to indemnify and hold harmless the Custodian and its
nominees, sub-custodians, depositories and agent from all taxes,
charges, expenses, assessments, liabilities, and losses (including
counsel fees) incurred or assessed against it or its nominees,
sub-custodians, depositories and agents in connection with the
performance of this Agreement, except such as may arise from its or
its nominee's, sub-custodian's, depositories' and agent's own
negligent action, negligent failure to act, breach of this agreement
or willful misconduct. The Custodian is authorized to charge any
account of the Trust for such items; provided, however, that, except
for overdrafts as to which the Custodian shall have the immediate
right of offset, prior to charging any such account for such items,
the Custodian shall first have forwarded an invoice for such item to
the Trust and 30 days shall have elapsed from the date of such invoice
to the Trust without payment of the same having been received by the
Custodian. In the event of any advance of funds for any purpose made
by the Custodian resulting from orders or instructions of the Trust,
or in the event that the Custodian or its nominees, sub-custodians,
depositories and agents shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the
performance of this Agreement, except such as may arise from its or
its nominee's own negligent action, negligent failure to act or
willful misconduct any property at any time held for the accounts of
the Trust shall be security therefor. Nothing in this paragraph,
however, shall be deemed to apply to transaction and asset holding
fees or out of pocket expenses of the Custodian which are payable by
Nottingham, and as to such fees and expenses the Custodian shall have
no right of offset or security under this paragraph.
(g) The Custodian agrees to indemnify and hold harmless the Trust and
Trust's Trustees and officers from all taxes, charges, expenses,
assessments, claims liabilities, and losses (including counsel fees)
incurred or assumed against any of them as a result of any breach or
violation of this Agreement by the Custodian or any act or omission by
the Custodian or its Trustees, officers, employees and agents and
resulting from their negligence or willful misconduct.
(h) In the event that, pursuant to this Agreement, instructions direct the
Custodian to pay for securities on behalf of the Trust, the Trust
hereby grants to the Custodian a security interest in such Securities,
until the Custodian has been reimbursed by the Trust in immediately
available funds. The instructions designating the Securities to be
paid for shall be considered the requisite description and designation
of the Securities pledged to the Custodian for purposes of the
requirements of the Uniform Commercial Code.
(i) The Custodian represents that it is qualified to act as such
under section 26(a) of the Investment Company Act of 1940.
14. REPORTS BY THE CUSTODIAN.
(a) The Custodian shall furnish the Trust and the appropriate investment
advisor of each series of the Trust, daily with a statement
summarizing all transactions and entries for the accounts of the
Trust. The Custodian shall furnish the Trust at the end of every month
with a list of the portfolio Securities held by it as Custodian for
the Trust, adjusted for all commitments confirmed by instructions as
of such time. The books and records of the Custodian pertaining to its
actions under this Agreement shall be open to inspection and audit at
reasonable times by officers of the Trust, its independent public
accountants and officers of its investment advisers.
(b) The Custodian will maintain such books and records relating to
transactions effected by it as are required by the Investment Company
Act of 1940, as amended, and any rule or regulation thereunder; or by
any other applicable provision of the law to be maintained by the
Trust or its Custodian, with respect to such transactions, and
preserving or causing to be preserved, any such books and records for
such periods as may be required by any such rule or regulation.
15. TERMINATION OR ASSIGNMENT.
This agreement may be terminated by the Trust, or by the Custodian, on
sixty (60) days' notice, given in writing and sent by registered mail to
the Custodian, or to the Trust, as the case may be, at the address
hereinafter set forth. Upon any termination of this Agreement, pending
appointment by the Trust of a successor to the Custodian or a vote of the
shareholders of the Trust to dissolve or to function without a Custodian of
its funds, the Custodian shall not deliver funds, Securities or other
property of the Trust to the Trust, but may deliver them to a bank or trust
company of its own selection having an aggregate capital, surplus, and
undivided profits, as shown by its last published report of not less than
ten million dollars ($10,000,000) and otherwise qualified to act as a
custodian to a registered investment company as a Custodian for the Trust
to be held under terms similar to those of this Agreement; provided,
however, that the Custodian shall not be required to make any such delivery
or payment until full payment shall have been made to the Custodian of all
its contractual fees, compensations, costs and expenses, except for fees
and expenses all as set forth in Section 13 of this Agreement.
16. MISCELLANEOUS.
(a) Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently
given if addressed to the Custodian and mailed or delivered to it at
its office at First Union National Bank of North Carolina, 401 South
Tryon Street, Charlotte, North Carolina 28288-1151, or at such other
place as the Custodian may from time to time designate in writing.
(b) Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Trust, shall be sufficiently given
if addressed to the Trust and mailed or delivered to it at 105 N.
Washington Street, Rocky Mount, North Carolina 27802, or at-such other
place as the Trust may from time to time designate in writing.
(c) This Agreement may not be amended or modified in any manner except by
a written agreement executed by both parties with the same formality
as this Agreement, and authorized or approved by a resolution of the
Board of Trustees of the Trust.
(d) This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns, provided, however,
that this Agreement shall not be assignable by the Trust without the
written consent of the Custodian or by the Custodian without the
written consent of the Trust, authorized or approved by a resolution
of its Board of Trustees.
(e) This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall,
together, constitute but one instrument.
(f) This Agreement and the rights and obligations of the Trust and the
Custodian hereunder shall be construed and interpreted in accordance
with the laws of the State of North Carolina.
(g) The Declaration of Trust of the Trust has been filed with the
Secretary of State of the Commonwealth of Massachusetts. The
obligations of the Trust on behalf of the Funds are not personally
binding upon, nor shall resort be had to the private property of any
of the Trustees, shareholders, officers, employees or agents of the
Trust, but only the Trust's property shall be bound.
<PAGE>
IN WITNESS WHEREOF, the Trust and the Custodian have caused this Agreement to be
signed and witnessed by duly authorized persons as of the date first written
above. Executed in several counterparts, each of which is an original.
Attest: FIRST UNION NATIONAL BANK OF NORTH CAROLINA
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By:________________________________________
Title:_____________________________________
Attest: THE NOTTINGHAM INVESTMENT TRUST II
- ----------------------------
By:________________________________________
Title:_____________________________________
EXHIBIT 15
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
WHEREAS, The Nottingham Investment Trust II, an unincorporated business trust
organized and existing under the laws of the Commonwealth of Massachusetts (the
"Trust"), engages in business as an open-end management investment company and
is registered as such under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate funds of securities and other assets; and
WHEREAS, the Trust offers a series of such Shares representing interests in the
WST GROWTH & INCOME FUND (the "Fund") of the Trust;
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Non-Interested Trustees"), having determined, in
the exercise of reasonable business judgment and in light of their fiduciary
duties under state law and under Section 36(a) and (b) of the 1940 Act, that
there is a reasonable likelihood that this Plan will benefit the Trust and its
shareholders, have approved this Plan by votes cast at a meeting called for the
purpose of voting hereon and on any agreements related hereto; and
NOW, THEREFORE, the Trust hereby adopts this Plan in accordance with Rule 12b-1
under the 1940 Act, on the following terms and conditions:
1. Distribution and Servicing Activities. Subject to the supervision of the
Trustees of the Trust, the Trust may, directly or indirectly, engage in any
activities primarily intended to result in the sale of Investor Shares of
the Fund, which activities may include, but are not limited to, the
following: (a) payments to the Trust's Distributor and to securities
dealers and others in respect of the sale of Investor Shares of the Fund;
(b) payment of compensation to and expenses of personnel (including
personnel of organizations with which the Trust has entered into agreements
related to this Plan) who engage in or support distribution of Investor
Shares of the Fund or who render shareholder support services not otherwise
provided by the Trust's transfer agent, administrator, or custodian,
including but not limited to, answering inquiries regarding the Trust,
processing shareholder transactions, providing personal services and/or the
maintenance of shareholder accounts, providing other shareholder liaison
services, responding to shareholder inquiries, providing information on
shareholder investments in the Fund, and providing such other shareholder
services as the Trust may reasonably request; (c) formulation and
implementation of marketing and promotional activities, including, but not
limited to, direct mail promotions and television, radio, newspaper,
magazine and other mass media advertising; (d) preparation, printing and
distribution of sales literature; (e) preparation, printing and
distribution of prospectuses and statements of additional information and
reports of the Trust for recipients other than existing shareholders of the
Trust; and (f) obtaining such information, analyses and reports with
respect to marketing and promotional activities as the Trust may, from time
to time, deem advisable. The Trust is authorized to engage in the
activities listed above, and in any other activities primarily intended to
result in the sale of Investor Shares of the Fund, either directly or
through other persons with which the Trust has entered into agreements
related to this Plan.
2. Maximum Expenditures. The expenditures to be made by the Trust pursuant to
this Plan and the basis upon which payment of such expenditures will be
made shall be determined by the Trustees of the Trust, but in no event may
such expenditures exceed an amount calculated at the rate of 0.50% per
annum of the average daily net asset value of the Investor Shares of the
Fund for each year or portion thereof included in the period for which the
computation is being made, elapsed since the inception of this Plan to the
date of such expenditures. Notwithstanding the foregoing, in no event may
such expenditures paid by the Trust as service fees exceed an amount
calculated at the rate of 0.25% of the average annual net assets of the
Investor Shares of the Fund, nor may such expenditures paid as service fees
to any person who sells Investor Shares of the Fund exceed an amount
calculated at the rate of 0.25% of the average annual net asset value of
such shares. Such payments for distribution and shareholder servicing
activities may be made directly by the Trust or to other persons with which
the Trust has entered into agreements related to this Plan.
3. Term and Termination. (a) This Plan shall become effective as of the 1st
day of October, 1997. Unless terminated as herein provided, this Plan shall
continue in effect for one year from the date hereof and shall continue in
effect for successive periods of one year thereafter, but only so long as
each such continuance is specifically approved by votes of a majority of
both (i) the Trustees of the Trust and (ii) the Non-Interested Trustees,
cast at a meeting called for the purpose of voting on such approval.
(b) This Plan may be terminated at any time with respect to the Fund by a
vote of a majority of the Non-Interested Trustees or by a vote of a
majority of the outstanding voting securities of the Investor Class of
the Fund as defined in the 1940 Act.
4. Amendments. This Plan may not be amended to increase materially the maximum
expenditures permitted by Section 2 hereof unless such amendment is
approved by a vote of the majority of the outstanding voting securities of
the Investor Class of the Fund as defined in the 1940 Act with respect to
which a material increase in the amount of expenditures is proposed, and no
material amendment to this Plan shall be made unless approved in the manner
provided for annual renewal of this Plan in Section 3(a) hereof.
5. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of the Non-Interested Trustees of the Trust shall
be committed to the discretion of such Non-Interested Trustees.
6. Quarterly Reports. The Treasurer of the Trust shall provide to the Trustees
of the Trust and the Trustees shall review quarterly a written report of
the amounts expended pursuant to this Plan and any related agreement and
the purposes for which such expenditures were made.
7. Recordkeeping. The Trust shall preserve copies of this Plan and any related
agreement and all reports made pursuant to Section 6 hereof, for a period
of not less than six years from the date of this Plan. Any such related
agreement or such reports for the first two years will be maintained in an
easily accessible place.
8. Limitation of Liability. Any obligations of the Trust hereunder shall not
be binding upon any of the Trustees, officers or shareholders of the Trust
personally, but shall bind only the assets and property of the Trust. The
term "The Nottingham Investment Trust II" means and refers to the Trustees
from time to time serving under the Agreement and Declaration of Trust of
the Trust, a copy of which is on file with the Secretary of The
Commonwealth of Massachusetts. The execution of this Plan has been
authorized by the Trustees, and this Plan has been signed on behalf of the
Trust by an authorized officer of the Trust, acting as such and not
individually, and neither such authorization by such Trustees nor such
execution by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the Trust as provided in the
Agreement and Declaration of Trust.
*
*
*
*
*
*
*
IN WITNESS THEREOF, the parties hereto have caused this Plan to be executed as
of the date written above.
THE NOTTINGHAM INVESTMENT TRUST II
By__________________________________
WST GROWTH & INCOME FUND
By__________________________________
EXHIBIT 18
THE NOTTINGHAM INVESTMENT TRUST II
AMENDED AND RESTATED
RULE 18f-3 MULTI-CLASS PLAN
I. Introduction.
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as amended (the
"1940 Act"), the following sets forth the method for allocating fees and
expenses among each class of shares in the following series of The Nottingham
Investment Trust II (the "Trust"): The Investek Fixed Income Trust, The Brown
Capital Management Equity Fund, The Brown Capital Management Balanced Fund, The
Brown Capital Management Small Company Fund, Capital Value Fund, WST Growth &
Income Fund and any other fund of the Trust proposed to be brought hereunder in
the future by the Board of Trustees of the Trust. In addition, this Rule 18f-3
Multi-Class Plan (the "Plan") sets forth the shareholder servicing arrangements,
distribution arrangements, conversion features, exchange privileges, and other
shareholder services of each class of shares in such series.
The Trust is an open-end series investment company registered under the 1940
Act, the shares of which are registered on Form N-1A under the Securities Act of
1933 (the "1933 Act"). Upon the effectiveness of applicable Post-Effective
Amendments to the Trust's Registration Statement under the 1933 Act filed in
conjunction with this Plan with respect to the shares of each of the series
listed above, the Trust hereby elects to offer multiple classes of shares in
such series pursuant to the provisions of Rule 18f-3 and this Plan.
The series of the Trust listed above (each a "Fund" or collectively the "Funds")
are authorized to issue the following classes of shares representing interests
in the Funds: Institutional Shares and Investor Shares.
II. Allocation of Expenses.
Pursuant to Rule 18f-3 under the 1940 Act, the Trust shall allocate to each
class of shares in a Fund (i) any fees and expenses incurred by the Trust in
connection with the distribution of such class of shares under a distribution
plan (and related agreements) adopted for such class of shares pursuant to Rule
12b-1, and (ii) any fees and expenses incurred by the Trust under a shareholder
servicing plan (and related agreements) in connection with the provision of
shareholder services to the holders of such class of shares. In addition,
pursuant to Rule 18f-3, the Trust may allocate the following fees and expenses
to a particular class of shares in a single Fund:
(i) transfer agency fees identified by the transfer agent as being attributable
to such class of shares;
(ii) printing and postage expenses related to preparing and distributing
materials such as shareholder reports, notices, prospectuses, reports, and
proxies to current shareholders of such class of shares or to regulatory
agencies with respect to such class of shares;
(iii)blue sky registration or qualification fees incurred by such class of
shares;
(iv) Securities and Exchange Commission registration fees incurred by such class
of shares;
(v) the expense of administrative and personnel services (including, but not
limited to, those of a portfolio accountant, custodian or dividend paying
agent charged with calculating net asset values or determining or paying
dividends) as required to support the shareholders of such class of shares;
(vi) litigation or other legal expenses relating solely to such class of shares;
(vii)fees of the Trustees of the Trust incurred as a result of issues relating
to such class of shares; and
(viii) independent accountants' fees relating solely to such class of shares.
The initial determination of the class expenses that will be allocated by the
Trust to a particular class of shares and any subsequent changes thereto will be
reviewed by the Board of Trustees of the Trust and approved by a vote of the
Trustees of the Trust, including a majority of the Trustees who are not
interested persons of the Trust.
Income, realized and unrealized capital gains and losses, and any expenses of a
Fund not allocated to a particular class of such Fund pursuant to this Plan
shall be allocated to each class of the Fund on the basis of the net asset value
of that class in relation to the net asset value of the Fund.
III. Class Arrangements.
The following summarizes the front-end sales charges, contingent deferred sales
charges, Rule 12b-1 distribution fees, shareholder servicing fees, conversion
features, exchange privileges and other shareholder services applicable to each
class of shares of the Funds. Additional details regarding such fees and
services are set forth in the relevant Fund's current Prospectus and Statement
of Additional Information.
Institutional Shares -- All Funds.
1. Initial Sales Load: None
2. Contingent Deferred Sales Charge: None
3. Rule 12b-1 Distribution Fees: None
4. Shareholder Servicing Fees: None
5. Conversion Features: None
6. Exchange Privileges: Institutional Shares of a Fund may be exchanged
for Institutional Shares of any other series of the Trust established
by the Fund's investment advisor.
7. Other Shareholder Services: None
Investor Shares -- All Funds.
1. Maximum Initial Sales Load (as a percentage of offering price): 3.50%
(3.75% for the WST Growth & Income Fund.
2. Contingent Deferred Sales Charge: None
3. Rule 12b-1 Distribution/Shareholder Servicing Fees: Pursuant to a
Distribution Plan adopted under Rule 12b-1, Investor Shares of the
Funds may pay distribution and shareholder servicing fees of up to
0.50% of the average daily net assets of such shares (0.25% for the
Investek Fixed Income Trust, and 0.35% for the Capital Value Fund
prior to August 1, 1995).
4. Conversion Features: None
5. Exchange Privileges: Investor Shares of a Fund may be exchanged for
Investor Shares of any other series of the Trust established by the
Fund's investment advisor, with the payment of any differences in
sales charges as described in the Prospectus for each Fund.
6. Other Shareholder Services: The Trust offers a Systematic Withdrawal
Plan and Automatic Investment Plan to holders of Investor Shares of
the Funds.
IV. Board Review.
The Board of Trustees of the Trust shall review this Plan as frequently as they
deem necessary. Prior to any material amendment(s) to this Plan, the Trust's
Board of Trustees, including a majority of the Trustees that are not interested
persons of the Trust, shall find that the Plan, as proposed to be amended
(including any proposed amendments to the method of allocating class and/or fund
expenses), is in the best interest of each class of shares of each Fund
individually and each Fund as a whole. In considering whether to approve any
proposed amendment(s) to the Plan, the Trustees of the Trust shall request and
evaluate such information as they consider reasonably necessary to evaluate the
proposed amendment(s) to the Plan.
Adopted: Originally adopted on April 17, 1995 and amended and restated on July
24, 1995 and _________, 1997.