File No. 33-53698
and 811-7322
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. __ [ ]
Post-Effective Amendment No. 6 [X]
and/or
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 7
(Check Appropriate Box or Boxes)
____________________
THE CANANDAIGUA FUNDS
(Exact Name of Registrant as Specified in Charter)
72 SOUTH MAIN STREET, CANANDAIGUA, NEW YORK 14424
(Address of Principal Executive Office and Zip Code)
REGISTRANT'S TELEPHONE NUMBER: 1-800-724-2621 (EXT. 216)
____________________
Steven H. Swartout, Secretary and Treasurer
The Canandaigua Funds
72 South Main Street
CANANDAIGUA, NEW YORK 14424
(Name and Address of Agent for Service)
Copy to:
Thomas P. Young, Esq.
Underberg & Kessler LLP
1800 Chase Square
Rochester, New York 14604
(Continued on next page)
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
this Amendment becomes effective.
DECLARATION PURSUANT TO RULE 24F-2
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended, Registrant hereby registers an indefinite number or amount of
securities under the Securities Act of 1933, as amended.
DECLARATION PURSUANT TO RULE 414
Pursuant to Rule 414 of Regulation C, Registrant hereby expressly
adopts the Registration Statement of The Canandaigua National Collective
Investment Fund for Qualified Trusts (File Nos. 033-53698 and 811-7322) for
all purposes of the Securities Act of 1933, as amended and the Investment
Company Act of 1940, as amended.
It is proposed that this filing will become effective:
(Check appropriate box)
[ ]Immediately upon filing pursuant to Paragraph (b)
[ ]On [date] pursuant to Paragraph (b)
[ X ]60 Days After Filing pursuant to Paragraph (a)(1)
[ ] On [date] pursuant to Paragraph (a)(1)
[ ] 75 days after filing pursuant to Paragraph (a)(2)
[ ]On [date] pursuant to Paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ]This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
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<PAGE>
FORM N-1A CROSS REFERENCE SHEET
PART A
<TABLE>
<CAPTION>
N-1A ITEM NO. DESCRIPTION LOCATION (CAPTION)
<S> <C> <C>
Item 1. Cover Page Cover Page
Item 2. Synopsis Expenses; Prospectus Summary
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant Organization and Capitalization;
Investment Objectives and Policies
Item 5. Management of the Fund Management of The Canandaigua Funds
Item 5A. Management's Discussion of Fund Contained in Registrant's 1996 Annual
Performance Report
Item 6. Capital Stock and Other Organization and Capitalization;
Securities Distribution and Tax Information
Item 7. Purchase of Securities Being Your Fund Account - How to Purchase
Offered Shares; Management of The Canandaigua
Funds; Net Asset Value
Item 8. Redemption or Repurchase Your Fund Account - How to Sell Shares;
Net Asset Value
Item 9. Pending Legal Proceedings Not Applicable
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<PAGE>
CROSS REFERENCE SHEET
PART B
N-1A ITEM NO. DESCRIPTION LOCATION (CAPTION)
Item 10 Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History Not Applicable
Item 13. Investment Objectives and Investment Restrictions; Other
Policies Investment Policies
Item 14. Management of the Fund Management of The Canandaigua Funds
Item 15. Control Persons and Principal Organization and Capitalization -
Holders of Securities Principal Shareholders
Item 16. Investment Advisory and Other Management of The Canandaigua Funds -
Services Investment Advisor
Item 17. Brokerage Allocation and Portfolio Transactions
Other Practices
Item 18. Capital Stock and Other Organization and Capitalization
Securities
Item 19. Purchase, Redemption and Pricing Net Asset Value
of Securities Being Offered
Item 20. Tax Status Tax Information
Item 21. Underwriters Management of The Canandaigua Funds -
Distributor
Item 22. Calculation of Performance Data Performance Information
Item 23. Financial Statements Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
PROSPECTUS
THE CANANDAIGUA FUNDS
72 South Main Street
Canandaigua, New York 14424
Telephone No.: 1-800-___-____
The Canandaigua Funds is registered with the Securities and Exchange
Commission ("SEC") as an open-end diversified management investment
company. It offers two no-load mutual funds: the Canandaigua Equity Fund
("Equity Fund"), which seeks long term growth of asset values through
capital appreciation and dividend income, and the Canandaigua Bond Fund
("Bond Fund"), which seeks to earn a high level of current income with
consideration also given to safety of principal. These Funds and their
investment objectives are described below. Investors may wish to pursue
more than one investment objective by investing in more than one Fund.
Investing in the Funds involves various investment risks and there can be
no assurance that either Fund will achieve its investment objectives.
This Prospectus gives you information about The Canandaigua Funds that
you should know before investing. Additional information is included in
the Statement of Additional Information dated [ __________ __, 1997], as
amended or supplemented from time to time, filed with the SEC and
incorporated by reference in this Prospectus. For a copy, call 1-[800-___-
____ ], or write to The Canandaigua Funds, c/o American Data Services,
Inc., P.O. Box 5536, Hauppauge, New York 11788-0132. Also, the SEC
maintains a Web site (http://www.sec.gov) that contains the Statement of
Additional Information as well as other information about The Canandaigua
Funds filed electronically with the SEC. KEEP THIS PROSPECTUS FOR FUTURE
REFERENCE.
SHARES OF THE CANANDAIGUA FUNDS ARE NOT BANK DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT 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 NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is __________, 1997
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<PAGE>
TABLE OF CONTENTS
Page
Expenses..........................................3
Prospectus Summary................................4
Financial Highlights..............................6
Investment Objectives and Policies................9
Equity Fund..................................9
Bond Fund...................................10
Other Investment Policies...................12
Your Fund Account................................13
How to Purchase Shares......................13
How to Sell Shares..........................13
Management of The Canandaigua Funds..............14
Board of Trustees...........................14
Investment Advisor..........................14
Distributor.................................15
Transfer Agent and Administrator............16
Custodian...................................16
Net Asset Value..................................16
Distribution and Tax Information.................16
Performance Data.................................17
Performance Comparisons..........................17
Organization and Capitalization..................18
Appendix A.......................................19
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION,
AND, IF GIVEN OR MADE, SUCH REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH IT RELATES, OR AN OFFER TO OR A SOLICITATION OF ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL.
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<PAGE>
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases None
Maximum Deferred Sales Load None
Maximum Sales Load Imposed on Reinvested Dividends None
Redemption Fees None
Exchange Fees None
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets*)
for the year ended December 31, 1996:
EQUITY FUND BOND FUND
Management Fees 1.00% 0.50%
Rule 12b-1 Fees 0.00% 0.00%
Other Expenses 0.12% 0.59%
Total Fund Operating Expenses 1.12%** 1.09%**
_____________________
* The maximum annual operating expenses which may be charged is 1.5% of
average net assets.
** Based upon expenses incurred in the year ended December 31, 1996, the
most recent fiscal year of the Canandaigua National Collective
Investment Fund for Qualified Trusts (the "Collective Investment
Trust"), the predecessor of The Canandaigua Funds.
Example:
You would pay the following expenses on a $1,000 investment in either the
Equity Fund or the Bond Fund, assuming 5% annual return and a maximum of
1.5% annual expense. The expenses would be the same for each time period
whether or not redemption occurred at the end of the period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Expenses: $15.75 $48.89 $84.33 $184.13
Investment at End of Period
After Expenses: $1,034.25 $1,106.30 $1,183.39 $1,400.41
The Table above is designed to assist you in understanding the direct
and indirect costs and expenses that you will bear as a shareholder. The
Example above shows the amount of expenses you would pay on a $1,000
investment in either of the Funds. These amounts assume the reinvestment of
all dividends and distributions, and payment by the relevant Fund of
operating expenses as shown in the Table under Total Fund Operating
Expenses. The Example is an illustration only and actual expenses may be
greater or less than those shown.
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<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information which appears elsewhere in this Prospectus and in the
Statement of Additional Information.
THE CANANDAIGUA FUNDS
The Canandaigua Funds is a no-load, open-end diversified management
investment company, consisting of two diversified mutual funds, registered
with the SEC under the Investment Company Act of 1940 ("Investment Company
Act"). Each mutual fund represents a separate and distinct series of
shares of beneficial interest in The Canandaigua Funds. See "Organization
and Capitalization."
INVESTMENT OBJECTIVES
The Canandaigua Funds offers two no-load mutual funds: the Equity
Fund and the Bond Fund. These Funds and their investment objectives are
described below. Investing in these Funds involves various investment
risks and there can be no assurance that either Fund will achieve its
investment objective.
EQUITY FUND. The Equity Fund seeks long-term growth of asset value
through capital appreciation and dividend income, by investing in a
diversified group of companies. Primary investment emphasis is on common
stocks.
BOND FUND. The Bond Fund seeks to earn a high level of current income
with consideration also given to safety of principal. Investment emphasis
is on fixed-income securities, primarily debt securities, such as bonds,
notes and debentures, issued by United States corporations, bonds and notes
issued or guaranteed by the United States Government or its agencies or
instrumentalities and preferred stock of United States corporations.
INVESTMENT ADVISOR
The Canandaigua Funds, on behalf of the Equity Fund and the Bond Fund,
has engaged The Canandaigua National Bank and Trust Company ("Advisor") as
investment advisor. The Advisor supervises the portfolio management of
each Fund and administers each Fund's business affairs. See "Management of
The Canandaigua Funds--Investment Advisor."
RISK FACTORS
The Equity Fund will invest in securities whose market values will
fluctuate daily. Further, it is expected that this Fund will have a dollar
weighted volatility somewhat higher than the stock market as a whole.
Although the Advisor will seek to reduce the risks associated with
investing in equity securities through diversification, quality criteria
and other investment policies, there can be no assurance that the Equity
Fund will achieve its objectives. Investors should not consider the Equity
Fund to be a complete investment program. See "Equity Fund Risk Factors."
The value of the Bond Fund's fixed income securities can be expected
to vary inversely with changes in prevailing interest rates. In addition,
lower-rated securities in which this Fund may invest may be lacking certain
protective elements and may be subject to greater investment risk over an
extended period. As a result, investment in the Bond Fund should not be
considered a complete investment program. See "Bond Fund Risk Factors."
HOW TO PURCHASE SHARES
You may purchase shares of each Fund at the net asset value next
determined after receipt and acceptance of your purchase order. The
minimum initial investment in each Fund is $250, except for certain
retirement and pension accounts, which have no minimum initial investment
requirement. See "Your Fund Account--How to Purchase Shares."
HOW TO SELL SHARES
You may redeem shares directly from a Fund at the net asset value per
share next determined after receipt of your redemption request in proper
order. Redemptions may only be made by mail. See "Your Fund Account--How
to Sell Shares."
DISTRIBUTION OPTIONS
Unless you elect to receive income dividends and capital gains in
cash, they will be reinvested in additional shares of the respective
distributing Fund. Dividend and capital gains distributions, if any, are
made at least annually. See "Distribution and Tax Information."
NET ASSET VALUE
The net asset value per share of each Fund is calculated on each day
the New York Stock Exchange is open for trading (normally 4 PM, Eastern
time). Call 1-[800-___-____ ] for the current day's net asset value of
either Fund. See "Net Asset Value."
TAXATION
Each Fund has qualified and has elected or will elect to be treated as
a regulated investment company for Federal income tax purposes under
Subchapter M of the Internal Revenue Code and intends to continue to
qualify for such treatment. See "Distribution and Tax Information."
SHAREHOLDER COMMUNICATION
Each shareholder will receive annual and semi-annual reports
containing financial statements, a statement confirming each share
transaction and quarterly transaction statements. Financial statements
included in annual reports are audited by the independent certified public
accountants of The Canandaigua Funds.
FINANCIAL HIGHLIGHTS
The financial information of selected per share data and ratios/
supplemental data for the years ended December 31, 1996, 1995, 1994,
and 1993 and for the period from inception (September 9, 1992) through
December 31, 1992 in the table below has been audited in
conjunction with the annual audit of the financial statements of the
Canandaigua National Collective Investment Fund for Qualified Trusts (the
"Collective Investment Trust"), the predecessor of The Canandaigua Funds,
by Morga, Jones & Hufsmith P.C., independent auditors. Financial
statements for the year ended December 31, 1996
and the independent auditors' report thereon and unaudited financial
statements for the six months ended June 30, 1997, are
included in the Statement of Additional Information. These Financial
Highlights should be read in conjunction with the financial statements and
notes thereto of the Collective Investment Trust as found in the Statement
of Additional Information. The information presented is for a share
outstanding throughout the periods shown.
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<PAGE>
EQUITY FUND
<TABLE>
<CAPTION>
Six Months
ENDED YEAR ENDED DECEMBER 31,
June 30, 1997(a) 1996 1995 1994 1993 1992 (b)
PER SHARE DATA (unaudited) (restated)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $16.67 $13.71 $10.89 $10.85 $10.26 (c)
Income from Investment
Operations
Net Investment Income
(d) 0.02 0.01 0.04 0.07 0.18 (c)
Net Realized and
Unrealized Gain (Loss)
on Investment
Transactions 2.57 2.95 2.78 (0.03) 0.41 (c)
Total Income From
Investment Operations 2.59 2.96 2.82 0.04 0.59 (c)
Distributions (e)
From Net Investment
Income (e) NA NA NA NA NA NA
From Net Realized Gains
on Investment
Transactions (e) NA NA NA NA NA NA
In Excess of Net
Realized Gains (e) NA NA NA NA NA NA
Total Distributions (e) NA NA NA NA NA NA
Net Asset Value,
End of Period $19.26 $16.67 $13.71 $10.89 $10.85 $10.26
Total Return (f) 15.54% 21.59% 25.90% 0.37% 5.75% (c)
RATIOS/SUPPLEMENTAL DATA
Net Assets,
End of Period
(000 omitted) $16,411 $12,644 $ 8,433 $ 5,777 $ 3,172 $93
Ratio of Operating
Expenses to
Average Net Assets 0.54% 1.12% 1.11% 1.09% 1.18% (c)
Ratio of Net
Investment Income
to Average
Net Assets 0.12% 0.03% 0.32% 0.69% 1.70% (c)
Portfolio Turnover Rate 205.39% 337.27% 375.30% 234.81% 165.68% (c)
Average Commission
Paid per Investment
Security Traded (g) $0.1017 $0.1204 - - - -
</TABLE>
____________________________
(a) Data for the six months ended June 30, 1997 is not annualized.
(b) For the period from inception (September 9, 1992) through December 31,
1992.
(c) Insignificant.
(d) From April 1994 through June 30, 1997, the investment management fees
for the bond portfolio were reduced from 1% to .5% of assets annually,
resulting in a per share savings of $.03 for the six months ended June
30, 1997 and $.06, $.06 and $.03 for the years ended December 31, 1996,
1995 and 1994, respectively. In addition, during the periods presented,
administrative expenses of the funds, other than primarily custodial and
audit fees, have been assumed by the trustee of the funds.
(e) Prior to its reorganization into a Delaware business trust on
______________, 1997, participation in the predecessor Collective
Investment Trust was limited to qualified retirement accounts such as
IRAs and retirement and pension trusts. Consequently, current income
earned by such retirement accounts was not distributed but was
reinvested for further accumulation of assets for such retirement
accounts and was reflected in an increase in net asset value per
share. However, as a result of the reorganization, both the Equity
Fund and the Bond Fund will now distribute their investment income
to shareholders.
(f) Assumes reinvestment of dividends and capital gains distributions, if any.
(g) Disclosure of average commissions paid per share is not required for the
periods prior to 1996. Average commissions paid were not material in
the bond portfolio. Shares traded on a principal basis are excluded.
Brokerage commissions paid on portfolio transactions increase the cost
of securities purchased or reduce the proceeds of securities sold and
are not reflected in the funds'statements of operations.
<PAGE>
BOND FUND
<TABLE>
<CAPTION>
Six Months
ENDED YEAR ENDED DECEMBER 31,
June 30, 1997(a) 1996 1995 1994 1993 1992 (b)
PER SHARE DATA (unaudited) (restated)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $12.54 $12.25 $10.01 $10.48 $10.06 (c)
Income (Loss)
from Investment
Operations
Net Investment
Income (d) 0.33 0.62 0.81 0.62 0.42 (c)
Net Realized and
Unrealized Gain (Loss)
on Investment
Transactions (0.05) (0.33) 1.43 (1.09) - (c)
Total Income (Loss)
From Investment
Operations 0.28 0.29 2.24 (0.47) 0.42 (c)
Distributions (e)
From Net Investment
Income (e) NA NA NA NA NA NA
From Net Realized
Gains on Investment
Transactions (e) NA NA NA NA NA NA
In Excess of Net
Realized Gains (e) NA NA NA NA NA NA
Total Distributions (e) NA NA NA NA NA NA
Net Asset Value,
End of Period $12.82 $12.54 $12.25 $10.01 $10.48 $10.06
Total Return (f) 2.23% 2.37% 22.38% (4.48)% 4.17% (c)
RATIOS/SUPPLEMENTAL DATA
Net Assets,
End of Period
(000 omitted) $598 $501 $408 $298 $555 $61
Ratio of Operating
Expenses to
Average Net Assets 0.52% 1.09% 0.89% 0.77% 1.14% (c)
Ratio of Net Investment
Income to
Average Net Assets 2.63% 5.17% 7.11% 6.16% 4.18% (c)
Portfolio Turnover Rate 3.74% 30.46% 14.13% 24.45% 62.96% (c)
Average Commission Paid
per Investment Security
Traded (g) (c) (c) - - - -
</TABLE>
_____________________
(a) Data for the six months ended June 30, 1997 is not annualized.
(b) For the period from inception (September 9, 1992) through December 31,
1992.
(c) Insignificant.
(d) From April 1994 through June 30, 1997, the investment management fees
for the bond portfolio were reduced from 1% to .5% of assets annually,
resulting in a per share savings of $.03 for the six months ended June
30, 1997 and $.06, $.06 and $.03 for the years ended December 31, 1996,
1995 and 1994, respectively. In addition, during the periods presented,
administrative expenses of the funds, other than primarily custodial and
audit fees, have been assumed by the trustee of the funds.
(e) Prior to its reorganization into a Delaware business trust on
______________, 1997, participation in the predecessor Collective
Investment Trust was limited to qualified retirement accounts such as
IRAs and retirement and pension trusts. Consequently, current income
earned by such retirement accounts was not distributed but was
reinvested for further accumulation of assets for such retirement
accounts and was reflected in an increase in net asset value per
share. However, as a result of the reorganization, both the Equity
Fund and the Bond Fund will now distribute their investment income
to shareholders.
(f) Assumes reinvestment of dividends and capital gains distributions, if any.
(g) Disclosure of average commissions paid per share is not required for the
periods prior to 1996. Average commissions paid were not material in
the bond portfolio. Shares traded on a principal basis are excluded.
Brokerage commissions paid on portfolio transactions increase the cost
of securities purchased or reduce the proceeds of securities sold and
are not reflected in the funds'statements of operations.
The 1996 Annual Report to shareholders of the predecessor Collective
Investment Trust contains additional performance information that will be
made available, without charge, upon request by writing The Canandaigua
Funds, c/o American Data Services, Inc., P.O.Box 5536, Hauppauge, New York
11788-0132 or calling 1-[800-___-____].
INVESTMENT OBJECTIVES AND POLICIES
Both the Equity Fund and the Bond Fund have their own respective
investment objectives and policies. Each Fund's investment objective is
fundamental, which means that it may only be changed by a vote of that
Fund's shareholders. The investment policies of each Fund described below
are non-fundamental, which means that they may be changed by The
Canandaigua Funds' Board of Trustees without shareholder approval. The
Canandaigua Funds has adopted certain fundamental investment restrictions
that are enumerated in detail in the Statement of Additional Information
and which may not be changed without shareholder approval.
EQUITY FUND
The Equity Fund seeks long-term growth of asset values, through
capital appreciation and dividend income, by investing in a diversified
group of companies. Primary investment emphasis will be on common stocks.
At least 65% of the value of the total assets of the Equity Fund will,
under normal market conditions, be invested in equity-based securities,
which consist of common stocks as well as debt securities and preferred
stocks which are convertible into common stocks. Normally, investments of
the Equity Fund in cash equivalents will not exceed 35% of its assets.
However, when market conditions dictate a temporary "defensive" investment
strategy, the Advisor may decide to hold a portion of the Equity Fund,
without limitation on amount, in cash equivalents. Such a decision,
although not offering the opportunity for capital appreciation, might be
deemed prudent to protect net asset values. (See "Investment Objectives
and Policies -- Bond Fund," for a definition of "cash equivalents.")
Equity securities of a company will be selected considering such
factors as the sales, growth and profitability prospects for the economic
sector and markets in which the company operates and for the products or
services it provides; the financial condition of the company and its
ability to meet its liabilities and to provide income in the form of
dividends; the prevailing price of the security; how that price compares to
historical price levels of the securities, to current price levels in the
general market, and to the prices of competing companies; projected
earnings estimates and earnings growth rate for the company and the
relation of those figures to the current price. It is expected that the
volatility of the Equity Fund will be slightly greater than that of the
stock market as a whole.
In general, the Equity Fund will not invest in securities that have,
in the judgment of the Advisor, a high level of debt as a percentage of
their total market capitalization. Ratios such as compound annual growth
rate to earnings and sales, market price to current and projected earnings,
market price to book value, market price to cash flow, and price to
earnings will be considered in selecting securities for the Equity Fund.
In addition, factors such as institutional ownership positions and analyst
coverage (each in relation to market ratios) will be considered. In order
to limit the level of risk, the Equity Fund will be invested in different
industries so that the value of its total assets invested in issuers
conducting their principal business activities in the same industry
ordinarily does not exceed 25% of the Equity Fund at the time of the
purchase.
The Equity Fund will not invest in securities of foreign issuers, but
may invest in American Depository Receipts that are traded on a U.S.
securities exchange or on The Nasdaq Stock Market<service-mark>.
The Equity Fund will not invest in puts, calls and other futures
contracts.
EQUITY FUND RISK FACTORS. The Equity Fund will invest in securities
whose market values will fluctuate daily. Further, it is expected that
this Fund will have a dollar weighted volatility somewhat higher than the
stock market as a whole. Although the Advisor will seek to reduce the
risks associated with investing in equity securities through
diversification, quality criteria, and the other investment policies
discussed herein, there can be no assurance that the Equity Fund will
achieve its objectives. Because the Equity Fund will participate in the
equity markets, it may provide greater potential for capital appreciation
and growth of current income over the long term than the Bond Fund.
However, the Equity Fund will generally have a more volatile unit value and
lower current yield than the Bond Fund.
BOND FUND
The Bond Fund seeks to earn a high level of current income with
consideration also given to safety of principal. Investment emphasis is on
fixed-income securities, primarily debt securities, such as bonds, notes
and debentures, issued by United States corporations, bonds and notes
issued or guaranteed by the United States Government or its agencies or
instrumentalities and preferred stock of United States corporations. Debt
obligations issued or guaranteed by the United States Government provide
greater safety of principal but also generally provide lower current income
than debt obligations of corporations. They include issues of the U.S.
Treasury such as bills, notes and bonds and issues of agencies and
instrumentalities of the U.S. Government which are established under the
authorities of an act of Congress. They include securities issued or
guaranteed by the Government National Mortgage Association, the Federal
National Mortgage Association, the Farmers Home Administration, Federal
Farm Credit Banks, Federal Home Loan Banks, the Federal Home Loan Mortgage
Corporation and the Student Loan Marketing Association. Some of these
securities such as debenture obligations of the Farmers Home Administration
and securities of the Government National Mortgage Association are
supported by the full faith and credit of the U.S. Treasury; others such as
obligations of the Federal Home Loan Banks are supported by the right of
the issuer to borrow from the U.S. Treasury; others such as those of the
Federal Farm Credit Banks are supported by the discretionary authority of
the U.S. Government to purchase the agency's obligations. Still others
such as those of the Student Loan Marketing Association are supported only
by the credit of the instrumentality. No assurance can be given that the
U.S. Government would provide financial support to any of the foregoing
when not obligated to do so by law. The Bond Fund will invest in debt
securities of United States corporations only if at the time of purchase
they carry a rating of at least "Baa" from Moody's Investors Services, Inc.
or "BBB" from Standard & Poor's Corporation. Debt securities carrying a
rating of "Baa" from Moody's Investor Services Inc. or "BBB" from Standard
& Poor's Corporation have speculative characteristics. See Appendix A for
an explanation of the ratings. A reduction below such rating for any debt
security owned will not require disposition of the security. The Bond
Fund's investments in securities other than debt of United States
corporations and debt obligations issued or guaranteed by the United States
Government, its agencies or instrumentalities (e.g., preferred stock and
all securities of foreign issuers) will be in those securities which, in
the judgment of the Advisor, would be of comparable quality to U.S.
securities in which the Bond Fund may invest, i.e., those securities having
a rating of "Baa" or better by Moody's or "BBB" or better by Standard &
Poor's. This judgment may be based upon such considerations as the
issuer's financial strength, including its historic and current financial
condition, its historic and projected earnings and its present and
anticipated cash flow; the issuer's debt maturity schedules and current and
future borrowing requirements; and the issuer's continuing ability to meet
its future obligations. At least 65% of the value of the total assets of
the Bond Fund will, under normal market conditions, be invested in bonds or
debentures.
The only non-interest paying securities to be held in the Bond Fund
will be (a) zero-coupon obligations of corporations, and (b) obligations
evidencing ownership of future interest and principal payments on United
States Treasury Bonds. Such zero-coupon obligations pay no current
interest. Zero-coupon obligations are sold at prices discounted from par
value, with that par value to be paid to the holder at maturity. The
return on the zero-coupon obligation, when held to maturity, equals the
difference between the par value and the original purchase price. Zero-
coupon obligations may be purchased if the Advisor considers the yield
spread between these obligations and coupon issues of the United States
government and United States corporations to be advantageous, giving
consideration to the differing durations of the zero coupon obligations and
the coupon issues. The Bond Fund will only purchase zero-coupon
obligations if at the time of purchase such investments constitute less
than 5% of the value of the Bond Fund's total assets. Various forms of
obligations exist to evidence future interest or principal payments on
Treasury securities. Typically such obligations take the form of custodial
receipts issued pursuant to a custody agreement which evidence ownership of
future interest and principal payments on treasury securities deposited
with the custodian. The interest and principal payments on the underlying
treasury securities are direct obligations of the United States.
The Bond Fund will not invest in securities of foreign issuers.
The Bond Fund will not invest in puts, calls or other futures
contracts.
A portion of the Bond Fund may be held in "cash equivalents." Except
when the Advisor, as investment manager of the Bond Fund, assumes a
temporary defensive position, the Fund's investment in cash equivalents
will not exceed 35% of the Fund's total assets. Cash equivalents are
short-term, interest-bearing instruments in which funds are invested
temporarily pending longer-term investment or in which funds are invested
when market conditions dictate a "defensive" investment strategy. The
purpose of cash equivalents is to provide income at money market rates
while minimizing the risk of decline in value to the maximum extent
possible. The instruments may include commercial paper, certificates of
deposit, repurchase agreements, bankers' acceptances and United States
Treasury Bills.
The Bond Fund will invest primarily in fixed-income securities with a
maturity in excess of one year. However, fixed-income securities can have
maturities as long as 30 or more years. The average maturity of securities
in the Bond Fund will be based primarily upon the Advisor's expectations
for the future course of interest rates and then prevailing price and yield
levels in the fixed-income market, and it is expected that the dollar
weighted average maturity of the Bond Fund will not exceed ten years. The
limitation of the average maturity of the Fund is expected to provide a
more stable net asset value than would be the case with a longer term fund.
BOND FUND RISK FACTORS. Changes in interest rates will cause the
value of securities held in the Bond Fund to vary inversely to changes in
prevailing interest rates. If, however, a security is held to maturity, no
gain or loss will be realized as a result of changes in prevailing rates.
The value of these securities will also be affected by general market and
economic conditions and by the creditworthiness of the issuer.
Fluctuations in value of the Bond Fund's securities will cause net asset
value per share to fluctuate. By stressing current yield through fixed-
income securities, the Bond Fund may provide greater stability of unit
value than the Equity Fund. However, Bond Fund investments should not be
expected to appreciate in value to the same extent as funds in the Equity
Fund since there will be minimal participation in the general equity
markets.
Because the dollar weighted average maturity of the Bond Fund is not
expected to exceed ten years, and because the volatility of the Equity Fund
is expected to be slightly greater than for the stock market as a whole,
the net asset value of the Bond Fund is likely to be more stable than the
net asset value of the Equity Fund. However, assuming that markets are
efficient in compensating higher risk with higher return, historical
evidence would suggest that a well diversified equity fund with higher than
average volatility might produce a higher total return over an extended
period than a bond fund having an average maturity of less than ten years.
OTHER INVESTMENT POLICIES
The following investment policies are NOT fundamental and may be
changed by the Board of Trustees of The Canandaigua Funds without
shareholder approval.
Both the Equity Fund and the Bond Fund may enter into repurchase
agreements. Under these agreements, a Fund purchases securities from a
bank, broker-dealer, savings and loan association or other recognized
financial institution with a concurrent obligation of the seller to
repurchase them within a specified time at a fixed price (equal to the
purchase price plus interest). Repurchase agreements are considered loans
under the Investment Company Act. Repurchase agreements maturing in more
than seven days will not exceed 10% of the value of the total assets of
either Fund. Repurchase agreements will be entered into only for debt
obligations issued or guaranteed by the United States Government, its
agencies or instrumentalities. Certificated securities must be placed in
the physical possession of the custodian of the Fund's assets.
Uncertificated securities, such as Treasury Bills and most agency issues,
which are recorded by book-entry on the records of the Federal Reserve
Banks, must be transferred to the custodian by appropriate entry in the
Federal Reserve Bank's records. If the value of the securities purchased
should decline below the sales price, additional securities sufficient to
make the value of the securities equal to the sales price must be deposited
with the custodian. If the seller defaults, the relevant Fund might incur
a loss if the value of the securities securing the repurchase agreement
declines and might incur disposition costs in connection with liquidating
the securities. In addition, if bankruptcy proceedings are commenced with
respect to the seller, realization upon the securities by the relevant Fund
may be delayed or denied.
Unless shareholder approval is obtained for a higher limit, both the
Equity Fund and the Bond Fund will limit their total respective borrowings
to 5% of that Fund's total net assets. Borrowing by either Fund will be
done only for temporary purposes, and all borrowings by a Fund will be
repaid before additional investments are made by that Fund.
YOUR FUND ACCOUNT
HOW TO PURCHASE SHARES
You can buy shares of either Fund through ADS Distributors, Inc., the
distributor ("Distributor") for The Canandaigua Funds by filling out the
New Account Application and returning it, along with a check drawn on a
U.S. bank and made payable to the Fund in which you are investing, to the
Distributor c/o American Data Services, Inc., P.O.Box 5536, Hauppauge, New
York 11788-0132. Shares of each Fund are purchased or sold at the net
asset value ("NAV") per share next calculated after a purchase request is
received in good order and accepted. Each Fund's net asset value per share
is calculated after 4 p.m. each business day that the New York Stock
Exchange is open. See "Net Asset Value" for a discussion of how each Fund
computes its NAV. The Canandaigua Funds and the Distributor may reject
any purchase order. The Funds do not issue share certificates.
You can open an account in either Fund with a minimum initial
investment of $250 and make additional investments of at least $50 at any
time. There is no sales charge on purchases or redemptions of shares in
either Fund. Each Fund reserves the right to redeem all of the shares of
any shareholder, other than a shareholder which is an Individual Retirement
Account ("IRA") or other tax-deferred retirement plan, whose account falls
below $500 due to redemptions. Each Fund will give shareholders 60 days'
prior written notice in which to purchase sufficient additional shares to
avoid such redemption. Each Fund reserves the right to waive the minimum
for certain retirement and employee savings plans or custodial accounts for
the benefit of minors.
Purchases will be processed at the next net asset value calculated
after your purchase order is received and accepted. If your purchase is
received by the close of business of the New York Stock Exchange (normally
4:00 p.m. Eastern time), your account will be credited on the day of
receipt. If your purchase is received after such time, it will be credited
the next business day. Third-party checks will not be honored except in
the case of employer sponsored retirement plans. When making a subsequent
investment, you should include the detachable stub from your confirmation
statement to provide additional information.
RETIREMENT PLANS. Shares of both Funds are available as an investment
for retirement plans, including IRAs, Keogh Plans, corporate pension and
profit-sharing plans, Simplified Employee Pension IRAs, 401(k) Plans and
403(b) Plans. Please contact the Distributor c/o American Data Services,
Inc., P.O.Box 5536, Hauppauge, New York 11788-0132 or by calling 1-[800-
___-____ ] to receive the appropriate documents which contain important
information and applications.
HOW TO SELL SHARES
You can sell (redeem) some or all of your shares by mail on any
business day. Your shares will be sold at the next net asset value
calculated after your redemption request is received and accepted by the
Distributor and your payment will be made by check within seven days.
Redemptions may be suspended and payments delayed under certain emergency
circumstances as determined by the SEC. The Distributor will reject any
redemption request made within 15 days after receipt of the purchase check
against which such redemption is requested.
To sell shares in a Fund, you should send a letter of instruction to
the Distributor that includes your name, account number, the name of the
Fund from which you are selling shares, the number of shares or dollar
amount you are selling and where you want the money to be sent. The letter
must be signed by all registered owners of the account and the signature(s)
must be guaranteed. The Distributor will accept a signature guarantee by
the following financial institutions: a U.S. bank, trust company, broker,
dealer, municipal securities broker or dealer, government securities broker
or dealer, credit union which is authorized to provide signature
guarantees, national securities exchange, registered securities association
or clearing agency.
RETIREMENT ACCOUNTS. To sell shares in an IRA or other retirement
account, please contact the Distributor c/o American Data Services, Inc.,
P.O.Box 5536, Hauppauge, New York 11788-0132 or by calling 1-[800-___-____]
to request the appropriate distribution form and for additional
instructions.
EXCHANGE PRIVILEGE
Shares in either Fund may be exchanged without cost for shares in the
other Fund. To participate in this program, you must contact the
Distributor c/o American Data Services, Inc., P.O.Box 5536, Hauppauge, New
York 11788-0132 or by calling 1-[800-___-____ ] to request the appropriate
form to initiate this privilege. Once enrolled, exchanges may be made over
the telephone.
Any exchange will be based on the respective net asset values of the
shares involved next computed after receipt of an exchange order.
Exchanges are subject to determination by the Distributor that the
investment instructions are complete.
MANAGEMENT OF THE CANANDAIGUA FUNDS
BOARD OF TRUSTEES
The Canandaigua Funds is governed by a Board of Trustees which is
responsible for protecting the interests of shareholders under Delaware
law. The Statement of Additional Information contains general background
information about each Trustee and officer of The Canandaigua Funds.
INVESTMENT ADVISOR
Subject to the direction of the Board of Trustees, The Canandaigua
National Bank and Trust Company, 72 South Main Street, Canandaigua, New
York 14424, acts as the Investment Advisor (the "Advisor") to both the
Equity Fund and the Bond Fund. The Advisor is a commercial bank offering a
wide range of banking services to its customers in the Canandaigua, New
York area. As of December 31, 1996, the Advisor had assets of $361
million, loans of $255 million and deposits of $308 million, and provided
personal, corporate and institutional investment management services for
accounts having an aggregate market value of approximately $297 million.
Under its Investment Management Agreement with The Canandaigua Funds,
the Advisor manages the investment of the assets of each Fund in conformity
with the stated objectives and policies of that Fund. It is the
responsibility of the Advisor to make investment decisions for each of the
Funds and to provide continuous supervision of their investment portfolios.
The Advisor makes investment decisions for each Fund, places orders to
purchase and sell securities on behalf of each Fund and selects
broker-dealers that, in its judgment, provide prompt and reliable execution
at favorable prices and reasonable commission rates. The Advisor provides
these services principally through its Investment and Trust Departments.
PORTFOLIO MANAGERS. Gregory S. MacKay and Robert J. Swartout are the
portfolio managers for the Bond Fund and the Equity Fund, respectively, and
have been such since the inception of the predecessor Collective Investment
Trust. Mr. MacKay is a Senior Vice President of the Advisor and Mr.
Swartout is Vice President and Investment Officer of the Advisor. Both Mr.
MacKay and Mr. Swartout have been officers of the Advisor for more than the
past five years.
FEES AND EXPENSES OF THE ADVISOR. As compensation for its services,
The Canandaigua Funds pays the Advisor a management fee computed daily and
paid monthly at the annual rate of 1.00% of the value of the average daily
net assets of each Fund. From 1994 through June 1997, the Board of
Trustees had approved a reduction of the fee for the Bond Fund to 0.50%,
which was further temporarily reduced to 0.00% in July 1997. With respect
to the predecessor Collective Investment Trust, the Advisor's fee included
not only investment advisory services but fiduciary and administrative
services. As a result, the total expenses for the predecessor Collective
Investment Trust for all such services was therefore somewhat lower than
the total of such expenses for most mutual funds.
The Canandaigua Funds pays other expenses related to its daily
operations, such as custodian fees, Trustees' fees, transfer agency fees,
legal and auditing costs. More information about the Investment Management
Agreement and other expenses paid by The Canandaigua Funds is included in
the Statement of Additional Information, which also contains information
about its brokerage policies and practices.
DISTRIBUTOR
ADS Distributors, Inc., c/o American Data Services, Inc., P.O.Box
5536, Hauppauge, New York 11788-0132 serves as the Distributor of each
Fund's shares. The Distributor is a Florida corporation and is a
registered broker-dealer.
TRANSFER AGENT AND ADMINISTRATOR
Under separate agreements with the Funds, American Data Services, Inc.
acts as the Transfer Agent and as the Administrator for each Fund.
CUSTODIAN
Northern Trust Company acts as custodian of the assets of each Fund.
NET ASSET VALUE
The price of one share of either the Equity Fund or the Bond Fund is
its respective "net asset value." For each Fund, its net asset value is
computed by adding the value of that Fund's investments plus cash and
other assets, deducting liabilities and then dividing the result by the
number of its shares outstanding. The net asset value of each Fund is
calculated by the Administrator for each Fund on each day the New York
Stock Exchange is open as of the close of business (normally 4:00 p.m.
Eastern time).
DISTRIBUTION AND TAX INFORMATION
DIVIDENDS AND DISTRIBUTIONS
In both the Equity Fund and the Bond Fund, dividends and distributions
will be automatically reinvested on the payment date in additional shares
of that Fund at net asset value, unless an election is made on the New
Account Application to have all dividends and/or distributions paid in
cash. Dividends are declared and paid at least annually. Distributions of
any net realized short-term and long-term capital gains usually will be
made annually prior to the close of the fiscal year in which the gains are
earned.
TAXES
Each Fund intends to qualify and elect to be treated each year as a
"regulated investment company" for federal income tax purposes. A
regulated investment company is not subject to regular income tax on any
income or capital gains distributed to its shareholders if it, among other
things, distributes at least 90 percent of its investment company taxable
income to them within applicable time periods.
For federal income tax purposes, dividends and distributions are
taxable to you whether paid in cash or reinvested in additional shares.
You may also be liable for tax on any gain realized upon the redemption of
shares in either Fund.
Shortly after the close of each calendar year, you will receive a
statement setting forth the dollar amounts of dividends and any
distributions for the prior calendar year and the tax status of the
dividends and distributions for federal income tax purposes. You should
consult your tax adviser to assess the federal, state and local tax
consequences of investing in the Funds. This discussion is not intended to
address the tax consequences of an investment by a nonresident alien.
PERFORMANCE DATA
From time to time The Canandaigua Funds may include the average annual
total return on the Bond Fund and/or the Equity Fund for various specified
time periods in advertisements or information furnished to present or
prospective shareholders. Average annual total return is computed in
accordance with formulas specified by the SEC.
Average annual total return quotations for the specified period will
be computed by finding the average annual compounded rates of return (based
on net investment income and any realized and unrealized capital gains or
losses on Fund investments over such periods) that would equate the initial
amount invested to the redeemable value of such investment at the end of
each period. Average annual total return will be computed assuming all
dividends and distributions are reinvested and taking into account all
applicable recurring and nonrecurring expenses.
The Canandaigua Funds also may quote total return and aggregate total
return performance data on the Bond Fund or Equity Fund for various
specified time periods. Such data will be calculated substantially as
described above, except that the rates of return calculated will not be
average annual rates, but rather, actual annual, annualized or aggregate
rates of return. Actual annual or annualized total return data generally
will be lower than average annual total return data since the average
annual rates of return reflect compounding; aggregate total return data
generally will be higher than average annual total return data since the
aggregate rates of return reflect compounding over a longer period of time.
Total return may be expressed either as a percentage or as a dollar amount
in order to illustrate such total return on a hypothetical $1,000
investment at the beginning of each specified period.
Total return figures are based on the historical performance of each
Fund and are not intended to indicate future performance. The total return
on the Bond Fund and the Equity Fund will vary depending on market
conditions, the securities comprising that Fund, that Fund's operating
expenses and the amount of realized and unrealized net capital gains or
losses during the period. The value of an investment in each Fund will
fluctuate and a shareholder's shares, when redeemed, may be worth more or
less than their original cost.
PERFORMANCE COMPARISONS
On occasion, The Canandaigua Funds may compare the performance of the
Bond Fund or Equity Fund to that of the Standard & Poor's 500 Composite
Stock Price Index, the Value Line Composite Index, the Lehman Brothers
Intermediate Government/Corporate Bond Index, the Dow Jones Industrial
Average, or other relevant indices, or to data contained in publications
such as Lipper Analytical Services, Inc., Morningstar Publications, Inc.,
Money Magazine, U.S. News & World Report, Business Week, Forbes, Fortune
and CDA Investment Technology, Inc. As with other performance data,
performance comparisons should not be considered representative of the
relative performance of the Bond Fund or the Equity Fund for any future
period.
ORGANIZATION AND CAPITALIZATION
From its inception in 1992 until _____________, 1997, The Canandaigua
Funds was organized by the Advisor as a Collective Investment Trust under
New York law and the regulations of the U.S. Comptroller of the Currency,
participation in which was limited to qualified retirement accounts such as
IRAs and retirement and pension trusts. On ____________, 1997, the
Collective Investment Trust reorganized as a Delaware business trust. In
connection with this reorganization, the name of the Fund was changes from
the "Canandaigua National Collective Investment Fund for Qualified Trusts"
to "The Canandaigua Funds." The Canandaigua Funds is authorized to issue
an unlimited number of shares. The Trustees of The Canandaigua Funds are
responsible for the overall management and supervision of its affairs.
Each share represents an equal proportionate interest in the Fund to which
it relates with each other share in that Fund. Shares entitle their
holders to one vote per share. Shares have noncumulative voting rights, do
not have preemptive or subscription rights and are transferable. Pursuant
to the Investment Company Act, shareholders of each Fund are required to
approve the adoption of any investment advisory agreement relating to such
Fund and of any changes in fundamental investment restrictions or policies
of such Fund. Shares of a Fund will be voted with respect to that Fund
only, except for the election of Trustees and the ratification of
independent accountants. The Trustees are empowered, without shareholder
approval, by The Canandaigua Funds' Declaration of Trust (the "Declaration
of Trust") and Bylaws to create additional series of shares and to classify
and reclassify any new or existing series of shares into one or more
classes.
As a Delaware business trust, The Canandaigua Funds is not required by
law to hold annual shareholder meetings. It may, however, hold meetings
from time to time on important matters, and shareholders have the right to
call a meeting to remove a Trustee or to take certain other actions as
described in the Declaration of Trust.
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<PAGE>
APPENDIX A
Description of Standard & Poor's Corporation's corporate bond ratings of
BBB or better:
AAA - Bonds rated AAA have the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is
extremely strong.
AA - Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only to
a small degree.
A - Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than bonds in higher rated categories.
BBB - Bonds rated BBB are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit
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 bonds in higher rated categories.
Description of Moody's Investor Service, Inc.'s corporate bond ratings of
Baa or better:
AAA - Bonds which are rated Aaa are judged to be 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 which 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 Aaa
securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest
are considered adequate but elements may be present which suggest
a susceptibility to impairment sometime in the future.
BAA - Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
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<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
THE CANANDAIGUA FUNDS
This Statement of Additional Information sets forth certain additional
information about The Canandaigua Funds, an open-end diversified management
investment company.
_____________________________
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. THE
INFORMATION HEREIN SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS FOR
THE CANANDAIGUA FUNDS DATED ____________, 1997, A COPY OF WHICH MAY BE
OBTAINED FREE OF CHARGE BY WRITING ADS DISTRIBUTORS, INC., THE FUNDS'
DISTRIBUTOR, C/O AMERICAN DATA SERVICES, INC., P.O. BOX 5536, HAUPPAUGE,
NEW YORK 11788-0132 OR BY CALLING 1-800-___-____.
__________, 1997
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<PAGE>
TABLE OF CONTENTS
PAGE
The Canandaigua Funds.............................3
Investment Restrictions...........................3
Other Investment Policies.........................5
Management of The Canandaigua Funds...............5
Trustees and Officers........................5
Investment Advisor...........................7
Distributor..................................9
Transfer Agent and Administrator.............9
Custodian....................................9
Code of Ethics..............................10
Net Asset Value..................................10
Performance Information..........................11
Portfolio Transactions...........................12
Tax Information..................................13
Organization and Capitalization..................14
Principal Shareholders......................15
Independent Accountants..........................16
Index to Financial Statements...................F-1
Report of Independent Accountants...............F-2
Financial Statements and Notes Thereto..........F-3
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<PAGE>
THE CANANDAIGUA FUNDS
The Canandaigua Funds is registered with the SEC as an open-end
diversified management investment company (or mutual fund) consisting of
two separate, diversified series: the Canandaigua Equity Fund (the "Equity
Fund") and the Canandaigua Bond Fund (the "Bond Fund") (individually
referred to as a "Fund" and collectively as the "Funds"). Additional funds
may be created by the Trustees from time to time. The Canandaigua National
Bank and Trust Company, acts as investment advisor to both Funds.
This Statement of Additional Information is not a prospectus and
should be read in conjunction with the Prospectus of The Canandaigua Funds
dated ____________ __, 1997, as amended or supplemented from time to time.
A copy of the Prospectus may be obtained without charge by calling 1-800-
___-____ or by writing to the Funds' Distributor, ADS Distributors, Inc.,
c/o American Data Services, Inc., P.O.Box 5536, Hauppauge, New York 11788-
0132.
The EQUITY FUND seeks long term growth of asset values through capital
appreciation and dividend income.
The BOND FUND seeks to earn a high level of current income with
consideration also given to safety of principal.
INVESTMENT RESTRICTIONS
The following investment restrictions are fundamental to both the
Equity Fund and the Bond Fund and cannot be changed for either Fund without
the approval of the holders of a majority of the outstanding shares of the
affected Fund. Under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), a "fundamental" policy may not be changed
without the vote of a "majority of the outstanding voting securities" of a
Fund, which is defined in the Investment Company Act as the lesser of (a)
67% or more of the shares present at a Fund meeting if the holders of more
than 50% of the outstanding shares of that Fund are present or represented
by proxy or (b) more than 50% of the outstanding shares of that Fund. An
investment policy that is not "fundamental" may be changed by vote of a
majority of the Board of Trustees of The Canandaigua Funds at any time.
As a matter of fundamental policy, neither Fund may:
(a) Purchase securities of any issuer (except securities issued or
guaranteed as to principal or interest by the United States Government, its
agencies or instrumentalities) if as a result more than 5% of the value of
the total assets of that Fund would be invested in the securities of such
issuer or both Funds together would own more than 10% of the outstanding
voting securities of such issuer (for purposes of this limitation,
identification of the "issuer" will be based on a determination of the
source of assets and revenues committed to meeting interest and principal
payments of each security);
(b) Invest in companies for the purpose of exercising control;
(c) Borrow money except from banks on a temporary basis for
extraordinary or emergency purposes, provided that a Fund is required to
maintain asset coverage of 300% for all borrowing (except with respect to
cash collateral received as a result of portfolio securities lending);
(d) Pledge, mortgage or hypothecate more than 10% of the total value
of its assets;
(e) Issue senior securities;
(f) Underwrite any issue of securities;
(g) Purchase or sell real estate or real estate mortgage loans (but
this shall not prevent investments in instruments secured by real estate or
interests therein or in marketable securities in real estate operations);
(h) Make loans to other persons, except that either Fund may make
time or demand deposits with banks, may purchase bonds, debentures or
similar obligations that are publicly distributed, may loan its securities
in an amount not in excess of 10% of the total value of its assets and may
enter into repurchase agreements as long as repurchase agreements maturing
in more than seven days do not exceed 10% of the total value of its assets;
(i) Purchase securities on margin or sell securities short;
(j) Purchase or retain securities of an issuer if the members of The
Canandaigua Funds' Board of Trustees, each of whom owns more than 1/2 of 1%
of such securities, together own more than 5% of the securities of such
issuer;
(k) Purchase or sell commodities or commodity contracts;
(l) Invest its assets in securities of other investment companies
except as part of a merger, consolidation, reorganization or purchase of
assets approved by the shareholders of the Fund involved in such
transaction;
(m) Except as may be permitted by clause (k), invest in or sell put,
call, straddle or spread options or interests in oil, gas or other mineral
exploration or development programs;
(n) Purchase any securities that would cause more than 25% of the
value of that Fund's total assets at the time of such purchase to be
invested in the securities of one or more issuers conducting their
principal activities in the same industry (except that there is no
limitation with respect to obligations issued or guaranteed by the United
States Government, its agencies or instrumentalities);
(o) Invest more than 10% of the total value of its assets in
nonmarketable securities (including repurchase agreements and time deposits
maturing in more than seven days but excluding master demand notes and
other securities payable on demand). If through the appreciation of
nonmarketable securities, or the depreciation of marketable securities, a
Fund has more than 10% of its assets invested in nonmarketable securities,
that Fund will reduce its holdings of nonmarketable securities to 10% or
less of its total assets as soon as practicable;
(p) Purchase securities of foreign issuers (except for American
Depository Receipts that are traded on a U.S. securities exchange or on The
Nasdaq Stock Market<service-mark>); or
(q) Purchase puts, calls or engage in other futures contracts.
If a percentage restriction is adhered to at the time of investment, then
except as noted in (o) above, a later increase or decrease in percentage
resulting from a change in values or assets will not constitute a violation
of that restriction.
OTHER INVESTMENT POLICIES
The following investment policies are not fundamental and may be
changed by the Board of Trustees of The Canandaigua Funds without the
approval of the shareholders of the affected Fund:
The Funds will not invest in securities which are subject to
restrictions on resale because they have not been registered under the
Securities Act of 1933, as amended (the "Securities Act") or which are not
readily marketable, except for master demand notes, other securities
payable upon demand, repurchase agreements and instruments evidencing loans
of securities. Such securities may, however, become a part of a Fund's
assets through a merger, exchange or recapitalization involving securities
already held in a Fund.
Either Fund may, to the extent consistent with its investment
objectives, invest in master demand notes. A master demand note is a
facility, typically maintained by a bank, pursuant to which monies are lent
on a daily basis to a corporate borrower by a group of purchasers in
amounts and at rates negotiated daily. The loan is payable on demand. As
with other debt obligations, there is a risk that the borrower will fail to
repay the obligation.
MANAGEMENT OF THE CANANDAIGUA FUNDS
TRUSTEES AND OFFICERS
Information pertaining to the Trustees, Advisory Trustees and officers
of The Canandaigua Funds, including their principal occupations for the
last five years, is set forth below.
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Principal
NAME, AGE AND POSITION(S) Occupation(s) During
ADDRESS WITH FUND PAST FIVE YEARS
Robert N. Coe, 48 Trustee President and co-owner, W.W. Coe
c/o The Canandaigua & Son, Inc. (independent
Funds, insurance agency)
72 South Main Street Canandaigua, NY 14424
Canandaigua, New York
Robert J. Craugh, 75 Chairman of the Board Retired since 1987; prior
c/o The Canandaigua Funds of Trustees thereto, Senior Vice President-
Operations,
72 South Main Street Canandaigua National Bank and
Canandaigua, NY, 14424 Trust Company, Canandaigua, NY
Donald C. Greenhouse, 62 Trustee President and owner, Seneca
c/o The Canandaigua Funds Point Associates, Inc. (business
72 South Main Street consultants)
Canandaigua, New York Canandaigua, NY 14424
Steven H. Swartout, 39 Trustee, Attorney-at-Law,
c/o The Canandaigua Funds Secretary Canandaigua, New York
72 South Main Street and Treasurer
Canandaigua, NY 14424
COMPENSATION OF THE BOARD OF TRUSTEES. Trustees receive $200.00 from
The Canandaigua Funds for each Board and Committee meeting attended,
together with reimbursement of reasonable expenses incurred.
To comply with certain restrictions applicable to the Advisor under
the Glass-Steagall Act ("Glass-Steagall Act"), none of the Trustees or
officers of The Canandaigua Funds are directors, officers or employees of
the Advisor.
As permitted by the regulations of the Federal Reserve Board under the
Glass-Steagall Act and the Bylaws of The Canandaigua Funds, the Board of
Trustees has established an Advisory Board of Trustees. The purpose of the
Advisory Board is to advise the Board of Trustees with respect to
investment policies and related matters. Members of the Advisory Board are
selected for their expertise in investment matters by the Board of
Trustees, are appointed by the Board of Trustees, serve for one-year terms,
have no vote with respect to any matters, and can be removed by the Board
of Trustees at any time.
Information pertaining to the members of the Advisory Board, including
their principal occupations for the last five years, is set forth below.
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Principal Occupation(s) During
NAME, AGE AND ADDRESS POSITION(S) WITH FUND PAST FIVE YEARS
Gregory S. MacKay, 48 Advisory Trustee Treasurer, Canandaigua National
72 South Main Street Corporation (parent holding
Canandaigua, NY 14424 company of the Advisor) and
Senior Vice President of the
Advisor
Robert J. Swartout, 36 Advisory Trustee Vice President and Investment
72 South Main Street Officer of the Advisor
Canandaigua, NY 14424
Advisory Trustees receive no compensation from The Canandaigua Funds
for their service in such capacity.
INVESTMENT ADVISOR
The Canandaigua National Bank and Trust Company, 72 South Main Street,
Canandaigua, New York 14424 is the Investment Advisor ("Advisor") for each
Fund pursuant to an investment advisory agreement (the "Investment Advisory
Agreement") that The Canandaigua Funds has entered into with the Advisor on
behalf of each Fund.
The Investment Advisory Agreement provides that the Advisor will
provide each Fund with investment research, advice and supervision and will
furnish continuously an investment program for that Fund consistent with
the investment objectives and policies of that Fund. The Advisor is
responsible for the payment of the salaries and expenses of all of its
personnel, office rent and the expenses of providing investment advisory,
research and statistical data and related clerical expenses.
Under the terms of the Investment Advisory Agreement, the Advisor
manages the investment of the assets of each Fund in conformity with the
investment objectives and policies of that Fund. It is the responsibility
of the Advisor to make investment decisions for each Fund and to provide
continuous supervision of the investment portfolios of each Fund. The
Advisor has agreed to maintain office facilities for the Funds, furnish the
Funds with statistical and research data, certain clerical, accounting and
bookkeeping services, and certain other services required by each Fund.
The Advisor pays all expenses incurred by it in connection with acting
as investment manager, other than costs (including taxes and brokerage
commissions, if any) of securities purchased for the Funds. Expenses
incurred by the Advisor in connection with acting as investment advisor
include the costs of accounting, data processing, bookkeeping and internal
auditing services (other than costs related to shareholder account
servicing), and rendering periodic and special reports to the Board of
Trustees. The Advisor pays for all employees, office space and facilities
required by it to provide services under the Investment Advisory Agreement,
except for specific items of expense referred to below.
Under the terms of the Investment Advisory Agreement, the Advisor is
obligated to manage each Fund in accordance with applicable laws and
regulations, including the regulations and rulings of the United States
Comptroller of the Currency relating to fiduciary powers of national banks.
In accordance with these regulations, the Advisor will not invest the
Funds' assets in stock or obligations of, or property acquired from, the
Advisor, its affiliates or directors, officers or employees or other
persons with substantial connections with the Advisor, and assets of the
Funds will not be sold or transferred, by loan or otherwise, to the Advisor
or persons connected with the Advisor as described above, except that in
accordance with applicable regulations of the Comptroller of the Currency,
assets of the Funds may be placed in deposits with the Advisor pending
investment or distribution.
For its services under the Investment Advisory Agreement, the Advisor
is paid with respect to each Fund a monthly management fee at the annual
rate of 1.00% of each Fund's average daily net assets. During the fiscal
years ended December 31, 1996, December 31, 1995 and December 31, 1994, the
Equity Portfolio of the predecessor Collective Investment Trust paid the
Advisor a net total of $108,183, $70,750 and $51,770, respectively, in
aggregate advisory fees, which amounted to 1.01%, 0.99% and 1.02%,
respectively, of that Fund's average annual net assets for those periods.
During the fiscal years ended December 31, 1996, December 31, 1995 and
December 31, 1994, the Bond Portfolio of the predecessor Collective
Investment Trust paid the Advisor a net total of $2,441, $1,655 and
$2,755, respectively, in aggregate advisory fees, which amounted to 0.50%,
0.50% and 0.66%, respectively, of that Fund's average annual net assets for
those periods. Beginning in 1994, the Advisor had in effect a reduction
from 1.00% to 0.50% of the advisory fee applicable to the Bond Portfolio,
which the Trustees temporarily reduced to 0.00% during 1997.
Except for the expenses described above which have been assumed by the
Advisor, all expenses incurred in administration of The Canandaigua Funds
will be charged to the Funds or to a particular Fund, as the case may be,
including investment management fees; fees and expenses of the Board of
Trustees; interest charges; taxes; brokerage commissions; expenses of
valuing assets; expenses of continuing registration and qualification of
The Canandaigua Funds and the shares under federal and state law; share
issuance expenses; fees and disbursements of independent accountants and
legal counsel; fees and expenses of custodians, including subcustodians and
securities depositories, transfer agents and shareholder account servicing
organizations; expenses of preparing, printing and mailing prospectuses,
reports, proxies, notices and statements sent to shareholders; expenses of
shareholder meetings; and insurance premiums. The Canandaigua Funds is
also liable for nonrecurring expenses, including litigation to which it may
from time to time be a party. Expenses incurred for the operation of a
particular Fund including the expenses of communications with its
shareholders, are paid by that Fund. Expenses that are general liabilities
of The Canandaigua Funds are allocated to the Equity Fund and the Bond Fund
in proportion to the total net assets of each Fund.
OTHER INFORMATION. The Investment Advisory Agreements remain in
effect initially for a two year term and continue in effect thereafter only
if such continuance is specifically approved at least annually by the
Trustees or by vote of a majority of the outstanding voting securities of
the relevant Fund (as defined in the Investment Company Act) and, in either
case, by a majority of the Trustees who are not interested persons of The
Canandaigua Funds or the Advisor. The Investment Advisory Agreements
provide that the Advisor shall not be liable to a Fund for any error of
judgment by the Advisor or for any loss sustained by the Fund except in the
case of the Advisor's willful misfeasance, bad faith, gross negligence or
reckless disregard of duty. Each Investment Advisory Agreement also
provides that it shall terminate automatically if assigned and that it may
be terminated without penalty by vote of a majority of the outstanding
voting securities of the Fund or by either party upon 60 days' written
notice. No person other than the Advisor regularly furnishes advice to the
Funds with respect to the desirability of a Fund's investing in, purchasing
or selling securities.
DISTRIBUTOR
ADS Distributors, Inc. (the "Distributor") acts as the principal
underwriter and distributor of each Fund's shares and continually offers
shares of the Funds pursuant to a distribution agreement approved by the
Trustees. The Distributor is a Florida corporation, and a registered
broker-dealer. Among its functions, the Distributor approves and accepts
new account applications, processes subsequent account purchases and
redemptions, and responds to requests for information about the Funds. For
its services, the Distributor will receive an annual fee of $22,750,
payable monthly, plus reimbursement of expenses.
TRANSFER AGENT AND ADMINISTRATOR
Under separate agreements, American Data Services, Inc. acts as the
Transfer Agent (the "Transfer Agent") and as the Administrator (the
"Administrator") for each Fund.
As Transfer Agent, American Data Services, Inc. provides various
recordkeeping services for the Funds, including maintenance of all Fund
share ownership books and records, recording of all purchase and redemption
orders, acting as dividend disbursing agent, generating transaction
confirmation statements and quarterly shareholder statements of account,
and distributing periodic reports and updated Fund Prospectuses to all
shareholders. The Transfer Agency Agreement has been approved by the
Trustees of The Canandaigua Funds.
In its capacity as Administrator of the Funds, American Data Services,
Inc. determines, for each Fund, its daily net asset value per share (see
"Net Asset Value" below), calculates all dividend and capital gain
distributions, maintains the Funds' corporate books and records, prepares
and files required tax returns and reports, and provides general data
processing, accounting and bookkeeping services to the Funds.
The Administrative Services Agreement has been approved by the
Trustees of The Canandaigua Funds. This agreement provides that, for each
Fund, the Administrator will be paid a monthly fee equal to the greater of:
(1) a sliding scale of $1,500 for a Fund with average net assets of under
$5 million to $2,500 for a Fund with average net assets of $20 million or
more; or (2) 1/12th of 0.012% (12 basis points) of the average net assets
of that Fund for the month.
CUSTODIAN
Northern Trust Company, 50 South LaSalle Street, Chicago, Illinois
60675, serves as the custodian ("Custodian") of the assets of each Fund.
The Custodian holds all securities and other assets of the Funds. The
Custodial Agreement with the Funds, which the Trustees have approved,
provides for the general duties of the Custodian, permissible use of
subcustodians, and book entry systems of account.
CODE OF ETHICS
The Board of Trustees has determined that the personnel of The
Canandaigua Funds may engage in personal trading in compliance with general
fiduciary principles which are incorporated into The Canandaigua Fund's
Code of Ethics. This Code of Ethics substantially complies in all respects
with Rule 17j-1 under the Investment Company Act, with the following
exceptions: (1) the disinterested Trustees of The Canandaigua Funds are not
required to pre-clear personal securities transactions, and (2) the
disinterested Trustees are not provided with information about the
portfolio transactions contemplated for a Fund or executed for a Fund for a
period of 15 days before and after such transactions.
NET ASSET VALUE
For each Fund, net asset value ("NAV") per share is determined by
dividing the total value of that Fund's assets, less any liabilities, by
the number of shares of that Fund outstanding.
The net asset value per share of each Fund is determined by the
Administrator as of the close of regular trading on the New York Stock
Exchange (normally 4 p.m., Eastern Time) on each day when the New York
Stock Exchange is open for trading. The New York Stock Exchange is closed
on the following holidays: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day as observed.
Except for debt securities with remaining maturities of 60 days or
less, assets for which market quotations are available are valued as
follows: (a) each listed security is valued at its closing price obtained
from the respective primary exchange on which the security is listed, or,
if there were no sales on that day, at its last reported current bid price;
(b) each unlisted security is valued at the last current bid price obtained
from the National Association of Securities Dealers Automated Quotation
System; (c) United States Government and agency obligations are valued
based upon bid quotations from the Federal Reserve Bank for identical or
similar obligations; (d) short-term money market instruments (such as
certificates of deposit, bankers' acceptances and commercial paper) are
most often valued by bid quotation or by reference to bid quotations of
available yields for similar instruments of issuers with similar credit
ratings. The Board of Trustees has determined that the values obtained
using the procedures described in (c) and (d) represent the fair values of
the securities valued by such procedures. All of these prices are obtained
by the Administrator from services which collect and disseminate such
market prices. Bid quotations for short-term money market instruments
reported by such a service are the bid quotations reported to it by the
major dealers.
Debt securities with remaining maturities of 60 days or less are
valued on the basis of amortized cost. Under this method of valuation, the
security is initially valued at cost on the date of purchase or, in the
case of securities purchased with more than 60 days remaining to maturity,
the market value on the 61st day prior to maturity. Thereafter the Fund
assumes a constant proportionate amortization in value until maturity of
any discount or premium, regardless of the impact of fluctuating interest
rates on the market value of the security, unless the Trustees determine
that amortized cost no longer represents fair value.
When approved by the Trustees, certain securities may be valued on the
basis of valuations provided by an independent pricing service when such
prices the Trustees believe reflect the fair value of such securities.
These securities would normally be those which have no available recent
market value, have few outstanding shares and therefore infrequent trades,
or for which there is a lack of consensus on the value, with quoted prices
covering a wide range. The lack of consensus would result from relatively
unusual circumstances such as no trading in the security for long periods
of time, or a company's involvement in merger or acquisition activity, with
widely varying valuations placed on the company's assets or stock. Prices
provided by an independent pricing service may be determined without
exclusive reliance on quoted prices and may take into account appropriate
factors such as institutional-size trading in similar groups of securities,
yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data.
In the absence of an ascertainable market value, assets are valued at
their fair value as determined by the Advisor using methods and procedures
reviewed and approved by the Trustees.
The proceeds received by each Fund for each issue or sale of its
shares, and all net investment income, realized and unrealized gain and
proceeds thereof, subject only to the rights of creditors, will be
specifically allocated to such Fund and constitute the underlying assets of
that Fund. The underlying assets of each Fund will be segregated on the
books of account, and will be charged with the liabilities in respect to
such Fund and with a share of the general liabilities of The Canandaigua
Funds. Expenses with respect to both Funds are to be allocated in
proportion to the total net assets of the respective Funds.
PERFORMANCE INFORMATION
The average annual total return of each Fund is determined for a
particular period in accordance with SEC Rule 482 by calculating the actual
dollar amount of the investment return on a $1,000 investment in the Fund
made at the maximum public offering price (I.E., net asset value) at the
beginning of the period, and then calculating the annual compounded rate of
return which would produce that amount. Total return for a period of one
year is equal to the actual return of the Fund during that period. This
calculation assumes that all dividends and distributions are reinvested at
net asset value on the reinvestment dates during the period.
The average annual total return for the Equity Fund and the Bond Fund
of the predecessor Collective Investment Trust for the one-year period and
since inception to December 31, 1996, was as follows:
Year Ended Inception* to
FUND 12/31/96 12/31/96
Equity Fund 21.59% 12.45%
Bond Fund 2.37% 5.54%
____________
*Inception for both Funds was September 9, 1992
The performance data quoted represents historical performance and the
investment return and principal value of an investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than
original cost.
PORTFOLIO TRANSACTIONS
Purchases and sales of securities on a securities exchange are
effected by brokers, and the Funds pay a brokerage commission for this
service. In transactions on stock exchanges these commissions are
negotiated. In the over-the-counter market, securities (e.g., debt
securities) are normally traded on a "net" basis with dealers acting as
principal for their own accounts without a stated commission, although the
price of the securities usually includes a profit to the dealer. In
underwritten offerings, securities are purchased at a fixed price which
includes an amount of compensation to the underwriter, generally referred
to as the underwriter's concession or discount.
The primary consideration in placing portfolio security transactions
with broker-dealers for execution is to obtain and maintain the
availability of execution at the most favorable prices and in the most
effective manner possible. The Advisor attempts to achieve this result by
selecting broker-dealers to execute portfolio transactions on behalf of
each Fund on the basis of the broker-dealers' professional capability, the
value and quality of their brokerage services and the level of their
brokerage commissions.
Although commissions paid on every transaction will, in the judgment
of the Advisor, be reasonable in relation to the value of the brokerage
services provided, under each Investment Advisory Agreement and as
permitted by Section 28(e) of the Securities Exchange Act of 1934, the
Advisor may cause a Fund to pay a commission to broker-dealers who provide
brokerage and research services to the Advisor for effecting a securities
transaction for a Fund. Such commission may exceed the amount other
broker-dealers would have charged for the transaction, if the Advisor
determines in good faith that the greater commission is reasonable relative
to the value of the brokerage and the research and investment information
services provided by the executing broker-dealer viewed in terms of either
a particular transaction or the Advisor's overall responsibilities to the
Funds and to its other clients. Such research and investment information
services may include advice as to the value of securities, the advisability
of investing in, purchasing or selling securities, the availability of
securities or of purchasers or sellers of securities, furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy and the performance of accounts, and
effecting securities transactions and performing functions incidental
thereto such as clearance and settlement.
Research provided by brokers is used for the benefit of all of the
clients of the Advisor and not solely or necessarily for the benefit of the
Funds. The Advisor's investment management personnel attempt to evaluate
the quality of research provided by brokers. Results of this effort are
sometimes used by the Advisor as a consideration in the selection of
brokers to execute portfolio transactions.
The investment advisory fees that the Funds pay to the Advisor will
not be reduced as a consequence of the Advisor's receipt of brokerage and
research services. To the extent a Fund's portfolio transactions are used
to obtain such services, the brokerage commissions paid by the Fund will
exceed those that might otherwise be paid, by an amount which cannot be
presently determined. Such services would be useful and of value to the
Adviser in serving both the Funds and other clients and, conversely, such
services obtained by the placement of brokerage business of other clients
would be useful to the Advisor in carrying out its obligations to the
Funds.
Certain investments may be appropriate for the Funds and also for
other clients advised by the Advisor. Investment decisions for the Funds
and other clients are made with a view to achieving their respective
investment objectives and after consideration of such factors as their
current holdings, availability of cash for investment and the size of their
investments generally. To the extent possible, Fund transactions are
traded separately from trades of other clients advised by the Advisor.
Occasionally, a particular security may be bought or sold for one or more
clients in different amounts. In such event, and to the extent permitted
by applicable law and regulations, such transactions will be allocated
among the clients in a manner believed to be equitable to each.
Ordinarily, such allocation will be made on the basis of the weighted
average price of such transactions effected during a trading day, and if
all orders for the same security could be only partially executed during a
trading day, then Fund transactions will take precedence over transactions
for other clients of the Advisor.
Securities owned by the Funds may not be purchased from or sold to the
Advisor or any affiliated person (as defined in the Investment Company Act)
of the Advisor except as may be permitted by the SEC and subject to the
rules and regulations of the Comptroller of the Currency. Affiliated
persons of the Advisor include its parent corporation, Canandaigua National
Corporation, each of their respective subsidiaries, and the officers and
directors of any of such entities.
The aggregate amounts of brokerage commissions paid by the Funds'
predecessor collective investment trust for the years ended December 31,
1996 and 1995 were $168,880 and $132,875, respectively.
As of December 31, 1996, the Bond Fund held the following securities
of brokers or dealers, or their parent organizations, with which it
regularly conducts business: 30,000 Merrill Lynch & Co. 6.25% bonds due
October 15, 2008.
TAX INFORMATION
The following discussion relates solely to U.S. Federal income tax law
as applicable to U.S. persons (i.e., U.S. citizens or residents and U.S.
domestic corporations, partnerships, trusts or estates) subject to tax
under such law. Shareholders should consult their own tax advisors as to
the federal, state or local tax consequences of ownership of shares of the
Funds in their particular circumstances.
Each Fund is treated as a separate taxpayer for federal income tax
purposes.
Each Fund intends to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
If qualified as a regulated investment company, the Fund will pay no
federal income taxes on its investment company taxable income (that is,
taxable income other than net realized capital gains) and its net realized
capital gains that are distributed to shareholders. To qualify under
Subchapter M, each Fund must, among other things distribute to its
shareholders at least 90% of its taxable net investment income and net
realized short-term capital gains. As a regulated investment company,
each Fund will be subject to a 4% non-deductible federal excise tax on
certain amounts not distributed (and not treated as having been
distributed) on a timely basis in accordance with annual minimum
distribution requirements. The Funds intend under normal circumstances to
seek to avoid liability for such tax by satisfying such distribution
requirements.
In general, any gain or loss on the redemption or exchange of a Fund's
shares will be long-term capital gain or loss if held by the shareholder
for more than 18 months, mid-term capital gain or loss if held for more
than one year but not more than 18 months, and short-term capital gain or
loss if held for one year or less. However, if a shareholder receives a
distribution taxable as long-term capital gain with respect to a Fund's
shares, and redeems or exchanges the shares before holding them for more
than six months, any loss on the redemption or exchange up to the amount of
the distribution will be treated as a long-term capital loss to the extent
of the capital gain distribution. For redemptions or exchanges occurring
after December 31, 2000, a holding period of more than five years will
entitle the shareholder to a long-term rate that is lower than the normal
long-term rate.
Dividends of a Fund's investment income and distributions of its
short-term capital gains will be taxable as ordinary income. Distributions
of long-term capital gains (or credited undistributed net capital gains)
will be taxable as such at the appropriate rate, regardless of the length
of time shares of a Fund have been held. Only dividends that reflect a
Fund's income from certain dividend-paying stocks will be eligible for the
federal dividends-received deduction for corporate shareholders.
Provided that a Fund qualifies as a regulated investment company under
the Code, such Fund will be exempt from Delaware corporation income tax.
If a shareholder fails to furnish a correct taxpayer identification
number, fails to fully report dividend or interest income, or fails to
certify that he or she has provided a correct taxpayer identification
number and that he or she is not subject to such withholding, then the
shareholder may be subject to a 31 percent "backup withholding tax" with
respect to (i) any taxable dividends and distributions and (ii) any
proceeds of any redemption of Fund shares.
ORGANIZATION AND CAPITALIZATION
The Canandaigua Funds was initially organized by the Advisor in 1992
as a Collective Investment Trust under New York law and the regulations of
the U.S. Comptroller of the Currency, participation in which was limited to
qualified retirement accounts such as IRAs and retirement and pension
trusts. On ____________, 1997, the Collective Investment Trust was
reorganized as a Delaware business trust, pursuant to a Declaration of
Trust (the "Declaration of Trust") dated October 31, 1997.
Unless otherwise required by the Investment Company Act or the
Declaration of Trust, The Canandaigua Funds does not intend to hold annual
meetings of shareholders. Shareholders may remove a Trustee by the
affirmative vote of at least two-thirds of all outstanding shares and the
Trustees shall promptly call a meeting for such purpose when requested to
do so in writing by the record holders of not less than 10% of the
outstanding shares entitled to vote. Shareholders may, under certain
circumstances, communicate with other shareholders in connection with
requesting a special meeting of shareholders. However, at any time that
less than a majority of the Trustees holding office were elected by the
shareholders, the Trustees will call a special meeting of shareholders for
the purpose of electing Trustees.
SHAREHOLDER AND TRUSTEE LIABILITY. The Canandaigua Funds is organized
as a Delaware business trust, and, under Delaware law, the shareholders of
such a trust are not generally subject to liability for the debts or
obligations of the trust. Similarly, Delaware law provides that none of
the Funds will be liable for the debts or obligations of any other Fund.
However, no similar statutory or other authority limiting business trust
shareholder liability exists in many other states. As a result, to the
extent that a Delaware business trust or a shareholder is subject to the
jurisdiction of courts in such other states, the courts may not apply
Delaware law and may thereby subject the Delaware business
trust shareholders to liability. To guard against this risk, the
Declaration of Trust contains an express disclaimer of shareholder
liability for acts or obligations of The Canandaigua Funds. Notice of such
disclaimer will normally be given in each agreement, obligation or
instrument entered into or executed by The Canandaigua Funds or the
Trustees. The Declaration of Trust provides for indemnification by the
relevant Fund for any loss suffered by a shareholder as a result of an
obligation of the Fund. The Declaration of Trust also provides that The
Canandaigua Funds shall, upon request, assume the defense of any claim made
against any shareholder for any act or obligation of The Canandaigua Funds
and satisfy any judgment thereon. The Trustees believe that, in view of
the above, the risk of personal liability of shareholders is remote.
The Declaration of Trust further provides that the Trustees will not
be liable for errors of judgment or mistakes of fact or law, but nothing in
the Declaration of Trust protects a Trustee against any liability to which
he or she would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in
the conduct of his or her office.
PRINCIPAL SHAREHOLDERS
As of November 30, 1997, no shareholder of record or beneficially
owned more than 5% of the outstanding shares of the Equity Fund. As of the
same date, the following persons owned more than 5% of the outstanding
shares of the Bond Fund:
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<PAGE>
Name and Address Percentage of
OF OWNER BOND FUND*
Willard B. Becker 5.7%
3299 West Lake Road
Canandaigua, New York 14424
Ida Mae Sengle 9.0%
18 State Street
Pittsford, New York 14534
Esther T. Wilson 8.2%
125 Roseland Lane
Canandaigua, New York 14424
Allied Builders Inc. 10.9%
Prevailing Wage Rate Retirement Plan
250 State Street
Brockport, New York
__________________
* Figures shown represent percentage of shares owned both of record and
beneficially by the persons indicated.
As of November 30, 1997, the Trustees, Advisory Trustees and officers
of The Canandaigua Funds as a group did not own more than 1% of the
outstanding shares of either Fund, either beneficially or of record.
INDEPENDENT ACCOUNTANTS
Morga Jones & Hufsmith, P.C., 25 North Street, Canandaigua, New York
14424, independent public accountants, have been selected to examine the
annual financial statements of The Canandaigua Funds and render a report
thereon. (The financial statements and notes thereto that follow were
prepared for the predecessor Collective Investment Trust for its fiscal
year ended December 31, 1996 and were audited by Morga Jones & Hufsmith,
P.C., as indicated in their report thereon.)
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<PAGE>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
TABLE OF CONTENTS
PAGE
Report of Independent Public Accountants F-2
Statements of Assets and Liabilities as of June 30, 1997
(unaudited) and December 31, 1996 F-3
Statements of Operations for the Six Months Ended June 30, 1997
(unaudited) and the year ended December 31, 1996 F-4
Statements of Changes in Net Assets for the Six Months Ended June
30, 1997 (unaudited) and for the Years Ended December 31, 1996
and 1995 F-5
Schedule of Portfolio Investments as of June 30, 1997 (unaudited)
- Bond Portfolio F-6
- Equity Portfolio F-8
Schedule of Portfolio Investments as of December 31, 1996
- Bond Portfolio F-11
- Equity Portfolio F-13
Notes to Financial Statements F-15
Selected Per-Share Data and Ratios/Supplemental Data F-20
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
Canandaigua National Collective Investment
Fund for Qualified Trusts
We have audited the accompanying statement of assets and liabilities, including
the schedule of portfolio investments, of Canandaigua National Collective
Investment Fund for Qualified Trusts (comprising, respectively, the Bond and
Equity portfolios), as of December 31, 1996, and the related statement of
operations for the year then ended, the statement of changes in net assets for
the years ended December 31, 1996 and 1995 and the selected per-share data and
ratios/supplemental data for the years ended December 31, 1996, 1995, 1994,
1993, and for the period from inception (September 9, 1992) through December
31, 1992. These financial statements and per-share data and
ratios/supplemental data are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
and per-share data and ratios/supplemental data based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and per-
share data and ratios/supplemental data are free of material misstatement.
An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1996, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and selected per-share data and
ratios/supplemental data
referred to above present fairly, in all material respects, the financial
position of each of the respective portfolios constituting the Canandaigua
National Collective Investment Fund for Qualified Trusts as of December 31,
1996, the results of their operations for the year then ended, the changes in
their net assets for the years ended December 1996 and 1995, and the selected
per-share data and ratios/supplemental data for the years ended December
31, 1996, 1995, 1994, 1993, and for the period of inception (September 9,
1992) through December 31, 1992, in conformity with generally accepted
accounting principles.
/s/Morga, Jones & Hufsmith, P.C.
Canandaigua, New York
January 24, 1997 (except for the matters discussed
in Note 5 as to which dates are July 9, 1997
and October 31, 1997)
<PAGE>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
June 30, 1997
Portfolio
ASSETS Bond Equity Total
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
INVESTMENT SECURITIES, AT MARKET (bond portfolio cost -
$548,398; equity portfolio cost - $14,908,217) $ 540,457 $16,097,687 $16,638,144
CASH AND CASH EQUIVALENT 42,792 334,664 377,456
RECEIVABLES FOR:
Sales of fund's units 6,000 439 6,439
Dividends and accrued interest 10,018 13,189 23,207
Total receivables 16,018 13,628 29,646
Total assets 599,267 16,445,979 17,045,246
LIABILITIES
PAYABLES FOR:
Repurchases of fund's units - (19,945) (19,945)
Investment management fees (231) (12,815) (13,046)
Professional fees (156) (1,456) (1,612)
Custodial fees (526) (806) (1,332)
Total liabilities (913) (35,022) (35,935)
NET ASSETS AT June 30, 1997: (equivalent to $12.82
per unit for bond portfolio and $19.26 per unit for
equity portfolio, based on 46,677 units and 852,047
units outstanding for bond and equity portfolios,
respectively) $ 598,354 $16,410,957 $17,009,311
December 31, 1996
Portfolio
ASSETS Bond Equity Total
INVESTMENT SECURITIES, AT MARKET (bond portfolio cost -
$483,520; equity portfolio cost - $11,639,993) $476,845 $12,419,478 $12,896,323
CASH AND CASH EQUIVALENT 16,393 45,652 62,045
RECEIVABLES FOR:
Sale of investments - 815,243 815,243
Dividends and accrued interest 8,658 16,575 25,233
Total assets 501,896 13,296,948 13,798,844
LIABILITIES
PAYABLES FOR:
Purchases of investments - (638,982) (638,982)
Investment management fees (213) (10,799) (11,012)
Professional fees (170) (3,031) (3,201)
Custodial fees (246) (329) (575)
Total liabilities (629) (653,141) (653,770)
NET ASSETS AT DECEMBER 31, 1996: (equivalent to $12.54
per unit for bond portfolio and $16.67 per unit
for equity portfolio, based on 39,981 units and
758,660 units outstanding for bond and equity
portfolios, respectively) $501,267 $12,643,807 $13,145,074
</TABLE>
The accompanying notes are an integral part
of these financial statements.
F-3
<PAGE>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Six Months Ended June 30, 1997
Portfolio
Bond Equity Total
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 15,311 $ 4,810 $ 20,121
Dividend income 887 87,133 88,020
Miscellaneous income 50 40 90
Total investment income 16,248 91,983 108,231
EXPENSES:
Investment management fees (1,274) (70,688) (71,962)
Custodial fees (1,271) (1,404) (2,675)
Professional fees (153) (3,276) (3,429)
Miscellaneous expense - (196) (196)
Total expenses (2,698) (75,564) (78,262)
Net investment income 13,550 16,419 29,969
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) (356) 1,742,347 1,741,991
Net unrealized gain (loss) (1,316) 409,985 408,669
Net realized and unrealized
gain (loss) on investments (1,672) 2,152,332 2,150,660
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS -
for the period $11,878 $2,168,751 $2,180,629
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1996
Portfolio
Bond Equity Total
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 29,045 $ 3,751 $ 32,796
Dividend income 1,330 119,413 120,743
Total investment income 30,375 123,164 153,539
EXPENSES:
Investment management fees (2,442) (108,183) (110,625)
Custodial fees (2,400) (2,921) (5,321)
Professional fees (432) (8,573) (9,005)
Total expenses (5,274) (119,677) (124,951)
Net investment income 25,101 3,487 28,588
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) (789) 1,418,848 1,418,059
Net unrealized gain (loss) (11,226) 608,639 597,413
Net realized and unrealized gain
(loss) on investments (12,015) 2,027,487 2,015,472
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS -
for the year $13,086 $2,030,974 $2,044,060
The accompanying notes are an integral part
of these financial statements.
</TABLE>
F-4
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended June 30, 1997
Portfolio
Bond Equity Total
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 13,550 $ 16,419 $ 29,969
Net realized gain (loss) on investments (356) 1,742,347 1,741,991
Net unrealized gain (loss) on investments (1,316) 409,985 408,669
Net increase in net assets
resulting from operations 11,878 2,168,751 2,180,629
UNIT SHARE TRANSACTIONS:
Proceeds from units sold (8,399 and
118,551 units in the bond
and equity funds, respectively) 106,707 2,044,417 2,151,124
Cost of units purchased (1,703 and
25,164 units in the bond
and equity funds, respectively) (21,498) (446,018) (467,516)
Net increase in net assets resulting
from unit transactions 85,209 1,598,399 1,683,608
TOTAL INCREASE IN NET ASSETS 97,087 3,767,150 3,864,237
NET ASSETS - beginning of period 501,267 12,643,807 13,145,074
NET ASSETS - end of period $598,354 $16,410,957 $17,009,311
Year Ended December 31, 1996
Portfolio
Bond Equity Total
OPERATIONS:
Net investment income $ 25,101 $ 3,487 $ 28,588
Net realized gain (loss) on investments (789) 1,418,848 1,418,059
Net unrealized gain (loss) on investments (11,226) 608,639 597,413
Net increase in net assets
resulting from operations 13,086 2,030,974 2,044,060
UNIT SHARE TRANSACTIONS:
Proceeds from units sold (12,951 and
178,976 units in the bond and equity
funds, respectively) 156,277 2,729,159 2,885,436
Cost of units purchased (6,310 and
35,580 units in the bond and
equity funds, respectively) (76,541) (548,895) (625,436)
Net increase in net assets
resulting from unit transactions 79,736 2,180,264 2,260,000
TOTAL INCREASE IN NET ASSETS 92,822 4,211,238 4,304,060
NET ASSETS - beginning of period 408,445 8,432,569 8,841,014
NET ASSETS - end of period $501,267 $12,643,807 $13,145,074
Year Ended December 31, 1995
Portfolio
Bond Equity Total
OPERATIONS:
Net investment income $23,752 $ 23,121 $ 46,873
Net realized gain (loss) on investments (665) 1,254,685 1,254,020
Net unrealized gain (loss) on investments 42,615 269,048 311,663
Net increase in net assets
resulting from operations 65,702 1,546,854 1,612,556
UNIT SHARE TRANSACTIONS:
Proceeds from units sold (7,521
and 130,447 units in the bond and
equity funds, respectively) 91,141 1,664,731 1,755,872
Cost of units purchased (3,969
and 45,578 units in the bond and
equity funds, respectively) (46,524) (555,722) (602,246)
Net increase in net assets
resulting from unit transactions 44,617 1,109,009 1,153,626
TOTAL INCREASE IN NET ASSETS 110,319 2,655,863 2,766,182
NET ASSETS - beginning of year 298,126 5,776,706 6,074,832
NET ASSETS - end of year $408,445 $8,432,569 $8,841,014
The accompanying notes are an integral part
of these financial statements.
</TABLE>
F-5
<PAGE>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
SCHEDULE OF PORTFOLIO INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
BOND PORTFOLIO
Cost Market Value
Percentage
Amount Amount of Net Assets
(Unaudited) (Unaudited)
<S>
INVESTMENT SECURITIES: <C> <C> <C>
U.S. GOVERNMENT NOTES & BONDS -
30,000 US Treasury Note, 7.000%, July 15, 2006 $30,053 $30,863 5.16%
30,000 US Treasury Bond, 5.875%, November 15, 2005 29,279 28,716 4.80%
15,000 US Treasury Note, 5.750%, September 30, 1997 14,969 15,009 2.51%
20,000 US Treasury Note, 6.125%, May 15, 1998 20,047 20,059 3.35%
25,000 US Treasury Note, 6.250%, August 31, 2000 24,931 24,992 4.18%
25,000 US Treasury Note, 6.125%, September 30, 2000 24,983 24,883 4.16%
30,000 US Treasury Note, 5.500%, December 31, 2000 29,622 29,259 4.89%
15,000 US Treasury Note, 5.250%, January 31, 2001 14,929 14,513 2.43%
25,000 US Treasury Note, 5.625%, February 15, 2006 24,955 23,485 3.92%
25,000 US Treasury Note, 6.125%, March 31, 1998 24,991 25,078 4.19%
30,000 US Treasury Note, 6.375%, March 31, 2001 29,946 30,056 5.02%
40,000 US Treasury Note, 6.875%, May 15, 2006 40,104 40,825 6.82%
10,000 US Treasury Note, 5.250%, January 31, 2001 9,759 9,678 1.62%
Total U.S. Government Notes & Bonds 318,568 317,416 53.05%
CORPORATE BONDS -
Capital Equipment
Aerospace & Military Technology
15,000 Lockheed Martin Corporation, 6.750%,
March 15, 2003 15,900 14,923 2.49%
Total Capital Equipment 15,900 14,923 2.49%
Consumer Goods
Beverage & Tobacco
20,000 Coca-Cola Company, 6.000%, July 15, 2003 19,962 19,297 3.23%
Retail Trading
25,000 Sears Roebuck & Company, 6.250%, January 15, 2004 23,680 24,117 4.03%
Specialty Chemicals
25,000 Eastman Chemical Company, 6.375%, January 15, 2004 25,141 24,208 4.05%
Total Consumer Goods 68,783 67,622 11.30%
Finance
Banking
30,000 Citicorp, 6.750%, August 15, 2005 30,853 29,397 4.91%
Financial Services
10,000 Ford Motor Credit Co., 6.850%, August 15, 2000 10,004 10,052 1.68%
20,000 General Electric Capital Corp. 5.500%,
November 01, 2001 19,939 19,108 3.19%
30,000 Merrill Lynch & Company, Inc. 6.250%,
October 15, 2008 29,681 27,980 4.68%
20,000 Salomon Inc., 6.750%, August 15, 2003 19,905 19,551 3.27%
Total Finance 110,382 106,088 17.73%
The accompanying notes are an integral part
of these financial statements.
</TABLE>
F-6
<PAGE>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
SCHEDULE OF PORTFOLIO INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
BOND PORTFOLIO (Continued)
Cost Market Value
Percentage
Amount Amount of Net Assets
(Unaudited) (Unaudited)
<S> <C> <C> <C>
CORPORATE BONDS (continued) -
Services
Telecommunications
20,000 Pacific Bell, 6.250%, March 01, 2005 19,600 19,183 3.21%
Total Services 19,600 19,183 3.21%
Total Corporate Bonds 214,665 207,816 34.73%
PREFERRED STOCK -
Finance
Financial Services
600 The Bear Stearns Companies, Inc., Class B 15,165 15,225 2.54%
Total Preferred Stock 15,165 15,225 2.54%
TOTAL INVESTMENT SECURITIES 548,398 540,457 90.32%
CASH AND CASH EQUIVALENT:
Canandaigua National Bank Collective Fixed Income 42,792 42,792 7.15%
EXCESS OF RECEIVABLES OVER PAYABLES 15,105 15,105 2.52%
NET ASSETS $606,295 $598,354 100.00%
The accompanying notes are an integral part
of these financial statements.
</TABLE>
F-7
<PAGE>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
SCHEDULE OF PORTFOLIO INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
EQUITY PORTFOLIO
Cost Market Value
Percentage
Amount Amount of Net Assets
(Unaudited) (Unaudited)
<S> <C> <C> <C>
INVESTMENT SECURITIES:
COMMON STOCK -
Capital Equipment
Farm Machinery
22,000 AGCO Corporation $ 565,862 $ 790,625 4.82%
Medical Devices
15,000 United States Surgical Corporation 475,790 558,750 3.40%
Total Capital Equipment 1,041,652 1,349,375 8.22%
Semiconductors
Semiconductors
5,000 Intel Corporation 738,560 709,063 4.32%
17,000 National Semiconductor Corporation 479,845 520,625 3.17%*
Total Semiconductors 1,218,405 1,229,688 7.49%
Consumer Goods
Beverage & Tobacco
18,000 Anheuser-Busch Companies, Inc. 746,732 754,875 4.60%
Electronics
5,600 Phillips Electronics NV (ADR) 347,080 402,500 2.45%
6,000 Emerson Electric 317,120 330,375 2.02%
Imaging
9,500 Eastman Kodak Co. 739,122 729,125 4.44%
Healthcare
10,000 Johnson & Johnson 548,560 643,750 3.92%
Total Consumer Goods 2,698,614 2,860,625 17.43%
Technology
Technology
6,000 Applied Materials 355,754 424,875 2.59%*
14,000 DuPont Photomasks, Incorporated 591,115 756,000 4.61%*
10,000 PRI Automation, Incorporated 371,770 379,375 2.31%*
15,000 Micron Technology, Inc. 606,565 599,062 3.65%
Information Systems
4,500 HBO & Company, Incorporated 283,970 309,937 1.89%
Total Technology 2,209,174 2,469,249 15.05%
* Non-income producing securities
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
SCHEDULE OF PORTFOLIO INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
EQUITY PORFOLIO (Continued)
Cost Market Value
Percentage
Amount Amount of Net Assets
(Unaudited) (Unaudited)
<S> <C> <C> <C>
COMMON STOCK (continued) -
Finance
Banking
3,000 Wells Fargo & Company $ 816,060 $ 808,500 4.93%
4,000 Chase Manhattan Corporation 376,690 388,250 2.37%
Financial Services
27,000 Amerin Corporation 583,811 654,750 3.99% *
Credit card
14,000 MBNA Corporation 465,648 512,750 3.12%
21,000 Capital One Financial 709,444 792,750 4.83%
Total Finance 2,951,653 3,157,000 19.24%
Pharmaceutical
Pharmaceutical
5,000 American Home Products Corp. 301,915 382,500 2.33%
6,500 Merck & Company, Inc. 594,737 672,750 4.10%
Total Pharmaceutical 896,652 1,055,250 6.43%
Services
Specialty and General Hospitals
9,000 Tenet Healthcare 241,670 266,062 1.62% *
Telecommunications
40,000 Frontier Corporation 781,342 797,500 4.86%
Total Services 1,023,012 1,063,562 6.48%
Specialty Chemical
Specialty Chemical
7,000 Great Lakes Chemical Corporation 315,020 366,625 2.23%
Total Specialty Chemical 315,020 366,625 2.23%
Energy
Utilities
5,000 AES Corporation 359,895 353,750 2.16%
Oil and Gas Exploration
14,000 Unocal Corporation 557,190 543,375 3.31%
Offshore Drilling
6,000 Reading & Bates Corporation 151,370 160,500 0.98%
Natural Gas
13,000 Enron Corporation 524,965 530,563 3.23%
Total Energy 1,593,420 1,588,188 9.68%
*Non-income producing securities
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
SCHEDULE OF PORTFOLIO INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
EQUITY PORTFOLIO (Continued)
Cost Market Value
Percentage
Amount Amount of Net Assets
(Unaudited) (Unaudited)
<S> <C> <C> <C>
COMMON STOCK (continued) -
Multi-Industry
Multi-Industry
10,000 U.S. Industries Group, Inc. $ 367,790 $ 356,250 2.17% *
Total Multi-Industry 367,790 356,250 2.17%
Property Casualty Insurance
Casualty Insurance
9,000 Chubb Corporation 592,825 601,875 3.67%
Total Property 592,825 601,875 3.67%
TOTAL INVESTMENT SECURITIES (COMMON STOCK) 14,908,217 16,097,687 98.09%
CASH AND CASH EQUIVALENT:
Canandaigua National Bank Collective Equity Fund 334,664 334,664 2.04%
EXCESS OF PAYABLES OVER RECEIVABLES (21,394) (21,394) - 0.13%
NET ASSETS $15,221,487 $16,410,957 100.00%
* Non-income producing securities
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 1996
<TABLE>
<CAPTION>
BOND PORTFOLIO
Cost Market Value
Percentage
Amount Amount of Net Assets
<S> <C> <C> <C>
INVESTMENT SECURITIES:
U.S. GOVERNMENT NOTES & BONDS -
20,000 US Treasury Note, 7.000%, July 15, 2006 $19,977 $20,781 4.15%
10,000 US Treasury Bond, 5.875%, November 15, 2005 9,981 9,647 1.92%
15,000 US Treasury Note, 5.750%, September 30, 1997 14,969 14,991 2.99%
10,000 US Treasury Note, 6.125%, May 15, 1998 9,989 10,022 2.00%
15,000 US Treasury Note, 6.250%, August 31, 2000 14,924 15,056 3.00%
25,000 US Treasury Note, 6.125%, September 30, 2000 24,983 24,984 4.98%
10,000 US Treasury Note, 5.500%, December 31, 2000 19,822 19,538 3.90%
15,000 US Treasury Note, 5.250%, January 31, 2001 14,928 14,544 2.90%
25,000 US Treasury Note, 5.625%, February 15, 2006 24,955 23,664 4.72%
25,000 US Treasury Note, 6.125%, March 31, 1998 24,991 25,055 5.00%
20,000 US Treasury Note, 6.375%, March 31, 2001 19,966 20,131 4.02%
25,000 US Treasury Note, 6.875%, May 15, 2006 24,939 25,773 5.14%
10,000 US Treasury Note, 5.250%, January 31, 2001 9,759 9,691 1.93%
Total U.S. Government Notes & Bonds 234,183 233,877 46.66%
CORPORATE BONDS -
Capital Equipment
Aerospace & Military Technology
15,000 Lockheed Martin Corporation,
6.750%, March 15, 2003 15,900 14,949 2.98%
Total Capital Equipment 15,900 14,949 2.98%
Consumer Goods
Beverage & Tobacco
20,000 Coca-Cola Company, 6.000%, July 15, 2003 19,962 19,434 3.88%
20,000 R.J.R. Nabisco Holdings Corp., 6.700%,
June 15, 2002 19,505 19,718 3.93%
Retail Trading
25,000 Sears Roebuck & Company, 6.250%,
January 15, 2004 23,680 24,121 4.81%
Specialty Chemicals
25,000 Eastman Chemical Company, 6.375%,
January 15, 2004 25,141 24,306 4.85%
Total Consumer Goods 88,288 87,579 17.47%
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 1996
<TABLE>
<CAPTION>
BOND PORTFOLIO (Continued)
Cost Market Value
Percentage
Amount Amount of Net Assets
<S> <C> <C> <C>
CORPORATE BONDS (continued) -
Finance
Banking
30,000 Citicorp, 6.750%, August 15, 2005 $30,854 $29,441 5.87%
Financial Services
10,000 Ford Motor Credit Co., 6.850%,
August 15, 2000 10,004 10,106 2.02%
20,000 General Electric Capital Corp.
5.500%, November 01, 2001 19,940 19,114 3.81%
30,000 Merrill Lynch & Company, Inc.
6.250%, October 15, 2008 29,681 27,898 5.57%
20,000 Salomon Inc., 6.750%, August 15, 2003 19,905 19,453 3.88%
Total Finance 110,384 106,012 21.15%
Services
Telecommunications
20,000 Pacific Bell, 6.250%, March 01, 2005 19,600 19,203 3.83%
Total Services 19,600 19,203 3.83%
Total Corporate Bonds 234,172 227,743 45.43%
PREFERRED STOCK -
Finance
Financial Services
600 The Bear Stearns Companies, Inc.,
Class B 15,165 15,225 3.04%
Total Preferred Stock 15,165 15,225 3.04%
TOTAL INVESTMENT SECURITIES 483,520 476,845 95.13%
CASH AND CASH EQUIVALENT:
Canandaigua National Bank Collective Fixed Income 16,393 16,393 3.27%
EXCESS OF RECEIVABLES OVER PAYABLES 8,029 8,029 1.60%
NET ASSETS $507,942 $501,267 100.00%
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 1996
<TABLE>
<CAPTION>
EQUITY PORTFOLIO
Cost Market Value
Percentage
Amount Amount of Net Assets
<S> <C> <C> <C>
INVESTMENT SECURITIES:
COMMON STOCK -
Capital Equipment
Aerospace & Military Technology
4,000 Lockheed Martin Corporation $354,151 $366,000 2.89%
Electrical and Electronics
3,500 General Electric Co. 338,616 346,063 2.74%
Farm Machinery
22,000 AGCO Corporation 531,811 629,750 4.98%
15,000 Deere & Company 675,086 609,375 4.82%
Semiconductors
4,500 Intel Corporation 585,206 589,219 4.66%
8,500 Vitesse Semiconductor Corporation 309,514 386,750 3.06%*
Industrial Technology
11,000 U.S. Robotics Corp. 511,068 792,000 6.26%*
Total Capital Equipment 3,305,452 3,719,157 29.41%
Consumer Goods
Beverage and Tobacco
6,500 Anheuser Busch Companies, Inc. 265,664 260,000 2.06%
Total Consumer Goods 265,664 260,000 2.06%
Pharmaceutical
Pharmaceutical
3,500 American Home Products Corp. 207,367 205,188 1.62%
2,500 Bristol-Meyers Squibb Co. 269,684 271,875 2.15%
4,500 Merck & Co., Inc. 275,055 356,625 2.82%
4,000 Schering-Plough Corp. 261,989 259,000 2.05%
5,000 Smithkline Beecham, p.l.c. 321,234 340,000 2.69%
4,000 Warner-Lambert Co. 315,489 300,000 2.37%
Total Pharmaceutical 1,650,818 1,732,688 13.70%
Software
Software
12,500 ORACLE Corporation 503,697 521,875 4.13%*
20,000 Platinum Technology, Inc. 265,009 272,500 2.16%*
6,000 CISCO Systems, Inc. 349,777 381,750 3.02%*
Total Software 1,118,483 1,176,125 9.30%
* Non-income producing securities
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 1996
<TABLE>
<CAPTION>
EQUITY PORFOLIO (Continued)
Cost Market Value
Percentage
Amount Amount of Net Assets
<S> <C> <C> <C>
COMMON STOCK (continued) -
Finance
Banking
2,300 Wells Fargo & Co. $638,982 $620,425 4.91%
Financial Services
9,000 American Guaranty Corporation 207,009 231,750 1.83% *
15,000 First USA, Inc. 435,581 519,375 4.11%
12,000 MBNA Corporation 358,460 498,000 3.94%
Total Finance 1,640,032 1,869,550 14.79%
Services
Entertainment
4,000 Walt Disney Co. 252,610 278,500 2.20%
Business & Public Services
11,450 Paychex, Inc. 501,117 588,958 4.66%
10,000 First Data Corporation 373,709 365,000 2.89%
Telecommunications
19,000 Frontier Corporation 426,675 429,875 3.40%
29,000 LCI International, Inc. 807,602 623,500 4.93% *
24,000 World Communications, Inc. 511,482 625,500 4.95% *
Transportation
20,000 Southwest Airlines Company 485,436 442,500 3.50%
Total Services 3,358,631 3,353,833 26.53%
Specialty Chemical
Specialty Chemical
2,500 Morton International, Inc. 102,184 101,875 0.81%
Total Specialty Chemical 102,184 101,875 0.81%
Multi-Industry
Multi-Industry
6,000 US Industries Group, Inc. 198,729 206,250 1.63%
Total Multi-Industry 198,729 206,250 1.63%
TOTAL INVESTMENT SECURITIES (COMMON STOCK) 11,639,993 12,419,478 98.23%
CASH AND CASH EQUIVALENT:
Canandaigua National Bank Collective Equity Fund 45,652 45,652 0.36%
EXCESS OF RECEIVABLES OVER PAYABLES 178,677 178,677 1.41%
NET ASSETS $11,864,322 $12,643,807 100.00%
*Non-income producing securities
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
Canandaigua National Collective Investment Fund for Qualified Trusts (the
Collective Trust) is registered under the Investment Company Act of 1940
as an open-end, diversified management investment company. The
Collective Trust was designed for the investment of retirement funds held
in certain qualified trusts (see Note 5). The Collective Trust was
formed in September, 1992, and consists of a bond portfolio with an
investment emphasis on fixed-income securities and an equity portfolio
with a primary investment emphasis in common stocks.
The Canandaigua National Bank and Trust Company (the Company) is the
trustee of the Collective Trust (see Note 3).
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES -
The financial statements have been prepared in conformity with generally
accepted accounting principles and as such include amounts based on
informed estimates and judgments of management with consideration given
to materiality. Actual results could differ from those estimates. The
interim financial statements, as of June 30, 1997 (unaudited), include
adjustments for the estimated effect of recurring annual accrued charges
which, in the opinion of management, are necessary for the fair
presentation of the interim financial statements.
CASH AND CASH EQUIVALENTS -
Interest bearing cash accounts are considered cash equivalents.
VALUATION OF INVESTMENT SECURITIES AND INCOME RECOGNITION -
Investments consist of debt and equity investment securities of the
United States (U.S.) government and of corporations whose securities are
traded on recognized U.S. securities exchanges. Investment securities
are stated at fair value as determined by market value based upon closing
sales prices reported on recognized securities exchanges on the last
business day of the year or, for listed securities having no sales
reported and for unlisted securities, upon last reported bid prices on
that date. The market value of investment securities is subject to daily
fluctuations. Short-term securities with 60 days or less to maturity are
amortized to maturity based on their cost to the Collective Trust if
acquired within 60 days of maturity or, if already held by the Collective
Trust on the 60th day, based on the value determined on the 61st day.
Securities for which quotations are not readily available are valued at
fair value as determined in good faith by the Supervisory Committee of
the Collective Trust.
The fair value of receivables for sale of investments and payables for
purchase of investments are based on fair values as of the date of sale
or purchase of the investment security.
The fair value of individual investment securities held at December 31,
1996 and at June 30, 1997 (unaudited) are disclosed in the accompanying
Schedules of Portfolio Investments.
As is customary in the industry, securities transactions are accounted
for on the date the securities are purchased or sold. Interest income is
reported on the accrual basis. Dividend income is recorded on the ex-
dividend date.
INCOME TAXES -
It is the policy of the Collective Trust to comply with applicable
requirements of the Internal Revenue Code. The Collective Trust is
exempt from Federal income tax under Section 408 (e) of the Internal
Revenue Code with respect to interests in the Collective Trust which are
attributable to individual retirement trust accounts maintained in
conformity with Section 408 (e) of the Internal Revenue Code, and exempt
from Federal income tax under Section 501 (a) of the Internal Revenue
Code with respect to interests in the Collective Trust which are
attributable to pension or profit-sharing trusts (including those
benefiting self-employed individuals) maintained in conformity with
Section 401 (a) of the Internal Revenue Code. The Collective Trust is
also not subject to taxation in New York State. For Federal income tax
purposes, income earned by the Collective Trust is not taxable to
participating trusts or participants until a participant receives a
distribution from the Collective Trust. Withdrawals from the Collective
Trust which are paid to participating trusts can be made at any time by
participating trusts without penalty and without the amount withdrawn
being subject to Federal income tax. There are no significant
differences in financial and tax accounting methods of the Collective
Trust.
VALUATION OF SHARE UNITS -
The Declaration of Trust provides that the Collective Trust may issue an
unlimited number of units of beneficial interest without par value.
Currently, the Collective Trust is offering units in a bond and a stock
portfolio. The unit shares are voting, non-assessable, and have no
preemptive rights or preferences as to conversion, exchange, dividends or
retirement. At June 30, 1997, December 31, 1996 and December 31, 1995,
the majority of unit holders are located in New York State. The net
asset value per unit of each portfolio is determined by dividing the
total value of the portfolio's net assets by the number of outstanding
units of the portfolio. The net asset values per unit in the accompanying
financial statements were calculated in consideration of all purchases
and sales transacted during the periods. Unit purchases are recorded
when an investor's request for a unit purchase is accepted and unit
distributions are recorded when an investor's request for distribution is
received. Accordingly, accepted unit purchase obligations for which cash
has not yet been received are reflected as sale of fund's units and
approved distribution requests for which cash has not yet been disbursed
are reflected as repurchases of fund's units in the accompanying
statements of assets and liabilities.
(3) AGREEMENTS
The Company is the trustee of the Collective Trust under a Declaration of
Trust. The portfolio investment managers of the Collective Trust are
also officers of the Company. Subject to the direction of the
Supervisory Committee of the Collective Trust, which performs the
duties and undertakes the responsibilities of the Board of Directors
of an investment company, the Company manages all of the business and
affairs of the Collective Trust.
The Collective Trust has entered into an Investment Management Agreement
with the Company. Under the terms of the agreement, the Company will
manage the investment of the assets of each retirement portfolio in
conformity with the stated objectives and policies of that portfolio.
For these services, the Collective Trust will and has paid investment
management fees to the Company, at the rate of 1% of assets annually of
each portfolio. In April 1994, however, the Supervisory
Committee authorized a temporary reduction of this fee for the bond
portfolio to .5%. This rate reduction resulted in savings to the bond
portfolio of $1,274 for the six months ended June 30, 1997 (unaudited)
and $2,442 for the year ended December 31, 1996. On July
9, 1997, the Supervisory Committee authorized a temporary elimination of
this fee for the bond portfolio, effective August 1, 1997.
In addition, the Company has historically assumed
expenses, other than primarily custodial and audit, incurred in the
administration of the Collective Trust. The Company will, if applicable,
reimburse the Collective Trust for the amount by which the expenses
exceed the lower of (1) 1.5% of the average daily value of the Collective
Trust's net assets during its fiscal year or (2) the most restrictive
expense limitation applicable to the Collective Trust imposed by the
securities laws of any state in which the units of the Collective Trust
are sold.
The Northern Trust Company acts as custodian of the assets of the
Collective Trust. Custodial fees paid by the Collective Trust are based
on an agreed fee schedule for asset holdings and transactions.
The Collective Trust has entered into an accounting service agreement
with American Data Services, Inc., for a three year period beginning
January 1, 1996. Fees are based on monthly average net assets per
portfolio. The agreement calls for an annual increase in fees based on a
defined increase in the Consumer Price Index for the Northeast region of
the United States of America. These fees ($5,116 for the six months
ended June 30, 1997 (unaudited) and $9,291 for the year ended December
31, 1996) have historically been paid by the Company.
(4) OTHER DISCLOSURES
INVESTMENT SECURITIES PURCHASES AND SALES -
JUNE 30, 1997 (UNAUDITED)
During the six months ended June 30, 1997, purchases and sales of
investment securities, excluding cash and cash equivalent, amounted to
the following:
PORTFOLIO
BOND EQUITY
(UNAUDITED) (UNAUDITED)
Purchases $ 84,384 $ 31,087,619
Sales $ 19,230 $ 28,922,760
Purchases in the bond portfolio during the period were all of government
securities. All other purchases and sales in the bond and equity
portfolios were of investment securities, excluding government
securities.
DECEMBER 31, 1996
During the year ended December 31, 1996, purchases and sales of
investment securities, excluding cash and cash equivalent,
amounted to the following:
PORTFOLIO
BOND EQUITY
Purchases $ 248,636 $ 38,237,652
Sales $ 147,827 $ 36,180,749
Purchases and sales of government securities included in the bond
portfolio amounts were $199,261 and $50,317,
respectively. All other purchases and sales in the bond and equity
portfolios were of investment securities, excluding government
securities.
UNREALIZED GAINS (LOSSES) ON INVESTMENTS -
JUNE 30, 1997 (UNAUDITED)
As of June 30, 1997, gross unrealized gains (losses) on investments with
a cost of $548,398 in the bond portfolio and $14,908,217 in the equity
portfolio are as follows:
PORTFOLIO
BOND EQUITY
(UNAUDITED) (UNAUDITED)
Gross unrealized gains $ 2,412 $ 1,275,528
Gross unrealized (losses) (10,353) (86,058)
Net unrealized gain (loss) $ (7,941) $ 1,189,470
DECEMBER 31, 1996
As of December 31, 1996, gross unrealized gains (losses) on
investments with a cost of $483,520 in the bond portfolio and
$11,908,217 in the equity portfolio are as follows:
PORTFOLIO
BOND EQUITY
Gross unrealized gains $ 756 $ 1,126,130
Gross unrealized (losses) (7,431) (346,645)
Net unrealized gain (loss) $ (6,675) $ 779,485
(5) SUBSEQUENT EVENT
On July 9, 1997, the Supervisory Committee authorized a temporary
suspension, effective August 1, 1997, in the investment management
fee it pays for the bond portfolio (see Note 3).
On October 31, 1997, the Supervisory Committee of the Trust, with the
earlier approval of the unit holders, authorized management to proceed
with the formal regulatory filings to effect a reorganization of the
Trust from a collective investment trust to a Delaware business trust.
Among other things, this change in form will enable the Trust to expand
its unit holders from certain qualified trusts to the general public.
It is anticipated that this reorganization will be tax free.
Management is planning for the reorganization to be effective early in
1998.
<PAGE>
CANANDAIGUA NATIONAL COLLECTIVE
INVESTMENT FUND FOR QUALIFIED TRUSTS
SELECTED PER-SHARE DATA AND RATIOS/SUPPLEMENTAL DATA
<TABLE>
<CAPTION>
Bond Portfolio
Six Months
Ended For the Years Ended December 31
June 30, 1997(a)1996 1995 1994 1993 1992 (b)
PER-SHARE DATA: (Unaudited) (Restated)
<S> <C> <C> <C> <C> <C> <C>
(For a share outstanding
throughout each period)
Net Asset Value,
beginning of period $12.54 $12.25 $10.01 $10.48 $10.06 (c)
Income (Loss) From
Investment Operations -
Net investment income (d) 0.33 0.62 0.81 0.62 0.42 (c)
Net realized and
unrealized gain (loss)
on investments (0.05) (0.33) 1.43 (1.09) - (c)
Total income (loss)
from investment operations 0.28 0.29 2.24 (0.47) 0.42 (c)
Net Asset Value,
end of period $12.82 $12.54 $12.25 $10.01 $10.48 $10.06
Total Return (e) 2.23% 2.37% 22.38% (4.48%) 4.17% (c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets,
end of period (000 omitted) $598 $501 $408 $298 $555 $ 61
Ratio of Expenses
to Average Net Assets 0.52% 1.09% 0.89% 0.77% 1.14% (c)
Ratio of Net Investment
Income to Average
Net Assets 2.63% 5.17% 7.11% 6.16% 4.18% (c)
Portfolio Turnover Rate 3.74% 30.46% 14.13% 24.45% 62.96% (c)
Equity Portfolio
Six Months
Ended For the Years Ended December 31
June 30, 1997(a)1996 1995 1994 1993 1992 (b)
PER-SHARE DATA: (Unaudited) (Restated)
(For a share outstanding
throughout each period)
Net Asset Value,
beginning of period $16.67 $13.71 $10.89 $10.85 $10.26 (c)
Income (Loss) From
Investment Operations -
Net investment income (d) 0.02 0.01 0.04 0.07 0.18 (c)
Net realized and
unrealized gain (loss)
on investments 2.57 2.95 2.78 (0.03) 0.41 (c)
Total income from
investment operations 2.59 2.96 2.82 0.04 0.59 (c)
Net Asset Value,
end of period $19.26 $16.67 $13.71 $10.89 $10.85 $10.26
Total Return (e) 15.54% 21.59% 25.90% 0.37% 5.75% (c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of
period (000 omitted) $16,411 $12,644 $8,433 $5,777 $3,172 $ 93
Ratio of Expenses
to Average Net Assets 0.54% 1.12% 1.11% 1.09% 1.18% (c)
Ratio of Net Investment
Income to Average
Net Assets 0.12% 0.03% 0.32% 0.69% 1.70% (c)
Portfolio Turnover Rate 205.39% 337.27% 375.30% 234.81% 165.68% (c)
Average Commission Rate
Paid (f) $0.1017 $0.1204 -- -- -- --
</TABLE>
_______________________________
(a) Data for the six months ended June 30, 1997 is not annualized.
(b) For the period from inception (September 9, 1992) through December 31,
1992.
(c) Insignificant.
(d) From April 1994 through June 30, 1997, the investment management fees
for the bond portfolio were reduced from 1% to .5% of assets annually,
resulting in a per share savings of $.03 for the six months ended June
30, 1997 and $.06, $.06 and $.03 for the years ended December 31, 1996,
1995 and 1994, respectively. In addition, during the periods presented,
administrative expenses of the funds, other than primarily custodial and
audit fees, have been assumed by the trustee of the funds.
(e) Assumes reinvestment of dividends and capital gains distributions, if any.
(f) Disclosure of average commissions paid per share is not required for the
periods prior to 1996. Average commissions paid were not material in
the bond portfolio. Shares traded on a principal basis are excluded.
Brokerage commissions paid on portfolio transactions increase the cost
of securities purchased or reduce the proceeds of securities sold and
are not reflected in the funds'statements of operations.
The accompanying notes are an integral part of these financial statements.
F-20
<PAGE>
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS:
Included in Prospectus:
None
Included in Statement of Additional Information:
Independent Auditors' Report
Statement of Assets and Liabilities - June 30, 1997 (unaudited)
and December 31, 1996
Statement of Operations for the six months ended June 30, 1997
(unaudited) and for the year ended December 31, 1996
Statement of Changes in Net Assets for the six months ended June
30, 1997 (unaudited) and for the years ended December
31, 1996 and 1995
Schedule of Portfolio Investments as of June 30, 1997 (unaudited)
Bond Portfolio
Equity Portfolio
Schedule of Portfolio Investments as of December 31, 1996
Bond Portfolio
Equity Portfolio
Notes to Financial Statements
Selected Per-Share Data and Ratios
(b) EXHIBITS:
EXHIBIT
NUMBER DOCUMENT
1 Declaration of Trust Dated October 31, 1997*
2 Bylaws of Registrant*
3 None
4 Establishment and Designation of Series of Shares of
Beneficial Interest, Par Value $.001 per share, dated
October 31, 1997*
5 Investment Advisory Agreement with Canandaigua National Bank
and Trust Company for the Equity Fund and the Bond Fund, dated
October 31, 1997*
6 Distribution Agreement between Registrant and ADS
Distributors, Inc.*
7 None
8.1 Equity Fund Custodian Agreement between Registrant and
Northern Trust Company*
8.2 Bond Fund Custodian Agreement between Registrant and Northern
Trust Company*
9.1 Transfer Agency Agreement between Registrant and American Data
Services, Inc.*
9.2 Administrative Service Agreement between Registrant and
American Data Services, Inc.*
10 Opinion and Consent of Underberg & Kessler LLP*
11 Consent of Morga Jones & Hufsmith, P.C.*
12 None
13 None
14 None
15 None
16 Schedule of Computation of Performance Quotations*
17(27) Financial Data Schedule (filed only with EDGAR submission per
Reg. S-K, rule 601(c)(1)(v)*
18 None
__________________________
* Filed herewith
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of November 30, 1997, the number of unitholders for each retirement
Fund was as follows:
Bond Fund: 89
Equity Fund: 970
ITEM 27. INDEMNIFICATION.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to the Trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the SEC
such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Trustee, officer, or
controlling person of the Registrant in connection with the successful
defense of any action, suit or proceeding) is asserted against the
Registrant by such Trustee, officer or controlling person in connection
with the shares being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication of such
issue.
The Declaration of Trust provides with regard to indemnification that:
A. The Trust shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by
reason of the fact that he/she is or was a Trustee, employee or officer of
the Trust or is or was serving at the request of the Trust as a director or
officer of another corporation, or as an official of a partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him/her in connection with such action, suit or
proceeding if he/she acted in good faith and in a manner he/she reasonably
believed to be in, or not opposed to, the best interests of the Trust, and,
with respect to any criminal action or proceeding, had no reasonable cause
to believe his/her conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which
he/she reasonably believed to be in, or not opposed to, the best interests
of the Trust, or, with respect to any criminal action or proceedings, that
he/she had reasonable cause to believe that his/her conduct was unlawful.
B. The Trust shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Trust to procure a judgment in its
favor by reason of the fact that he/she is or was a Trustee, employee or
officer of the Trust or is or was serving at the request of the Trust as a
director or officer of another corporation, or as an official of a
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him/her in
connection with the defense or settlement of such action or suit if he/she
acted in good faith and in a manner he/she reasonably believed to be in, or
not opposed to, the best interests of the Trust, EXCEPT, however, that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable for negligence
or misconduct in the performance of his/her duty to the Trust unless and
only to the extent that an appropriate court shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper.
C. To the extent that a Trustee, employee or officer of the Trust
has been successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in subsections A or B above in defense of
any claim, issue or matter therein, he/she shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by
him/her in connection therewith.
D. Except as provided in subsection C above, any indemnification
under subsection A or B of this Section (unless ordered by a court) shall
be made by the Trust only as permitted under any applicable provisions of
Title I of the Employee Retirement Income Security Act of 1974, as amended,
and as authorized in the specific case upon a determination that
indemnification of a Trustee, employee or officer is proper in the
circumstances because he/she has met the applicable standard of conduct set
forth in subsection A, B or H. Such determination shall be made (1) by the
Trustees by a majority vote of a quorum consisting of Trustees who were not
parties to such action, suit or proceeding, or (2) if such a quorum is not
obtainable, or, even if such a quorum is obtainable and such quorum so
directs, by independent legal counsel in a written opinion.
E. Expenses (including attorneys' fees) incurred in defending a
civil or criminal action, suit or proceeding may be paid by the Trust in
advance of the final disposition of such action, suit or proceeding as
authorized by the Trustees upon receipt of an undertaking by or on behalf
of the Trustee, employee or officer to repay such amount unless it shall
ultimately be determined that he/she is entitled to be indemnified by the
Trust as authorized in this Section; provided that such an undertaking must
be secured by a surety bond or other suitable insurance.
F. The indemnification provided by this Section shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any rule, agreement, vote of the Shareholders or
disinterested Trustees or otherwise, both as to actions in his/her official
capacity and as to actions in any capacity while holding such office, and
shall continue as to a person who has ceased to be a Trustee, employee or
officer and shall inure to the benefit of the heirs, executors and
administrators of such a person.
G. The Trust may purchase and maintain insurance on behalf of any
person who is or was a Trustee, employee or officer of the Trust, or is or
was serving at the request of the Trust as a director or officer of another
corporation, or as an official of a partnership, joint venture, trust or
other enterprise against any liability asserted against him/her and
incurred by him/her in any such capacity, or arising out of his/her status
as such; provided, however, that the Trust shall not purchase or maintain
any such insurance in contravention of any applicable provision of Title I
of the Employee Retirement Income Security Act of 1974, as amended.
H. Anything to the contrary in the foregoing subsections A through G
notwithstanding, no Trustee, employee or officer of the Trust shall be
indemnified against any liability to the Trust or the Shareholders to which
he/she would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his/her office, and no Trustee, employee or officer of the Trust
shall be indemnified in any other case in which the 1940 Act would restrict
or prohibit such indemnification.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS.
The business of The Canandaigua National Bank and Trust Company is
summarized under "Management of The Canandaigua Funds - Investment Advisor"
in the Statement of Additional Information constituting Part B of this
Registration Statement, which summary is incorporated herein by reference.
The following are, for the investment adviser, the directors and
senior officers who are or have been, at any time during the past two
fiscal years, engaged in any other business, profession, vocation or
employment of a substantial nature for their own account or in the capacity
of director, officer, employee, partner or trustee and a description of
such business, profession, vocation or employment of a substantial nature
and, if engaged in the capacity of director, officer, employee, partner or
trustee, the name and principal business address of the company with which
the person specified is so connected and the nature of such connection:
<TABLE>
<CAPTION>
OTHER BUSINESS,
POSITION WITH PROFESSION OR
NAME ADVISOR VOCATION
<S> <C> <C>
George W. Hamlin, IV President, Chief Executive President and
Officer, Trust Officer Director of Canandaigua National
and Director Corporation (parent holding
company of the Advisor) ("CNC")
Patricia A. Boland Director Executive Director,
Granger Homestead;
Director of CNC
Daniel P. Fuller Director Owner, Bristol Mountain Ski
Resort
David Hamlin, Jr. Director Farmer, Director of CNC
Frank H. Hamlin Director President, Sonnenberg Gardens,
Director of CNC
Stephen D. Hamlin Director President, Draper Development
Corp.; Director of CNC
Paul R. Kellogg Director Retired; Director of CNC
Eldred M. Sale Director Retired; Director of CNC
Robert G. Sheridan Senior Vice President, Secretary and Director of CNC
Cashier and Director
Caroline C. Shipley Director Educator and Area II Director,
New York State School Board
Association; Director of CNC
Alan J. Stone Director and Chairman of the Managing Partner, Stone
Board Properties; Director of CNC
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) As of the date hereof, in addition to acting as Distributor for
the Funds, ADS Distributors, Inc. acts as a principal underwriter,
depositor or investment advisor for the America Asia Allocation Fund.
(b) The information required by this item with respect to each
director, officer and partner of ADS Distributors, Inc. is incorporated by
reference to Schedule A of Form BD filed by ADS Distributors, Inc. under
the Securities Exchange Act of 1934 (SEC File Number 8-49995).
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
Certain accounts, books and records required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules
thereunder are maintained at the offices of the Registrant or The
Canandaigua National Bank and Trust Company, each of which is 72 South Main
Street, Canandaigua, New York 14424; ADS Distributors, Inc. and/or American
Data Services, Inc., both with an address of P.O. Box 5536, Hauppauge, New
York 11788-0132. Records relating to the duties of the Registrant's
custodian are maintained by Northern Trust Company, 50 South LaSalle
Street, Chicago, Illinois 60675.
ITEM 31. MANAGEMENT SERVICES.
Not applicable.
ITEM 32. UNDERTAKINGS.
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to furnish each person to whom a
Prospectus is delivered with a copy of the Registrant's latest Annual
Report to shareholders, upon request and without charge.
G:\UKC\CANNATBK\GENSEC\N-1A\N1APOS#6.RE3
<PAGE>
POWER OF ATTORNEY
Registrant and each person whose signature appears below hereby
appoint Steven H. Swartout as attorney-in-fact with full power of
substitution, to execute in their name and on behalf of the Registrant and
each such person, individually and in each capacity state below, one or
more amendments (including post-effective amendments) to this Registration
Statement as the attorney-in-fact acting on the premise shall from time to
time deem appropriate and to file any such amendment to this Registration
Statement with the Securities and Exchange Commission.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Canandaigua, New York on the 4th day of
December, 1997.
THE CANANDAIGUA FUNDS
By: /s/ Robert J. Craugh
Pursuant to the Securities Act of 1933, this Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated:
SIGNATURE TITLE DATE
/s/ Robert N. Coe Trustee December 4, 1997
Robert N. Coe
/s/ Robert J. Craugh Trustee December 4, 1997
Robert J. Craugh
/s/ Donald C. Greenhouse Trustee December 4, 1997
Donald C. Greenhouse
/s/ Steven H. Swartout Trustee December 4, 1997
Steven H. Swartout
G:\UKC\CANNATBK\GENSEC\N-1A\N1APOS#6.RE3
<PAGE>
EXHIBIT INDEX
Exhibit
NUMBER DESCRIPTION LOCATION
99.B1 Declaration of Trust Dated
October 31, 1997*
99.B2 Bylaws of Registrant*
99.B4 Establishment and Designation of Series
of Shares of Beneficial Interest, Par Value
$.001 per share, dated October 31, 1997*
99.B5 Investment Advisory Agreement with
Canandaigua National Bank and Trust
Company for the Equity Fund and
Bond Fund*
99.B6 Distribution Agreement between Registrant
and ADS Distributors, Inc.*
99.B8.1 Equity Fund Custodian Agreement between Registrant and
Northern Trust Company*
99.B8.2 Bond Fund Custodian Agreement between Registrant and
Northern Trust Company*
99.B9.1 Transfer Agency Agreement between Registrant
and American Data Services, Inc.*
99.B9.2 Administrative Service Agreement between
Registrant and American Data Services, Inc.*
99.B10 Opinion and Consent of Underberg & Kessler LLP*
99.B11 Consent of Morga Jones & Hufsmith, P.C.*
99.B16 Schedule of Computation of Performance
Quotations*
27 Financial Data Schedule * Filed only with EDGAR
submission per Reg. S-K,
rule 601(c)(1)(v)
__________________________
* Filed herewith
G:\UKC\CANNATBK\GENSEC\N-1A\N1APOS#6.RE3
DECLARATION OF TRUST
THE CANANDAIGUA FUNDS
October 31, 1997
DECLARATION OF TRUST, made as of October 31, 1997 by Robert J.
Craugh, Robert N. Coe, Donald C. Greenhouse and Steven H. Swartout (each a
"Trustee," and collectively, the "Trustees"):
WHEREAS, the Trustees desire to establish a trust fund for the
investment and reinvestment of funds contributed thereto;
NOW, THEREFORE, the Trustees declare that all monEY and property
contributed to the trust fund hereunder shall be held and managed under
this Declaration of Trust as herein set forth below.
I.
NAME
This trust shall be known as THE CANANDAIGUA FUNDS (hereinafter called
the "Trust"), and the Trustees shall conduct the business of the Trust
under that name or any other name as they shall from time to time
determine.
II.
DEFINITIONS
2.1 Definition of Certain Terms. As used in this Declaration of
Trust, the terms set forth below shall have the following meanings:
A. The "1940 Act" refers to the Investment Company Act of 1940,
as now or hereafter amended, to the rules and regulations adopted from time
to time thereunder and to any order or orders thereunder which may from
time to time be applicable to the Trust.
B. The "1933 Act" refers to the Securities Act of 1933, as now
or hereafter amended, to the rules and regulations adopted from time to
time thereunder and to any order or orders thereunder which may from time
to time be applicable to the Trust.
C. The terms "affiliated person," "assignment" and "interested
person" shall have the respective meanings set forth in the 1940 Act. The
term "vote of a majority of outstanding Shares" shall mean the "vote of a
majority of the outstanding voting securities" as defined in Section
2(a)(42) of the 1940 Act.
D. The "Bylaws" shall refer to the Bylaws of the Trust as
adopted and amended from time to time.
E. The "Declaration of Trust" shall mean this Declaration of
Trust as amended or restated from time to time.
F. "Person" shall mean a natural person, a corporation, a
partnership, an association, a joint-stock company, a trust, a fund or any
organized group of persons whether incorporated or not.
G. "Shares" means the equal proportionate transferable units of
interest of each class into which the beneficial interest in the Trust may
be classified or reclassified from time to time by the Trustees acting
under this Declaration of Trust, or in the absence of such action, means
the equal proportionate transferable units of interest into which the
entire beneficial interest in the Trust shall be divided from time to time,
and includes fractions of Shares as well as whole Shares.
H. "Shareholder" means a record owner of Shares in the Trust.
I. The "Trustees" refers to the individual trustees of the
Trust named herein or elected in accordance with Article VI hereof in their
capacity as trustees here under and not as individuals and to their
successor or successors while serving in office as a trustee of the Trust,
and includes a single trustee.
J. "Trust Property" means any and all assets and property, real
or personal, tangible or intangible, which is owned or held by or for the
account of the Trust or the Trustees.
III.
PURPOSE OF TRUST; AGENT FOR SERVICE
The Trust is a Delaware business trust of the type described in Title
12, Section 3801 of the Code of the State of Delaware formed for the
purpose of acting as an open-end diversified management investment company
under the 1940 Act; PROVIDED, HOWEVER, that the Trust may exercise all
powers which are ordinarily exercised by or permissible for Delaware
business trusts.
IV.
OWNERSHIP OF ASSETS OF THE TRUST
The assets of the Trust shall be held separate and apart from any
assets now or hereafter held in any capacity, other than as Trustees
hereunder, by the Trustees, including without limitation any successor
Trustees. Legal title to all the assets of the Trust shall be vested in
the Trustees as joint tenants except that the Trustees shall have power to
cause legal title to any assets of the Trust to be held by or in the name
of one or more of the Trustees, or in the name of the Trust, or in the name
of any other person as nominee, on such terms as the Trustees may
reasonably determine. The right, title and interest of the Trustees in the
assets of the Trust shall vest automatically in each person who may
hereafter become a Trustee. Upon the resignation, removal or death of a
Trustee, such Trustee shall automatically cease to have any right, title or
interest in any of the assets of the Trust, and the right, title and
interest of such Trustee in the assets of the Trust shall vest
automatically in the remaining Trustees. Such vesting and cessation of
title shall be effective regardless of whether conveyancing documents
(pursuant to Section 6.6 hereof or otherwise) have been executed and
delivered. Except to the extent otherwise required by Article V hereof, no
Shareholder shall be deemed to have severable ownership in any individual
asset of the Trust or any right of partition or possession thereof, or
shall be called upon to assume any loss of the Trust nor can he be called
upon to assume any loss of the Trust or suffer an assessment of any kind by
virtue of his/her ownership of Shares, but each Shareholder shall have a
proportionate undivided beneficial interest in the assets belonging to the
class of Shares held by such Shareholder. The ownership of the Trust
Property of every description and the right to conduct any business
hereinbefore described shall be vested exclusively in the Trustees, and the
Shareholders shall have no interest therein other than the beneficial
interest conferred by their Shares, and they shall have no right to call
for any partition or division of any property, profits, rights or interests
of the Trust nor can they be called upon to assume any losses of the Trust
or suffer an assessment of any kind by virtue of their ownership of Shares.
The Shares shall be personal property giving only the rights specifically
set forth in this Declaration of Trust. Shares shall not entitle any
holder thereof to preference, preemptive, appraisal, conversion or exchange
rights, except as the Trustees may determine pursuant to Article V hereof.
V.
SHAREHOLDERS; BENEFICIAL INTEREST IN THE TRUST;
PURCHASE AND REDEMPTION OF SHARES
5.1 SHARES IN THE TRUST.
A. The beneficial interest in the Trust may at all times be
divided into an unlimited number of full and fractional transferable Shares
with $.001 par value. All Shares shall be of one class, PROVIDED that
subject to this Declaration of Trust and the requirements of applicable
law, the Trustees shall have the power to classify or reclassify any
unissued Shares into any number of additional classes of Shares by setting
or changing in any one or more respects, from time to time before the
issuance thereof, their designations, preferences, conversion or other
rights, voting powers, restrictions, limitations, qualifications or terms
or conditions of redemption, PROVIDED FURTHER that the investment
objectives, policies and restrictions governing the management and
operations of the Trust, including the management of assets belonging to
any class of Shares, may from time to time be changed or supplemented by
the Trustees, subject to the requirements of the 1940 Act. The power of
the Trustees to classify or reclassify Shares shall include, without
limitation, the power to classify or reclassify any class of Shares into
one or more series of such class. All references to Shares in this
Declaration of Trust which are not accompanied by a reference to any
particular class of Shares shall be deemed to apply to all outstanding
Shares of any and all classes. All references in this Declaration of Trust
to any class of Shares shall include and refer to the Shares of any series
thereof.
Upon the issuance of the first Share of a second class of Shares
classified or reclassified by the Trustees pursuant to this Section 5.1,
all Shares theretofore issued and outstanding shall automatically represent
Shares of a separate class having the preferences, conversion and other
rights, voting powers, restrictions, limitations, qualifications and terms
and conditions of redemption provided for in this Declaration of Trust with
respect to any class of Shares. The Trustees may from time to time divide
or combine the outstanding Shares of the Trust or of any class into a
greater or lesser number without thereby changing the proportionate
beneficial interest of the Shares in the Trust so divided or combined or in
the assets belonging to such class as the case may be.
At any time that there are no Shares outstanding of any
particular class previously established and designated, the Trustees may
abolish that class and the establishment and designation thereof.
B. Subject to the power of the Trustees to classify and
reclassify any unissued Shares pursuant to subsection A of this Section
5.1, Shares of the Trust shall have the following preferences, conversion
and other rights, voting powers, restrictions, limitations, qualifications
and terms and conditions of redemption:
(1) ASSETS BELONGING TO A CLASS. All consideration
received by the Trust for the issue or sale of Shares of any class,
together with all income, earnings, profits and proceeds derived from the
investment thereof, including any proceeds derived from the sale, exchange
or liquidation of such investments, any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, and any
general assets of the Trust not belonging to a particular class which the
Trustees may, in their sole discretion, allocate to a class, shall
irrevocably belong to the class of Shares with respect to which such
assets, payments or funds were received or allocated for all purposes,
subject only to the rights of creditors, and shall be so handled upon the
books of account of the Trust. Such assets and the income, earnings,
profits and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation thereof, and any assets derived from any
reinvestment of such proceeds in whatever form, are herein referred to as
"assets belonging to" such class. Shareholders of any class of Shares
shall have no right, title or interest in or to the assets belonging to any
other class.
(2) LIABILITIES BELONGING TO A CLASS. Subject to the
provisions of Article IX hereof, the assets belonging to any class of
Shares shall be charged with the direct liabilities in respect of such
class and shall also be charged with such class's proportionate share of
the general liabilities of the Trust as determined by comparing, before the
allocation of the general liabilities, the net asset value of such class
with the aggregate net asset value of all of the several classes of shares.
The liabilities so charged to a class are herein referred to as
"liabilities belonging to" such class.
(3) DIVIDENDS AND DISTRIBUTIONS. Shares of each class
shall be entitled to such dividends and distributions, in Shares or in cash
or both, as may be declared from time to time by the Trustees, acting in
their sole discretion, with respect to such class, PROVIDED that dividends
and distributions on Shares of a particular class shall be paid only out of
the lawfully available "assets belonging to" such class as such term is
defined in subsection C(l) of this Section 5.1.
(4) LIQUIDATING DISTRIBUTIONS. In the event of the
termination of the Trust and the winding up of its affairs, the
Shareholders of each class shall be entitled to receive, as a class, out of
the assets of the Trust available for distribution to Shareholders, but
other than general assets , not belonging to any particular class of
Shares, the assets belonging to such class; and the assets so distributable
to the Shareholders of any class shall be distributed among such
Shareholders in proportion to the number of Shares of such class held by
them and recorded in their name on the books of the Trust. In the event
that there are any general assets not belonging to any particular class of
Shares and available for distribution, such distribution shall be made to
the Shareholders of all classes in proportion to the relative net assets of
the respective classes determined as hereinafter provided and the number of
Shares of such class held by them and recorded in their name on the books
of the Trust.
(5) VOTING. The holder of each Share shall be entitled to
one vote for each full Share, and a proportionate fractional vote for each
fractional Share, irrespective of the class, then recorded in his/her name
on the books of the Trust, to the extent provided in Article VIII hereof.
(6) PRE-EMPTIVE RIGHTS. Shareholders shall have no pre-
emptive or other rights to subscribe to any additional Shares or other
securities issued by the Trust.
(7) CONVERSION RIGHTS. The Trustees shall have the
authority to provide from time to time that the holders of Shares of any
class shall have the right to convert or exchange said Shares for or into
Shares of one or more other classes in accordance with such requirements
and procedures as may be established from time to time by the Trustees.
(8) REDEMPTION OF SHARES. To the extent that the assets of
the Trust are legally available for such redemptions, a Shareholder of the
Trust shall have the right to require the Trust to redeem his/her full and
fractional Shares of any class out of assets belonging to such class at a
redemption price equal to the net asset value per Share next determined
after receipt of a request to redeem in proper form as determined by the
Trustees, subject to the right of the Trustees to suspend the right of
redemption of Shares or postpone the date of payment of such redemption
price in accordance with the provisions of applicable law. The Trustees
shall establish such rules and procedures as they deem appropriate for the
redemption of Shares, provided that all redemptions shall be in accordance
with the 1940 Act. Without limiting the generality of the foregoing, the
Trust shall, to the extent permitted by applicable law, have the right at
any time to redeem the Shares owned by any holder thereof (a) in connection
with the termination of any class of Shares as provided hereunder; (b) if
the value of such Shares in the account or accounts maintained by the Trust
or its transfer agent for any class or classes of Shares is less than the
value determined from time to time by the Trustees as the minimum required
for an account or accounts of such class or classes, PROVIDED that the
Trust shall provide a Shareholder with written notice at least fifteen (15)
days prior to effecting a redemption of Shares as a result of not
satisfying such requirement; (c) to reimburse the Trust for any loss it has
sustained by reason of the failure of such Shareholder to make full payment
for Shares purchased by such Shareholder; (d) to collect any charge
relating to a transaction effected for the benefit of such Shareholder
which is applicable to Shares as provided in the prospectus relating to
such Shares; or (e) if the net income with respect to any particular class
of Shares should be negative or it should otherwise be appropriate to carry
out the Trust's responsibilities under the 1940 Act, in each case subject
to such further terms and conditions as the Trustees may from time to time
establish. The redemption price of Shares in the Trust shall, except as
otherwise provided in this section, be the net asset value thereof as
determined by the Trustees from time to time in accordance with the
provisions of applicable law, less such redemption fee or other charge, if
any, as may be fixed by the Trustees. When the net income of any class
with respect to which the Trustees have, in their discretion, established a
policy of maintaining a constant net asset value per Share is negative or
whenever deemed appropriate by the Trustees in order to carry out the
Trust's responsibilities under the 1940 Act, the Trust may, without payment
of compensation but in consideration of the interests of the Trust and the
holders of Shares of such class in maintaining a constant net asset value
per Share of such class, redeem pro rata from each holder of record on such
day, such number of full and fractional Shares of such class as may be
necessary to reduce the aggregate number of outstanding Shares in order to
permit the net asset value thereof to remain constant. Payment of the
redemption price, if any, shall be made in cash by the Trust at such time
and in such manner as may be determined from time to time by the Trustees
unless, in the opinion of the Trustees, which shall be conclusive,
conditions exist which make payment wholly in cash unwise or undesirable;
in such event the Trust may make payment in the assets belonging or
allocable to the class of the Shares redemption of which is being sought,
the value of which shall be determined as provided herein.
(9) TERMINATION OF A CLASS. Without the vote of the Shares
of any class then outstanding (unless otherwise required by applicable
law), the Trustees may:
(a) Sell and convey the assets belonging to a class of
Shares to another trust or corporation that is an open-end diversified
management investment company (as defined in the 1940 Act) and is organized
under the laws of any state of the United States for consideration which
may include the assumption of all outstanding obligations, taxes and other
liabilities, accrued or contingent, belonging to such class and which may
include securities issued by such trust or corporation. Following such
sale and conveyance, and after making provision for the payment of any
liabilities belonging to such class that are not assumed by the purchaser
of the assets belonging to such class, the Trust may, at the Trustees'
option, redeem all outstanding shares of such class at the net asset value
thereof as determined by the Trustees in accordance with the provisions of
applicable law, less such redemption fee or other charge, if any, as may be
fixed by the Trustees. Notwithstanding any other provision of this
Declaration of Trust to the contrary, the redemption price may be paid in
cash or by distribution of the securities or other consideration received
by the Trust for the assets belonging to such class upon such conditions as
the Trustees deem, in their sole discretion, to be appropriate consistent
with applicable law and this Declaration of Trust;
(b) Sell and convert the assets belonging to a class
of Shares into money and, after making provision for the payment of all
obligations, taxes and other liabilities, accrued or contingent, belonging
to such class, the Trust may, at the Trustees' option, (i) redeem all
outstanding shares of such class at the net asset value thereof as
determined by the Trustees in accordance with the provisions of applicable
law, less such redemption fee or other charge, if any, as may be fixed by
the Trustees upon such conditions as the Trustees deem, in their sole
discretion, to be appropriate consistent with applicable law and this
Declaration of Trust; or (ii) combine the assets belonging to such class
following such sale and conversion with the assets belonging to any one or
more other classes of Shares pursuant to and in accordance with subsection
C of this Section 5.9; or
(c) Combine the assets belonging to a class of Shares
with the assets belonging to any one or more other classes of Shares if the
Trustees reasonably determine that such combination will not have a
material adverse effect on the Shareholders of any class participating in
such combination. In connection with any such combination of assets the
Shares of any class then outstanding may, if so determined by the Trustees,
be converted into shares of any other class or classes of Shares with
respect to which conversion is permitted by applicable law, or may be
redeemed, at the option of the Trustees, at the net asset value thereof as
determined by the Trustees in accordance with the provisions of applicable
law, less such redemption fee or other charge, or conversion cost, if any,
as may be fixed by the Trustees upon such conditions as the Trustees deem,
in their sole discretion, to be appropriate consistent with applicable law
and this Declaration of Trust. Notwithstanding any other provision of this
Declaration of Trust to the contrary, any redemption price, or part
thereof, paid pursuant to this subsection may be paid in Shares of any
other existing or future class or classes.
In connection with the termination of a class of Shares and the
winding up of its affairs, all of the powers of the Trustees under this
Declaration of Trust shall continue until the affairs of such class shall
have been wound up, including the power to fulfill or discharge the
contracts of the Trust relating to such class, to collect assets belonging
to such class, to sell, convey, assign, exchange, transfer or otherwise
dispose of all or any part of the remaining assets belonging to such class
to one or more persons at public or private sale for consideration that may
consist in whole or in part of cash, securities or other property of any
kind, to discharge or pay the liabilities belonging to such class, and to
do all other acts appropriate to liquidate the business of such class,
provided that the holders of Shares of any class shall not be entitled in
any liquidation to receive any distribution upon the assets belonging to
any other class.
After the excess of the assets belonging to any class over the
liabilities belonging to such class have been distributed among the
Shareholders of such class in proportions to the numbers of Shares held by
them and recorded on the books of the Trust, the Trustees may authorize the
termination of such class of Shares.
5.2 PURCHASE OF SHARES. The Trustees may accept investments in the
Trust from such persons for such consideration, including cash or property,
and on such other terms as they may from time to time authorize and the
Trustees may in such manner acquire other assets (including the acquisition
of assets subject to, and in connection with, the assumption of
liabilities) and businesses. The Trustees may in their discretion reject
any order for the purchase of Shares.
5.3 NET ASSET VALUE PER SHARE. The net asset value per Share of any
class of Shares shall be computed at such time or times as the Trustees may
specify pursuant to the 1940 Act. Assets shall be valued and net asset
value per Share shall be determined by such person or persons as the
Trustees may appoint under the supervision of the Trustees in such manner
as the Trustees may determine not inconsistent with the 1940 Act.
5.4 OWNERSHIP OF SHARES. The ownership of Shares shall be recorded
on the record books of the Trust. The Trustees may make such rules and
regulations as they consider appropriate for the issuance of Share
certificates, the transfer of Shares and similar matters. Certificates
certifying the ownership of Shares may be issued as the Trustees may
determine from time to time, PROVIDED that the Trustees shall have the
power to call outstanding Share certificates and to replace them with book
entries. The record books of the Trust shall be conclusive as to the
identity of holders of Shares and as to the number of Shares held by each
Shareholder.
VI.
THE TRUSTEES
6.1 MANAGEMENT OF THE TRUST. The affairs of the Trust shall be
managed by the Trustees and they shall have all powers necessary or
desirable to carry out such responsibility, including without limitation
the appointment of and delegation of responsibility to such officers,
employees, agents, and contractors as they may select.
6.2 NUMBER AND TERM OF OFFICE. The number of Trustees shall be
determined from time to time by the Trustees themselves, but shall not be
less than three nor more than ten. Subject to the provisions of this
section relating to resignation or removal, the Trustees shall have the
power to set and alter the terms of office of the Trustees, and they may at
any time lengthen or shorten their own terms or make their terms of
unlimited duration, PROVIDED that the term of office of any incumbent
Trustee shall continue until terminated as provided in Section 6.5 hereof,
or, if not so terminated until the election of such Trustee's successor in
office has become effective in accordance with this section. A Trustee
shall qualify by accepting in writing his/her election or appointment and
agreeing to be bound by the provisions of this Declaration of Trust.
Except as otherwise provided herein in the case of vacancies, Trustees
(other than the Initial Trustees provided in Section 6.3 hereof) shall be
elected by the Shareholders at such time or times as the Trustees shall
determine that such election is required under Section 16(a) of the 1940
Act or is otherwise advisable. Notwithstanding the foregoing, (a) any
Trustee may resign as a Trustee by written instrument signed by him/her and
delivered to the other Trustees at the principal business office of the
Trust (without need for prior or subsequent accounting), which shall take
effect upon such delivery or upon such later date as is specified therein;
(b) any Trustee may be removed at any time with or without cause by written
instrument, signed by at least two-thirds of the number of Trustees prior
to such removal, specifying the date when such removal shall become
effective; (c) any Trustee may be removed at any time with or without cause
by the action of at least two-thirds of the outstanding Shares of the
Trust; (d) any Trustee who has become incapacitated by illness or injury
may be retired by written instrument signed by a majority of the other
Trustees; and (e) the term of a Trustee shall terminate at his/her death,
resignation, removal or adjudicated incompetency.
6.3 INITIAL TRUSTEEs. The initial Trustees shall be Robert J. Craugh,
Robert N. Coe, and Donald C. Greenhouse, who, by their execution hereof,
have agreed to be bound by the provisions of this Declaration of Trust.
6.4 QUORUM. At all meetings of the Trustees, a majority of the
Trustees shall constitute a quorum for the transaction of business and the
action of a majority of the Trustees present at any meeting at which a
quorum is present shall be the action of the Trustees unless the
concurrence of a greater proportion is required for such action by law, the
Bylaws or this Declaration of Trust. If a quorum shall not be present at
any meeting of Trustees, the Trustees present thereat may by a majority
vote adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present. Meetings may
be held by means of a conference telephone circuit or similar
communications equipment by means of which all persons participating may
hear each other. The Trustees may also act without a meeting, unless
provided otherwise in this Declaration of Trust or required by law, by
written consents of a majority of the Trustees. As used herein, a
"majority of the Trustees" shall mean a majority of the Trustees in office
at the time in question or if there shall be only one Trustee then in
office, then such term shall mean such Trustee.
The Trustees may appoint committees of Trustees and delegate powers to
them as provided in the Bylaws. Any committee of the Trustees, including
an executive committee, if any, may act with or without a meeting. A
quorum for all meetings of any such committee shall be a majority of the
members thereof. Unless provided otherwise in this Declaration of Trust,
any action of any such committee may be taken at a meeting by vote of a
majority of the members present (a quorum being present) or without a
meeting by unanimous written consent of the members.
6.5 VACANCIES. In case a vacancy shall exist by reason of an
increase in number, or for any other reason, the remaining Trustees may
fill such vacancy by appointing such other person as they in their
discretion shall select. An appointment of a Trustee may be made in
anticipation of a vacancy to occur at a later date by reason of retirement
or resignation of a Trustee or an increase in the number of Trustees;
provided, that such appointment will not become effective prior to such
retirement or resignation or such increase in the number of Trustees.
Whenever a vacancy in number of Trustees shall occur, until such vacancy is
filled as provided in this section, the Trustees in office, regardless of
their number, shall have all the powers granted to the Trustees and shall
discharge all the duties imposed on the Trustees by the Declaration of
Trust. A written instrument certifying the existence of such vacancy
signed by a majority of the Trustees shall be conclusive evidence of the
existence of such vacancy. Such appointment shall be evidenced by a
written instrument signed by a majority of the then Trustees but the
appointment shall not take effect until the individual so named shall have
qualified by accepting in writing the appointment and agreeing to be bound
by the terms of this Declaration of Trust. A vacancy may also be filled by
the Shareholders in an election held at an annual or special meeting. As
soon as any Trustee so appointed or elected shall have qualified, the Trust
estate shall vest in the new Trustee or Trustees, together with the
continuing Trustees, without any further act or conveyance.
6.6 EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE. The death,
resignation, removal, or incapacity of the Trustees, or any one of them,
shall not operate to annul the Trust or to revoke any existing agency
created pursuant to the terms of this Declaration of Trust. Upon the
resignation or removal of a Trustee, or his/her otherwise ceasing to be a
Trustee, he/she shall execute and deliver such documents as the remaining
Trustees shall require for the purpose of conveying to the Trust or the
remaining Trustees any Trust property held in the name of the resigning or
removed Trustee. Upon the incapacity or death of any Trustee, his/her
legal representative shall execute and deliver on his/her behalf such
documents as the remaining Trustees shall require as provided in the
preceding sentence. The failure to request or deliver such documents shall
not affect the operation of the provisions of Article IV hereof.
6.7 POWERS. The Trustees in all instances shall act as principals
and are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all acts and to
make and execute any and all contracts and instruments that they may
consider necessary or desirable in connection with the management of the
Trust. The Trustees shall not be bound or limited by present or future
laws or customs in regard to Trust investments, but shall have full
authority and power to make any and all investments which they, in their
uncontrolled discretion, shall deem proper to accomplish the purpose of
this Trust. Without limiting the foregoing, and subject to any applicable
limitation in this Declaration of Trust or the Bylaws, the Trustees shall
have power and authority:
A. To conduct, operate and carry on, either directly or through
one or more wholly-owned subsidiaries, the business of an investment
company or any other lawful business activity which the Trustees, in their
sole and absolute discretion, consider to be (1) incidental to the business
of the Trust or such class of Shares as an investment company, (2)
conducive to or expedient for the benefit or protection of the Trust or the
Shareholders of such class of Shares, or (3) calculated in any other manner
to promote the interests of the Trust or the Shareholders of such class of
Shares.
B. To adopt Bylaws not inconsistent with this Declaration of
Trust providing for the conduct of the affairs of the Trust and to amend
and repeal them to the extent that they do not reserve that right solely to
the Shareholders.
C. To issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in Shares
of the Trust; and to apply to any such repurchase, redemption, retirement,
cancellation or acquisition of Shares, any funds or other assets of the
Trust, whether constituting capital or surplus or otherwise, to the full
extent now or hereafter permitted by applicable law; and to divide or
combine Shares without thereby changing the proportionate beneficial
interest in the Trust.
D. To issue, acquire, hold, resell, convey, write options on,
and otherwise deal in securities, debt instruments and other instruments
and rights of a financial character and to apply to any acquisition of
securities any property of the Trust whether from capital or surplus or
otherwise.
E. To invest and reinvest cash, and to hold cash uninvested.
F. To borrow money, issue guarantees of indebtedness or
contractual obligations of others, to sell, exchange, lend, pledge,
mortgage, hypothecate, write options on and lease any or all of the Trust
Property.
G. To act as a distributor of Shares and as underwriter of, or
broker or dealer in, securities or other property.
H. To vote or give assent, or exercise any rights of ownership,
with respect to stock or other securities or property; and to execute and
deliver proxies or powers of attorney to such Person or Persons as the
Trustees shall deem proper, granting to such Person or Persons such power
and discretion with relation to securities or property as the Trustees
shall deem proper.
I. To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities.
J. To hold any security or property in a form not indicating
any trust, whether in bearer, unregistered or other negotiable form, or in
the name of the Trustees or of the Trust or in the name of a custodian,
sub-custodian or other depositary or a nominee or nominees or otherwise.
K. To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer; any
security of which is or was held in the Trust; and consent to any contract,
lease, mortgage, purchase or sale of property by such corporation or
issuer; and to pay calls or subscriptions with respect to any security held
in the Trust.
L. To join with other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in that connection
to deposit any security with, or transfer any security to, any such
committee, depositary or trustee, and to delegate to them such power and
authority with relation to any security (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to pay, and to
pay, such portion of the expenses and compensation of such committee,
depositary or trustee as the Trustees shall deem proper.
M. To enter into joint ventures, general or limited
partnerships and any other combinations or associations.
N. To enter into contracts of any kind and description.
O. To collect all property due to the Trust, to pay all claims,
including taxes, against the assets belonging to the Trust, to prosecute,
defend, compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited
to, claims for taxes, to foreclose any security interest securing any
obligations by virtue of which any property is owed to the Trust, and to
enter into releases, agreements and other instruments.
P. To retain and employ any Person or Persons to serve on
behalf of the Trust as investment adviser, administrator, transfer agent,
custodian, underwriter, distributor or in such other capacities as they
consider desirable and to delegate such power and authority as they
consider desirable to any such Person or Persons.
Q. To indemnify any person with whom the Trust has dealings.
R. To purchase and pay for entirely out of Trust Property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including without limitation, insurance policies insuring the
Trust Property and payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers or managers, principal
underwriters, or independent contractors of the Trust individually against
all claims and liabilities of every nature arising by reason of holding,
being or having held any such office or position, or by reason of any
action alleged to have been taken or omitted by any such person as
Shareholder, Trustee, officer, employee, agent, investment adviser or
manager, principal underwriter, or independent contractor, including any
action taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such Person
against such liability.
S. To engage in and to prosecute, defend, compromise, abandon,
or adjust, by arbitration or otherwise, any actions, suits, proceedings,
disputes, claims, and demands relating to the Trust or the Trust Property,
and, out of the Trust Property, to pay or to satisfy any debts, claims or
expenses incurred in connection therewith, including those of litigation,
and such power shall include without limitation the power of the Trustees
or any appropriate committee thereof, in the exercise of their or its good
faith business judgment, consenting to dismiss any action, suit,
proceeding, dispute, claims, or demand, derivative or otherwise, brought by
any person, including a Shareholder in such Shareholder's own name or in
the name of the Trust, whether or not the Trust or any of the Trustees may
be named individually therein or the subject matter arises by reason of
business for or on behalf of the Trust.
T. To establish pension, profit sharing, Share purchase, and
other retirement, incentive and benefit plans for any Trustees, officers,
employees and agents of the Trust.
U. To determine and change the fiscal year of the Trust and the
method by which its accounts shall be kept.
V. To establish in their absolute discretion in accordance with
the provisions of applicable law the basis or method for determining the
value of the assets belonging to any class of Shares, the value of the
liabilities belonging to any class of Shares, the allocation of any assets
or liabilities to any class of Shares, the net asset value of any class of
Shares, the times at which Shares of any class shall be deemed to be
outstanding or no longer outstanding and the net asset value of each Share
of any class for purposes of sales, redemptions, repurchases of Shares or
otherwise.
W. To determine in accordance with generally accepted
accounting principles and practices what constitutes net profits or net
earnings, and to determine what accounting periods shall be used by the
Trust for any purpose, whether annual or any other period, including daily;
to set apart out of the assets belonging to any class of Shares such
reserves of funds for such purposes as it shall determine and to abolish
the same; to declare and pay any dividends and distributions to any class
of Shares in cash, securities or other property from any assets legally
available therefor, at such intervals (which may be as frequently as daily)
or on such other periodic basis, as it shall determine; to declare such
dividends or distributions by means of a formula or other method of
determination, at meetings held less frequently than the frequency of the
effectiveness of such declaration; to establish payment dates for dividends
or any other distributions on any basis, including dates occurring less
frequently than the effectiveness of declarations thereof; and to provide
for the payment of declared dividends on a date earlier or later than the
specified payment date in the case of Shareholders redeeming their entire
ownership of Shares of any class.
X. To engage in any other lawful act or activity in which a
Delaware business trust or a corporation organized under the Delaware
General Corporation Law may engage.
No one dealing with the Trustees shall be under any obligation to
make any inquiry concerning the authority of the Trustees, or to see to the
application of any payments made or property transferred to the Trustees or
upon their order.
6.8 TRUSTEES AND REPRESENTATIVES AS SHAREHOLDERS. Any Trustee,
representative or other agent of the Trust may acquire, own and dispose of
Shares of the Trust to the same extent as if he/she were not a Trustee,
representative or agent; and the Trust may issue and sell or cause to be
issued and sold Shares of the Trust to, and may buy such Shares from, any
person with which such Trustee, representative or agent is affiliated
subject only to the general limitations herein contained as to the sale and
purchase of such Shares; all subject to any restrictions which may be
contained in the Bylaws.
6.9 EXPENSES; TRUSTEE REIMBURSEMENT. The Trustees shall have the
power to incur and to pay (or shall be reimbursed) from the Trust Property
all expenses and disbursements of the Trust, including, without limitation,
interest expense, compensation payable to Trustees and representatives of
the Trust, taxes, fees and commissions of every kind incurred in connection
with the affairs of the Trust, expenses of issue, repurchase and redemption
of Shares, expenses of registering and qualifying the Trust and its Shares
under Federal and State securities laws and regulations, charges of
custodians, transfer agents, investment advisers, administrators and
registrars, expenses of preparing and printing and distributing
prospectuses, auditing and legal expenses, expenses of reports to
Shareholders, expenses of meetings of Shareholders and proxy solicitations
therefor, insurance expense, association membership dues and such non-
recurring items as may arise, including costs and expenses of litigation to
which the Trust is a party, and for all losses and liabilities by them
incurred in administering the Trust, PROVIDED that expenses, disbursements,
losses and liabilities incurred in connection with a class of Shares or in
connection with the management of the assets belonging to such class shall
be payable solely out of the assets belonging to such class, and PROVIDED
FURTHER that the Trustees shall have a lien on the Trust Property prior to
any rights or interests of the Shareholders thereto for the payment of any
expenses, disbursements, losses and liabilities of the Trust.
6.10 POWER TO CARRY OUT TRUST'S PURPOSES; PRESUMPTIONS. The Trustees
shall have power to carry out any and all acts consistent with the Trust's
purposes through branches and offices both within and without the State of
New York, in any and all states of the United States of America, in the
District of Columbia, and in any and all commonwealths, territories,
dependencies, possessions, agencies or instrumentalities of the United
States of America and of foreign governments, and to do all such other
things and execute all such instruments as they deem necessary, proper or
desirable in order to promote the interests of the Trust although such
things are not herein specifically mentioned. Any determination as to what
is in the interests of the Trust made by the Trustees in good faith shall
be conclusive. In construing the provisions of this Declaration, the
presumption shall be in favor of a grant of power to the Trustees. The
enumeration of any specific power herein shall not be construed as limiting
the aforesaid power. The Trustees shall not be required to obtain any court
order to deal with the Trust Property.
6.11 DETERMINATIONS BY TRUSTEES. Any determination made in good faith
and, so far as accounting matters are involved in accordance with generally
accepted accounting principles, by or pursuant to the direction of the
Trustees as to the amount and value of assets, obligations or liabilities
of the Trust or any class of Shares, as to the amount of net income of the
Trust or any class of Shares from dividends and interest for any period or
amounts at any time legally available for the payment of dividends, as to
the amount of any reserves or charges set up and the propriety thereof, as
to the time of or purpose for creating reserves or as to the use,
alteration or cancellation of any reserves or charges (whether or not any
obligation or liability for which such reserves or charges shall have been
created shall have been paid or discharged or shall be then or thereafter
required to, be paid or discharged), as to the value of any security owned
by the Trust or any class of Shares, as to the allocation of any assets or
liabilities to a class or classes of Shares, as to the times at which
Shares of any class shall be deemed to be outstanding or no longer
outstanding, or as to any other matters relating to the issuance, sale,
redemption or other acquisition or disposition of securities or Shares, and
any reasonable determination made in good faith by the Trustees as to
whether any transaction constitutes a purchase of securities on "margin," a
sale of securities "short," or any underwriting of the sale of, or a
participation in any underwriting or selling group in connection with the
public distribution of, any securities, shall be final and conclusive, and
shall be binding upon the Trust and all Shareholders, past, present and
future, and Shares are issued and sold on the condition and understanding,
evidenced by the purchase of Shares or acceptance of Share certificates,
that any and all such determinations shall be binding as aforesaid.
6.12 SERVICE IN OTHER CAPACITIES. Any Trustee, representative,
employee or agent of the Trust, including any investment adviser, transfer
agent, administrator, distributor, custodian or underwriter for the Trust,
may serve in any other capacity on his/her or its own behalf or on behalf
of others, and may engage in other business activities in addition to
his/her or its services on behalf of the Trust, PROVIDED that such other
activities do not materially interfere with the performance of his/her or
its duties for or on behalf of the Trust.
VII.
AGREEMENTS WITH INVESTMENT ADVISER, DISTRIBUTOR, ADMINISTRATOR, TRANSFER
AGENT, CUSTODIAN AND OTHERS
7.1 INVESTMENT ADVISER. The Trustees may, on such terms and
conditions as they may in their discretion determine, enter into a written
investment advisory agreement or agreements with any Person or Persons
providing for portfolio management, investment advisory, statistical and
research facilities and other services pertaining to the assets belonging
to one or more classes of Shares. Notwithstanding any other provision
hereof, the Trustees may authorize such an investment adviser (subject to
such general or specific instructions as the Trustees may adopt) to effect
purchases, sales or exchanges of portfolio securities of such class(es) on
behalf of the Trustees and to determine the net asset value and net income
of such class(es) or may authorize any representative or Trustee to effect
such purchases, sales or exchanges pursuant to the recommendations of such
investment adviser (all without further action by the Trustees). Any such
purchases, sales and exchanges so effected shall be deemed to have been
authorized by all of the Trustees.
7.2 ADMINISTRATOR. The Trustees may, on such terms and conditions as
they may in their-discretion determine, enter into one or more agreements
with any Person or Persons providing for administrative services to one or
more classes of Shares, including assistance in supervising the affairs of
such class(es) and performance of administrative, clerical and other
services considered desirable by the Trustees.
7.3 DISTRIBUTOR. The Trustees may, on such terms and conditions as
they may in their discretion determine, enter into one or more distribution
agreements with any Person or Persons providing for the sale of Shares of
one or more classes at a price at least equal to the net asset value per
Share of such class(es) and providing for sale of the Shares of such
class(es) pursuant to arrangements by which the Trust may either agree to
sell the Shares of such class(es) to the other party to the agreement or
appoint such other party its sales agent for such Shares. Such agreements
may also provide for the repurchase of Shares of such class(es) by such
other party as principal or as agent of the Trust, and may authorize the
other party to enter into agreements with others for the purpose of the
distribution or repurchase of Shares of such class(es).
7.4 TRANSFER AGENT. The Trustees may, on such terms and conditions
as they may in their discretion determine, enter into one or more
agreements with any Person or Persons providing for transfer agency and
other services to Shareholders of any class.
7.5 CUSTODIAN. The Trustees may, on such terms and conditions as
they may in their discretion determine, enter into one or more agreements
with any Person or Persons providing for the custody and safekeeping of the
property of the Trust or any class of Shares.
7.6 SERVICE AND DISTRIBUTION PLANS. The Trustees may, on such terms
and conditions as they may in their discretion determine, adopt one or more
plans pursuant to which Persons may be compensated directly or indirectly
by the Trust for Shareholder servicing, administration or distribution with
respect to one or more classes of Shares, including without limitation
plans subject to Rule 12b-1 under the 1940 Act, and the Trustees may enter
into agreements pursuant to such Plans.
7.7 PARTIES TO AGREEMENTS. The same Person may be employed in
multiple capacities under Sections 7.1 through 7.6 of this Article VII and
may receive compensation from the assets belonging to a particular class in
as many capacities in which such persons shall serve such class. The
Trustees may enter into any agreement of the character described in this
Article VII with any Person, including any Person in which any Trustee,
representative, employee or Shareholder of the Trust may be interested, and
no such agreement shall be invalidated or rendered voidable by reason of
the existence of any such relationship, nor shall any Person holding such
relationship be liable by reason of such relationship for any loss or
expense to the Trust under or by reason of said agreement or accountable
for any profit realized directly or indirectly therefrom.
VIII.
SHAREHOLDERS' VOTING POWERS AND MEETINGS
8.1 VOTING POWERS. The Shareholders shall have power to vote (a) for
the election of Trustees as provided in Section 6.2 hereof, (b) to the same
extent as the shareholders of a Delaware business corporation when
considering whether a court action, proceeding or claim should or should
not be brought or maintained derivatively or as a class action on behalf of
the Trust or the Shareholders, (c) with respect to any of the matters and
to the extent provided in Article X hereof, (d) with respect to such
additional matters relating to the Trust as may be required by law, by this
Declaration of Trust, the Bylaws of the Trust, by any requirement
applicable to or agreement of the Trust, and as the Trustees may consider
desirable. Every Shareholder of record shall have the right to one vote
for every whole Share (other than Shares held in the treasury of the Trust)
standing in his/her or its name on the books of the Trust, and to have a
proportional fractional vote for any fractional Share, as to any matter on
which the Shareholder is entitled to vote. There shall be no cumulative
voting. Shares may be voted in person or by proxy. Until Shares are
issued, the Trustees may exercise all rights of Shareholders and may take
any action required or permitted to be taken by Shareholders by law, this
Declaration of Trust or the Bylaws.
8.2 MEETINGS. No annual or regular meetings of Shareholders are
required. Special meetings of Shareholders may be called by the Trustees
as provided in the Bylaws and shall be called by the Trustees upon the
written request of Shareholders owning at least ten percent of the
outstanding Shares entitled to vote.
8.3 QUORUM AND REQUIRED VOTE. At any meeting of Shareholders a
quorum for the transaction of business shall consist of a majority of the
Shares of each class outstanding and entitled to vote appearing in person
or by proxy, PROVIDED that at any meeting at which the only actions to be
taken are actions required by the 1940 Act to be taken by vote of all
outstanding Shares of all classes entitled to vote thereon, irrespective of
class, a quorum shall consist of a majority of the Shares (without regard
to class) entitled to vote thereon, and that at any meeting at which the
only actions to be taken shall have been determined by the Board of
Trustees to affect the rights and interests of one or more but not all
classes of outstanding Shares, a quorum shall consist of a majority of the
outstanding Shares of that class or classes so affected, PROVIDED FURTHER
that reasonable adjournments of such meeting until a quorum is obtained may
be made by vote of the Shares present in person or by proxy.
The Trustees shall cause each matter required or permitted to be voted
upon at a meeting or by written consent of Shareholders to be submitted to
a separate vote of each class of outstanding Shares entitled to vote
thereon, PROVIDED that (a) when required by the 1940 Act, actions of
Shareholders shall be taken by vote of all outstanding Shares of all
classes entitled to vote thereon, irrespective of class, with all
outstanding Shares of all classes voting as a single class and (b) when the
Trustees determine that any matter to be submitted to a vote of
Shareholders affects only the rights or interests of one or more but not
all classes of outstanding Shares, only the Shareholders of the class or
classes so affected will be entitled to vote thereon.
A majority of Shares voting of any class of Shares entitled to vote on
any question shall determine such question, subject to any requirements of
the 1940 Act or other applicable law or this Declaration of Trust. In the
election of Trustees, a plurality of Shares voting, irrespective of class,
shall elect a Trustee, to the extent the 1940 Act or other applicable law
requires that voting shall be irrespective of class; otherwise, a plurality
of each class entitled to vote shall elect a Trustee.
8.4 SHAREHOLDER ACTION BY WRITTEN CONSENT. Any action which may be
taken by Shareholders may be taken without a meeting if not less than a
majority of the Shareholders entitled to vote on the matter consent to the
action in writing and the written consents are filed with the records of
the meetings of Shareholders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
8.5 BYLAWS. The Bylaws may include further provisions not
inconsistent with this Declaration of Trust for meetings of Shareholders,
votes, record dates, notices of meetings and related matters.
IX.
LIMITATIONS OF LIABILITY AND INDEMNIFICATION
9.1 LIABILITIES OF A CLASS. Liabilities belonging to any class of
Shares, including, without limitation, expenses, fees, charges, taxes, and
liabilities incurred or arising in connection with a particular class, or
in connection with the management thereof, shall be paid only from the
assets belonging to such class.
9.2 LIMITATION OF TRUSTEE LIABILITY. Every act or thing done or
omitted, and every power exercised or obligation incurred by the Trustees
or any of them in the administration of this Trust or in connection with
any affairs, property or concerns of the Trust, whether ostensibly in their
own names or in their Trust capacity, shall be done, omitted, exercised or
incurred by them as Trustees and not as individuals. Every person
contracting or dealing with the Trustees or having any debt, claim or
judgment against them or any of them shall look only to the funds and
property of the Trust for payment or satisfaction. No Trustee or Trustees
of the Trust shall ever be personally liable for or on account of any
contract, debt, tort, claim, damage, judgment or decree arising out of or
connected with the administration or preservation of the Trust Property or
the conduct of any of the affairs of the Trust. Every note, bond,
contract, order or other undertaking issued by the Trust or the Trustees
relating to the Trust shall include the notice set forth in Section 9.5 of
this Article IX (but the omission thereof shall not be construed as a
waiver of the foregoing provision, and shall not render the Trustees
personally liable).
No Trustee shall be subject to any personal liability whatsoever to
any person for any action or failure to act (including without limitation
the failure to compel in any way any former or acting Trustee to redress
any breach of trust) except that nothing in this Declaration of Trust shall
protect any Trustee from any liability to the Trust or its Shareholders to
which he/she would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of his/her duties, or by
reason of reckless disregard of his/her obligations and duties as Trustee;
and that all persons shall look solely to the Trust Property belonging to a
class of Shares for satisfaction of claims of any nature arising in
connection with the affairs of such class of the Trust.
9.3 INDEMNIFICATION OF TRUSTEES, OFFICERS, REPRESENTATIVES AND
EMPLOYEES.
A. The Trust shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by
reason of the fact that he/she is or was a Trustee, employee or officer of
the Trust or is or was serving at the request of the Trust as a director or
officer of another corporation, or as an official of a partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him/her in connection with such action, suit or
proceeding if he/she acted in good faith and in a manner he/she reasonably
believed to be in, or not opposed to, the best interests of the Trust, and,
with respect to any criminal action or proceeding, had no reasonable cause
to believe his/her conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which
he/she reasonably believed to be in, or not opposed to, the best interests
of the Trust, or, with respect to any criminal action or proceedings, that
he/she had reasonable cause to believe that his/her conduct was unlawful.
B. The Trust shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Trust to procure a judgment in its
favor by reason of the fact that he/she is or was a Trustee, employee or
officer of the Trust or is or was serving at the request of the Trust as a
director or officer of another corporation, or as an official of a
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him/her in
connection with the defense or settlement of such action or suit if he/she
acted in good faith and in a manner he/she reasonably believed to be in, or
not opposed to, the best interests of the Trust, EXCEPT, however, that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable for negligence
or misconduct in the performance of his/her duty to the Trust unless and
only to the extent that an appropriate court shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper.
C. To the extent that a Trustee, employee or officer of the
Trust has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections A or B of this
Section 9.3 in defense of any claim, issue or matter therein, he/she shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him/her in connection therewith.
D. Except as provided in subsection C of this Section 9.3, any
indemnification under subsection A or B of this Section 9.3 (unless ordered
by a court) shall be made by the Trust only as permitted under any
applicable provisions of Title I of the Employee Retirement Income Security
Act of 1974, as amended, and as authorized in the specific case upon a
determination that indemnification of a Trustee, employee or officer is
proper in the circumstances because he/she has met the applicable standard
of conduct set forth in subsection A, B or H of this Section 9.3. Such
determination shall be made (1) by the Trustees by a majority vote of a
quorum consisting of Trustees who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, or, even if such a
quorum is obtainable and such quorum so directs, by independent legal
counsel in a written opinion.
E. Expenses (including attorneys' fees) incurred in defending a
civil or criminal action, suit or proceeding may be paid by the Trust in
advance of the final disposition of such action, suit or proceeding as
authorized by the Trustees upon receipt of an undertaking by or on behalf
of the Trustee, employee or officer to repay such amount unless it shall
ultimately be determined that he/she is entitled to be indemnified by the
Trust as authorized in this Section 9.3; provided that such an undertaking
must be secured by a surety bond or other suitable insurance.
F. The indemnification provided by this Section 9.3 shall not
be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any rule, agreement, vote of the
Shareholders or disinterested Trustees or otherwise, both as to actions in
his/her official capacity and as to actions in any capacity while holding
such office, and shall continue as to a person who has ceased to be a
Trustee, employee or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person.
G. The Trust may purchase and maintain insurance on behalf of
any person who is or was a Trustee, employee or officer of the Trust, or is
or was serving at the request of the Trust as a director or officer of
another corporation, or as an official of a partnership, joint venture,
trust or other enterprise against any liability asserted against him/her
and incurred by him/her in any such capacity, or arising out of his/her
status as such; provided, however, that the Trust shall not purchase or
maintain any such insurance in contravention of any applicable provision of
Title I of the Employee Retirement Income Security Act of 1974, as amended.
H. Anything to the contrary in the foregoing subsections A
through G of this Section 9.3 notwithstanding, no Trustee, employee or
officer of the Trust shall be indemnified against any liability to the
Trust or the Shareholders to which he/she would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his/her office, and no
Trustee, employee or officer of the Trust shall be indemnified in any other
case in which the 1940 Act would restrict or prohibit such indemnification.
9.4 RELIANCE ON EXPERTS, ETC. Each Trustee and representative of the
Trust shall, in the performance of his/her duties, be fully and completely
justified and protected with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other
records of the Trust, upon an opinion of counsel satisfactory to the Trust,
or upon reports made to the Trust by any of its representatives or
employees or by the investment adviser, the principal underwriter, selected
dealers, accountants, appraisers or other experts or consultants selected
with reasonable care by the Trustees or representatives of the Trust,
regardless of whether such counsel or expert may also be a Trustee.
9.5 LIMITATION OF SHAREHOLDER LIABILITY. Shareholders shall not be
subject to any personal liability in connection with the assets of the
Trust for the acts or obligations of the Trust. The Trustees shall have no
power to bind any Shareholder personally or to call upon any Shareholder
for the payment of any sum of money or assessment whatsoever other than
such as the Shareholder may at any time personally agree to pay by way of
subscription to any Shares or otherwise. Every obligation, contract,
instrument, certificate, Share, other security of any class of Shares or
undertaking, and every other act whatsoever executed in connection with the
Trust or any class of Shares shall be conclusively presumed to have been
executed or done by the executors thereof only in their capacities as
Trustees under the Declaration of Trust or in their capacity as officers,
employees or agents of the Trust and not individually. Every note, bond,
contract, order or other undertaking issued by or on behalf of the Trust or
the Trustees relating to the Trust or any class of Shares, and the
stationery used by the Trust, shall include a recitation limiting the
obligation represented thereby to the Trust and its assets (but the
omission of such a recitation shall not operate to bind any Shareholder),
as follows:
"The names 'The Canandaigua Funds' and 'Trustees of The
Canandaigua Funds' refer respectively to the Trust created and the
Trustees, as trustees but not individually or personally, acting
from time to time under a Declaration of Trust dated October
31, 1997 which is hereby referred to and a copy of which is on file
at the office of the Secretary of State of the State of Delaware
and at the principal office of the Trust. The obligations of 'The
Canandaigua Funds' entered into in the name or on behalf thereof by
any of the Trustees, representatives or agents are made not
individually, but in such capacities, and are not binding upon any
of the Trustees, Shareholders or representatives of the Trust
personally, but bind only the Trust property, and all persons
dealing with any class of shares of the Trust must look solely to
the Trust property belonging to such class for the enforcement of
any claims against the Trust."
The rights accruing to a Shareholder under this Section 9.5 shall not
exclude any other right to which such Shareholder may be lawfully entitled,
nor shall anything herein contained restrict the right of the Trust to
indemnify or reimburse a Shareholder in any appropriate situation even
though not specifically provided for herein, PROVIDED that a Shareholder of
any class of Shares shall be indemnified only from assets belonging to such
class.
9.6 INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder or
former Shareholder shall be held to be personally liable solely by reason
of his/her being or having been a Shareholder and not because of his/her
acts or omissions outside such capacity or for some other reason, the
Shareholder or former Shareholder (or his/her heirs, executors,
administrators or other legal representatives or, in the case of a
corporation or other entity, its corporate or other general successor)
shall be entitled out of the assets belonging to the class(es) of Shares
owned by such Shareholder to be held harmless from and indemnified against
all loss and expense arising from such liability. The Trust shall, upon
request, by the Shareholder, assume the defense of any claim made against
any Shareholder for any act or obligations of the Trust and satisfy any
judgment thereon from such assets.
X.
MISCELLANEOUS
10.1 TRUST NOT A PARTNERSHIP. It is hereby expressly declared that a
Delaware business trust and not a partnership, joint venture, corporation,
joint stock company or any form of legal relationship other than a trust is
created hereby. Nothing herein shall be construed to make the
Shareholders, either by themselves or with the Trustees, partners or
members of a joint stock association. No Trustee hereunder shall have any
power to bind personally either a representative of the Trust or any
Shareholder. All persons extending credit to, contracting with or having
any claim against the Trust or the Trustees shall look only to the assets
of the Trust for payment under such credit, contract or claim; and neither
the Shareholders nor the Trustees, whether past, present or future, shall
be personally liable therefor.
10.2 NO BOND OR SURETY. The Trustees shall not be required to give
any bond as such, nor any surety if a bond is required.
10.3 DURATION OF TRUST. This Trust shall continue without limitation
of time, provided that the Trust or any class of Shares may be terminated
at any time in accordance with the provisions of this Declaration of Trust
and applicable law.
10.4 MERGER, CONSOLIDATION AND SALE OF ASSETS. The Trust may merge
into or consolidate with any other corporation, association, trust or other
organization or may sell, lease or exchange all or substantially all of the
Trust Property, including its good will, upon such terms and conditions and
for such consideration when and as authorized by vote or written consent of
the Trustees and approved by the affirmative vote of the holders of not
less than two-thirds of the Shares outstanding and entitled to vote, voting
separately by class except to the extent that the 1940 Act may require
voting without regard to class, or by an instrument or instruments in
writing without a meeting consented to by the holders of not less than two-
thirds of such Shares, voting separately by class except to the extent that
the 1940 Act may require voting without regard to class, and by the vote or
written consent of the holders of two-thirds of the Shares of each class of
Shares, provided that if such merger, consolidation, sale, lease or
exchange is recommended by the Trustees, such may be approved by a vote of
the majority of the outstanding Shares of each class, voting separately by
class.
10.5 INCORPORATION. With the approval of the holders of a majority of
the outstanding Shares, voting separately by class except to the extent
that the 1940 Act may require voting without regard to class, the Trustees
may cause to be organized, or assist in organizing, a corporation or
corporations under the laws of any jurisdiction, to carry on any affairs in
which the Trust shall directly or indirectly have any interest, and to
transfer the Trust Property to any such Person in exchange for any Shares
or securities thereof or otherwise, and to lend money to, subscribe for the
Shares or securities of, and enter into any contracts with any such Person
in which the Trust holds or is about to acquire securities or any other
interest. The Trustees may also cause a merger or consolidation between
the Trust or any successor thereto and any such Person if and to the extent
permitted by law. Nothing contained herein shall be construed as requiring
approval of Shareholders for the Trustees to organize or assist in
organizing one or more corporations, trusts, partnerships, associations or
other organizations and selling, conveying or transferring a portion of the
Trust Property to such Person(s).
10.6 FILING OF COPIES, REFERENCES, HEADINGS. The original instrument
of this Declaration of Trust and of each amendment hereto shall be filed
with the Secretary of State of the State of Delaware and copies thereof
shall be kept at the office of the Trust where they may be inspected by any
Shareholder. Each amendment so filed shall be accompanied by a certificate
signed and acknowledged by a Trustee or by the Secretary or any Assistant
Secretary of the Trust stating that such action was duly taken in the
manner provided herein, and unless such amendment or such certificate sets
forth some later time for the effectiveness of such amendment, such
amendment shall be effective upon its filing. A restated Declaration of
Trust, integrating into a single instrument all of the provisions of the
Declaration of Trust that are then in effect and operative, may be executed
from time to time by a majority of the Trustees and shall, upon filing with
the Secretary of State of the State of Delaware, be conclusive evidence of
all amendments contained therein and may thereafter be referred to in lieu
of the initial Declaration of Trust and the various amendments thereto.
Anyone dealing with the Trust may rely on a certificate by a representative
of the Trust as to whether or not any such amendment hereto may have been
made and as to any matters in connection with the Trust hereunder, with the
same effect as if it were the original, and may rely on a copy certified by
a representative of the Trust to be a copy of this instrument or of any
amendment thereto. Headings are placed herein for convenience of reference
only and in the case of any conflict, the text of this instrument, rather
than the headings, shall control. This instrument may be executed in any
number of counterparts each of which shall be deemed an original. All
signatures to this instrument need not appear on the same page.
10.7 APPLICABLE LAW. The Trust set forth in this instrument is to be
governed by and construed and administered according to the laws of the
State of Delaware.
10.8 PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.
A. No provision of this Declaration of Trust shall be effective
to:
(1) Require a waiver of compliance with any provision of
the 1933 Act, as amended, or the 1940 Act, as amended, or of any valid
rule, regulation or order of the Securities and Exchange Commission
thereunder; or
(2) Protect or purport to protect any Trustee or officer of
the Trust against any liability to the Trust or its Shareholders to which
he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his/her office.
B. The provisions of this Declaration of Trust are severable,
and if the Trustees shall determine with the advice of counsel that any of
such provisions is in conflict with the 1940 Act, the regulated investment
company provisions of the Internal Revenue Code, Chapter 38 of Title 12 of
the Delaware Code Annotated or with any other applicable law or regulation,
then in such event the conflicting provision shall be deemed never to have
constituted a part of this Declaration of Trust, PROVIDED that such
determination shall not affect any of the remaining provisions of this
Declaration of Trust or render invalid or improper any action taken or
omitted prior to such determination.
C. If any provision of this Declaration of Trust shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction
and shall not in any manner affect such provision in any other jurisdiction
or any other provision of this Declaration of Trust in any jurisdiction.
10.9 AMENDMENT OF DECLARATION OF TRUST.
A. This Declaration of Trust may be amended upon a resolution
to that effect being adopted by the Trustees and approved by the
affirmative vote of the holders of not less than a majority of the
outstanding Shares, voting separately by class except to the extent that
the 1940 Act may require voting without regard to class.
B. Notwithstanding any other provision hereof, until such time
as a Registration Statement under the 1933 Act, as amended, covering the
first public offering of securities of the Trust shall have become
effective, this Declaration of Trust may be terminated or amended in any
respect by the affirmative vote of a majority of the Trustees.
C. The Trustees may amend this Declaration of Trust without a
vote of Shareholders to change the name of the Trust or to cure any error
or ambiguity or if they deem it necessary to conform this Declaration of
Trust to the requirements of applicable state or federal laws or
regulations, including without limitation the requirements of the regulated
investment company provisions of the Internal Revenue Code, but the
Trustees shall not be liable for failing so to do.
D. Notwithstanding any other provision hereof, this Declaration
of Trust may not be amended in any manner whatsoever that would impair the
exemption from personal liability of the Trustees and Shareholders of the
Trust or that would permit an assessment upon any Shareholder.
IN WITNESS WHEREOF, the undersigned have executed this Declaration of
Trust as Trustees and not individually, as of October 31, 1997.
/s/ Robert J. Craugh
Robert J. Craugh, Trustee
/s/ Robert N. Coe
Robert N. Coe, Trustee
/s/ Donald C. Greenhouse
Donald C. Greenhouse, Trustee
/s/ Steven H. Swartout
Steven H. Swartout, Trustee
C:\TPY\CNB\PEA6X1
<PAGE>
STATE OF NEW YORK)
COUNTY OF ONTARIO) SS.:
On the 31st day of October, 1997, before me personally came Robert J.
Craugh, to me known and known to me to be the individual described in, and
who executed the foregoing document, and he duly acknowledged to me that he
executed the same.
/s/ Thomas P. Young
Notary Public
STATE OF NEW YORK)
COUNTY OF ONTARIO) SS.:
On the 31st day of October, 1997, before me personally came Robert N.
Coe, to me known and known to me to be the individual described in, and who
executed the foregoing document, and he duly acknowledged to me that he
executed the same.
/s/ Thomas P. Young
Notary Public
STATE OF NEW YORK)
COUNTY OF ONTARIO) SS.:
On the 31st day of October, 1997, before me personally came Donald C.
Greenhouse, to me known and known to me to be the individual described in,
and who executed the foregoing document, and he duly acknowledged to me
that he executed the same.
/s/ Thomas P. Young
Notary Public
STATE OF NEW YORK)
COUNTY OF ONTARIO) SS.:
On the 31st day of October, 1997, before me personally came Steven H.
Swartout, to me known and known to me to be the individual described in,
and who executed the foregoing document, and he duly acknowledged to me
that he executed the same.
/s/ Thomas P. Young
Notary Public
C:\TPY\CNB\PEA6X1
BYLAWS
of
THE CANANDAIGUA FUNDS
ARTICLE I
TRUSTEES
1.1 NUMBER AND TERM OF OFFICE. The number of Trustees shall be such
number, not less than three nor more than ten, as may be fixed from time to
time by the Trustee(s). Each Trustee shall hold office until the next
meeting of the Shareholders following his/her election or appointment as a
Trustee at which trustees are elected and until his/her successor shall
have been elected and qualified.
1.2 PLACE OF MEETING; TELEPHONE MEETING. Meetings of the Trustees,
regular or special, shall be held at the principal office of the Trust or
at such other place as the Trustees may from time to time determine. The
Trustees or any committee thereof may participate in a meeting of the
Trustees or of such committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
conference may hear each other at the same time and participation by such
means shall constitute presence in person at the meeting.
1.3 REGULAR MEETINGS. Regular meetings of the Trustees may be held
without notice at such time and at the principal office of the Trust or at
such other place as the Trustees may from time to time determine.
1.4 SPECIAL MEETINGS. Special meetings of the Trustees may be called
by the Chairman or the President on one day's notice to each Trustee;
special meetings of the Trustees shall be called by the Chairman or the
President or the Secretary in like manner and on like notice on the written
request of three Trustees.
1.5 COMMITTEES. The Trustees may by resolution passed by a majority
of the Trustees appoint from among its members an executive committee and
other committees composed of three or more Trustees, and may delegate to
such committees, in the intervals between meetings of the Trustees, any or
all of the powers of the Trustees in the management of the business and
affairs of the Trust, except the power to issue Shares in the Trust or to
recommend to Shareholders any action requiring Shareholders' approval.
1.6 CHAIRMAN OF THE BOARD. The Trustees may at any time appoint one
of their number as Chairman of the Board, who shall serve at the pleasure
of the Trustees and shall perform and execute such duties as the Trustees
may from time to time provide but who shall not by reason of performing or
executing these duties be deemed an officer or employee of the Trust.
1.7 COMPENSATION. Any Trustee, whether or not a salaried officer,
employee, or agent of the Trust, may be compensated for his/her services as
a Trustee or as a member of a committee, or as Chairman of the Trustees or
Chairman of a committee, by fixed periodic payments or by fees for
attendance at meetings or by both, and in addition may be reimbursed for
transportation and other expenses, a in such manner and amounts as the
Trustees may from time to time determine.
1.8 ADVISORY TRUSTEES. The Trustees may from time to time appoint
Advisory Trustees. Advisory Trustees shall be selected based upon their
expertise in investment matters to advise the Trustees with respect to
investment policies of the Trust and related matters. Advisory Trustees
shall be invited to attend all meetings of the Trustees, but shall have no
voting or other power with respect to any Trust matters and shall serve
without remuneration. Advisory Trustees shall hold such office for one-year
terms, subject to removal by the Trustees at any time without cause.
Advisory Trustees shall not be eligible to serve as officers or employees
of the Trust.
ARTICLE II
SHAREHOLDERS
2.1 MEETINGS. Meetings of the Shareholders of the Trust may be
called by the Trustees and shall be called by the Trustees whenever
required by law or upon the written request of the holders of at least ten
percent of the outstanding Shares entitled to vote.
2.2 NOTICE. Written notice, stating the place, day and hour of each
meeting of the Shareholders and the general nature of the business to be
transacted shall be given by, or at the direction of, the person calling
the meeting to each Shareholder of record entitled to vote at the meeting
at least ten days, but not more than sixty days, prior to the date set for
the meeting, unless in a particular case a longer period of notice is
required by law.
2.3 SHAREHOLDERS' LIST. The officer or agent having charge of the
transfer books for Shares of the Trust shall make, at least five days
before each meeting of the Shareholders, a complete list of the
Shareholders entitled to vote at the meeting, arranged in alphabetical
order with the address of and the number of Shares held by each such
Shareholder. The list shall be kept on file at the office of the Trust and
shall be subject to inspection by any Shareholders at any time during usual
business hours and shall also be produced and kept open at the time and
place of each meeting of Shareholders and shall be subject to the
inspection of any Shareholder during each meeting of Shareholders.
2.4 RECORD DATE. The Trustees may fix a time (during which they may
close the Share transfer books of the Trust) not more than sixty days prior
to the date of any meeting of the Shareholders, or the date fixed for the
payment of any dividend, or the date of the allotment of rights or the date
when any change or conversion or exchange of Shares shall go into effect,
as a record date for the determination of the Shareholders entitled to
notice of, or to vote at, any such meeting, or entitled to receive payment
of any such dividend, or to receive any such allotment of rights, or to
exercise such rights, as the case may be. In such case, only such
Shareholders as shall be Shareholders of record at the close of business on
the date so fixed shall be entitled to notice of, or to vote at, such
meeting or to receive payment of such dividend, or to receive such
allotment of rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any Shares on the books of the Trust after
any record date fixed as aforesaid.
ARTICLE III
NOTICES
3.1 FORM. Notices to the Trustees may be given in person or by
telephone, fax, telegram or in writing delivered personally or mailed to
the Trustees at their addresses appearing on the books of the Trust.
Notices to the Shareholders shall be in writing and delivered personally or
mailed to the Shareholders at their addresses appearing on the books of the
Trust. Oral or telephonic notice shall be deemed to be given when given
directly to the person required to be notified. Written notice by fax
shall be deemed given when successfully transmitted to a Trustee's fax
number appearing on the Trust's records, written notice by telegram shall
be deemed given when deposited with a telegraph office for transmission,
and written notice by mail shall be deemed given on the third day following
deposit in the United States mail, postage prepaid. Notice to the Trustees
need not state the purpose of any regular or special meeting of the
Trustees or committee.
3.2 WAIVER. Whenever any notice of the time, place or purpose of any
meeting of the Shareholders, the Trustees or a committee is required to be
given under the provisions of Delaware law or under the provisions of the
Declaration of Trust or these Bylaws, a waiver thereof in writing, signed
by the person or persons entitled to such notice and filed with the records
of the meeting, whether before or after the holding thereof, or actual
attendance at the meeting of the Shareholders in person or by proxy, or at
the meeting of the Trustees or the committee in person, shall be deemed
equivalent to the giving of such notice to such persons.
ARTICLE IV
OFFICERS
4.1 NUMBER. The officers of the Trust shall be chosen by the
Trustees and shall include a President, who shall be a Trustee, a Secretary
and a Treasurer. The Board of Trustees may from time to time elect or
appoint one or more Vice Presidents, Assistant Secretaries and Assistant
Treasurers.
4.2 OTHER OFFICERS. The Trustees from time to time may appoint such
other officers and agents as they shall deem advisable, who shall hold
their offices for such terms and shall exercise such powers and perform
such duties as the Trustees may from time to time prescribe. The Trustees
may delegate to one or more officers or agents the power to appoint any
such subordinate officers or agents and to prescribe the respective rights,
terms of office, authorities and duties.
4.3 ELECTION AND TENURE. The officers of the Trust shall be chosen
by the Trustees. Two or more offices may be held by the same person but no
officer shall execute, acknowledge or verify any instrument in more than
one capacity if such instrument is required by law, the Declaration of
Trust or these Bylaws to be executed, acknowledged or verified by two or
more officers. Any officer or agent may be removed by the Trustees. An
officer of the Trust may resign by filing a written resignation with the
President or with the Trustees or with the Secretary. Any vacancy
occurring in any office of the Trust by death, resignation, removal or
otherwise may be filled by the Trustees.
4.4 COMPENSATION. The salaries or other compensation of all officers
and agents of the Trust shall be fixed by the Trustees, except that the
Trustees may delegate to any committee the power to fix the salary or other
compensation of any officer of the Trust.
4.5 PRESIDENT. The President shall be the chief executive officer of
the Trust; he/she shall preside at all meetings of the Trustees and of the
Shareholders unless a Chairman has been designated; he/she shall be, EX
OFFICIO, a member of all standing committees; and he/she shall see that all
orders and resolutions of the Trustees are carried into effect. He/she, or
such person as he/she may designate, shall sign, execute and acknowledge,
in the name of the Trust, all deeds, mortgages, bonds, contracts and other
instruments authorized by the Trustees, except in the case where the
signing and execution thereof shall be delegated by the Trustees to some
other officer or agent of the Trust. The President shall also be the chief
administrative officer of the Trust and shall perform such other duties and
shall have such other powers as the Trustees may from time to time
prescribe.
4.6 VICE PRESIDENTS. The Vice Presidents, in the order of their
seniority, shall, in the absence or disability of the President, perform
the duties and exercise the powers of the President, and shall perform such
other duties as the Trustees may from time to time prescribe.
4.7 SECRETARY. The Secretary shall attend all meetings of the
Trustees and of the Shareholders and shall record all the proceedings
thereof and shall perform like duties for any committee when required.
He/she shall give, or cause to be given, notice of meetings of the Trustees
and of the Shareholders, and shall perform such other duties as may be
prescribed by the Trustees or the President, under whose supervision he/she
shall be. He/she shall keep in safe custody the seal of the Trust and,
when authorized by the Trustees, affix and attest tie same to any
instrument requiring it, provided that, in lieu of affixing the seal of the
Trust to any document, it shall be sufficient to meet the requirements of
any law, rule or regulation relating to a seal to affix the word "(SEAL)"
adjacent to the signature of the authorized officer of the Trust. The
Trustees may give general authority to any other officer to affix the seal
of the Trust and to attest the affixing by his/her signature.
4.8 ASSISTANT SECRETARIES. The Assistant Secretaries, in order of
their seniority, shall, in the absence or disability of the Secretary,
perform the duties and exercise the powers of the Secretary and shall
perform such other duties as the Trustees may from time to time prescribe.
4.9 TREASURER. The Treasurer shall be the chief financial officer of
the Trust. He/she shall be responsible for the maintenance of its
accounting records and shall render to the Trustees when the Trustees so
require an account of all the Trust's financial transactions and a report
of the financial condition of the Trust.
4.10 ASSISTANT TREASURERS. The Assistant Treasurers, in the order of
their seniority, shall, in the absence or disability of the Treasurer,
perform the duties and exercise the powers of the Treasurer and shall
perform such other duties as the Trustees may from time to time prescribe.
ARTICLE V
INVESTMENT RESTRICTIONS
The Trustees may from time to time adopt such restrictions upon the
investment of the assets of the Trust, or amendments thereto, as they may
consider necessary or desirable, PROVIDED that any such restriction or
amendment shall be approved by a majority of the outstanding Shares of the
Trust entitled to vote thereon if required by the Investment Company Act of
1940, as amended.
ARTICLE VI
GENERAL PROVISIONS
6.1 INSPECTION OF BOOKS. The Trustees may from time to time
determine whether and to what extent, and at what time and places, and
under what conditions and regulations the accounts and books of the Trust
or any of them shall be open to the inspections of the Shareholders; and no
Shareholder shall have any right of inspecting any account book or document
of the Trust except as conferred by law or authorized by the Trustees or by
resolution of the Shareholders.
6.2 REPORTS. The Trust shall transmit to the Shareholders and/or
file with federal and state regulatory agencies such reports of its
operations as the Trustees shall consider necessary or desirable or as may
be required by law.
6.3 BONDING OF OFFICERS AND EMPLOYEES. All officers and employees of
the Trust shall be bonded to such extent, and in such manner, as may be
required by law.
6.4 TRANSFER OF SHARES. Transfer of Shares shall be made on the
books of the Trust at the direction of the person named on the Trust's
books or named in the certificates for such Shares (if issued), or by
his/her attorney lawfully constituted in writing, and upon surrender of the
certificate or certificates for such Shares (if issued) properly endorsed,
together with a proper request for redemption, to the Trust's transfer
agent, with such evidence of the authenticity of such transfer,
authorization and other matters as the Trust or its agents may reasonably
require, and subject to such other reasonable conditions and requirements
as may be required by the Trust or its agents; or if the Trustees shall by
resolution so provide, transfer of Shares may be made in any other manner
provided by law.
ARTICLE VII
AMENDMENTS
These Bylaws may be altered or repealed by the Trustees at any regular
or special meeting of the Trustees.
APPROVED BY THE TRUSTEES AND EFFECTIVE AS OF OCTOBER 31, 1997.
G:\UKC\CANNATBK\DELBUSTR\BYLAWS.DBT
THE CANANDAIGUA FUNDS
ESTABLISHMENT AND DESIGNATION
OF SERIES OF SHARES OF BENEFICIAL INTEREST
$.001 PAR VALUE
October 31, 1997
The undersigned, being a majority of the Trustees of The Canandaigua
Funds, a Delaware business trust (the "Trust"), acting pursuant to ARTICLE
V, Section 5.1 of the Trust's Declaration of Trust dated October 31, 1997
as amended from time to time (the "Declaration of Trust"), hereby divide
the shares of beneficial interest of the Trust into two separate series
(each individually a "Fund" or collectively the "Funds"), each Fund hereby
created having the following relative rights and preferences.
1. The Funds shall be designated as follows:
The Canandaigua Equity Fund
The Canandaigua Bond Fund
2. Each Fund shall be authorized to hold cash and invest in
securities and instruments and use investment techniques as described in
the Trust's registration statement under the Securities Act of 1933, as
amended from time to time. Each share of beneficial interest, $.001 par
value, of each Fund shall be redeemable as provided in the Declaration of
Trust, shall be entitled to one vote (or fraction thereof in respect of a
fractional share) on matters on which shares of that Fund shall be entitled
to vote and shall represent a pro rata beneficial interest in the assets
allocated to that Fund. The proceeds of sales of shares of a Fund,
together with any income and gain thereon, less any diminution or expenses
thereof, shall irrevocably belong to that Fund, unless otherwise required
by law. Each share of a Fund shall be entitled to receive its pro rata
share of net assets of that Fund upon liquidation of that Fund. Upon
redemption of a shareholder's shares, or indemnification for liabilities
incurred by reason of a shareholder being or having been a shareholder of a
Fund, such shareholder shall be paid solely out of the property of such
Fund.
3. Shareholders of each Fund shall vote separately as a series on
any matter except, consistent with the Investment Company Act of 1940, as
amended (the "Act"), and the rules and the Trust's registration statement
thereunder, (i) the election of Trustees, (ii) any amendment of the
Declaration of Trust, unless the amendment affects fewer than all series,
in which case shareholders of the affected series shall vote separately,
and (iii) ratification of the selection of auditors. In each case of
such separate voting, the Trustees shall determine whether, for the matter
to effectively acted upon within the meaning of Rule 18f-2 under the Act or
any successor rule as to a Fund, the applicable percentage (as specified in
the Declaration of Trust, or the Act and the rules thereunder) of the
shares of that Fund alone must be voted in favor of the matter, or whether
the favorable vote of such applicable percentage of the shares of each Fund
entitled to vote on the matter is required.
4. The shares of the Trust outstanding on the date set forth in the
resolution of the Trustees establishing and designating the series of the
Trust shall remain classified as shares of the Fund designated as the
Canandaigua Equity Fund and the Canandaigua Bond Fund.
5. The assets and liabilities of the Trust existing on the date
hereof shall, except as provided below, remain allocated among the Funds
designated as the Canandaigua Equity Fund and the Canandaigua Bond Fund and
hereafter, the assets and liabilities of the Trust shall be allocated among
the Funds designated in Paragraph 1 above, as set forth in ARTICLE V,
Section 5.1 of the Declaration of Trust, except as provided below:
(a) Cost incurred by the Trust on behalf of a Fund in connection
with the organization, registration and public offering of shares of
such Fund shall be amortized for such Fund over the lesser of the life
of such Fund or the five year period beginning with the month that
such Fund commences or commenced (as the case may be) operations.
(b) The liabilities, expenses, costs, charges or reserves of the
Trust which are not readily identifiable as belonging to any
particular Fund shall be allocated among the Funds on the basis of
their relative average daily net assets except where allocations of
direct expenses can otherwise fairly be made.
(c) The Trustees may from time to time in particular cases make
specific allocations of assets or liabilities among the Funds.
6. The Trustees (including any successor Trustees) shall have the
right at any time and from time to time to reallocate assets and expenses
or to change the designation of any Fund now or hereafter created, or to
otherwise change the relative rights and preferences of any such Fund,
provided that such change shall not adversely affect the rights of
shareholders of a Fund.
Executed as of the date first noted above.
/s/ Robert N. Coe
Robert N. Coe, as Trustee and not
individually
/s/ Robert J. Craugh
Robert J. Craugh, as Trustee and not
individually
/s/ Donald C. Greenhouse
Donald C. Greenhouse, as Trustee and not
individually
/s/ Steven H. Swartout
Steven H. Swartout, as Trustee and not
individually
C:\TPY\CNB\PEA6X4
THE CANANDAIGUA FUNDS
72 SOUTH MAIN STREET
CANANDAIGUA, NEW YORK 14424
October 31, 1997
The Canandaigua National Bank and Trust Company
72 South Main Street
Canandaigua, New York 14424
INVESTMENT ADVISORY AGREEMENT
CANANDAIGUA EQUITY FUND
CANANDAIGUA BOND FUND
Dear Sirs:
The Canandaigua Funds (the "Trust") has been organized under the laws
of Delaware to engage in the business of an investment company. The shares
of beneficial interest of the Trust ("Shares") are divided into multiple
series, including The Canandaigua Equity Fund and The Canandaigua Bond Fund
(each a "Fund"; collectively, the "Funds"), as established pursuant to a
written instrument executed by the Trustees of the Trust. Series may be
terminated, and additional series established, from time to time by action
of the Trustees.
The Trust on behalf of the Funds has selected you to act as the
investment advisor to both Funds and to provide certain other services, as
more fully set forth below, and you are willing to act as such investment
advisor and to perform such services under the terms and conditions
hereinafter set forth.
Accordingly, the Trust agrees with you as follows:
1. DELIVERY OF FUND DOCUMENTS. The Trust has furnished you with
copies properly certified or authenticated of each of the following:
(a) The Declaration of Trust of the Trust, dated October 31, 1997
(the "Declaration of Trust").
(b) The Certificate of Trust, as filed with the Delaware Secretary of
State.
(c) The Bylaws of the Trust as in effect on the date hereof.
(d) Resolutions of the Trustees selecting you as investment advisor
and approving the form of this Agreement.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing, including future resolutions of the Trustees approving the
continuance of the items listed in (d) above.
2. ADVISORY SERVICES. You will regularly provide both Funds with
investment research, advice and supervision and will furnish continuously
an investment program for each Fund consistent with its respective
investment objectives and policies. You will determine what securities
shall be purchased for each Fund, what securities shall be held or sold by
each Fund, and what portion of that Fund's assets shall be held uninvested,
subject always to the provisions of the Trust's Declaration of Trust and
Bylaws, the Investment Company Act of 1940, as amended (the "Investment
Company Act"), the rules and regulations of the United States Comptroller
of the Currency relating to fiduciary powers of national banks, any other
applicable federal or state laws or regulations, and the investment
objectives, policies and restrictions of each Fund, as each of the same
shall be from time to time in effect, and subject further to such policies
and instructions as the Board of Trustees may from time to time establish.
You shall advise and assist the officers of the Trust in taking such steps
as are necessary or appropriate to carry out the decisions of the Board of
Trustees and the appropriate committees of the Board of Trustees regarding
the conduct of the business of the Trust insofar as it relates to the
Funds. On occasions when you deem the purchase or sale of a security to be
in the best interest of a Fund as well as other customers, to the extent
permitted by applicable law, you may aggregate the securities to be so sold
or purchased in order to obtain the best execution or lower brokerage
commissions, if any. In such event, you will allocate the securities so
purchased or sold, as well as the expenses incurred in the transaction, in
the manner you consider to be the most equitable and consistent with your
fiduciary obligations to that Fund and to your other customers. You will
maintain books and records with respect to the securities transactions of
the Funds in accordance with the requirements of the Investment Company Act
and with generally accepted accounting principles and will render to the
Board of Trustees such periodic and special reports as may be required by
law or as they may reasonably request. You may have deposit, loan and
other commercial banking relationships with issuers of securities purchased
by the Funds, including outstanding loans to such issuers which may be
repaid in whole or in part with proceeds of securities purchased by a Fund.
However, you will not purchase securities on behalf of the Funds in any
offerings where you know, or should know, that the proceeds of the offering
will be used to repay loans outstanding with you.
3. COMPENSATION OF THE ADVISOR. For all services to be rendered
hereunder, the Trust on behalf of the Funds will pay you on the last day of
each month a fee equal to the sum of 1.00% per annum of the average daily
net assets, as defined below, of each Fund. The "average daily net assets"
of a Fund are defined as the average of the values placed on the net assets
as of 4:00 P.M. (New York time), on each day on which the net asset value
of a Fund's portfolio is determined consistent with the provisions of Rule
22c-1 under the Investment Company Act or, if a Fund lawfully determines
the value of the net assets of its portfolio as of some other time on each
business day, as of such time. The net asset value of each Fund shall be
determined pursuant to the applicable provisions of the Declaration of
Trust. If, pursuant to such provisions, the determination of net asset
value is suspended for any particular business day, then for the purposes
of this paragraph, the value of the net assets of a Fund as last determined
shall be deemed to be the value of its net assets as of the close of the
New York Stock Exchange, or as of such other time as the value of the net
assets of that Fund's portfolio may lawfully be determined, on that day.
If the determination of the net asset value of the Shares of a Fund has
been suspended pursuant to the Declaration of Trust for a period including
such month, your compensation payable at the end of such month shall be
computed on the basis of the value of the net assets of that Fund as last
determined (whether during or prior to such month).
4. EXPENSES OF THE ADVISOR. During the term of this Agreement, you
will pay all expenses that you incur in connection with your provision of
investment advisory services to the Funds as described in paragraph 2
above, other than the cost of, and taxes and brokerage commissions with
respect to, securities purchased for the Funds. You will not be required
to pay any expenses of the Funds other than those specifically allocated to
you in this paragraph. In particular, but without limiting the generality
of the foregoing, you will not be required to pay: organization expenses
of the Funds; clerical salaries; fees and expenses incurred by the Funds in
connection with membership in investment company organizations; brokers'
commissions; payment for portfolio pricing services to a pricing agent, if
any; legal, auditing or accounting expenses; taxes or governmental fees;
the fees and expenses of the Funds' transfer agent; the cost of preparing
share certificates or any other expenses, including clerical expenses of
issue, redemption or repurchase of shares of beneficial interest of the
Funds; the expenses of and fees for registering or qualifying securities
for sale and of maintaining the registration of the Funds and registering
the Funds as a broker or a dealer; the fees and expenses of the Trustees of
the Trust; the cost of preparing and distributing reports and notices to
shareholders; the fees or disbursements of custodians of the Trust's
assets, including expenses incurred in the performance of any obligations
enumerated by the Declaration of Trust or Bylaws of the Trust insofar as
they govern agreements with any such custodian; or litigation and
indemnification expenses and other extraordinary expenses not incurred in
the ordinary course of the Trust's business. You shall not be required to
pay expenses of activities which are primarily intended to result in sales
of Shares of the Trust.
5. AVOIDANCE OF INCONSISTENT POSITION. In connection with purchases
or sales of portfolio securities for the account of either Fund, neither
you nor any of your partners, directors, officers or employees will act as
a principal or agent or receive any commission. You or your agent shall
arrange for the placing of all orders for the purchase and sale of
portfolio securities for a Fund's account with brokers or dealers selected
by you. In the selection of such brokers or dealers and the placing of such
orders, you are directed at all times to seek for the Funds the most
favorable execution and net price available. It is also understood that it
is desirable for the Funds that you have access to supplemental investment
and market research and security and economic analyses provided by certain
brokers who may execute brokerage transactions at a higher cost to a Fund
than may result when allocating brokerage to other brokers on the basis of
seeking the most favorable price and efficient execution. Therefore, you
are authorized to place orders for the purchase and sale of securities for
the Funds with such certain brokers, subject to review by the Trust's
Trustees from time to time with respect to the extent and continuation of
this practice. It is understood that the services provided by such brokers
may be useful to you in connection with your services to other clients. If
any occasion should arise in which you give any advice to clients of yours
concerning the Shares of a Fund, you will act solely as investment counsel
for such clients and not in any way on behalf of that Fund. Your services
to the Funds pursuant to this Agreement are not to be deemed to be
exclusive and it is understood that you may render investment advice,
management and other services to others.
6. LIMITATION OF LIABILITY OF ADVISOR. You shall not be liable for
any error of judgment or mistake of law or for any loss suffered by either
Fund in connection with the matters to which this Agreement relates, except
a loss resulting from willful misfeasance, bad faith or gross negligence on
your part in the performance of your duties or from reckless disregard by
you of your obligations and duties under this Agreement.
7. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
remain in force until October 31, 1999 and from year to year thereafter,
but only so long as such continuance is specifically approved at least
annually by the vote of a majority of the Trustees who are not interested
persons of you or of the Trust, cast in person at a meeting called for the
purpose of voting on such approval and by a vote of the Board of Trustees
or of a majority of the outstanding voting securities of the Funds. The
aforesaid requirement that continuance of this Agreement be "specifically
approved at least annually" shall be construed in a manner consistent with
the Investment Company Act and the rules and regulations thereunder. This
Agreement may, on 60 days written notice, be terminated at any time without
the payment of any penalty, by the Board of Trustees, by vote of a majority
of the outstanding voting securities of the Funds, or by you. This
Agreement shall automatically terminate in the event of its assignment. In
interpreting the provisions of this Agreement, the definitions contained in
Section 2(a) of the Investment Company Act (particularly the definitions of
"interested person," "assignment," and "majority of the outstanding voting
securities"), as from time to time amended, shall be applied, subject,
however, to such exemptions as may be granted by the Securities and
Exchange Commission by any rule, regulation or order.
8. AMENDMENT OF THIS AGREEMENT. No provisions of this Agreement may
be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, and no amendment of
this Agreement shall be effective until approved by vote of the holders of
a majority of the outstanding voting securities of the Funds and by the
Board of Trustees, including a majority of the Trustees who are not
interested persons of you or of the Trust, cast in person at a meeting
called for the purpose of voting on such approval.
9. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
10. MISCELLANEOUS. It is understood and expressly stipulated that
neither the holders of Shares of the Funds nor the Trustees shall be
personally liable hereunder. The captions in this Agreement are included
for convenience of reference only and in no way define or delimit any of
the provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
The name "The Canandaigua Funds" is the designation of the Trustees
for the time being under the Declaration of Trust as amended from time to
time, and all persons dealing with the Trust or the Funds must look solely
to the property of the Trust or the respective Fund for the enforcement of
any claims against the Trust as neither the Trustees, officers, agents or
shareholders assume any personal liability for obligations entered into on
behalf of the Trust. No series of the Trust shall be liable for any claims
against any other series of the Trust. If you are in agreement with the
foregoing, please sign the form of acceptance on the accompanying
counterpart of this letter and return such counterpart to the Trust,
whereupon this letter shall become a binding contract.
Yours very truly,
THE CANANDAIGUA FUNDS
By:/s/ Steven H. Swartout
Title: Secretary and Treasurer
The foregoing Agreement is hereby accepted as of the date hereof.
THE CANANDAIGUA NATIONAL BANK AND TRUST COMPANY
By: /s/ Robert J. Swartout
Title: Vice President and Investment Officer
C:\TPY\CNB\PEA6X5
EXHIBIT 6
UNDERWRITING AGREEMENT
BETWEEN
THE CANANDAIGUA FUNDS
AND
ADS DISTRIBUTORS, INC.
UNDERWRITING AGREEMENT
AGREEMENT made as of this 2{nd} day of December, 1997 between The Canandaigua
Funds, a Delaware Business Trust (the "Fund"), and ADS Distributors, Inc., a
Florida Corporation (the "Underwriter").
1. The Underwriter will receive orders from purchasers for and the Fund will
sell, issue and deliver from time to time to such purchasers, such part of
the authorized shares of capital stock of the Fund remaining un-issued as
from time to time shall be effectively registered under the Securities Act
of 1933, as amended (the "33 Act"), at prices determined as hereinafter
provided and on the terms hereinafter set forth, all subject to applicable
Federal and State laws and regulations and to the charter of the Fund.
2. The Underwriter shall present all orders received by it for shares of
capital stock of the Fund to the Fund by telegraphic or written purchase
orders and each such order shall be subject to the acceptance or rejection
by the Fund in its sole discretion
2.1 Notwithstanding any other provision hereof, whenever in the judgment of
the Fund such action is warranted by market, economic or political conditions
or by abnormal circumstances of any kind, the Fund may suspend the offer of
shares in effect and may, without liability under the provision of this
Agreement, decline to accept or confirm any orders or make any sales of
shares or capital stock under this Agreement until such time as the Fund
shall deem it advisable to resume the offering of such shares, provided that
as soon as practicable after the taking of any such action a special meeting
of the Board of Directors shall be called to be held as soon as practicable
thereafter to determine whether or not such action shall then continue to be
effective, and the period during, or the circumstance under, which such
action shall continue or cease to be effective. During any period during
which the offer of shares shall be suspended or the Fund shall decline to
acceptor confirm any such orders or make any such sales, the Fund shall be
under no obligation to confirm or accept any such orders or make any such
sale at any price.
2.2 The Fund will use its best efforts to keep effectively registered under
the 33 Act for sale as herein contemplated such shares of its capital stock
as the Underwriter shall reasonably request and as the Securities and
Exchange Commission (the "SEC") shall permit to be so registered.
3. Sales by the Underwriter shall be made as agent for the Fund and all such
sales be made to or though qualified dealers or others in such manner, not
inconsistent with the provisions hereof and the then effective registration
statement of the Fund under the 33 Act, (and related prospectus), as the
Underwriter may determine from time to time.
4. All shares of capital stock offered for sale or sold by the Underwriter
shall be so offered or sold at a price per share (the "Offering Price")
equal to the net asset value per share (determined as authorized from time
to time by the Board of Directors of the Fund pursuant to its charter).
4.1 For the purpose of determining the offering price, the net asset value of
any such shares shall be so determined in accordance with the then current
offering prospectus. The Fund, or its authorized agent, will promptly furnish
to the Underwriter a statement of the Offering Price as often as such net
asset value is determined and such statement shall at the request of the
Underwriter show the basis of computation of the Offering Price.
4.2 Orders presented by the Underwriter for shares, if accepted by the Fund,
shall be accepted and confirmed by it or its duly authorized agent at the
Offering Price in effect at the time of its receipt of such order at its
principal office.
4.3 The Underwriter will not in any event (a) offer for sale or sell shares
of capital stock in excess of the number then effectively registered under
the 33 Act, and available for sale, or (b) offer for sale or sell any shares
in violation of any applicable Federal or State law, rule or regulation.
5. The Fund will execute any and all documents and furnish any and all
information which may be reasonably necessary in connection with the
qualification of its shares of capital stock in such states as the
Underwriter may reasonably request (it being understood that the Fund shall
not be required without its consent to qualify to do business in any
jurisdiction or to comply with any requirement which in its opinion is
unduly burdensome). The Underwriter, at its own expense, will effect all
qualifications as dealer or broker.
6. The Fund will furnish to the Underwriter from time to time such information
with respect to its shares as the Underwriter may reasonably request for use
in connection with the sale of shares. The Underwriter will not use or
distribute or authorize the use, distribution or dissemination by its
dealers or others in connection with such sale of any literature,
advertising or selling aids in any form or through any medium, written or
oral, without prior written specific approval thereof by the Fund.
7. Nothing herein contained shall limit the right of the Fund, in its absolute
discretion, to issue or sell shares of its capital stock for such other
considerations (whether in connection with the acquisition of assets or
shares or securities of another corporation or entity or with the merger or
consolidation of any other corporation into or with the Fund, or otherwise)
as and to the extent permitted by its charter and any applicable laws, or to
issue or sell any such shares directly to the shareholders of the Fund, upon
such terms and conditions and for such consideration, if any, as may be
determined by the Board of Directors, whether pursuant to the distribution
of subscription or purchase rights to such holders or by way of dividends or
otherwise.
8. At the request of the Fund, the Underwriter agrees to act as agent for the
Fund for the repurchase or redemption of shares of the Fund at such prices
as the Fund from time to time shall prescribe.
9. In selling or reacquiring shares, the Underwriter agrees to conform to the
requirements of all state and Federal laws relating to such sale or
reacquisition, as the case may be, and will indemnify and hold the Fund
harmless from any damage or expense on account of any wrongful act by the
Underwriter or any employee, representative or agent of the Underwriter. The
Underwriter will observe and be bound by all the provisions of the charter
of the Fund and any fundamental policies adopted by the Fund pursuant to the
Investment Company Act of 1940, as amended (the "40 Act"), notice of which
has been given to the Underwriter.
10. Neither the Underwriter, any dealer nor any other person is authorized by
the Fund to give any information or to make any representation other than
those contained (a) in the latest effective registration statement (and
related prospectus) filed with the SEC under the 33 Act as such registration
statement (and prospectus) may be amended from time to time, or (b) in any
statement expressly authorized by the Fund for use in connection with any
sale or reacquisition of capital stock for the account of the Fund.
11. In Consideration of the agreements on the part of the Underwriter herein
contained, the Underwriter shall receive payment in the amount of $22,750
per annum, billed monthly, plus reimbursement of all reasonable out-of-
pocket expenses incurred at the request of the Fund in fulfillment of its
responsibilities in this Agreement.
12. This Agreement shall continue in effect until such time as there remain no
unsold balance of shares of capital stock effectively registered under the
33 Act; provided, however, that (a) this Agreement shall continue in effect
for a period more than two years from the date hereof only so long as such
continuance is specifically approved at least annually by the Board of
Directors or a majority of the outstanding voting securities of the Fund,
and (b) either party hereto may terminate this Agreement on any date by
giving the other party at least six months prior written notice of such
termination specifying the date fixed therefor..
12.1 This Agreement shall automatically terminate in the event of its
assignment by the Underwriter, the term "assignment" having the meaning
defined in Section 2(a)(4) of the 40 Act.
13. Any notice under this Agreement shall be in writing addressed and delivered
by mail, postage prepaid, to the party to whom addressed at the address
given below, or at such other address as such party shall theretofore have
designated (by notice given to the other party as herein provided) in
writing for the receipt of such notice:
TO THE FUND: TO THE UNDERWRITER:
The Canandaigua Funds Mr. Michael Rogan
72 South Main Street President
Canandaigua, New York 14424 ADS Distributors, Inc.
Attention Steven Swartout 101 Main Street, Suite E
Safety Harbor, Florida 34695
IN WITNESS WHEREOF, The Fund and the Underwriter have each caused
this Agreement to be executed on its behalf by an officer thereunto duly
authorized on the day and year first above written.
The Canandaigua Funds ADS Distributors, Inc.
By: /s/ Steven Swartout By: /s/ Michael Rogan
Steven Swartout Secretary Michael Rogan, President
and Treasurer
THE NORTHERN TRUST COMPANY
DEPOSITORY CUSTODY AGREEMENT
The Northern Trust Company
50 South LaSalle Street
Chicago, Illinois 60675
RE: DEPOSITORY CUSTODY SERVICE-ACCOUNT NO. 17-88266
Gentlemen:
We hereby request that you serve as our custodial agent for all cash,
securities and other property that we deliver to you from time to time for
safekeeping and processing on our behalf in accordance with this Depository
Custody Agreement (the "Agreement"). Your appointment hereunder will
become effective upon your acceptance of this request.
1. Custody Account. You will establish and maintain a custodial
account (the "Account") in our name and will record as credits to that
account all cash, securities and other property, both foreign and domestic,
that we deliver, or that we direct others to deliver, to you for that
purpose. You will separately identify the Account on your books by the
number 17-88266 and by the name "The Canandaigua Equity Fund".
2. Account and Custody Operations. You will hold in custody for
safekeeping, pending transfer from the Account pursuant to our
instructions, all the cash, securities and other property delivered to you
for credit to the Account. You may hold such securities or other property
in your name or in the name of your nominee, and you may place securities
or other property credited to the Account in a securities depository,
clearing corporation, federal book-entry securities account, or other third
party facility, whether foreign or domestic. You may return to us any
securities or other properties that are not accepted for deposit or
recordation by the relevant third-party agent or facility, securities
depository, clearing corporation, or federal book-entry system, or that
cannot be re-registered in your nominee name or held by you in bearer form.
If, in connection with your use of such agents and facilities, you are
required to follow specified operational procedures and time frames, we
agree that those procedures and time frames will be binding on us in
respect of Account activity. In addition, both you and we will carry out
processing duties under this Agreement in accordance with The Northern
Trust Company's Depository Custody Services Operations Manual (the
"Operations Manual") as updated by you from time to time. On your
acceptance of our request, you will supply us with a copy of the Operations
Manual, which we have previously reviewed. During the term of this
Agreement, you will provide us promptly with all material changes that are
made to the Operations Manual.
You will collect income, noncash distributions, and maturing principal
on the assets credited to the Account when paid or distributed and will
retain such collections, together with any other cash credited to the
Account, in the form(s) and in depository facilities you deem appropriate,
including deposit accounts in your banking department, subject to our
specific direction. If any noncash distribution represents a fractional
share or other interest, you are authorized, but not required, to liquidate
such fraction, collect the liquidation proceeds, and credit the account
with the cash received.
You will use your best efforts to provide us with timely notice of
corporate actions or other events that involve assets credited to the
Account and that require the exercise of discretion in providing necessary
instructions or making necessary responses to the issuer or a third party.
We will assume the responsibility to forward such notices on a timely basis
to the appropriate person for decision-making and provide you with timely
instructions regarding the action to be taken (except that we will assume
full responsibility to communicate any proxy vote directly to the proxy
agent). If any securities credited to the Account are called for partial
redemption, you may allot the called portion or cause such portion to be
allotted among your account holders, including us, in any manner you
consider equitable. With respect to nondiscretionary corporate actions or
other nondiscretionary events, you may act as you consider appropriate on a
best-efforts basis, subject to any instructions we timely communicate to
you.
You will effect transfers of property credited to the Account,
including transfers incident to settlement of purchase and sale
transactions involving Account assets that we or our agents initiate, at
such times and to such persons as we or our agents direct. We or our
agents will provide you with transaction settlement instructions either in
written or electronic form. In any case, all instructions will be deemed
communicated to you only if made in accordance with governing rules and
procedures of the relevant third-party agent, securities depository,
clearing corporation, or book-entry system and the Operations Manual. We
will assume sole responsibility to assure that only authorized individuals
provide you with instructions respecting all transactions involving Account
assets, including, but not limited to, transaction settlements, asset
transfers, and cash transfers or disbursements, and you will provide us
with notice of instructions you receive from third parties pursuant to the
time frames and procedures specified in the Operations Manual. Absent an
authorized individual's timely disavowal of any instructions you receive,
you may rely conclusively and act on all instructions you receive (see
Appendix A).
We authorize you to execute and deliver in our name any assignments,
stock or bond powers or other documents or instruments which you deem
necessary or convenient and proper (a) to sell, assign, transfer, or make
other disposition of any security or other property in the Account; (b) to
take any action in relation to any such security or property; or (c) to
obtain any payment due. You may execute any and all documents by signing
our name alone or as our attorney-in-fact pursuant to this authorization.
You are not obligated to follow any instruction to purchase securities
or other property that is to be delivered for credit to the Account, or to
transfer cash credited to the Account unless sufficient cash is on deposit
and credited to the Account at the time specified in the Operations Manual
to enable payment in full, nor are you obligated to sell properties
credited to the Account unless the properties are in good deliverable form.
Notwithstanding the foregoing, you may in your sole discretion advance for
the benefit of our Account cash needed to settle a purchase transaction or
for such other purposes as we may request. We will consider any such
advance to be an interest-bearing loan from the date of the advance until
the date of repayment in full (including accrued interest) of such advance,
and we agree to pay interest on the unpaid principal amount of the advance
from time to time outstanding at a rate equal to two percent (2.00%) in
addition to the "Prime Rate," which shall mean that rate of interest per
year announced from time to time by The Northern Trust Company, Chicago
("Northern"), called its prime rate, which may not at any time be the
lowest rate of interest charged by Northern. Changes in the rate of
interest resulting from a change in the Prime Rate shall take effect on the
date set forth in each announcement.
3. ACCOUNT RECORDS AND REPORTS. You will keep complete, accurate
and current records of all receipts, disbursements and transfers in respect
of Account assets. We or our designee may examine such records at any
reasonable time during your normal business hours.
You will furnish us with daily electronic reports showing receipts,
disbursements and transfers in respect of Account assets, trade
settlements, and Account assets as of the close of the prior business day.
Securities listed will be appropriately identified in terms of number of
shares, par value, principal amount, or other customary identifiers. We
will give you written or electronic notice of any exceptions to a report
within 30 days of the date of the report. Thereafter, all unexcepted
entries in a report will be considered final and binding on us.
4. REPRESENTATIONS AND SPECIAL UNDERTAKINGS. We represent to you
that all cash, securities and other property delivered to you for credit to
the Account constitute the assets of trust and agency accounts we
administer. We are solely responsible for the maintenance of separate
books and records respecting ownership of those assets and for the
allocation of income and principal among our accounts. We understand that
you, necessarily, will commingle the assets of our various accounts that
are delivered to you for Credit to the Account, and will commingle, in each
omnibus agency account you maintain with each third party agent,
depository, book-entry system administrator, or other central repository,
assets credited to the Account with assets of other persons for whom you
act as custodian.
We will be responsible to you as a principal for all our obligations
under this Agreement and for all actions you take on our behalf hereunder,
and we warrant that we have, or will take all necessary steps to have,
authority to effect any instruction we give you and any deposit we make in
the Account.
You will not be liable to us for any loss that occurs as a result of
any action taken or not taken under this Agreement so long as you act, or
refrain from acting, in good faith and in the absence of gross negligence,
provided, however, that you will not be liable to us under any
circumstances for (a) any loss that may result from any action taken or not
taken based on an oral instruction from us or our agent or an instruction
that is not communicated to you in a timely manner pursuant to the
procedures set forth in the Operations Manual, (b) investment losses that
may result from any action you take or refrain from taking under this
Agreement, or (c) losses attributable to defaults or insolvencies by any
agent we designate. We agree to indemnity you and hold you harmless from
any loss or liability you incur in taking or not taking action under the
Agreement except losses and liabilities attributable to your bad faith or
gross negligence. We acknowledge that you have no obligation hereunder to
render investment advice or to act or to refrain from acting with reference
to investment considerations.
5. ENTIRE AGREEMENT; ACKNOWLEDGMENTS. This Agreement represents the
entire agreement between you and us with respect to our use of your custody
services, and supersedes any previous oral or written agreements in
relation thereto. This Agreement does not cover our use of options, unless
the separate Options Sub-Agreement has been executed and made an attachment
hereto. This Agreement does not cover any other agency services you
provide us, including securities lending services, absent an express
written agreement to the contrary.
6. CUSTODIAN FEES AND EXPENSES. We will pay you for your services
as custodian in amounts and at intervals set forth in your schedule of fees
current from time to time, and will reimburse you for all reasonable
expenses, including accounting and legal expenses, incident to
administering the Account under this Agreement (see Appendix B). You may
collect payment for your fees and expenses by debits to the Account. You
will give us 60 days' advance written notice of fee changes.
7. TERM AND TERMINATION OF THIS AGREEMENT. This Agreement, which
shall
remain in effect until terminated, may be terminated at any time following
30 days' advance written notice from us to you or you to us. At the end of
the 30-day termination period, we will promptly return your Operations
Manual, and you will promptly deliver to us or to such other person as we
direct all assets credited to the Account, less fees due and expenses not
paid, including expenses incident to termination of the Account, together
with a closing statement.
8. MODIFICATIONS. This Agreement may be amended or modified only by
a writing signed by you and by us, except that fees may be changed and the
Operations Manual may be modified at any time as provided in paragraphs 6
and 2 above.
9. GOVERNING LAW: SEVERABILITY. This Agreement shall be governed by
the internal law of the State of Illinois. If any provision of this
Agreement is invalid, the balance of the Agreement shall be considered
severable and independently enforceable.
Dated this 4th day of December, 1997.
ACCEPTED:
THE CANANDAIGUA THE NORTHERN TRUST COMPANY
EQUITY FUND
By: /s/ Steven H. Swartout By:____________________________
As its Secretary and Treasurer As its__________________________
Tax Identification No.____________
G:\UKC\CANNATBK\DELBUSTR\CUSTEQFD.AGR
THE NORTHERN TRUST COMPANY
DEPOSITORY CUSTODY AGREEMENT
The Northern Trust Company
50 South LaSalle Street
Chicago, Illinois 60675
RE: DEPOSITORY CUSTODY SERVICE-ACCOUNT NO. 17-88265
Gentlemen:
We hereby request that you serve as our custodial agent for all cash,
securities and other property that we deliver to you from time to time for
safekeeping and processing on our behalf in accordance with this Depository
Custody Agreement (the "Agreement"). Your appointment hereunder will
become effective upon your acceptance of this request.
1. Custody Account. You will establish and maintain a custodial
account (the "Account") in our name and will record as credits to that
account all cash, securities and other property, both foreign and domestic,
that we deliver, or that we direct others to deliver, to you for that
purpose. You will separately identify the Account on your books by the
number 17-88265 and by the name "The Canandaigua Bond Fund".
2. Account and Custody Operations. You will hold in custody for
safekeeping, pending transfer from the Account pursuant to our
instructions, all the cash, securities and other property delivered to you
for credit to the Account. You may hold such securities or other property
in your name or in the name of your nominee, and you may place securities
or other property credited to the Account in a securities depository,
clearing corporation, federal book-entry securities account, or other third
party facility, whether foreign or domestic. You may return to us any
securities or other properties that are not accepted for deposit or
recordation by the relevant third-party agent or facility, securities
depository, clearing corporation, or federal book-entry system, or that
cannot be re-registered in your nominee name or held by you in bearer form.
If, in connection with your use of such agents and facilities, you are
required to follow specified operational procedures and time frames, we
agree that those procedures and time frames will be binding on us in
respect of Account activity. In addition, both you and we will carry out
processing duties under this Agreement in accordance with The Northern
Trust Company's Depository Custody Services Operations Manual (the
"Operations Manual") as updated by you from time to time. On your
acceptance of our request, you will supply us with a copy of the Operations
Manual, which we have previously reviewed. During the term of this
Agreement, you will provide us promptly with all material changes that are
made to the Operations Manual.
You will collect income, noncash distributions, and maturing principal
on the assets credited to the Account when paid or distributed and will
retain such collections, together with any other cash credited to the
Account, in the form(s) and in depository facilities you deem appropriate,
including deposit accounts in your banking department, subject to our
specific direction. If any noncash distribution represents a fractional
share or other interest, you are authorized, but not required, to liquidate
such fraction, collect the liquidation proceeds, and credit the account
with the cash received.
You will use your best efforts to provide us with timely notice of
corporate actions or other events that involve assets credited to the
Account and that require the exercise of discretion in providing necessary
instructions or making necessary responses to the issuer or a third party.
We will assume the responsibility to forward such notices on a timely basis
to the appropriate person for decision-making and provide you with timely
instructions regarding the action to be taken (except that we will assume
full responsibility to communicate any proxy vote directly to the proxy
agent). If any securities credited to the Account are called for partial
redemption, you may allot the called portion or cause such portion to be
allotted among your account holders, including us, in any manner you
consider equitable. With respect to nondiscretionary corporate actions or
other nondiscretionary events, you may act as you consider appropriate on a
best-efforts basis, subject to any instructions we timely communicate to
you.
You will effect transfers of property credited to the Account,
including transfers incident to settlement of purchase and sale
transactions involving Account assets that we or our agents initiate, at
such times and to such persons as we or our agents direct. We or our
agents will provide you with transaction settlement instructions either in
written or electronic form. In any case, all instructions will be deemed
communicated to you only if made in accordance with governing rules and
procedures of the relevant third-party agent, securities depository,
clearing corporation, or book-entry system and the Operations Manual. We
will assume sole responsibility to assure that only authorized individuals
provide you with instructions respecting all transactions involving Account
assets, including, but not limited to, transaction settlements, asset
transfers, and cash transfers or disbursements, and you will provide us
with notice of instructions you receive from third parties pursuant to the
time frames and procedures specified in the Operations Manual. Absent an
authorized individual's timely disavowal of any instructions you receive,
you may rely conclusively and act on all instructions you receive (see
Appendix A).
We authorize you to execute and deliver in our name any assignments,
stock or bond powers or other documents or instruments which you deem
necessary or convenient and proper (a) to sell, assign, transfer, or make
other disposition of any security or other property in the Account; (b) to
take any action in relation to any such security or property; or (c) to
obtain any payment due. You may execute any and all documents by signing
our name alone or as our attorney-in-fact pursuant to this authorization.
You are not obligated to follow any instruction to purchase securities
or other property that is to be delivered for credit to the Account, or to
transfer cash credited to the Account unless sufficient cash is on deposit
and credited to the Account at the time specified in the Operations Manual
to enable payment in full, nor are you obligated to sell properties
credited to the Account unless the properties are in good deliverable form.
Notwithstanding the foregoing, you may in your sole discretion advance for
the benefit of our Account cash needed to settle a purchase transaction or
for such other purposes as we may request. We will consider any such
advance to be an interest-bearing loan from the date of the advance until
the date of repayment in full (including accrued interest) of such advance,
and we agree to pay interest on the unpaid principal amount of the advance
from time to time outstanding at a rate equal to two percent (2.00%) in
addition to the "Prime Rate," which shall mean that rate of interest per
year announced from time to time by The Northern Trust Company, Chicago
("Northern"), called its prime rate, which may not at any time be the
lowest rate of interest charged by Northern. Changes in the rate of
interest resulting from a change in the Prime Rate shall take effect on the
date set forth in each announcement.
3. ACCOUNT RECORDS AND REPORTS. You will keep complete, accurate
and current records of all receipts, disbursements and transfers in respect
of Account assets. We or our designee may examine such records at any
reasonable time during your normal business hours.
You will furnish us with daily electronic reports showing receipts,
disbursements and transfers in respect of Account assets, trade
settlements, and Account assets as of the close of the prior business day.
Securities listed will be appropriately identified in terms of number of
shares, par value, principal amount, or other customary identifiers. We
will give you written or electronic notice of any exceptions to a report
within 30 days of the date of the report. Thereafter, all unexcepted
entries in a report will be considered final and binding on us.
4. REPRESENTATIONS AND SPECIAL UNDERTAKINGS. We represent to you
that all cash, securities and other property delivered to you for credit to
the Account constitute the assets of trust and agency accounts we
administer. We are solely responsible for the maintenance of separate
books and records respecting ownership of those assets and for the
allocation of income and principal among our accounts. We understand that
you, necessarily, will commingle the assets of our various accounts that
are delivered to you for Credit to the Account, and will commingle, in each
omnibus agency account you maintain with each third party agent,
depository, book-entry system administrator, or other central repository,
assets credited to the Account with assets of other persons for whom you
act as custodian.
We will be responsible to you as a principal for all our obligations
under this Agreement and for all actions you take on our behalf hereunder,
and we warrant that we have, or will take all necessary steps to have,
authority to effect any instruction we give you and any deposit we make in
the Account.
You will not be liable to us for any loss that occurs as a result of
any action taken or not taken under this Agreement so long as you act, or
refrain from acting, in good faith and in the absence of gross negligence,
provided, however, that you will not be liable to us under any
circumstances for (a) any loss that may result from any action taken or not
taken based on an oral instruction from us or our agent or an instruction
that is not communicated to you in a timely manner pursuant to the
procedures set forth in the Operations Manual, (b) investment losses that
may result from any action you take or refrain from taking under this
Agreement, or (c) losses attributable to defaults or insolvencies by any
agent we designate. We agree to indemnity you and hold you harmless from
any loss or liability you incur in taking or not taking action under the
Agreement except losses and liabilities attributable to your bad faith or
gross negligence. We acknowledge that you have no obligation hereunder to
render investment advice or to act or to refrain from acting with reference
to investment considerations.
5. ENTIRE AGREEMENT; ACKNOWLEDGMENTS. This Agreement represents the
entire agreement between you and us with respect to our use of your custody
services, and supersedes any previous oral or written agreements in
relation thereto. This Agreement does not cover our use of options, unless
the separate Options Sub-Agreement has been executed and made an attachment
hereto. This Agreement does not cover any other agency services you
provide us, including securities lending services, absent an express
written agreement to the contrary.
6. CUSTODIAN FEES AND EXPENSES. We will pay you for your services
as custodian in amounts and at intervals set forth in your schedule of fees
current from time to time, and will reimburse you for all reasonable
expenses, including accounting and legal expenses, incident to
administering the Account under this Agreement (see Appendix B). You may
collect payment for your fees and expenses by debits to the Account. You
will give us 60 days' advance written notice of fee changes.
7. TERM AND TERMINATION OF THIS AGREEMENT. This Agreement, which
shall
remain in effect until terminated, may be terminated at any time following
30 days' advance written notice from us to you or you to us. At the end of
the 30-day termination period, we will promptly return your Operations
Manual, and you will promptly deliver to us or to such other person as we
direct all assets credited to the Account, less fees due and expenses not
paid, including expenses incident to termination of the Account, together
with a closing statement.
8. MODIFICATIONS. This Agreement may be amended or modified only by
a writing signed by you and by us, except that fees may be changed and the
Operations Manual may be modified at any time as provided in paragraphs 6
and 2 above.
9. GOVERNING LAW: SEVERABILITY. This Agreement shall be governed by
the internal law of the State of Illinois. If any provision of this
Agreement is invalid, the balance of the Agreement shall be considered
severable and independently enforceable.
Dated this 4th day of December, 1997.
ACCEPTED:
THE CANANDAIGUA THE NORTHERN TRUST COMPANY
BOND FUND
By: /s/ Steven H. Swartout By:____________________________
As its Secretary and Treasurer As its__________________________
Tax Identification No.____________
G:\UKC\CANNATBK\DELBUSTR\CUSTBDFD.AGR
EXHIBIT 9.1
TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
THE CANANDAIGUA FUNDS
AND
AMERICAN DATA SERVICES, INC.
<PAGE>
INDEX
1. TERMS OF APPOINTMENT; DUTIES OF ADS
2. FEES AND EXPENSES
3. REPRESENTATIONS AND WARRANTIES OF ADS
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
5. INDEMNIFICATION
6. COVENANTS OF THE FUND AND ADS
7. TERMINATION OF AGREEMENT
8. ASSIGNMENT
9. AMENDMENT
10. NEW YORK LAWS TO APPLY
11. MERGER OF AGREEMENT
12. NOTICES.
FEE SCHEDULE
(a) ACCOUNT MAINTENANCE CHARGE:
(b) TRANSACTION FEES:
(C) 24 HOUR AUTOMATED VOICE RESPONSE:
(d) Fund/SERV
FEE INCREASES
(E) IRA PLAN FEES:
(f) EXPENSES:
(G) SPECIAL REPORTS:
(h) SERVICE DEPOSIT:
(I) CONVERSION CHARGE: (EXISTING FUNDS ONLY, NEW FUNDS PLEASE IGNORE)
SCHEDULE A
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made the 2{nd} day of December 1997, by and between THE CANANDAIGUA
FUNDS, a Delaware Business Trust, having its principal office and place of
business at 72 South Main Street, Canandaigua, New York 14424 (the "Fund"), and
American Data Services, Inc., a New York corporation having its principal
office and place of business at the Hauppauge Corporate Center, 150 Motor
Parkway, Suite 109, Hauppauge, New York 11788 ("ADS")
WHEREAS, the Fund desires to appoint ADS as its transfer agent, dividend
disbursing agent and agent in connection with certain other activities, and ADS
desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. TERMS OF APPOINTMENT; DUTIES OF ADS
1.01 Subject to the terms and conditions set forth in this agreement, the
Fund hereby employs and appoints ADS to act as, and ADS agrees to act as its
transfer agent for the Fund's authorized and issued shares of its common stock,
$.001 par value, ("Shares"), dividend disbursing agent and agent in connection
with any accumulation, open-account or similar plans provided to the
shareholders of the fund ("Shareholders") set out in the currently effective
prospectus and statement of additional information ("prospectus") of the Fund.
1.02 ADS agrees that it will perform the following services:
(a) In accordance with procedures established from time to
time by agreement between the Fund and ADS, ADS shall:
I. Receive for acceptance, orders for the purchase of Shares, and promptly
deliver payment and appropriate documentation therefore to the Custodian of
the Fund authorized by the Board of Directors of the Fund (the "Custodian");
II. Pursuant to purchase orders, issue the appropriate number of Shares and
hold such Shares in the appropriate Shareholder account;
III. Receive for acceptance redemption requests and redemption directions and
deliver the appropriate documentation therefore to the Custodian;
IV. At the appropriate time as and when it receives monies paid to it by the
Custodian with respect to any redemption, pay over or cause to be paid over
in the appropriate manner such monies as instructed by the redeeming
Shareholders;
V. Effect transfers of Shares by the registered owners thereof upon receipt of
appropriate instructions;
VI. Prepare and transmit payments for dividends and distributions declared by
the Fund;
VII. Maintain records of account for and advise the Fund and its Shareholders
as to the foregoing; and
VIII. Record the issuance of shares of the Fund and maintain pursuant to SEC
Rule 17Ad-10(e) a record of the total number of shares of the Fund which are
authorized, based upon data provided to it by the Fund, and issued and
outstanding. ADS shall also provide the Fund on a regular basis with the
total number of shares which are authorized and issued and outstanding and
shall have no obligation, when recording the issuance of shares, to monitor
the issuance of such shares or to take cognizance of any laws relating to
the issue or sale of such shares, which functions shall be the sole
responsibility of the Fund.
(b) In addition to and not in lieu of the services set forth in the
above paragraph (a), ADS shall:
IX. Perform all of the customary services of a transfer agent, dividend
disbursing agent, including but not limited to: maintaining all Shareholder
accounts, preparing Shareholder meeting lists, mailing proxies, receiving
and tabulating proxies, mailing Shareholder reports and prospectuses to
current Shareholders, withholding taxes on U.S. resident and non-resident
alien accounts, preparing and filing U.S. Treasury Department Forms 1099 and
other appropriate forms required with respect to dividends and distributions
by federal authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to Shareholders for all
purchases redemption's of Shares and other confirmable transactions in
Shareholder accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account information and (ii) provide
a system and reports which will enable the Fund to monitor the total number
of Shares sold in each State.
(j) In addition, the Fund shall (i) identify to ADS in writing those
transactions and shares to be
treated as exempt from blue sky reporting for each State and (ii)
verify the establishment of such transactions for each state on the
system prior to activation and thereafter monitor the daily
activity for each State as provided by ADS. The responsibility of
ADS for the Fund's blue sky State registration status is solely
limited to the initial establishment of transactions subject to
blue sky compliance by the Fund and the reporting of such
transactions to the Fund as provided above.
Procedures applicable to certain of these services may be established
from time to time by agreement between the Fund and ADS.
2. FEES AND EXPENSES
2.01 For performance by ADS pursuant to this Agreement, the Fund agrees
to pay ADS an annual maintenance fee for each Shareholder account and
transaction fees for each portfolio or class of shares serviced under this
Agreement (See Schedule A) as set out in the fee schedule attached hereto.
Such fees and out-of pocket expenses and advances identified under Section 2.02
below may be changed from time to time subject to mutual written agreement
between the Fund and ADS.
2.02 In addition to the fee paid under Section 2.01 above, the Fund
agrees to reimburse ADS for out-of-pocket expenses or advances incurred by ADS
for the items set out in the fee schedule attached hereto. In addition, any
other expenses incurred by ADS at the request or with the consent of the Fund,
will be reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses within
five days following the receipt of the respective billing notice. Postage for
mailing of dividends, proxies, Fund reports and other mailings to all
shareholder accounts shall be advanced to ADS by the Fund at least seven (7)
days prior to the mailing date of such materials.
3. REPRESENTATIONS AND WARRANTIES OF ADS
ADS represents and warrants to the Fund that:
3.01 It is a corporation duly organized and existing and in good standing
under the laws of The State of New York.
3.02 It is duly qualified to carry on its business in The State of New
York.
3.03 It is empowered under applicable laws and by its charter and by-laws
to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
3.06 ADS is duly registered as a transfer agent under the Securities Act
of 1934 and shall continue to be registered throughout the remainder of this
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to ADS that;
4.01 It is a Delaware Business Trust duly organized and existing and in
good standing under the laws of the State of Delaware.
4.02 It is empowered under applicable laws and by its Declaration of
Trust and By-Laws to enter into and perform this Agreement.
4.03 All corporate proceedings required by said Declaration of Trust and
By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.04 It is an open-end and diversified management investment company
registered under the Investment Company Act of 1940.
4.05 A registration statement under the Securities Act of 1933 is
currently or will become effective and will remain effective, and appropriate
state securities law filings as required, have been or will be made and will
continue to be made, with respect to all Shares of the Fund being offered for
sale.
5. INDEMNIFICATION
5.01 ADS shall not be responsible for, and the Fund shall indemnify and
hold ADS harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to:
(a) All actions of ADS or its agents or subcontractors required to be taken
pursuant to this Agreement, provided that such actions are taken in good
faith and without gross negligence or willful misconduct.
(b) The Fund's refusal or failure to comply with the terms of this Agreement,
or which arise out of the Fund's lack good faith, gross negligence or
willful misconduct or which arise out of the breach of any representation
or warranty of the Fund hereunder.
(c) The reliance on or use by ADS or its agents or subcontractors of
information, records and documents which (i) are received by ADS or its
agents or subcontractors and furnished to it by or on behalf of the Fund,
and (ii) have been prepared and/or maintained by the Fund or any other
person or firm on behalf of the Fund.
(d) The reliance on, or the carrying out by ADS or its agents or subcontractors
of any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state or
in violation of any stop order or other determination or ruling by any
federal agency or any state with respect to the offer or sale of such
Shares in such state.
5.02 ADS shall indemnify and hold the Fund harmless from and against any
and all losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to any action or failure or omission
to act by ADS as a result of ADS's lack of good faith, gross negligence or
willful misconduct.
5.03 At any time ADS may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by ADS under this
Agreement, and ADS and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. ADS, its
agents and subcontractors shall be protected and indemnified in acting upon any
paper or document furnished by or on behalf of the Fund, reasonably believed to
be genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided ADS or its agents
or subcontractors by machine readable input, telex, CRT data entry or other
similar means authorized by the Fund, and shall not be held to have notice of
any change of authority of any person, until receipt of written notice thereof
from the Fund. ADS, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Fund,
and the proper countersignature of any former transfer agent or registrar, or
of a co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to
the other for any damages resulting from such failure to perform or otherwise
from such causes.
5.05 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any act
or failure to act hereunder.
5.06 In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party of seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in
any case in which the other party may be required to indemnify it except with
the other party's prior written consent.
6. COVENANTS OF THE FUND AND ADS
6.01 The Fund Shall promptly furnish to ADS a certified copy of the
resolution of the Board of Directors of the Fund authorizing the appointment of
ADS and the execution and delivery of this Agreement.
6.02 ADS hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
6.03 ADS shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, ADS agrees that all such records prepared or maintained
by ADS relating to the services to be performed by ADS hereunder are the
property of the Fund and will be preserved, maintained and made available in
accordance with such Section and Rules, and will be surrendered promptly to the
Fund on and in accordance with its request.
6.04 ADS and the Fund agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or received
pursuant to the negotiation or the carrying out of this Agreement shall remain
confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, ADS will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. ADS reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person, and
shall promptly notify the Fund of any unusual request to inspect or copy the
shareholder records of the Fund or the receipt of any other unusual request to
inspect, copy or produce the records of the Fund.
7. TERMINATION OF AGREEMENT
7.01 This Agreement shall become effective as of the date hereof and
shall remain in force for a period of three (3) years terminating on December,
2, 2000, provided however, that both parties to this Agreement have the option
to terminate the Agreement upon ninety (90) days prior written notice.
7.02 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, ADS reserves the right to charge for any other
reasonable expenses associated with such termination.
8. ASSIGNMENT
8.01 Neither this Agreement nor any rights or obligations hereunder may
be assigned by either party without the written consent of the other party.
8.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
9. AMENDMENT
9.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the
Board of Directors of the Fund.
10. NEW YORK LAWS TO APPLY
10.01 The provisions of this Agreement shall be construed and interpreted
in accordance with the laws of the State of New York as at the time in effect
and the applicable provisions of the 1940 Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
11. MERGER OF AGREEMENT
11.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
12. NOTICES.
All notices and other communications hereunder shall be in writing, shall
be deemed to have been given when received or when sent by telex or facsimile,
and shall be given to the following addresses (or such other addresses as to
which notice is given):
To the Fund: To the Administrator:
72 South Main Street Michael Miola, President
Canandaigua, New York 14424 American Data Services, Inc.
Attention: Steven Swartout 150 Motor Parkway, Suite 900
Hauppauge, NY 11788
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
THE CANANDAIGUA FUNDS AMERICAN DATA SERVICES, INC.
By: /s/ Steven Swartout By: /s/ Michael Miola
Steven Swartout, Secretary and Treasurer Michael Miola, President
<PAGE>
FEE SCHEDULE
For the services rendered by ADS in its capacity as transfer agent, the
Fund shall pay ADS, within ten (10) days after receipt of an invoice from ADS
at the beginning of each month, a fee, calculated as a combination of account
maintenance charges plus transaction charges as follows:
(A) ACCOUNT MAINTENANCE CHARGE:
The Greater of (No prorating for partial months):
(11) Minimum maintenance charge per portfolio/class $900.00/ month
OR,
(12) Based upon the total of all open/closed accounts {(1)} per portfolio/class
upon the following annual rates
(billed monthly):
FUND TYPE:
Dividend calculated and
paid annually, semi-annually, quarterly....................... $ 9.00 per
account
Dividend calculated and paid
monthly<ellipsis><ellipsis><ellipsis>.............. $10.50 per account
Dividend accrued daily and paid monthly <ellipsis><ellipsis>............ $14.00
per account
Closed accounts ................. $ 2.00 per account {(2)}
{(1)} All accounts closed during a month will be considered as open accounts
for billing purposes in the month the account is closed.
{(2)} Closed accounts remain on the shareholder files until all 1099's and
5498's have been distributed to the shareholders and send via mag-media
to the IRS.
PLUS,
(b) TRANSACTION FEES:
Trade Entry (purchase/liquidation) and maintenance transactions $ 1.50 each
New account set-up $ 3.00 each
Customer service calls $ 1.25 each
Correspondence/ information requests $ 1.75 each {(2)}
Check preparation $ .50 each
Liquidation's paid by wire transfer $ 3.00 each
ACH charge $ .45 each
SWP $ 1.00 each
(c) 24 HOUR AUTOMATED VOICE RESPONSE:
Initial set-up (one-time) charge per portfolio - $750.00
Monthly maintenance charge per portfolio - $50.00
All calls processed through automated voice response will be billed as a
customer service call listed above.
(D) FUND/SERV
All portfolios processed through Fund/SERV will be subject to an additional
monthly charge of $250.00
All transactions processed through Fund/SERV will be billed at the transaction
fee rates listed in (b) above.
FEE INCREASES
On each annual anniversary date of this Agreement, the fees enumerated above
will be increased by the change in the Consumer Price Index for the Northeast
region (CPI) for the twelve month period ending with the month preceding such
annual anniversary date.
(E) IRA PLAN FEES:
The following fees will be charged directly to the shareholder account:
Annual maintenance fee $15.00/account *
Incoming transfer from prior custodian $12.00
Distribution to a participant $15.00
Refund of excess contribution $15.00
Transfer to successor custodian $15.00
Automatic periodic distributions $15.00/year per account
* Includes $8.00 Bank Custody Fee.
(F) EXPENSES:
The Fund shall reimburse ADS for any out-of-pocket expenses, exclusive of
salaries, advanced by ADS in connection with but not limited to the costs for
printing fund documents, (i.e. printing of confirmation forms, shareholder
statements, redemption/dividend checks, envelopes, financial statements, proxy
statement, fund prospectus, etc.) proxy solicitation and mailing expenses,
travel requested by the Fund, telephone toll charges, 800-line costs and fees,
facsimile and data transmission costs, stationery and supplies (related to Fund
records), record storage, postage (plus a $0.085 service charge for all
mailings), pro-rata portion of annual SAS-70 audit letter, telex and courier
charges incurred in connection with the performance of its duties hereunder.
ADS shall provide the Fund with a monthly invoice of such expenses and the Fund
shall reimburse ADS within fifteen (15) days after receipt thereof.
(G) SPECIAL REPORTS:
All reports and/or analyses requested by the Fund that are not included
in the fee schedule, shall be subject to an additional charge, agreed upon in
advance, based upon the following rates:
Labor:
Senior staff - $150.00/hr.
Junior staff - $ 75.00/hr.
Computer time - $45.00/hr.
(H) SERVICE DEPOSIT:
The Fund will remit to ADS upon execution of this Agreement a security
deposit of equal to one (1) month's shareholder service fee. The service
deposit computation will be based either on the total number of shareholder
accounts (open and closed) of each portfolio to be serviced or the minimum
fee, whichever is greater, as of the execution date of this Agreement. The
Fund will have the option to have the security deposit applied to the last
month's service fee, or applied to any new contract between the Fund and ADS.
However, if the Fund elects or is forced to terminate this Agreement for any
reason what-so-ever other than a material breach by ADS (including, but not
limited to, the voluntary or involuntary termination of the Fund, liquidation
of the Fund's assets, the sale or merger of the Fund or it's assets to any
successor entity) prior to the termination date of this Agreement as specified
in Paragraph 7 of this Agreement, the Fund will forfeit the Security Deposit
paid to ADS upon execution of this Agreement
(I) CONVERSION CHARGE: (EXISTING FUNDS ONLY, NEW FUNDS PLEASE IGNORE)
There will be a charge to convert the Fund's shareholder accounting
records on to the ADS stock transfer system. In addition, ADS will be
reimbursed for all out-of-pocket expenses, enumerated in paragraph (b) above
and data media conversion costs, incurred during the conversion process.
The conversion charge will be estimated and agreed upon in advance by the
Fund and ADS. The charge will be based upon the quantity of records to be
converted and the condition of the previous service agents records.
<PAGE>
SCHEDULE A
PORTFOLIOS TO BE SERVICED UNDER THIS AGREEMENT:
The Equity Fund
The Bond Fund
EXHIBIT 9.2
ADMINISTRATIVE SERVICE AGREEMENT
BETWEEN
THE CANANDAIGUA FUNDS
AND
AMERICAN DATA SERVICES, INC.
<PAGE>
INDEX
1. DUTIES OF THE ADMINISTRATOR.
2. COMPENSATION OF THE ADMINISTRATOR.
3. RESPONSIBILITY AND INDEMNIFICATION.
4. REPORTS.
5. ACTIVITIES OF THE ADMINISTRATOR.
6. RECORDS.
7. CONFIDENTIALITY.
8. DURATION AND TERMINATION OF THE AGREEMENT.
9. ASSIGNMENT.
10. NEW YORK LAWS TO APPLY
11. AMENDMENTS TO THIS AGREEMENT.
12. MERGER OF AGREEMENT
13. NOTICES.
SCHEDULE A
(A) ADMINISTRATIVE SERVICE FEE:
FEE INCREASES
(B) EXPENSES.
(c) STATE REGISTRATION (BLUE SKY) SURCHARGE:
(D) SPECIAL REPORTS.
(e) SECURITY DEPOSIT.
SCHEDULE B
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made the 2nd day of December 1997, by and between The Canandaigua
Funds, a Delaware Business Trust, having its principal office and place of
business at 72 South Main Street, Canandaigua New York, 14424 (the "Fund"), and
American Data Services, Inc., a New York corporation having its principal
office and place of business at the Hauppauge Corporate Center, 150 Motor
Parkway, Suite 109, Hauppauge, New York 11788 (the "Administrator").
BACKGROUND
WHEREAS, the Fund is a diversified open-end management investment
company registered with the United States Securities and Exchange Commission
under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Administrator is a corporation experienced in
providing administrative services to mutual funds and possesses facilities
sufficient to provide such services; and
WHEREAS, the Fund desires to avail itself of the experience,
assistance and facilities of the Administrator and to have the Administrator
perform for the Fund certain services appropriate to the operations of the Fund
and the Administrator is willing to furnish such services in accordance with
the terms hereinafter set forth.
TERMS
NOW, THEREFORE, in consideration of the promises and mutual
covenants hereinafter contained, the Fund and the Administrator hereby agree to
the following:
1. DUTIES OF THE ADMINISTRATOR.
The Administrator will provide the Fund with the necessary office space,
communication facilities and personnel to perform the following services for
the Fund:
(a) Monitor all regulatory (1940 Act and IRS) and prospectus
restrictions for compliance;
(b) Prepare and coordinate the printing of semi-annual and
annual financial statements;
(c) Prepare selected management reports for performance and
compliance analyses as agreed upon by the Fund and Administrator
from time to time;
(d) Prepare selected financial data required for directors'
meetings as agreed upon by the Fund and the Administrator from time
to time and coordinate directors meeting agendas with outside legal
counsel to the Fund;
(e) Determine income and capital gains available for
distribution and calculate distributions required to meet
regulatory, income, and excise tax requirements, to be reviewed by
the Fund's independent public accountants;
(f) Prepare the Fund's federal, state, and local tax returns
to be reviewed by the Fund's independent public accountants;
(g) Prepare and maintain the Fund's operating expense budget
to determine proper expense accruals to be charged to the Fund in
order to calculate it's daily net asset value;
(h) 1940 ACT filings -
In conjunction with the Fund's outside legal counsel the
Administrator will:
Prepare the Fund's Form N-SAR reports;
Update all financial sections of the Fund's Statement of
Additional Information and coordinate its completion;
Update all financial sections of the Fund's prospectus and
coordinate its completion;
Update all financial sections of the Fund's proxy statement and
coordinate its completion;
Prepare an annual update to Fund's 24f-2 filing
(if applicable);
(i) Monitor services provided by the Fund's custodian bank as
well as any other service providers to the Fund;
(j) Provide appropriate financial schedules (as requested by
the Fund's independent public accountants or SEC examiners),
coordinate the Fund's annual or SEC audit, and provide office
facilities as may be required;
(k) Attend management and board of directors meetings as
requested;
(l) The preparation and filing (filing fee to be paid by the
Fund) of applications and reports as necessary to register
or maintain the Funds registration under the securities or "Blue
Sky" laws of the various states selected by the Fund or its
Distributor.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
2. COMPENSATION OF THE ADMINISTRATOR.
In consideration of the services to be performed by ADS as set forth
herein for each portfolio listed in Schedule B, ADS shall be entitled to
receive compensation and reimbursement for all reasonable out-of-pocket
expenses. The Fund agrees to pay ADS the fees and reimbursement of out-of-
pocket expenses as set forth in the fee schedule attached hereto as Schedule A.
3. RESPONSIBILITY AND INDEMNIFICATION.
(a) The Administrator shall be held to the exercise of reasonable care in
carrying out the provisions of the Agreement, but shall be without liability to
the Fund for any action taken or omitted by it in good faith without gross
negligence, bad faith, willful misconduct or reckless disregard of its duties
hereunder. It shall be entitled to rely upon and may act upon the accounting
records and reports generated by the Fund, advice of the Fund, or of counsel
for the Fund and upon statements of the Fund's independent accountants, and
shall be without liability for any action reasonably taken or omitted pursuant
to such records and reports or advice, provided that such action is not, to the
knowledge of the Administrator, in violation of applicable federal or state
laws or regulations, and provided further that such action is taken without
gross negligence, bad faith, willful misconduct or reckless disregard of its
duties.
(b) The Administrator shall not be liable to the Fund for any error of
judgment or mistake of law or for any loss arising out of any act or omission
by the Administrator in the performance of its duties hereunder except as
hereinafter set forth. Nothing herein contained shall be construed to protect
the Administrator against any liability to the Fund or its security
holders to which the Administrator shall otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence in the performance of its
duties on behalf of the Fund, reckless disregard of the Administrator's
obligations and duties under this Agreement or the willful violation of
any applicable law.
(c) Except as may otherwise be provided by applicable law, neither the
Administrator nor its stockholders, officers, directors, employees or agents
shall be subject to, and the Fund shall indemnify and hold such persons
harmless from and against, any liability for and any damages, expenses or
losses incurred by reason of the inaccuracy of information furnished to
the Administrator by the Fund or its authorized agents or in connection with
any error in judgment or mistake of law or any act or omission in the course
of, connected with or arising out of any services to be rendered hereunder,
except by reason of willful misfeasance, bad faith or gross negligence
in the performance of its duties, by reason of reckless disregard of the
Administrator's obligations and duties under this Agreement or the willful
violation of any applicable law.
4. REPORTS.
(a) The Fund shall provide to the Administrator on a quarterly basis a
report of a duly authorized officer of the Fund representing that all
information furnished to the Administrator during the preceding quarter was
true, complete and correct to the best of its knowledge. The Administrator
shall not be responsible for the accuracy of any information furnished to
it by the Fund, and the Fund shall hold the Administrator harmless in regard to
any liability incurred by reason of the inaccuracy of such information.
(b) The Administrator shall provide to the Board of Directors of the
Fund, on a quarterly basis, a report, in such a form as the Administrator and
the Fund shall from time to time agree, representing that, to its knowledge,
the Fund was in compliance with all requirements of applicable federal and
state law, including without limitation, the rules and regulations of the
Securities and Exchange Commission and the Internal Revenue Service, or
specifying any instances in which the Fund was not so in compliance. Whenever,
in the course of performing its duties under this Agreement, the Administrator
determines, on the basis of information supplied to the Administrator by the
Fund, that a violation of applicable law has occurred, or that, to its
knowledge, a possible violation of applicable law may have occurred or, with
the passage of time, could occur, the Administrator shall promptly notify the
Fund and its counsel of such violation.
5. ACTIVITIES OF THE ADMINISTRATOR.
The Administrator shall be free to render similar services to others so
long as its services hereinunder are not impaired thereby.
6. RECORDS.
The records maintained by the Administrator shall be the property of the
Fund, and shall be made available to the Fund promptly upon request by the Fund
in the form in which such records have been maintained or preserved. The
Administrator shall upon approval of the Fund assist the Fund's independent
auditors, or, any regulatory body, in any requested review of the Fund's
accounts and records. The Administrator shall preserve the records in its
possession (at the expense of the Fund) as required by Rule 31a-1 of the 1940
Act.
7. CONFIDENTIALITY.
The Administrator agrees that it will, on behalf of itself and its
officers and employees, treat all transactions contemplated by this Agreement,
and all other information germane thereto, as confidential and such information
shall not be disclosed to any person except as may be authorized by the Fund.
8. DURATION AND TERMINATION OF THE AGREEMENT.
This Agreement shall become effective as of the date hereof and shall
remain in force for a period of three (3) years, provided however, that both
parties to this Agreement have the option to terminate the Agreement, upon
ninety (90) days prior written notice.
Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, ADS reserves the right to charge for any other
reasonable expenses associated with such termination.
9. ASSIGNMENT.
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 Fund without the prior written
consent of the Administrator, or by the Administrator without the prior written
consent of the Fund.
10. NEW YORK LAWS TO APPLY
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the 1940 Act. To the extent that the applicable
law of the State of New York, or any of the provisions herein, conflict with
the applicable provisions of the 1940 Act, the latter shall control.
11. AMENDMENTS TO THIS AGREEMENT.
This Agreement may be amended by the parties hereto only if such
amendment is in writing and signed by both parties.
12. MERGER OF AGREEMENT
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
13. NOTICES.
All notices and other communications hereunder shall be in writing, shall
be deemed to have been given when delivered in person or by certified mail,
return receipt requested, and shall be given to the following addresses (or
such other addresses as to which notice is given):
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
THE CANANDAIGUA FUNDS AMERICAN DATA SERVICES, INC.
By: /s/ Steven Swartout By: /s/ Michael Miola
Steven Swartout, Secretary and Treasurer Michael Miola, President
<PAGE>
SCHEDULE A
(A) ADMINISTRATIVE SERVICE FEE:
For the services rendered by ADS in its capacity as administrator, as
specified in Paragraph 1. DUTIES OF THE ADMINISTRATOR., the Fund shall pay ADS
within ten (10) days after receipt of an invoice from ADS at the beginning of
each month, a fee equal to the greater of:
NOTE: THE FOLLOWING FEES ARE PER PORTFOLIO SERVICED.
MINIMUM FEE:
CALCULATED FEE WILL BE BASED UPON PRIOR MONTH AVERAGE NET ASSETS:
(No prorating partial months)
EACH
PORTFOLIO
Under $5 million <ellipsis>.......................... $1,500
From $5 million to $10 million.<ellipsis>.... 1,750
From $10 million to $20 million....... 2,000
From $20 million on......................... 2,500
OR,
NET ASSET CHARGE:
1/12th of 0.012% (12 basis points) of average net assets of portfolio for
month.
FEE INCREASES
On each annual anniversary date of this Agreement, the fees enumerated above
will be increased by the change in the Consumer Price Index for the Northeast
region (CPI) for the twelve month period ending with the month preceding such
annual anniversary date.
(B) EXPENSES.
The Fund shall reimburse ADS for any out-of-pocket expenses , exclusive
of salaries, advanced by ADS in connection with but not limited to the printing
or filing of documents for the Fund, travel, telephone, quotation services,
facsimile transmissions, stationery and supplies, record storage,
postage, telex, and courier charges, incurred in connection with the
performance of its duties hereunder. ADS shall provide the Fund with a monthly
invoice of such expenses and the Fund shall reimburse ADS within fifteen (15)
days after receipt thereof.
(C) STATE REGISTRATION (BLUE SKY) SURCHARGE:
The fees enumerated in paragraph (a) above include the initial state
registration, renewal and maintenance of registrations (as detailed in
Paragraph 1(l) DUTIES OF THE ADMINISTRATOR) for three (3) states. Each
additional state registration requested will be subject to the following fees:
Initial registration ............... $295.00
Registration renewal ........... $150.00
Sales reports (if required) ... $ 25.00
(D) SPECIAL REPORTS.
All reports and /or analyses requested by the Fund, its auditors, legal
counsel, portfolio manager, or any regulatory agency having jurisdiction over
the Fund, that are not in the normal course of fund administrative activities
as specified in Section 1 of this Agreement shall be subject to an additional
charge, agreed upon in advance, based upon the following rates:
Labor:
Senior staff - $150.00/hr.
Junior staff - $ 75.00/hr.
Computer time - $45.00/hr.
(E) SECURITY DEPOSIT.
The Fund will remit to ADS upon execution of this Agreement a security
deposit equal to one (1) month's minimum fee under this Agreement, computed in
accordance with the number of portfolios listed in Schedule B of this
Agreement. The Fund will have the option to have the security deposit applied
to the last month's service fee, or applied to any new contract between the
Fund and ADS.
However, if the Fund elects or is forced to terminate this Agreement for any
reason what-so-ever (including, but not limited to, the voluntary or
involuntary termination of the Fund, liquidation of the Fund's assets, the sale
or merger of the Fund or it's assets to any successor entity) prior to the
termination date of this Agreement as specified in Paragraph 8 of this
Agreement, the Fund will forfeit the Security Deposit paid to ADS upon
execution of this Agreement
<PAGE>
SCHEDULE B
PORTFOLIOS TO BE SERVICED UNDER THIS AGREEMENT:
The Equity Fund
The Bond Fund
EXHIBIT 10
Underberg & Kessler LLP
1800 Chase Square
Rochester, New York 14604
December 3, 1997
The Canandaigua Funds
72 South Main Street
Canandaigua, New York 14424
Re: The Canandaigua Funds: Registration Statement on Form N-1A
Gentlemen:
You have requested our opinion as to certain matters relating to The
Canandaigua Funds, an open end management investment company organized as a
Delaware business trust (the "Trust") established pursuant to a Declaration
of Trust dated October 31, 1997 (the "Declaration"). We understand that
the Trust and The Canandaigua National Collective Investment Fund for
Qualified Trusts, a collective investment fund organized as a trust under
New York law and in accordance with the rules and regulations of the U.S.
Comptroller of the Currency (the "Predecessor Trust"), have entered into an
Agreement and Plan of Reorganization, Conversion and Termination dated as
of October 31, 1997 (the "Reorganization Agreement"), which will effect the
conversion of the Equity Portfolio and the Bond Portfolio, each a separate
series of units of beneficial interest ("Units") of the Predecessor Trust
(each a "Portfolio"), into an equal number of shares of beneficial
interest, par value $.001 per share (the "Shares"), of its corresponding
series of the Trust, the Equity Fund and the Bond Fund (each a
"Corresponding Series"), respectively. The conversion will involve the
transfer of all of the assets of each Portfolio to the Trust solely in
exchange (1) for assumption of all liabilities of that Portfolio by the
Corresponding Series and (2) for the issuance by the Corresponding Series
of its Shares to the Predecessor Trust, followed by the constructive
distribution on the Closing Date (as defined in the Reorganization
Agreement) of such Shares to the holders of Units of that Portfolio in
exchange for their Units in and in liquidation and termination of that
Portfolio.
As successor to the Predecessor Trust, the Trust is in the process of
filing or has filed with the Securities and Exchange Commission (the "SEC")
Post-Effective Amendment No. 6 to the registration statement on Form N-1A,
Registration No. 033-53698, heretofore filed by the Predecessor Trust under
the Securities Act of 1933, as amended (the "Securities Act"), to register
an indefinite number of shares of the Trust, which also constitutes Post-
Effective Amendment No. 7 to the registration statements heretofore filed
by the Predecessor Trust under the Investment Company Act of 1940, as
amended (the "Investment Company Act"), Registration No. 811-7322,
(collectively, the "Registration Statement").
Our firm has acted as counsel to both the Predecessor Trust and to you
in connection with the preparation, execution and delivery of the
Declaration, the Bylaws and other organizational documents of the Trust,
the Reorganization Agreement, and the Registration Statement. For purposes
of this opinion, we have also reviewed the actions taken by the Trustees to
organize the Trust and to authorize the execution and delivery of the
Reorganization Agreement and the issuance and sale of the Shares, as well
as certificates of public officials and of the Trustees and officers of the
Trust as to matters of fact, and such other documents as we have deemed
necessary for the purpose of rendering this opinion. We have assumed
without independent verification the genuineness of the signatures on, and
the authenticity of, all documents furnished to us and the conformity to
the originals of all documents submitted to us as copies.
We are members of the Bar of the State of New York, and our opinion is
limited to matters governed by the laws of the State of New York, the
Business Trust Act and the General Corporation Law of the State of
Delaware, and the federal laws of the United States of America.
Based upon the foregoing, it is our opinion that:
1) The Trust is a duly organized and validly existing business trust
in good standing under the laws of the state of Delaware.
2) The Trust is authorized to issue an unlimited number of Shares.
The Shares that the Trust is to issue to the Predecessor Trust
pursuant to the Reorganization Agreement (the "Initial Shares"),
and the Shares to be offered pursuant to the Registration
Statement (the "Offered Shares"), have been duly and validly
authorized by all requisite action of the Trustees of the Trust.
3) The Initial Shares, when issued by the Trust in accordance with
the provisions of the Reorganization Agreement, and the Offered
Shares, when issued and sold as contemplated by the Registration
Statement, will have been validly and legally issued, and will be
fully paid and non-assessable by the Trust.
4) Under the Delaware Business Trust Act and the terms of the
Declaration, each shareholder of the Trust, in such capacity,
will be entitled to the same limitation of personal liability as
that extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of
Delaware; provided, however, that we express no opinion as to the
liability of any shareholder who is, was or may become a Trustee
of the Trust.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to any references to this opinion therein.
Very truly yours,
/s/ Underberg & Kessler LLP
UNDERBERG & KESSLER LLP
G:\UKC\CANNATBK\GENSEC\N-1A\REORGSEC.OPN
Exhibit 11
INDEPENDENT AUDITORS' CONSENT
As independent public accountants, we hereby consent to the use of
our report and all references to our Firm included in or made a part
of this Form N-1A Registration Statement Post-Effective Amendment No. 6/
Registration Statement under the Investment Company Act of 1940
Amendment No. 7, of The Canandaigua Funds, successor by reorganization
of the Canandaigua National Collective Investment Fund for Qualified Trusts.
/s/ Morga Jones & Hufsmith, P.C.
Canandaigua, New York
December 2, 1997
Exhibit 16
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
AVERAGE ANNUAL RETURN QUOTATIONS
EQUITY FUND:
The Average Annual Total Return for the Equity Portfolio of the
Canandaigua National Collective Investment Fund for Qualified Trusts, the
predecessor to the Equity Fund, was calculated according to the following
formula:
n
FORMULA: P (1+T) = ERV
P= a hypothetical investment of $1,000
T= average total return
n= number of years
ERV= ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the 1, 5 or 10 year (or other) periods at
the end of the 1, 5 or 10 year (or other) periods (or fractional portion
thereof)
Ending Average
Period Redeemable Annual Rate
COVERED: VALUE: OF RETURN:
Year Ended 12/31/96 $1,215.90 21.59%
Inception (10/21/92)
through 12/31/96 $1,129.95 12.95%
BOND FUND:
The Average Annual Total Return for the Bond Portfolio of the
Canandaigua National Collective Investment Fund for Qualified Trusts, the
predecessor to the Bond Fund, was calculated according to the following
formula:
n
FORMULA: P (1+T) = ERV
P= a hypothetical investment of $1,000
T= average total return
n= number of years
ERV= ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the 1, 5 or 10 year (or other) periods at
the end of the 1, 5 or 10 year (or other) periods (or fractional portion
thereof)
Ending Average
Period Redeemable Annual Rate
COVERED: VALUE: OF RETURN:
Year Ended 12/31/96 $1,023.70 2.37%
Inception (10/21/92)
through 12/31/96 $1,055.40 5.54%
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUNDS'
FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<CIK> 0000893730
<NAME> THE CANANDAIGUA NAT'L COLLECTIVE INVESTMENT FUND
<SERIES>
<NUMBER> 1
<NAME> EQUITY PORTFOLIO
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1.00
<INVESTMENTS-AT-COST> 14,908
<INVESTMENTS-AT-VALUE> 16,098
<RECEIVABLES> 14
<ASSETS-OTHER> 335
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 16,446
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 35
<TOTAL-LIABILITIES> 35
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 852
<SHARES-COMMON-PRIOR> 759
<ACCUMULATED-NII-CURRENT> 92
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,742
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 410
<NET-ASSETS> 16,411
<DIVIDEND-INCOME> 87
<INTEREST-INCOME> 5
<OTHER-INCOME> 0
<EXPENSES-NET> 76
<NET-INVESTMENT-INCOME> 16
<REALIZED-GAINS-CURRENT> 1,742
<APPREC-INCREASE-CURRENT> 410
<NET-CHANGE-FROM-OPS> 2,169
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 119
<NUMBER-OF-SHARES-REDEEMED> 25
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,767
<ACCUMULATED-NII-PRIOR> 3
<ACCUMULATED-GAINS-PRIOR> 1,419
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 71
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 76
<AVERAGE-NET-ASSETS> 14,082
<PER-SHARE-NAV-BEGIN> 16.67
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> 2.57
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.26
<EXPENSE-RATIO> 0.54
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<CIK> 0000893730
<NAME> THE CANANDAIGUA NAT'L COLLECTIVE INVESTMENT FUND
<SERIES>
<NUMBER> 2
<NAME> BOND PORTFOLIO
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1.00
<INVESTMENTS-AT-COST> 548
<INVESTMENTS-AT-VALUE> 540
<RECEIVABLES> 16
<ASSETS-OTHER> 43
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 599
<PAYABLE-FOR-SECURITIES> 1
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 1
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 47
<SHARES-COMMON-PRIOR> 40
<ACCUMULATED-NII-CURRENT> 16
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1)
<NET-ASSETS> 598
<DIVIDEND-INCOME> 1
<INTEREST-INCOME> 15
<OTHER-INCOME> 0
<EXPENSES-NET> 3
<NET-INVESTMENT-INCOME> 14
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (1)
<NET-CHANGE-FROM-OPS> 12
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8
<NUMBER-OF-SHARES-REDEEMED> 2
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 97
<ACCUMULATED-NII-PRIOR> 25
<ACCUMULATED-GAINS-PRIOR> (1)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3
<AVERAGE-NET-ASSETS> 515
<PER-SHARE-NAV-BEGIN> 12.54
<PER-SHARE-NII> 0.33
<PER-SHARE-GAIN-APPREC> (0.05)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.82
<EXPENSE-RATIO> 0.52
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
