As filed with the Securities and Exchange Commission on March 25, 1996
Securities Act File No. 33-85242
Investment Company Act File No. 811-8822
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 3 X
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 4 X
CAPITAL MANAGEMENT INVESTMENT TRUST
71 Broadway
Suite 2201
New York, New York 10006
Telephone (212) 509-1111
AGENT FOR SERVICE:
Frank P. Meadows III, Treasurer
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
With copies to:
M. Guy Brooks, III, Esq.
Poyner & Spruill, L.L.P.
3600 Glenwood Avenue
Raleigh, North Carolina 27612
It is proposed that this filing will become effective:
_ Immediately upon filing pursuant X on April l, 1996 pursuant
to Rule 485(b) to Rule 485(b)
_ 60 days after filing pursuant _ on ____________, 1996 pursuant
to Rule 485(a)(1) to Rule 485(a)(1)
_ 75 days after filing pursuant _ on ____________, 1996 pursuant
to Rule 485(a)(2) to Rule 485(a)(2)
The issuer has previously registered an indefinite number of shares of two
classes of one series: Capital Management Equity Fund, under the Securities Act
of 1933, as amended, pursuant to Rule 24f-2 under the Investment Company Act of
1940, as amended. The Rule 24f-2 Notice for the year ended November 30, 1995,
was filed on February 26, 1996.
CAPITAL MANAGEMENT INVESTMENT TRUST
Capital Management Equity Fund
Institutional Shares
Cross Reference Sheet
Pursuant to Rule 481(a) Under the Securities Act of 1933
Form N-1A Item No. Prospectus Caption
PART A
Item 1 Cover Page Cover Page
Item 2 Synopsis Summary of Fund Expenses
Item 3 Condensed Financial Information Performance Data
Item 4 General Description of Registrant Investment Objective and Policies
Risk Factors
Investment Limitations
Other Information
Item 5 Management of the Fund Management of the Fund
Item 6 Capital Stock and Other Securities Dividends and Distributions
Federal Income Tax Information
Organization and Capital Shares
Voting Rights
Item 7 Purchase of Securities Being Offered
How to Purchase Shares
How Net Asset Value is Determined
Item 8 Redemption or Repurchase How to Redeem Shares
Item 9 Pending Legal Proceedings Not Applicable
Statement of Additional
Information Caption
PART B
Item 10 Cover Page Cover Page
Item 11 Table of Contents Cover Page
Item 12 General Information and History Investment Objective and Policies
Investment Limitations
Management
Item 13 Investment Objectives and Policies Investment Objective and Policies
Investment Limitations
Portfolio Transactions
Fund Expenses
Appendix A - Description of Ratings
Item 14 Management of the Fund Management
Item 15 Control Persons and Principal Management
Holders of Securities Capital Shares and Voting
Item 16 Investment Advisory and Other Management
Services
Item 17 Brokerage Allocation and Other Special Shareholder Services
Practices
Item 18 Capital Stock and Other Securities Capital Shares and Voting
Item 19 Purchase, Redemption and Pricing Purchase of Shares
of Securities Being Offered Redemption of Shares
Item 20 Tax Status Additional Tax Information
Item 21 Underwriters Management
Item 22 Calculation of Performance Data Additional Information on
Performance
Item 23 Financial Statements Attached to Statement of
Additional Information
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 Cusip Number 140296104
CAPITAL MANAGEMENT EQUITY FUND
INSTITUTIONAL SHARES
The investment objective of the Capital Management Equity Fund (the "Fund") is
to seek capital appreciation principally through investments in equity
securities, consisting of common and preferred stocks and securities convertible
into common stocks. While there is no assurance that the Fund will achieve its
investment objective, it endeavors to do so by following the investment policies
described in this Prospectus.
This Prospectus relates to shares ("Institutional Shares") representing
interests in the Fund. The Institutional Shares are available only to certain
institutions and other investors described herein. See "Prospectus Summary -
Offering Price." Institutional Shares are sold and redeemed at net asset value
without any sales or redemption charges or shareholder servicing or distribution
fees.
INVESTMENT ADVISOR
Capital Management Associates, Inc.
New York, New York
The Fund is a diversified series of the Capital Management Investment Trust, a
registered, open-end management, investment company. This Prospectus sets forth
concisely the basic information you should know before investing in the Fund.
You should read it and keep it for future reference. A Statement of Additional
Information dated April 1, 1996, containing additional information about the
Fund has been filed with the Securities and Exchange Commission and is
incorporated by reference in this Prospectus in its entirety. The Fund's
address is 71 Broadway, Suite 2201, New York, New York 10006, and its telephone
number is 1- 800-525-3863. A copy of the Statement of Additional Information
may be obtained at no charge by calling or writing the Fund.
Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any financial institution, and Fund shares are not federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
agency. Investment in the Fund involves risks, including the possible loss of
principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
April 1, 1996
TABLE OF CONTENTS
PROSPECTUS SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SUMMARY OF FUND EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . 3
FINANCIAL HIGHLIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . . . . . . . . . . . . 5
RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
INVESTMENT LIMITATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
HOW NET ASSET VALUE IS DETERMINED . . . . . . . . . . . . . . . . . . . . . 10
PERFORMANCE DATA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
MANAGEMENT OF THE FUND. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
HOW TO PURCHASE SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
HOW TO REDEEM SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . 18
FEDERAL INCOME TAX INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 19
ORGANIZATION AND CAPITAL SHARES . . . . . . . . . . . . . . . . . . . . . . 20
VOTING RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
This Prospectus is not an offering of the securities herein described in any
state in which the offering is unauthorized. No sales representative, dealer,
or other person is authorized to give any information or to make any
representations other than those contained in this Prospectus.
PROSPECTUS SUMMARY
The Fund The Capital Management Equity Fund (the "Fund") is a
diversified series of the Capital Management Investment
Trust (the "Trust"), a registered, open-end management,
investment company organized as a Massachusetts business
trust. This Prospectus relates to Institutional Shares of
the Fund. See "Organization and Capital Shares."
Offering Price The Institutional Shares are offered at net asset value
without a sales charge. The Institutional Shares are
available only to the following classes of investors: any
account managed by the Advisor, and any other institutional
investor with a minimum investment in the Fund of at least
$250,000. The minimum initial investment is $250,000
unless otherwise approved by the Advisor. The minimum
subsequent investment is $500. See "How to Purchase
Shares."
Investment The investment objective of the Fund is to seek capital
Objective appreciation principally through investments in equity
securities, consisting of common and preferred stocks and
securities convertible into common stocks. Realization of
current income is not a significant investment
consideration, and any income realized will be incidental
to the Fund's objective. See "Investment Objective and
Policies."
Advisor Subject to the general supervision of the Trust's Board of
Trustees and in accordance with the Fund's investment
policies, Capital Management Associates, Inc., of New York,
New York (the "Advisor"), manages the Fund's investments.
The Advisor manages over $1 billion in assets. Its clients
include individuals, corporations, pension and profit-
sharing plans, and endowments. For its advisory the
Advisor receives a monthly fee based on the Fund's daily
net assets at the annual rate of 1.00% of the first $100
million of Fund assets, 0.90% of the next $150 million,
0.85% of the next $250 million, and 0.80% of all assets
over $500 million. Although the investment advisory fee is
higher than that paid by most other investment companies,
the Board of Trustees believes the fee is reasonable given
the Fund's policy of investing in medium-capitalization
companies, which may require additional research and
monitoring by the Advisor. See "Management of the Fund -
Investment Advisor."
Dividends The Fund may pay income dividends, if any, quarterly;
capital gains, if any, are paid at least once each year.
Dividends and capital gains distributions are automatically
reinvested in additional Institutional Shares at net asset
value unless the shareholder elects to receive cash. See
"Dividends and Distributions."
Distributor Shields & Company (the "Distributor") serves as distributor
of the Fund's shares. The Distributor is affiliated with
the Advisor. See "Management of the Fund - Distributor."
Redemption There is no charge for redemptions. Shares may be redeemed
of Shares at any time at the net asset value next determined after
receipt of a redemption request by the Fund. A shareholder
who submits appropriate written authorization may redeem
shares by telephone. See "How to Redeem Shares."
Special Risk The Fund is not intended to provide a complete investment
Considerations program, and there can be no assurance that the Fund will
achieve its investment objective. To the extent that
equities comprise a major portion of the Fund's portfolio,
the Fund's net asset value will be subject to stock market
fluctuation. Some of the Fund's investments may include
illiquid securities, foreign securities, and securities
purchased subject to a repurchase agreement or on a "when-
issued" basis, which involve certain risks. The Fund may
borrow only under certain limited conditions (including to
meet redemption requests) and not to purchase securities.
It is not the intent of the Fund to borrow except for
temporary cash requirements. Borrowing, if done, would
tend to exaggerate the effects of market and interest rate
fluctuations on the Fund's net asset value until repaid.
See "Risk Factors."
SUMMARY OF FUND EXPENSES
The following tables set forth certain information in connection with the
expenses of the Institutional Shares of the Fund for the current fiscal year.
The information is intended to assist the investor in understanding the various
costs and expenses borne by the Institutional Shares of the Fund, and therefore
indirectly by its investors, the payment of which will reduce an investor's
return on an annual basis.
Shareholder Transaction Expenses for Institutional Shares
Maximum Sales Charge Imposed on Purchases . . . . . . . . . . . . . . . . .None
(as a percentage of offering price)
Maximum Sales Charge Imposed on Reinvested Dividends. . . . . . . . . . . .None
Deferred Sales Load . . . . . . . . . . . . . . . . . . . . . . . . . . . .None
Redemption Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .None
Exchange Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .None
Annual Fund Operating Expenses
for Institutional Shares1
(as a percentage average net assets)
Management Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00%1
12b-1 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .None
Other Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.50%1
Total Fund Operating Expenses . . . . . . . . . . . . . . . . . . . . . . 1.50%1
EXAMPLE: You would pay the following expenses on a $1,000 investment in
Institutional Shares of the Fund, whether or not you redeem at the end of the
period, and assuming a 5% annual return:
1 year 3 years 5 years 10 years
$15 $47 $82 $199
THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
1 The Total Fund Operating Expenses shown above are based upon actual
operating expenses incurred by the Institutional Shares of the Fund for the
fiscal period ended November 30, 1995, which, after fee waivers and expense
reimbursements, were 0.31% of average daily net assets of the Institutional
Shares of the Fund, but restated to reflect the expenses anticipated to be
incurred by the Institutional Shares of the Fund for the current fiscal
year. Absent such waivers and reimbursements, the percentages would have
been 1.00% for Management Fees and 7.20% for Total Fund Operating Expenses
for the Institutional Shares of the Fund for the fiscal period ended
November 30, 1995. The management fee is higher than that paid by most
other investment companies. The Advisor has voluntarily agreed to a
reduction in the fees payable to it and to reimburse expenses of the Fund,
if necessary, in an amount that limits Total Fund Operating Expenses
(exclusive of interest, taxes, brokerage fees and commissions, and
extraordinary expenses) to not more than 1.50% of the Institutional Shares'
average daily net assets. There can be no assurance that the Advisor's
voluntary fee waivers and expense reimbursements will continue in the
future.
See "How to Purchase Shares" and "Management of the Fund" below for more
information about the fees and costs of operating the Fund. The example shown
above assumes a 5% annual return pursuant to the requirements of the Securities
and Exchange Commission. The hypothetical rate of return is not intended to be
representative of past or future performance of the Fund. The annual rate of
return may be greater or less than 5%.
FINANCIAL HIGHLIGHTS
The Fund has two classes of shares - Investor Shares and Institutional Shares.
See "Organization and Capital Shares." This Prospectus relates to Institutional
Shares. The financial data included in the table below has been derived from
audited financial statements of the Fund. The financial data for the fiscal
period ended November 30, 1995, have been derived from financial statements
audited by KPMG Peat Marwick LLP, independent auditors, whose report covering
such period is included in the Statement of Additional Information. The
information in the table below should be read in conjunction with the Fund's
latest audited financial statements and notes thereto, which are included in the
Statement of Additional Information, a copy of which may be obtained at no
charge by calling the Fund. Further information about the performance of the
Fund is contained in the Annual Report of the Fund, a copy of which may be
obtained at no charge by calling the Fund.
Institutional Class
(For a Share Outstanding Throughout the Fiscal Period)
For the period from
January 27, 1995,
(commencement of operations)
to November 30, 1995
Net asset value, beginning of period $10.00
Income from investment operations
Net investment income 0.20
Net realized and unrealized
gains on investments 2.10
Total from investment operations 2.30
Distributions to shareholders from
Net investment income (0.14)
Total distributions (0.14)
Net asset value, end of period $12.16
Total return 23.00% (a)
Ratios/supplemental data
Net assets, end of period $1,832,507
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 7.20%(b)
After expense reimbursements and waived fees 0.31%(b)
Ratio of net investment income (loss)
to average net assets
Before expense reimbursements and waived fees (4.45)%(b)
After expense reimbursements and waived fees 2.44%(b)
Portfolio turnover rate 47.74%
(a) Annualized total return is 27.91%.
(b) Annualized
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is growth of capital through capital
appreciation. The Fund will seek to attain its objective by investing in equity
securities, consisting of common and preferred stocks and debt or equities
convertible into or exchangeable for common stocks. Realization of current
income is not a significant investment consideration, and any income realized
will be incidental to the Fund's objective. The Fund's investment objective and
fundamental investment limitations described herein may not be altered without
the prior approval of a majority of the Fund's shareholders.
Under normal market conditions, at least 90% of the Fund's total assets will be
invested in equity securities. However, as a temporary defensive measure, when
the Advisor determines that market conditions warrant such investments, the Fund
may invest up to 100% of its total assets in investment grade bonds, U.S.
Government Securities, repurchase agreements, or money market instruments. When
the Fund invests its assets in investment grade bonds, U.S. Government
Securities, repurchase agreements, or money market instruments as a temporary
defensive measure, it is not pursuing its stated investment objective. Under
normal circumstances, however, the Fund will also hold money market or
repurchase agreement instruments for funds awaiting investment, to accumulate
cash for anticipated purchases of portfolio securities, to allow for shareholder
redemptions, and to provide for Fund operating expenses.
Equity Selection Criteria. The Advisor will manage the Fund's assets by
utilizing an investment philosophy which has been employed by the Advisor since
the firm's inception. Under normal market conditions, the Fund will invest in
equity securities consisting of common stocks and securities convertible into
common stocks. The Fund intends to invest in a diversified group of common
stocks and will not concentrate its investments in any one industry or group.
The Fund will focus on medium-capitalization companies, which are defined as
those whose market capitalization range is from $300 million to $6 billion.
This market-capitalization range includes a universe of approximately 1,700
companies. Stocks held in the portfolio will generally be traded on either the
New York Stock Exchange, American Stock Exchange, or the over-the-counter
market. Foreign securities, if held, will generally be traded on foreign
securities exchanges. Foreign securities may be held in the form of American
Depository Receipts ("ADRs"). ADRs are foreign securities denominated in U.S.
dollars and traded on U.S. securities markets. See "Foreign Securities" below.
An economic forecast is developed by the Advisor's Investment Committee to guide
industry allocation decisions. Medium-capitalization equities in industries
where the outlook is favorable relative to current price levels are then
subjected to additional screening, and are finally selected through fundamental
security analysis to identify value. This process most often includes visits
with company management and contacts with industry experts and suppliers. The
results of this research are presented at meetings of the Advisor's investment
professionals. Final investment decisions are made by the Advisor's Investment
Committee (identified below under "Management of the Fund-Investment Advisor").
U.S. Government Securities. The Fund may invest a portion of the portfolio in
U.S. Government Securities, defined to be U.S. Government obligations such as
U.S. Treasury notes, U.S. Treasury bonds, and U.S. Treasury bills; obligations
guaranteed by the U.S. Government such as obligations issued by the Government
National Mortgage Association ("GNMA"); as well as obligations of U.S.
Government authorities, agencies and instrumentalities such as Federal National
Mortgage Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"),
Federal Home Administration ("FHA"), Federal Farm Credit Bank ("FFCB"), Federal
Home Loan Bank ("FHLB"), Student Loan Marketing Association ("SLMA"), Resolution
Trust Corporation, and The Tennessee Valley Authority. U.S. Government
Securities may be acquired subject to repurchase agreements. While obligations
of some U.S. Government sponsored entities are supported by the full faith and
credit of the U.S. Government (e.g., GNMA), several are supported by the right
of the issuer to borrow from the U.S. Government (e.g., FNMA, FHLMC), and still
others are supported only by the credit of the issuer itself (e.g., SLMA, FFCB).
No assurances can be given that the U.S. Government will provide financial
support to U.S. Government agencies or instrumentalities in the future, other
than as set forth above, since it is not obligated to do so by law. The
guarantee of the U.S. Government does not extend to the yield or value of the
Fund's shares.
Money Market Instruments. Money market instruments may be purchased for
temporary defensive purposes, to accumulate cash for anticipated purchases of
portfolio securities, and to provide for shareholder redemptions and operating
expenses of the Fund. Money market instruments mature in thirteen months or
less from the date of purchase and may include U.S. Government Securities,
corporate debt securities (including those subject to repurchase agreements),
bankers acceptances and certificates of deposit of domestic branches of U.S.
banks, and commercial paper (including variable amount demand master notes)
rated in one of the two highest rating categories by any of the nationally
recognized statistical rating organizations, or if not rated, of equivalent
quality in the Advisor's opinion. The Advisor may, when it believes that
unusually volatile or unstable economic and market conditions exist, depart from
the Fund's investment approach and assume temporarily a defensive portfolio
posture, increasing the Fund's percentage investment in money market
instruments, even to the extent that 100% of the Fund's total assets may be so
invested.
Repurchase Agreements. The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when a Fund acquires a security and simultaneously
resells it to the vendor (normally a member bank of the Federal Reserve or a
registered Government Securities dealer) for delivery on an agreed upon future
date. The repurchase price exceeds the purchase price by an amount which
reflects an agreed upon market interest rate earned by the Fund effective for
the period of time during which the repurchase agreement is in effect. Delivery
pursuant to the resale typically will occur within one to five days of the
purchase. The Fund will not enter into any repurchase agreement which will
cause more than 10% of its net assets to be invested in repurchase agreements
which extend beyond seven days or other illiquid securities. In the event of
the bankruptcy of the other party to a repurchase agreement, the Fund could
experience delays in recovering its cash or the securities lent. To the extent
that in the interim the value of the securities purchased may have declined, the
Fund could experience a loss. In all cases, the creditworthiness of the other
party to a transaction is reviewed and found satisfactory by the Advisor.
Repurchase agreements are, in effect, loans of Fund assets. The Fund will not
engage in reverse repurchase transactions, which are considered to be borrowings
under the 1940 Act.
Foreign Securities. The Fund may invest in the securities of foreign private
issuers. The same factors would be considered in selecting foreign securities
as with domestic securities. Foreign securities' investment presents special
consideration not typically associated with investment in domestic securities.
Foreign taxes may reduce income. Currency exchange rates and regulations may
cause fluctuations in the value of foreign securities. Foreign securities are
subject to different regulatory environments than in the United States, and
compared to the United States, there may be a lack of uniform accounting,
auditing, and financial reporting standards; less volume and liquidity and more
volatility; less public information; and less regulation of foreign issuers.
Countries have been known to expropriate or to nationalize assets, and foreign
investments may be subject to political, financial, or social instability or to
adverse diplomatic developments. There may be difficulties in obtaining service
of process on foreign issuers and difficulties in enforcing judgments with
respect to claims under the U.S. Securities laws against such issuers.
Favorable or unfavorable differences between U.S. and foreign economies could
affect foreign securities' values. The U.S. Government has, in the past,
discouraged certain foreign investments by U.S. investors through taxation or
other restrictions, and it is possible that such restrictions could be imposed
again.
Because of the inherent risk of foreign securities over domestic issues, the
Fund will generally limit foreign investments to those traded domestically as
American Depository Receipts (ADRs). ADRs are receipts issued by a U.S. bank or
trust company evidencing ownership of securities of a foreign issuer. ADRs may
be listed on a national securities exchange or may trade in the over-the-counter
market. The prices of ADRs are denominated in U.S. dollars while the underlying
security may be denominated in a foreign currency. To the extent the Fund
invests in other foreign securities, it will generally limit such investments to
foreign securities traded on foreign securities exchanges.
Investment Companies. To achieve its investment objective, the Fund may invest
its total assets in securities of other investment companies whose investment
objectives are consistent with the Fund's investment objective, to the limited
extent permitted by the 1940 Act. The Fund will not acquire securities of any
one investment company if, immediately thereafter, the Fund would own more than
3% of such company's total outstanding voting securities, securities issued by
such company would have an aggregate value in excess of 5% of the Fund's total
assets, or securities issued by such company and securities held by the Fund
issued by other investment companies would have an aggregate value in excess of
10% of the Fund's total assets. The Fund will only invest in other investment
companies by purchase of such securities on the open market where no commission
or profit to a sponsor or dealer results from the purchase other than the
customary broker's commissions or when the purchase is part of a plan of merger,
consolidation, reorganization, or acquisition. To the extent the Fund invests
in other investment companies, the shareholders of the Fund would indirectly pay
a portion of the operating costs of the underlying investment companies. These
costs include management, brokerage, shareholder servicing, and other
operational expenses. Shareholders of the Fund would then indirectly pay higher
operational costs than if they owned shares of the underlying investment
companies directly. The Advisor will waive its advisory fee for that portion of
the Fund's assets invested in other investment companies, except when such
purchase is part of a plan of merger, consolidation, reorganization, or
acquisition.
Real Estate Securities. The Fund will not invest in real estate (including
limited partnership interests), but may invest in readily marketable securities
secured by real estate or interests therein or issued by companies that invest
in real estate or interests therein. The Fund may also invest in readily
marketable interests in real estate investment trusts ("REITs"). REITs are
generally publicly traded on the national stock exchanges and in the over-the-
counter market and have varying degrees of liquidity. Although the Fund is not
limited in the amount of these types of real estate securities it may acquire,
it is not presently expected that within the next 12 months the Fund will have
in excess of 5% of its total assets in real estate securities.
RISK FACTORS
Investment Policies and Techniques. Reference should be made to "Investment
Objective and Policies" above for a description of special risks presented by
the investment policies of the Fund and the specific securities and investment
techniques that may be employed by the Fund, including the risks associated with
repurchase agreements and foreign securities. A more complete discussion of
certain of these securities and investment techniques and their associated risks
is contained in the Statement of Additional Information.
Fluctuations in Value. To the extent that the major portion of the Fund's
portfolio consists of common stocks, it may be expected that its net asset value
will be subject to greater fluctuation than a portfolio containing mostly fixed-
income securities. Although certain of the U.S. Government Securities in which
the Fund may invest are guaranteed as to timely payment of principal and
interest, the market value of the securities will fluctuate due to interest rate
risks. Additionally, not all U.S. Government Securities are backed by the full
faith and credit of the U.S. Government. Given the Fund's limitation primarily
to securities which are commonly defined as `mid-capitalization' securities, the
Fund may be expected to exhibit more volatility than an equity fund investing in
larger-capitalization securities. Because there is risk in any investment,
there can be no assurance that the Fund will meet its objective.
Portfolio Turnover. The Fund sells portfolio securities without regard to the
length of time they have been held to take advantage of new investment
opportunities. Nevertheless, the Fund's portfolio turnover generally will not
exceed 100% in any one year. The degree of portfolio activity affects the
brokerage costs of the Fund and other transaction costs related to the sale of
securities and the reinvestment in other securities. Portfolio turnover may
also have capital gain tax consequences. The Fund's portfolio turnover rate for
its prior fiscal period is set forth under "Financial Highlights" above.
Borrowing. The Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and 15% of its total assets to meet redemption requests
which might otherwise require untimely disposition of portfolio holdings. To
the extent the Fund borrows for these purposes, the effects of market price
fluctuations on portfolio net asset value will be exaggerated. If, while such
borrowing is in effect, the value of the Fund's assets declines, the Fund could
be forced to liquidate portfolio securities when it is disadvantageous to do so.
The Fund would incur interest and other transaction costs in connection with
borrowing. The Fund will borrow only from a bank. The Fund will not make any
further investments if the borrowing exceeds 5% of its total assets until such
time as repayment has been made to bring the total borrowing below 5% of its
total assets.
Illiquid Investments. The Fund may invest up to 10% of its net assets in
illiquid securities. Illiquid securities are those that may not be sold or
disposed of in the ordinary course of business within seven days at
approximately the price at which they are valued. Under the supervision of the
Board of Trustees, the Advisor determines the liquidity of the Fund's
investments. The absence of a trading market can make it difficult to ascertain
a market value for illiquid investments. Disposing of illiquid securities
before maturity may be time consuming and expensive, and it may be difficult or
impossible for the Fund to sell illiquid investments promptly at an acceptable
price. Included within the category of illiquid securities will also be
restricted securities, which cannot be sold to the public without registration
under the federal securities laws. Unless registered for sale, these securities
can only be sold in privately negotiated transactions or pursuant to an
exemption from registration.
Forward Commitments and When-Issued Securities. The Fund may purchase when-
issued securities and commit to purchase securities for a fixed price at a
future date beyond customary settlement time. The Fund is required to hold and
to maintain in a segregated account until the settlement date, cash, U.S.
Government Securities, or high-grade debt obligations in an amount sufficient to
meet the purchase price. Purchasing securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines prior to the settlement date; this risk is in addition to the
risk of decline in value of the Fund's other assets. In addition, no income
accrues to the purchaser of when-issued securities during the period prior to
issuance. Although the Fund would generally purchase securities on a when-issued
or forward commitment basis with the intention of acquiring securities for its
portfolio, the Fund may dispose of a when-issued security or forward commitment
prior to settlement if the Advisor deems it appropriate to do so. The Fund may
realize short-term gains or losses upon such sales.
INVESTMENT LIMITATIONS
To limit exposure to risk, the Fund has adopted certain investment limitations.
Some of these limitations are that the Fund will not: (1) issue senior
securities, borrow money, or pledge its assets, except that it may borrow from
banks as a temporary measure (a) for extraordinary or emergency purposes, in
amounts not exceeding 5% of the Fund's total assets, or (b) to meet redemption
requests which might otherwise require untimely disposition of portfolio
securities in amounts not exceeding 15% of its total assets (the Fund will not
make any investments if borrowing exceeds 5% of its total assets); (2) make
loans of money or securities, except that the Fund may invest in repurchase
agreements (but repurchase agreements having a maturity of longer than seven
days are subject to the limitation on investing in illiquid securities); (3)
invest more than 10% of its net assets in illiquid securities; (4) invest in
securities of issuers which have a record of less than three years' continuous
operation (including predecessors and, in the case of bonds, guarantors), if
more than 5% of its total assets would be invested in such securities; (5)
purchase or sell commodities, commodities' contracts, real estate (including
limited partnership interests, but excluding readily marketable interests in
real estate investment trusts or other securities secured by real estate or
interests therein or readily marketable securities issued by companies that
invest in real estate or interests therein) or interests in oil, gas, or other
mineral exploration or development programs or leases (although it may invest in
readily marketable securities of issuers that invest in or sponsor such programs
or leases); (6) with respect to 75% of Fund assets, invest more than 5% at cost
of its total assets in the securities of any one issuer or purchase more than
10% of the outstanding voting stock of any one issuer; and (7) write, purchase,
or sell puts, calls, straddles, spreads, or combinations thereof, or futures
contracts or related options. Investment limitations (1), (5), (6), and (7) are
deemed fundamental; that is, they may not be changed without shareholder
approval. See "Investment Limitations" in the Fund's Statement of Additional
Information for a complete list of investment limitations.
If the Board of Trustees of the Trust determines that the Fund's investment
objective can best be achieved by a substantive change in a non-fundamental
investment limitation, the Board can make such change without shareholder
approval and will disclose any such material changes in the then current
Prospectus. Any limitation that is not specified in the Fund's Prospectus, or
in the Statement of Additional Information, as being fundamental, is non-
fundamental. If a percentage limitation is satisfied at the time of investment,
a later increase or decrease in such percentage resulting from a change in the
value of the Fund's portfolio securities will not constitute a violation of such
limitation. To permit the sale of the Fund's shares in certain states, the Fund
may make commitments that are more restrictive than the investment policies and
limitations described above and in the Statement of Additional Information.
Such commitments may have an effect on the investment performance of the Fund.
Should the Fund determine that any such commitment is no longer in the best
interest of the Fund, it may revoke the commitment and terminate sales of its
shares in the state involved.
HOW NET ASSET VALUE IS DETERMINED
The net asset value for each Institutional Share of the Fund is determined at
4:00 p.m., New York time, Monday through Friday, except on business holidays
when the New York Stock Exchange ("NYSE") is closed. The net asset value of the
shares of the Fund for purposes of pricing sales and redemptions is equal to the
total market value of its investments, less all of its liabilities, divided by
the number of its outstanding shares.
Securities that are listed on a securities exchange are valued at the last
quoted sales price at the time the valuation is made. Price information on
listed securities is taken from the exchange where the security is primarily
traded by the Fund. Securities that are listed on an exchange and which are not
traded on the valuation date are valued at the mean of the bid and asked prices.
Prices for securities traded on foreign exchanges will be converted to the
equivalent price in U.S. currency using the published currency exchange rates
available at the time of valuation. Unlisted securities for which market
quotations are readily available are valued at the latest quoted sales price, if
available, otherwise, at the latest quoted bid price. Temporary cash
investments with maturities of 60 days or less will be valued at amortized cost,
which approximates market value. Securities for which no current quotations are
readily available are valued at fair value as determined in good faith using
methods approved by the Board of Trustees of the Trust. Securities may be
valued on the basis of prices provided by a pricing service when such prices are
believed to reflect the fair market value of such securities.
PERFORMANCE DATA
From time to time the Fund may advertise its average annual total return for
each Class of Fund shares. The average annual total return refers to the
average annual compounded rates of return over 1-, 3-, 5-, and 10-year periods
that would equate an initial amount invested at the beginning of a stated period
to the ending redeemable value of the investment. The calculation assumes the
reinvestment of all dividends and distributions, includes all recurring fees
that are charged to all shareholder accounts, and deducts all nonrecurring
charges at the end of each period. If the Fund has been operating less than 1,
3, 5, or 10 years, the time period during which the Fund has been operating is
substituted.
In addition, the Fund may advertise total return performance data other than
average annual total return for each Class of Fund shares. Such data would show
a percentage rate of return encompassing all elements of return (i.e., income
and capital appreciation or depreciation) and would assume reinvestment of all
dividends and capital gain distributions. Such other total return data may be
shown for the same or different periods as those used for average annual total
return. These data may consist of a cumulative percentage rate of return,
actual year-by-year rates of return, or any combination thereof. A cumulative
percentage rate of return would show the cumulative change in value of an
investment in the Fund for various periods.
The total return of the Fund could be increased to the extent the Advisor may
waive all or a portion of its fees or reimburse all or a portion of the Fund's
expenses. It is not currently contemplated that the Advisor will waive portions
of its fees or reimburse Fund expenses except as provided under "Summary of Fund
Expenses." Total return figures are based on the historical performance of the
Fund, show the performance of a hypothetical investment, and are not intended to
indicate future performance. The Fund's quotations may from time to time be
used in advertisements, sales literature, shareholder reports, or other
communications to shareholders.
MANAGEMENT OF THE FUND
Trustees and Officers. The Fund is a diversified series of the Capital
Management Investment Trust (the "Trust"), a registered, open-end management,
investment company organized as a Massachusetts business trust on October 18,
1994. The Board of Trustees has overall responsibility for management of the
Fund under the laws of Massachusetts and the Declaration of Trust. The
Statement of Additional Information identifies the Trustees and officers of the
Trust, and the Fund and provides information about them. The Trustees of the
Trust and executive officers of the Fund and their principal occupations for the
last five years are set forth below.
TRUSTEES
Lucius E. Mr. Burch is Chairman and Chief Executive Officer of Massey
Burch, III Burch Investment Group, Inc., a large, southeastern venture
Trustee capital firm based in Nashville, Tennessee. After working
as a commercial banker at Morgan Guaranty Trust Co. in New
York City, he joined Massey Investment Company, the
predecessor of Massey Burch Investment Group, as a
financial analyst and portfolio manager in 1968. He has
extensive experience in management consulting, corporate
finance, and mergers and acquisitions. Mr. Burch currently
serves on the Board of Directors of Surgical Care
Affiliates, Inc., and QMS, Inc., both NYSE-listed
companies; Bio-Safe Systems, Inc.; and several private
companies. He is a graduate of the University of North
Carolina.
Thomas A. Mr. Saunders is a Partner of Saunders Karp & Co., L.P., a
Saunders, III New York-based merchant bank. From 1974 to 1989 he was a
Trustee Managing Director of Morgan Stanley & Co., Incorporated,
and from 1987 to 1989 he was Chairman of Morgan Stanley's
Leveraged Equity Fund II, L.P. Mr. Saunders received a
B.S. degree in Electrical Engineering from the Virginia
Military Institute and an M.B.A. degree from the University
of Virginia's Darden Graduate School of Business
Administration. He is Chairman of the Board of Trustees of
the Darden Graduate School, as well as a member of the
Board of Visitors of the Virginia Military Institute. Mr.
Saunders is also a member of the Board of Trustees of the
Cold Spring Harbor Laboratory. He serves as a Director to
numerous industrial, consumer, and healthcare companies in
the Saunders Karp portfolio.
David V. Shields Mr. Shields is a Managing Director of the Advisor. He has
Trustee been a member of the New York Stock Exchange since 1968,
specializing in institutional brokerage. Mr. Shields
served on the Board of Directors of the NYSE from 1986 to
1992, having served as Governor prior to that time. He has
served on various NYSE committees including the Audit,
Market Performance, and the Committee for Review. He is
past director of the Alliance of Floor Brokers of the NYSE
and served as its President from 1980 to 1986. Mr. Shields
has acted in various advisory capacities on capital markets
in Russia, Estonia, and Norway. He holds a B.S. degree in
Economics from the Wharton School of the University of
Pennsylvania and a Graduate Certificate from the London
School of Economics.
J. V. Shields, Jr. Mr. Shields is a Managing Director and Chairman of the
Trustee Advisor. He previously had been the Director of Corporate
Finance at H.N. Whitney, Goadby & Company. He is
responsible for the development of the Advisor's corporate
policy and serves on the Investment Committee. He
currently serves as the Chairman of the Board of Trustees
of the 59 Wall Street Trust, the Brown Brothers Harriman &
Co. mutual fund group, and on the Board of Directors of
Flowers Industries, Inc., a NYSE-listed, diversified, food
manufacturer. He received his B.S.B.A. degree in Finance
and Economics from Georgetown University.
Anthony J. Mr. Walton is Chief Executive Officer of and a partner of
Walton the Llama Company, a regional investment bank in
Trustee Fayetteville, Arkansas, which is owned by members of the
Walton family, founders of Wal-Mart Stores, Inc. Prior to
joining Llama, he was Director of Westpac Banking
Corporation of Sidney, Australia, and served as Chief
General Manager of the combined Americas & Europe Group in
New York. From 1968 to 1983 Mr. Walton was with The Chase
Manhattan Bank, NA, in New York and London in various
executive positions. He holds a B.A. degree from Haverford
College and an M.B.A. degree in International Finance from
the University of Pennsylvania's Wharton Graduate School of
Finance.
EXECUTIVE
OFFICERS
C. Lennis Mr. Koontz joined the Advisor in 1992. From 1987 to 1992
Koontz, II he was associated with Smith Barney Capital Management as
President a senior portfolio manager and analyst. From 1976 until
1987 he was with Scudder, Stevens & Clark in New York where
he was a managing director, member of the stock strategy
group, and head of the employee benefit plans group. At
the Advisor he serves as a portfolio manager/analyst and
sits on the Investment Committee. Mr. Koontz received both
his B.S. and M.S. degrees from the University of Tennessee,
majoring in industrial management. He is a Chartered
Financial Analyst and member of the New York Society of
Security Analysts.
Joseph A. Zock Mr. Zock joined the Advisor when the firm was founded in
Vice President 1982. Prior to that he worked closely with the founders of
the Advisor while at H.N. Whitney, Goadby & Company, where
he served as portfolio manager and research analyst since
1980. He serves as a portfolio manager/analyst and sits on
the advisor's Investment Committee. He received his BA
degree in Political Science/Economics from the University
of New Hampshire, his J.D. degree from the University of
San Diego Law School, and a Certificate of International
Law from the University of London, Kings College School of
Law.
Investment Advisor. The Fund is advised by Capital Management Associates, Inc.
(the "Advisor"), pursuant to an advisory contract. Subject to the authority of
the Board of Trustees, the Advisor provides guidance and policy direction in
connection with its daily management of the Fund's assets. The Advisor manages
the investment and reinvestment of the Fund's assets in a manner consistent with
the investment objective and policies of the Fund. The Advisor is also
responsible for the selection of broker-dealers through which the Fund executes
portfolio transactions, subject to the brokerage policies established by the
Trustees, and it provides certain executive personnel to the Fund.
The Advisor, organized as a New York corporation in 1982, is controlled by its
officers and directors, with the principal shareholders being J.V. Shields, Jr.;
David V. Shields; and Richard B. Thatcher, who also comprise the Board of
Directors. An Investment Committee of the Advisor, comprised of J.V. Shields,
Jr.; Dimitri H. Kuriloff; Richard B. Thatcher; Joseph A. Zock; and C. Lennis
Koontz, II, CFA, select the investments for the Fund. Messrs. Shields,
Thatcher, and Zock have been affiliated with the Advisor since the firm's
inception in 1982. Mr. Kuriloff has been affiliated with the Advisor since 1982.
Mr. Koontz has been affiliated with the Advisor since 1992. While the Advisor
has no previous experience in managing investment companies, the Advisor has
been providing investment advice in a style identical to that of the Fund to
individuals, corporations, pension and profit sharing plans, endowments, and
other business and private accounts since 1982. The Advisor currently serves as
investment advisor to over $1 billion in assets, most of which is managed using
similar investment objectives to those employed by the Fund.
The Advisor's address is 71 Broadway, Suite 2201, New York, New York 10006.
As full compensation for the investment advisory services provided to the Fund,
the Fund pays the Advisor monthly compensation based on the Fund's daily average
net assets at the annual rate of 1.00% of the first $100 million of the Fund's
net assets, 0.90% of the next $150 million, 0.85% of the next $250 million, and
0.80% of all assets over $500 million. Although the investment advisory fee is
higher than that paid by most other investment companies, the Board of Trustees
believes the fee is reasonable given the Fund's policy of investing in medium-
capitalization companies, which may require additional research and monitoring
by the Advisor. The Advisor has voluntarily waived its fee and reimbursed a
portion of the Fund's operating expenses for the fiscal period ended November
30, 1995. The total fees waived amounted to $12,413 and expenses reimbursed
amounted to $72,059.
Administrator and Transfer Agent. The Nottingham Company serves as the Fund's
administrator, transfer and dividend paying agent, and shareholder servicing
agent (the "Administrator"). The Administrator, subject to the authority of the
Board of Trustees, provides administrative and transfer agency services to and
is generally responsible for the overall management and day-to-day
administrative operations of the Fund, pursuant to a Fund Accounting, Dividend
Disbursing & Transfer Agent and Administration Agreement (the "Administration
Agreement") with the Trust.
The Administrator, which was established as a North Carolina corporation in 1988
and converted to a limited liability company in 1995, has been operating (with
affiliates) as a financial services firm since 1985. Frank P. Meadows III,
Treasurer and Secretary of the Trust, is the firm's Managing Director and
controlling member.
The Administrator, whose address is 105 North Washington Street, Post Office
Drawer 69, Rocky Mount, North Carolina 27802-0069, provides the Fund with office
space and facilities; provides certain executive personnel to the Fund;
supervises the Fund's shareholder servicing operations; maintains the Fund's
accounting and shareholder records; computes daily the Fund's net asset value;
supervises the preparation of tax returns, financial reports, prospectuses; and
proxy statements; and monitors compliance with certain recordkeeping and
regulatory requirements.
Compensation of the Administrator, based upon the average daily net assets of
the Fund, is at the following annual rates: On the first $50 million of the
Fund's net assets, 0.20%; on the next $50 million, 0.175%; on all assets over
$100 million, 0.15%. In addition, the Administrator currently receives a
monthly fee of $2,000 for the first class of the Fund and $750 for each
additional class of the Fund for accounting and recordkeeping services for the
Fund. The Administrator also charges the Fund for certain costs involved with
the daily valuation of investment securities and is reimbursed for out-of-pocket
expenses. The Administrator charges a minimum fee of $3,000 per month for all of
its fees taken in the aggregate, analyzed monthly.
Distributor. Shields & Company (the "Distributor"), a New York corporation, is
the principal underwriter and distributor of the shares of the Fund pursuant to
a Distribution Agreement between the Trust and the Distributor. The Distributor
may sell Fund shares to or through qualified securities dealers and others.
J.V. Shields, Jr.; David V. Shields; and Richard B. Thatcher, affiliated persons
of the Fund, are also affiliated persons of the Advisor and the Distributor.
The principal business address of the Distributor is 71 Broadway, New York, New
York 10006.
Custodian. The custodian of the Fund's assets is Wachovia Bank of North
Carolina, N.A. (the "Custodian"). The Custodian's mailing address is 301 North
Main Street, Winston-Salem, North Carolina 27102. The Advisor, Administrator,
or interested persons thereof, may have banking relationships with the
Custodian.
Other Fund Costs. The Fund pays all expenses not assumed by the Advisor or the
Administrator. Fund expenses include the fees and expenses, if any, of the
Trustees and officers who are not affiliated persons of the Advisor; fees of the
Custodian; interest expense, taxes, brokerage fees, and commissions; fees and
expenses of the Fund's shareholder servicing operations; fees and expenses of
qualifying and registering the Fund's shares under federal and state securities
laws; expenses of preparing, printing, and distributing prospectuses and reports
to existing shareholders; auditing and legal expenses; insurance expense;
association dues; and the expense of shareholders' meetings and proxy
solicitations. The Fund is also liable for any nonrecurring expenses as may
arise such as litigation to which the Fund may be a party. The Fund may be
obligated to indemnify the Trustees and officers with respect to such
litigation. Any expenses relating only to a particular Class of shares of the
Fund will be borne solely by such Class of shares.
Brokerage. The Fund has adopted brokerage policies that allow the Advisor to
(a) prefer brokers which provide research services to the Advisor or (b) utilize
a brokerage firm affiliated with the Advisor or the Trust. In all cases, the
primary consideration for selection of broker-dealers will be to obtain the best
overall terms available for the Fund. Research services obtained through Fund
brokerage transactions may be used by the Advisor for its other clients, and
conversely, the Fund may benefit from research services obtained through the
brokerage transactions of the Advisor's other clients. More information about
the brokerage practices of the Fund is contained in the Statement of Additional
Information under the heading "Portfolio Transactions."
HOW TO PURCHASE SHARES
Shares in the Fund may be purchased through members of the National Association
of Securities Dealers, Inc., who are registered in the state where the purchase
is made and who have a sales agreement with the Distributor. After a
shareholder account is established and the investment dealer is recorded,
subsequent orders for shares may be mailed directly to the Fund.
Assistance in opening accounts and Fund Shares Applications may be obtained from
the Fund by calling 1-800-525-FUND, or by writing to the Fund at the address
shown below for regular mail orders. Institutional Shares may be purchased by
any account managed by the Advisor and any other institutional investor with a
minimum investment in the Fund of at least $250,000. Assistance is also
available through any broker-dealer authorized to sell shares in the Fund.
Payment for shares purchased may be made through your account at the broker-
dealer processing your application and order to purchase. The Fund's shares are
offered at the net asset value next determined after your order is received by
the Fund in proper order as indicated herein. The minimum initial investment,
unless stated otherwise herein, is $250,000. The Fund may, in the Advisor's
sole discretion, accept certain accounts with less than the stated minimum
initial investment.
Payment must be made by check or money order drawn on a U.S. bank and payable in
U.S. dollars. Under certain circumstances the Fund, at the sole discretion of
the Advisor, may allow payment in kind for Fund shares purchased, by accepting
securities in lieu of cash. Any securities so accepted would be valued on the
date received and included in the calculation of net asset value of the Fund.
See the Statement of Additional Information for additional information on
purchases in kind.
If checks are returned unpaid due to nonsufficient funds, stop payment, or other
reasons, the Fund will charge $20. To recover any such loss or charge, the Fund
reserves the right, without further notice, to redeem shares of the Fund already
owned by any purchaser whose order is cancelled, and such a purchaser may be
prohibited from placing further orders unless investments are accompanied by
full payment by wire or cashier's check.
All orders received by the Fund, whether by mail, bank wire, or facsimile order
from a qualified broker-dealer, prior to 4:00 p.m. New York time will purchase
shares at the net asset value determined at that time. Otherwise, your order
will purchase shares as of 4:00 p.m. New York time on the next business day.
For orders placed through a qualified broker-dealer, such firm is responsible
for promptly transmitting purchase orders to the Administrator. All purchases
of shares are subject to acceptance and are not binding until accepted. The
Fund reserves the right to reject any application or investment.
Regular Mail Orders. Please complete and sign the Fund Shares Application
accompanying this Prospectus and mail it, with your check made payable to the
Fund, to:
Capital Management Equity Fund
Institutional Shares
c/o The Nottingham Company
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
Applications must contain social security and Taxpayer Identification Numbers
("TINs"). If you have applied for a social security or TIN at the time of
completing your account application, the application should so indicate. Taxes
are not withheld from distributions to U.S. investors if certain IRS
requirements regarding TINs are met.
Bank Wire Orders. Investments can be made directly by bank wire. To establish
a new account or to add to an existing account by wire, please call the Fund, at
1-800-525-FUND before wiring funds, to advise it of the investment, the dollar
amount of the investment, and the account identification number. This
notification will ensure prompt and accurate handling of your investment.
Please have your bank use the following wire instructions to purchase by wire:
Wachovia Bank of North Carolina, N.A.
Winston-Salem, North Carolina
ABA # 053100494
For credit to the Rocky Mount Office
For the Capital Management Equity Fund - Institutional Shares
Acct# 6768-021065
For further credit to (shareholder's name and SS# or EIN#)
It is important that the wire message contain all the relevant information and
that the Fund receive prior telephone notification to ensure proper credit.
Upon opening an account by wire order, you must, as soon as possible, complete
and mail your Fund Shares Application to the Fund as described under "Regular
Mail Orders" above. Investors should be aware that some banks may impose a wire
service fee.
Additional Investments. You may add to your account by mail or wire at any time
by purchasing shares at the then current net asset value. The minimum
additional investment is $500. Before adding funds by bank wire, please alert
the Fund by telephone at 1-800-525-FUND. Follow the wire order instructions set
forth above to send your wire order. When calling for any reason, please have
your account number ready, if known. Mail orders should include, when possible,
the "Invest by Mail" stub which is attached to your Fund confirmation statement.
Otherwise, be sure to identify your account in your letter.
Employees and Affiliates of the Fund. The minimum purchase requirement is not
applicable to accounts of Trustees, officers, or employees of the Fund or
certain parties related thereto. The minimum initial investment for such
accounts is $1,000. See the Statement of Additional Information for further
details.
Stock Certificates. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
which will show the number of shares owned.
Automatic Investment Plan. The automatic investment plan enables shareholders
to make regular monthly or quarterly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Administrator will automatically charge the checking account for
the amount specified ($100 minimum), which will be automatically invested in
shares at the net asset value on or about the 21st day of the month. The
shareholder may change the amount of the investment or discontinue the plan at
any time by writing to the Administrator.
HOW TO REDEEM SHARES
Shares of the Fund may be redeemed (the Fund will repurchase them from
shareholders) by mail or telephone. Any redemption proceeds may be more or less
than the purchase price of your shares, depending on the market value of the
Fund's portfolio securities. All redemption orders received in proper form, as
indicated herein, by the Fund, whether by mail or telephone, prior to 4:00 p.m.
New York time, will be made at the net asset value determined at that time.
Otherwise, your redemption order will be made as of 4:00 p.m. New York time on
the next business day. There is no charge for redemptions from the Fund. You may
also redeem your shares through a broker-dealer, which may charge a fee for its
services.
The Board of Trustees reserves the right to redeem involuntarily any account
having a net asset value of less than $250,000 (due to redemptions, exchanges,
or transfers, and not due to market action) upon 60-days' written notice. If
the shareholder brings his account net asset value up to at least $250,000
during the notice period, the account will not be redeemed. Redemptions from
retirement plans may be subject to federal income tax withholding.
If you are uncertain of the requirements for redemption, please contact the Fund
at 1-800-525-FUND or write to the address shown below.
Regular Mail Redemptions. Your request should be addressed to Capital
Management Equity Fund, c/o The Nottingham Company, 105 North Washington Street,
Post Office Drawer 69, Rocky Mount, North Carolina 27802-0069. Your request for
redemption must include:
1) Your letter of instruction specifying the account number, and the
number of shares, or dollar amount to be redeemed. This request must
be signed by all registered shareholders in the exact names in which
they are registered;
2) Any required signature guarantees (see "Signature Guarantees" below);
and
3) Other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships,
pension or profit sharing plans, and other organizations.
Your redemption proceeds will be sent to you within seven days after receipt of
your redemption request. However, the Fund may delay forwarding a redemption
check for recently purchased shares while it determines whether the purchase
payment will be honored. Such delay (which may take up to fifteen days from the
date of purchase) may be reduced or avoided if the purchase is made by certified
check or wire transfer. In all cases, the net asset value next determined after
receipt of the request for redemption will be used in processing the redemption
request. The Fund may suspend redemption privileges or postpone the date of
payment (i) during any period that the NYSE is closed, or trading on the NYSE is
restricted as determined by the Securities and Exchange Commission (the
"Commission"); (ii) during any period when an emergency exists as defined by the
rules of the Commission, as a result of which it is not reasonably practicable
for the Fund to dispose of securities owned by it, or to determine fairly the
value of its assets; and (iii) for such other periods as the Commission may
permit.
Telephone and Bank Wire Redemptions. The Fund offers shareholders the option of
redeeming shares by telephone and bank wire under certain limited conditions.
The Fund will redeem shares in this manner when so requested by the shareholder
only if the shareholder confirms redemption instructions in writing.
The Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 919-972-1908). The confirmation instructions must include:
1) Designation of Class (Institutional or Investor),
2) Shareholder name and account number,
3) Number of shares or dollar amount to be redeemed,
4) Instructions for transmittal of redemption funds to the shareholder,
and
5) Shareholder signature as it appears on the application then on file
with the Fund.
The net asset value used in processing the redemption request will be the net
asset value next determined after the telephone or bank wire request is
received. Redemption proceeds will not be distributed until written confirmation
of the redemption request is received, per the instructions above. You can
choose to have redemption proceeds mailed to you at your address of record, your
bank, or to any other authorized person, or you can have the proceeds sent by
bank wire to your bank ($5,000 minimum). Shares of the Fund may not be redeemed
by wire on days in which your bank is not open for business. You can change
your redemption instructions anytime you wish by filing a letter including your
new redemption instructions with the Fund. See "Signature Guarantees" below.
The Fund reserves the right to restrict or to cancel telephone and bank wire
redemption privileges for shareholders, without notice, if the Trustees believe
it to be in the best interest of the shareholders to do so. Shareholders would
be given at least 30-days' written notice prior to imposing any fees with
respect to telephone redemptions or bank wires. During drastic economic and
market changes, telephone redemption privileges may be difficult to implement.
There is currently no charge by the Administrator for wire redemptions.
However, the Administrator reserves the right, upon 30-days' written notice, to
make reasonable charges for wire redemptions. All charges will be deducted from
your account by redemption of shares in your account. Your bank or brokerage
firm may also impose a charge for processing the wire. If wire transfer of
funds is impossible or impractical, the redemption proceeds will be sent by mail
to the designated account.
You may redeem shares, subject to the procedures outlined above, by calling the
Fund at 1-800-525-FUND. Redemption proceeds will only be sent to the bank
account or person named in your Fund Shares Application currently on file with
the Fund. Telephone redemption privileges authorize the Fund to act on
telephone instructions from any person representing himself or herself to be the
investor and reasonably believed by the Fund to be genuine. The Fund will
employ reasonable procedures, such as requiring a form of personal
identification, to confirm that instructions are genuine, and if it does not
follow such procedures, the Fund will be liable for any losses due to fraudulent
or unauthorized instructions. The Fund will not be liable for following
telephone instructions reasonably believed to be genuine.
Signature Guarantees. To protect your account and the Fund from fraud,
signature guarantees are required to be sure that you are the person who has
authorized a change in registration, or standing instructions, for your account.
Signature guarantees are required for (1) change of registration requests, (2)
requests to establish or to change exchange privileges or telephone and bank
wire redemption service other than through your initial account application, and
(3) redemption requests in excess of $50,000. Signature guarantees are
acceptable from a member bank of the Federal Reserve System, a savings and loan
institution, credit union (if authorized under state law), registered
broker-dealer, securities exchange, or association clearing agency, and must
appear on the written request for change of registration, establishment or
change in exchange privileges, or redemption request.
Systematic Withdrawal Plan. A shareholder who owns shares of the Fund valued at
$250,000 or more at the current offering price may establish a Systematic
Withdrawal Plan to receive a monthly or quarterly check in a stated amount not
less than $100. Each month or quarter, as specified, the Fund will
automatically redeem sufficient shares from your account to meet the specified
withdrawal amount. The shareholder may establish this service whether dividends
and distributions are reinvested in shares of the Fund or paid in cash. Call or
write the Fund for an application form. See the Statement of Additional
Information for further details.
DIVIDENDS AND DISTRIBUTIONS
The Fund distributes substantially all of its net investment income, if any, in
the form of dividends. The Fund may pay dividends, if any, quarterly and will
distribute net realized capital gains, if any, at least annually.
Unless a shareholder elects to receive cash, dividends and capital gains will be
automatically reinvested in additional full and fractional Institutional Shares
of the Fund at the net asset value per share next determined. Shareholders
wishing to receive their dividends or capital gains in cash may make their
request in writing to the Fund, c/o The Nottingham Company at 105 North
Washington Street, Post Office Drawer 69, Rocky Mount, North Carolina
27802-0069. That request must be received by the Fund prior to the record date
to be effective for the next dividend. If cash payment is requested, checks
will be mailed within five business days after the last day of each quarter or
the Fund's fiscal year end, as applicable. Each shareholder of the Fund will
receive a quarterly summary of his or her account, including information
regarding reinvested dividends from the Fund. Tax consequences to shareholders
of dividends and distributions are the same if received in cash or in additional
shares of the Fund.
To satisfy certain requirements of the Code, the Fund may declare special
year-end dividend and capital gains distribution during December. Such
distributions, if received by shareholders by January 31, are deemed to have
been paid by the Fund and received by shareholders on December 31 of the prior
year.
There is no fixed-dividend rate, and there can be no assurance regarding the
payment of any dividends or the realization of any gains. The Fund's net
investment income available for distribution to holders of Institutional Shares
will be reduced by the amount of any expenses allocated to the Institutional
Shares.
FEDERAL INCOME TAX INFORMATION
Taxation of the Fund. The Internal Revenue Code of 1986, as amended (the
"Code"), treats the Fund, and any other series in the Trust, as a separate
regulated investment company. The Fund intends to remain qualified as a
regulated investment company under the Code by distributing substantially all of
its "net investment income" to shareholders and meeting other requirements of
the Code. For the purpose of calculating dividends, net investment income
consists of income accrued on portfolio assets, less accrued expenses. Upon
qualification, the Fund will not be liable for federal income taxes to the
extent earnings are distributed. The Board of Trustees retains the right for
the Fund, or any other series of the Trust, to determine for any particular year
if it is advantageous not to qualify as a regulated investment company.
Regulated investment companies, such as the Fund, are subject to a
non-deductible 4% excise tax to the extent they do not distribute the
statutorily required amount of investment income, determined on a calendar year
basis, and capital gain net income, using an October 31 year end measuring
period. The Fund intends to declare or distribute dividends during the calendar
year in an amount sufficient to prevent imposition of the 4% excise tax.
Taxation of Shareholders. For federal income tax purposes, any dividends and
distributions from short-term capital gains that a shareholder receives in cash
from the Fund or which are re-invested in additional shares will be taxable
ordinary income. If a shareholder is not required to pay a tax on income, he
will not be required to pay federal income taxes on the amounts distributed to
him. A dividend declared in October, November, or December of a year and paid
in January of the following year will be considered to be paid on December 31 of
the year of declaration.
Distributions paid by the Fund from long-term capital gains, whether received in
cash or reinvested in additional shares, are taxable as long-term capital gains,
regardless of the length of time an investor has owned shares in the Fund.
Capital gain distributions are made when the Fund realizes net capital gains on
sales of portfolio securities during the year. Dividends and capital gain
distributions paid by the Fund shortly after shares have been purchased,
although in effect a return of investment, are subject to federal income
taxation.
The sale of shares of the Fund is a taxable event and may result in a capital
gain or loss. Capital gain or loss may be realized from an ordinary redemption
of shares or an exchange of shares between two mutual funds (or two series of a
mutual fund).
The Trust will inform shareholders of the Fund of the source of their dividends
and capital gains distributions at the time they are paid and, promptly after
the close of each calendar year, will issue an information return to advise
shareholders of the federal tax status of such distributions and dividends.
Dividends and distributions may also be subject to state and local taxes.
Shareholders should consult their tax advisors regarding specific questions as
to federal, state or local taxes.
The Fund is required by federal law to withhold and remit to the IRS 31% of the
dividends, capital gains distributions, and in certain cases, proceeds of
redemptions paid to any shareholder who fails to furnish the Fund with a correct
taxpayer identification number, who under-reports dividend or interest income,
or who fails to provide certification of tax identification number.
Instructions to exchange or to transfer shares held in established accounts will
be refused until the certification has been provided. To avoid this withholding
requirement, you must certify on your application, or on a separate W-9 Form
supplied by the Administrator, that your taxpayer identification number is
correct and that you are not currently subject to backup withholding, or you are
exempt from backup withholding. For individuals, your taxpayer identification
number is your social security number.
ORGANIZATION AND CAPITAL SHARES
The Fund is a series of the Capital Management Investment Trust the ("Trust"),
an open-end investment company that was organized in 1994 as a Massachusetts
business trust. The Trust is currently offering one series of shares,
representing the Fund, which shares are divided into two classes as described
below. The Board of Trustees may, in the future, authorize the issuance of
other series of capital shares (or classes of such shares) representing shares
of additional funds. All shares of the Trust, when issued, will be fully paid
and non-assessable.
The Declaration of Trust authorizes the Board of Trustees to classify and
reclassify any unissued shares into one or more classes of shares. Pursuant to
such authority, the Board of Trustees has authorized the issuance of an
unlimited number of shares in each of two classes ("Institutional Shares" and
"Investor Shares") representing equal pro rata interests in the Fund, except
that the classes bear different expenses that reflect the difference in the
range of services provided to them.
Investor Shares of the Fund are offered to the public as an investment vehicle
for individuals, institutions, corporations, and fiduciaries. Holders of
Investor Shares bear an initial sales charge and potential ongoing shareholder
servicing and distribution fees described in the prospectus for such shares.
Institutional Shares are sold without an initial sales charge and bear no
shareholder servicing or distribution fees. As a result of these different
charges and fees, the total return on the Fund's Institutional Shares will
generally be higher than the total return on the Investor Shares. Standardized
total return quotations will be computed separately for each Class of shares of
the Fund.
THIS PROSPECTUS RELATES PRIMARILY TO THE FUND'S INSTITUTIONAL SHARES AND
DESCRIBES ONLY THE POLICIES, OPERATIONS, CONTRACTS, AND OTHER MATTERS PERTAINING
TO THE INSTITUTIONAL SHARES. THE FUND ALSO ISSUES A CLASS OF INVESTOR SHARES
WHICH MAY HAVE DIFFERENT SALES CHARGES AND EXPENSES, WHICH MAY AFFECT
PERFORMANCE. INVESTORS MAY CALL THE FUND AT 1-800-525-FUND TO OBTAIN MORE
INFORMATION CONCERNING OTHER CLASSES AVAILABLE TO THEM. INVESTORS MAY OBTAIN
INFORMATION CONCERNING OTHER CLASSES FROM THEIR SALES REPRESENTATIVE, THE
DISTRIBUTOR, THE FUND, OR ANY OTHER PERSON WHICH IS OFFERING OR MAKING AVAILABLE
TO THEM THE SECURITIES OFFERED IN THIS PROSPECTUS.
VOTING RIGHTS
Each outstanding share of the Trust is entitled to one vote for each full share
and a fractional vote for each fractional share on all matters which concern the
Trust as a whole. The Trust's shareholders will vote in the aggregate and not
by fund or class, except where otherwise required by law or when the Board of
Trustees determines that the matter to be voted on affects only the interests of
the shareholders of a particular fund or class. Examples of matters that would
affect only a particular fund are any proposed change in the fundamental
investment objective or policies of that fund or a proposed change in the
investment advisory agreement for a fund. The shares of the Trust will have
noncumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of Trustees can elect all of the Trustees if
they so choose. The Trust may dispense with the annual meeting of shareholders
in any year in which it is not to call a meeting of shareholders for purposes of
voting on the removal of a Trustee or Trustees. Thus, there will normally be no
meeting of shareholders for the purpose of electing Trustees, and the Fund is
not expected to have an annual meeting of shareholders.
Shareholders representing 10 percent or more of the Trust's shares then
outstanding may call a meeting for the purpose of removing one or more of the
Trustees. If shareholders desire to call a meeting to consider the removal of
one or more Trustees, they will be assisted in communicating with other
shareholders. See "Capital Shares and Voting" in the Statement of Additional
Information for more information. Shareholder inquiries may be made in writing,
addressed to the Fund at the address shown on the cover of this document.
As of March 15, 1996, the following persons owned of record or beneficially more
than 25% of the Institutional Shares of the Fund: Shields Capital Corporation
401(k), 71 Broadway, New York, New York 10006, record owner with respect to
57.78% of the Institutional Shares and Capital Management Associates, Inc., 71
Broadway, Suite 2201, New York, New York 10006. Accordingly this person is
deemed to be a "controlling person" of the Institutional Shares of the Fund
within the meaning of the 1940 Act.
OTHER INFORMATION
Accountants. KPMG Peat Marwick LLP serves as independent auditors for the
Trust. Its address is 1021 East Cary Street, Suite 1900, Richmond, Virginia
23219-4023.
Information on the Fund. The Fund provides annual and semi-annual reports to
all shareholders. The annual reports contain audited financial statements and
other information about the Fund.
No dealer, salesman, or other person
has been authorized to give any
information or to make any
representations, other than those
contained in this Prospectus, and if CAPITAL MANAGEMENT
given or made, such other information EQUITY FUND
or representations must not be relied
upon as having been authorized by the INSTITUTIONAL SHARES
Fund or the Advisor. This Prospectus
does not constitute an offering in
any state in which an offering may
not lawfully be made.
The Fund reserves the right in its
sole discretion to withdraw all or
any part of the offering made by this
Prospectus or to reject purchase
orders. All orders to purchase
shares are subject to acceptance by PROSPECTUS
the Fund and are not binding until
confirmed or accepted in writing.
Investment Advisor
Capital Management Associates, Inc.
New York, New York April 1, 1996
Distributor
Shields & Company
Member NYSE
New York, New York
Fund Administrator,
Transfer Agent & Shareholder
Servicing Agent
The Nottingham Company
Rocky Mount, North Carolina
1-800-525-3863
Independent Auditors
KPMG Peat Marwick LLP
Richmond, Virginia
Custodian
Wachovia Bank of North Carolina, N.A.
Winston Salem, North Carolina
CAPITAL MANAGEMENT INVESTMENT TRUST
Capital Management Equity Fund
Investor Shares
Cross Reference Sheet
Pursuant to Rule 481(a) Under the Securities Act of 1933
Form N-1A Item No. Prospectus Caption
PART A
Item 1 Cover Page Cover Page
Item 2 Synopsis Summary of Fund Expenses
Item 3 Condensed Financial Information Performance Data
Item 4 General Description of Registrant Investment Objective and Policies
Risk Factors
Investment Limitations
Other Information
Item 5 Management of the Fund Management of the Fund
Item 6 Capital Stock and Other Securities Dividends and Distributions
Federal Income Tax Information
Organization and Capital Shares
Voting Rights
Item 7 Purchase of Securities Being Offered
How to Purchase Shares
How Net Asset Value is Determined
Item 8 Redemption or Repurchase How to Redeem Shares
Item 9 Pending Legal Proceedings Not Applicable
Statement of Additional
Information Caption
PART B
Item 10 Cover Page Cover Page
Item 11 Table of Contents Cover Page
Item 12 General Information and History Investment Objective and Policies
Investment Limitations
Management
Item 13 Investment Objectives and Policies Investment Objective and Policies
Investment Limitations
Portfolio Transactions
Fund Expenses
Appendix A-Description of Ratings
Item 14 Management of the Fund Management
Item 15 Control Persons and Principal Management
Holders of Securities Capital Shares and Voting
Item 16 Investment Advisory and Other Management
Services
Item 17 Brokerage Allocation and Other Special Shareholder Services
Practices
Item 18 Capital Stock and Other Securities Capital Shares and Voting
Item 19 Purchase, Redemption and Pricing Purchase of Shares
of Securities Being Offered Redemption of Shares
Item 20 Tax Status Additional Tax Information
Item 21 Underwriters Management
Item 22 Calculation of Performance Data Additional Information on
Performance
Item 23 Financial Statements Attached to Statement of
Additional Information
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 Cusip Number 140296203
CAPITAL MANAGEMENT EQUITY FUND
INVESTOR SHARES
The investment objective of the Capital Management Equity Fund (the "Fund") is
to seek capital appreciation principally through investments in equity
securities, consisting of common and preferred stocks and securities convertible
into common stocks. While there is no assurance that the Fund will achieve its
investment objective, it endeavors to do so by following the investment policies
described in this Prospectus.
This Prospectus relates to shares ("Investor Shares") representing interests in
the Fund. The Investor Shares are sold to the public as an investment vehicle
for individuals, institutions, corporations, and fiduciaries. See "Prospectus
Summary - Offering Price."
INVESTMENT ADVISOR
Capital Management Associates, Inc.
New York, New York
The Fund is a diversified series of the Capital Management Investment Trust, a
registered, open-end management, investment company. This Prospectus sets forth
concisely the basic information you should know before investing in the Fund.
You should read it and keep it for future reference. A Statement of Additional
Information dated April 1, 1996, containing additional information about the
Fund has been filed with the Securities and Exchange Commission and is
incorporated by reference in this Prospectus in its entirety. The Fund's
address is 71 Broadway, Suite 2201, New York, New York 10006, and its telephone
number is 1- 800-525-3863. A copy of the Statement of Additional Information
may be obtained at no charge by calling or writing the Fund.
Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any financial institution, and Fund shares are not federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
agency. Investment in the Fund involves risks, including the possible loss of
principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
April 1, 1996
TABLE OF CONTENTS
PROSPECTUS SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SUMMARY OF FUND EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
FINANCIAL HIGHLIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . . . . . . . . . . . . . 5
RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
INVESTMENT LIMITATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
HOW NET ASSET VALUE IS DETERMINED . . . . . . . . . . . . . . . . . . . . . . 10
PERFORMANCE DATA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
MANAGEMENT OF THE FUND. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
HOW TO PURCHASE SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
HOW TO REDEEM SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 22
FEDERAL INCOME TAX INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . 22
ORGANIZATION AND CAPITAL SHARES . . . . . . . . . . . . . . . . . . . . . . . 23
VOTING RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
This Prospectus is not an offering of the securities herein described in any
state in which the offering is unauthorized. No sales representative, dealer,
or other person is authorized to give any information or to make any
representations other than those contained in this Prospectus.
PROSPECTUS SUMMARY
The Fund The Capital Management Equity Fund (the "Fund") is a
diversified series of the Capital Management Investment
Trust (the "Trust"), a registered, open-end management,
investment company organized as a Massachusetts business
trust. This Prospectus relates to Investor Shares of the
Fund. See "Organization and Capital Shares."
Offering Price The Investor Shares are offered at net asset value plus a
3% sales charge, which is reduced on purchases involving
larger amounts. The Investor Shares are sold to the public
as an investment vehicle for individuals, institutions,
corporations, and fiduciaries. Investor Shares bear
certain expenses relating to their distribution. See
"Distributor and Distribution Fee" below. The minimum
initial investment is $2,500 ($1,000 for IRA accounts).
The minimum subsequent investment is $500. See "How to
Purchase Shares."
Investment The investment objective of the Fund is to seek capital
Objective appreciation principally through investments in equity
securities, consisting of common and preferred stocks and
securities convertible into common stocks. Realization of
current income is not a significant investment
consideration, and any income realized will be incidental
to the Fund's objective. See "Investment Objective and
Policies."
Advisor Subject to the general supervision of the Trust's Board of
Trustees and in accordance with the Fund's investment
policies, Capital Management Associates, Inc., of New York,
New York (the "Advisor"), manages the Fund's investments.
The Advisor manages over $1 billion in assets. Its clients
include individuals, corporations, pension and profit-
sharing plans, and endowments. For its services, the
Advisor receives a monthly fee based on the Fund's daily
net assets at the annual rate of 1.00% of the first $100
million of Fund assets, 0.90% of the next $150 million,
0.85% of the next $250 million, and 0.80% of all assets
over $500 million. Although the investment advisory fee is
higher than that paid by most other investment companies,
the Board of Trustees believes the fee is reasonable given
the Fund's policy of investing in medium-capitalization
companies, which may require additional research and
monitoring by the Advisor. See "Management of the Fund -
Investment Advisor."
Dividends The Fund may pay income dividends, if any, quarterly;
capital gains, if any, are paid at least once each year.
Dividend and capital gain distributions are automatically
reinvested in additional Investor Shares at net asset value
unless the shareholder elects to receive cash. See
"Dividends and Distributions."
Distributor and Shields & Company(the "Distributor") serves as distributor
Distribution Fee of the Fund's shares. For its services, which include
payments to qualified securities dealers for sales of Fund
shares, the Distributor receives commissions consisting of
the portion of the sales charge on sales of Investor Shares
remaining after the discounts it allows to securities
dealers. Under the Fund's Distribution Plan applicable to
the Investor Shares, payments of up to 0.75% annually of
the Investor Shares' average net assets may be made to the
Distributor and others to compensate them and to reimburse
them for activities intended to result in the sale of
Investor Shares and the servicing of accounts of holders of
Investor Shares. The Distributor is affiliated with the
Advisor. See "Management of the Fund - Distributor" and
"- Distribution Plan."
Redemption There is no charge for redemptions. Shares may be redeemed
of Shares at any time at the net asset value next determined after
receipt of a redemption request by the Fund. A shareholder
who submits appropriate written authorization may redeem
shares by telephone. See "How to Redeem Shares."
Special Risk The Fund is not intended to provide a complete investment
Considerations program, and there can be no assurance that the Fund will
achieve its investment objective. To the extent that
equities comprise a major portion of the Fund's portfolio,
the Fund's net asset value will be subject to stock market
fluctuation. Some of the Fund's investments may include
illiquid securities, foreign securities, and securities
purchased subject to a repurchase agreement or on a "when-
issued" basis, which involve certain risks. The Fund may
borrow only under certain limited conditions (including to
meet redemption requests) and not to purchase securities.
It is not the intent of the Fund to borrow except for
temporary cash requirements. Borrowing, if done, would
tend to exaggerate the effects of market and interest rate
fluctuations on the Fund's net asset value until repaid.
See "Risk Factors."
SUMMARY OF FUND EXPENSES
The following tables set forth certain information in connection with the
expenses of the Investor Shares of the Fund for the current fiscal year. The
information is intended to assist the investor in understanding the various
costs and expenses borne by the Investor Shares of the Fund, and therefore
indirectly by its investors, the payment of which will reduce an investor's
return on an annual basis.
Shareholder Transaction Expenses for Investor Shares
Maximum Sales Charge Imposed on Purchases. . . . . . . . . . . . . . . . 3.00%1
(as a percentage of offering price)
Maximum Sales Charge Imposed on Reinvested Dividends . . . . . . . . . . .None
Deferred Sales Load. . . . . . . . . . . . . . . . . . . . . . . . . . . .None
Redemption Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .None
Exchange Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .None
Annual Fund Operating Expenses
for Investor Shares
(as a percentage of average net assets)
Management Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00%3
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.75%2
Total Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 1.50%3
Total Fund Operating Expenses. . . . . . . . . . . . . . . . . . . . . . 2.25%3
EXAMPLE: You would pay the following expenses (including the maximum initial
sales charge) on a $1,000 investment in Investor Shares of the Fund, whether or
not you redeem at the end of the period, and assuming a 5% annual return:
1 year 3 years 5 years 10 years
$52 $98 $147 $281
1 Reduced for larger purchases. See "How to Purchase Shares - Sales Charges."
2 The Fund, with respect to the Investor Shares, has adopted a Distribution and
Service Plan pursuant to Rule 12b-1 under the Investment Company Act of 1940,
as amended (the "1940 Act"), which provides that the Investor Shares may pay
distribution and service fees up to 0.75% of average net assets of the
Investor Shares annually. See "Management of the Fund - Distribution Plan"
below. Long-term shareholders may pay more than the economic equivalent of
the maximum front-end sales charge permitted by the National Association of
Securities Dealers.
3 The Total Fund Operating Expenses shown above are based on actual operating
expenses incurred by the Investor Shares of the Fund for the fiscal period
ended November 30, 1995, which, after fee waivers and expense reimbursements,
were 1.06% of average daily net assets of the Investor Shares of the Fund,
but restated to reflect the expenses anticipated to be incurred by the
Investor Shares of the Fund for the current fiscal year. Absent such waivers
and reimbursements,the percentages would have been 1.00% for Management Fees
and 7.18% for Total Fund Operating Expenses for the Investor Shares of the
Fund for the fiscal period ended November 30, 1995. The management fee is
higher than that paid by most other investment companies. The Advisor has
voluntarily agreed to a reduction in the fees payable to it and to reimburse
expenses of the Fund, if necessary, in an amount that limits Total Fund
Operating Expenses (exclusive of interest, taxes, brokerage fees and
commissions, sales charges, and extraordinary expenses) to not more than
2.25% of the Investor Shares' average daily net assets. There can be no
assurance that the Advisor's voluntary fee waivers and expense reimbursements
will continue in the future.
See "How to Purchase Shares" and "Management of the Fund" below for more
information about the fees and costs of operating the Fund. The example shown
above assumes a 5% annual return pursuant to the requirements of the Securities
and Exchange Commission. The hypothetical rate of return is not intended to be
representative of past or future performance of the Fund. The annual rate of
return may be greater or less than 5%.
FINANCIAL HIGHLIGHTS
The Fund has two classes of shares - Investor Shares and Institutional Shares.
See "Organization and Capital Shares." This Prospectus relates to Investor
Shares. The financial data included in the table below has been derived from
audited financial statements of the Fund. The financial data for the fiscal
period ended November 30, 1995, have been derived from financial statements
audited by KPMG Peat Marwick LLP, independent auditors, whose report covering
such period is included in the Statement of Additional Information. The
information in the table below should be read in conjunction with the Fund's
latest audited financial statements and notes thereto, which are included in the
Statement of Additional Information, a copy of which may be obtained at no
charge by calling the Fund. Further information about the performance of the
Fund is contained in the Annual Report of the Fund, a copy of which may be
obtained at no charge by calling the Fund.
Investor Class
(For a Share Outstanding Throughout the Fiscal Period)
For the period from
April 7, 1995,
(commencement of operations)
to November 30, 1995
Net asset value, beginning of period $11.07
Income from investment operations
Net investment income 0.11
Net realized and unrealized
gains on investments 1.02
Total from investment operations 1.13
Distributions to shareholders from
Net investment income (0.11)
Total distributions (0.11)
Net asset value, end of period $12.09
Total return 10.24% (a)
Ratios/supplemental data
Net assets, end of period $550,814
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 7.18%(b)
After expense reimbursements and waived fees 1.06%(b)
Ratio of net investment income (loss)
to average net assets
Before expense reimbursements and waived fees (4.23)%(b)
After expense reimbursements and waived fees 1.89%(b)
Portfolio turnover rate 47.74%
(a) Total return does not reflect payment of a sales charge. Annualized
total return is 16.20%
(b) Annualized.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is growth of capital through capital
appreciation. The Fund will seek to attain its objective by investing in equity
securities, consisting of common and preferred stocks and debt or equities
convertible into or exchangeable for common stocks. Realization of current
income is not a significant investment consideration, and any income realized
will be incidental to the Fund's objective. The Fund's investment objective and
fundamental investment limitations described herein may not be altered without
the prior approval of a majority of the Fund's shareholders.
Under normal market conditions, at least 90% of the Fund's total assets will be
invested in equity securities. However, as a temporary defensive measure, when
the Advisor determines that market conditions warrant such investments, the Fund
may invest up to 100% of its total assets in investment grade bonds, U.S.
Government Securities, repurchase agreements, or money market instruments. When
the Fund invests its assets in investment grade bonds, U.S. Government
Securities, repurchase agreements, or money market instruments as a temporary
defensive measure, it is not pursuing its stated investment objective. Under
normal circumstances, however, the Fund will also hold money market or
repurchase agreement instruments for funds awaiting investment, to accumulate
cash for anticipated purchases of portfolio securities, to allow for shareholder
redemptions, and to provide for Fund operating expenses.
Equity Selection Criteria. The Advisor will manage the Fund's assets by
utilizing an investment philosophy which has been employed by the Advisor since
the firm's inception. Under normal market conditions, the Fund will invest in
equity securities consisting of common stocks and securities convertible into
common stocks. The Fund intends to invest in a diversified group of common
stocks and will not concentrate its investments in any one industry or group.
The Fund will focus on medium-capitalization companies, which are defined as
those whose market capitalization range is from $300 million to $6 billion.
This market-capitalization range includes a universe of approximately 1,700
companies. Stocks held in the portfolio will generally be traded on either the
New York Stock Exchange, American Stock Exchange, or the over-the-counter
market. Foreign securities, if held, will generally be traded on foreign
securities exchanges. Foreign securities may be held in the form of American
Depository Receipts ("ADRs"). ADRs are foreign securities denominated in U.S.
dollars and traded on U.S. securities markets. See "Foreign Securities" below.
An economic forecast is developed by the Advisor's Investment Committee to guide
industry allocation decisions. Medium-capitalization equities in industries
where the outlook is favorable relative to current price levels are then
subjected to additional screening, and are finally selected through fundamental
security analysis to identify value. This process most often includes visits
with company management and contacts with industry experts and suppliers. The
results of this research are presented at meetings of the Advisor's investment
professionals. Final investment decisions are made by the Advisor's Investment
Committee (identified below under "Management of the Fund -Investment Advisor").
U.S. Government Securities. The Fund may invest a portion of the portfolio in
U.S. Government Securities, defined to be U.S. Government obligations such as
U.S. Treasury notes, U.S. Treasury bonds, and U.S. Treasury bills; obligations
guaranteed by the U.S. Government such as obligations issued by the Government
National Mortgage Association ("GNMA"); as well as obligations of U.S.
Government authorities, agencies, and instrumentalities such as Federal National
Mortgage Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"),
Federal Home Administration ("FHA"), Federal Farm Credit Bank ("FFCB"), Federal
Home Loan Bank ("FHLB"), Student Loan Marketing Association ("SLMA"), Resolution
Trust Corporation, and The Tennessee Valley Authority. U.S. Government
Securities may be acquired subject to repurchase agreements. While obligations
of some U.S. Government sponsored entities are supported by the full faith and
credit of the U.S. Government (e.g., GNMA), several are supported by the right
of the issuer to borrow from the U.S. Government (e.g., FNMA, FHLMC), and still
others are supported only by the credit of the issuer itself (e.g., SLMA, FFCB).
No assurances can be given that the U.S. Government will provide financial
support to U.S. Government agencies or instrumentalities in the future, other
than as set forth above, since it is not obligated to do so by law. The
guarantee of the U.S. Government does not extend to the yield or value of the
Fund's shares.
Money Market Instruments. Money market instruments may be purchased for
temporary defensive purposes, to accumulate cash for anticipated purchases of
portfolio securities, and to provide for shareholder redemptions and operating
expenses of the Fund. Money market instruments mature in thirteen months or
less from the date of purchase and may include U.S. Government Securities,
corporate debt securities (including those subject to repurchase agreements),
bankers acceptances and certificates of deposit of domestic branches of U.S.
banks, and commercial paper (including variable amount demand master notes)
rated in one of the two highest rating categories by any of the nationally
recognized statistical rating organizations, or if not rated, of equivalent
quality in the Advisor's opinion. The Advisor may, when it believes that
unusually volatile or unstable economic and market conditions exist, depart from
the Fund's investment approach and assume temporarily a defensive portfolio
posture, increasing the Fund's percentage investment in money market
instruments, even to the extent that 100% of the Fund's total assets may be so
invested.
Repurchase Agreements. The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when a Fund acquires a security and simultaneously
resells it to the vendor (normally a member bank of the Federal Reserve or a
registered Government Securities dealer) for delivery on an agreed upon future
date. The repurchase price exceeds the purchase price by an amount which
reflects an agreed upon market interest rate earned by the Fund effective for
the period of time during which the repurchase agreement is in effect. Delivery
pursuant to the resale typically will occur within one to five days of the
purchase. The Fund will not enter into any repurchase agreement which will
cause more than 10% of its net assets to be invested in repurchase agreements
which extend beyond seven days or other illiquid securities. In the event of
the bankruptcy of the other party to a repurchase agreement, the Fund could
experience delays in recovering its cash or the securities lent. To the extent
that in the interim the value of the securities purchased may have declined, the
Fund could experience a loss. In all cases, the creditworthiness of the other
party to a transaction is reviewed and found satisfactory by the Advisor.
Repurchase agreements are, in effect, loans of Fund assets. The Fund will not
engage in reverse repurchase transactions, which are considered to be borrowings
under the 1940 Act.
Foreign Securities. The Fund may invest in the securities of foreign private
issuers. The same factors would be considered in selecting foreign securities
as with domestic securities. Foreign securities' investment presents special
considerations not typically associated with investment in domestic securities.
Foreign taxes may reduce income. Currency exchange rates and regulations may
cause fluctuations in the value of foreign securities. Foreign securities are
subject to different regulatory environments than in the United States, and
compared to the United States, there may be a lack of uniform accounting,
auditing, and financial reporting standards; less volume and liquidity and more
volatility; less public information; and less regulation of foreign issuers.
Countries have been known to expropriate or to nationalize assets, and foreign
investments may be subject to political, financial, or social instability or to
adverse diplomatic developments. There may be difficulties in obtaining service
of process on foreign issuers and difficulties in enforcing judgments with
respect to claims under the U.S. Securities' laws against such issuers.
Favorable or unfavorable differences between U.S. and foreign economies could
affect foreign securities' values. The U.S. Government has, in the past,
discouraged certain foreign investments by U.S. investors through taxation or
other restrictions, and it is possible that such restrictions could be imposed
again.
Because of the inherent risk of foreign securities over domestic issues, the
Fund will generally limit foreign investments to those traded domestically as
American Depository Receipts (ADRs). ADRs are receipts issued by a U.S. bank or
trust company evidencing ownership of securities of a foreign issuer. ADRs may
be listed on a national securities exchange or may trade in the over-the-counter
market. The prices of ADRs are denominated in U.S. dollars while the underlying
security may be denominated in a foreign currency. To the extent the Fund
invests in other foreign securities, it will generally limit such investments to
foreign securities traded on foreign securities exchanges.
Investment Companies. To achieve its investment objective, the Fund may invest
its total assets in securities of other investment companies whose investment
objectives are consistent with the Fund's investment objective, to the limited
extent permitted by the 1940 Act. The Fund will not acquire securities of any
one investment company if, immediately thereafter, the Fund would own more than
3% of such company's total outstanding voting securities, securities issued by
such company would have an aggregate value in excess of 5% of the Fund's total
assets, or securities issued by such company and securities held by the Fund
issued by other investment companies would have an aggregate value in excess of
10% of the Fund's total assets. The Fund will only invest in other investment
companies by purchase of such securities on the open market where no commission
or profit to a sponsor or dealer results from the purchase other than the
customary broker's commissions, or when the purchase is part of a plan of
merger, consolidation, reorganization, or acquisition. To the extent the Fund
invests in other investment companies, the shareholders of the Fund would
indirectly pay a portion of the operating costs of the underlying investment
companies. These costs include management, brokerage, shareholder servicing,
and other operational expenses. Shareholders of the Fund would then indirectly
pay higher operational costs than if they owned shares of the underlying
investment companies directly. The Advisor will waive its advisory fee for that
portion of the Fund's assets invested in other investment companies, except when
such purchase is part of a plan of merger, consolidation, reorganization, or
acquisition.
Real Estate Securities. The Fund will not invest in real estate (including
limited partnership interests), but may invest in readily marketable securities
secured by real estate or securities interests therein or securities issued by
companies that invest in real estate or interests therein. The Fund may also
invest in readily marketable interests in real estate investment trusts
("REITs"). REITs are generally publicly traded on the national stock exchanges
and in the over-the-counter market and have varying degrees of liquidity.
Although the Fund is not limited in the amount of these types of real estate
securities it may acquire, it is not presently expected that within the next 12
months the Fund will have in excess of 5% of its total assets in real estate
securities.
RISK FACTORS
Investment Policies and Techniques. Reference should be made to "Investment
Objective and Policies" above for a description of special risks presented by
the investment policies of the Fund and the specific securities and investment
techniques that may be employed by the Fund, including the risks associated with
repurchase agreements and foreign securities. A more complete discussion of
certain of these securities and investment techniques and their associated risks
is contained in the Statement of Additional Information.
Fluctuations in Value. To the extent that the major portion of the Fund's
portfolio consists of common stocks, it may be expected that its net asset value
will be subject to greater fluctuation than a portfolio containing mostly fixed-
income securities. Although certain of the U.S. Government Securities in which
the Fund may invest are guaranteed as to timely payment of principal and
interest, the market value of the securities will fluctuate due to interest rate
risks. Additionally, not all U.S. Government Securities are backed by the full
faith and credit of the U.S. Government. Given the Fund's limitation primarily
to securities which are commonly defined as `mid-capitalization' securities, the
Fund may be expected to exhibit more volatility than an equity fund investing in
larger-capitalization securities. Because there is risk in any investment,
there can be no assurance that the Fund will meet its objective.
Portfolio Turnover. The Fund sells portfolio securities without regard to the
length of time they have been held to take advantage of new investment
opportunities. Nevertheless, the Fund's portfolio turnover generally will not
exceed 100% in any one year. The degree of portfolio activity affects the
brokerage costs of the Fund and other transaction costs related to the sale of
securities and the reinvestment in other securities. Portfolio turnover may
also have capital gain tax consequences. The Fund's portfolio turnover rate for
its prior fiscal period is set forth under "Financial Highlights" above.
Borrowing. The Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and 15% of its total assets to meet redemption requests
which might otherwise require untimely disposition of portfolio holdings. To
the extent the Fund borrows for these purposes, the effects of market price
fluctuations on portfolio net asset value will be exaggerated. If, while such
borrowing is in effect, the value of the Fund's assets declines, the Fund could
be forced to liquidate portfolio securities when it is disadvantageous to do so.
The Fund would incur interest and other transaction costs in connection with
borrowing. The Fund will borrow only from a bank. The Fund will not make any
further investments if the borrowing exceeds 5% of its total assets until such
time as repayment has been made to bring the total borrowing below 5% of its
total assets.
Illiquid Investments. The Fund may invest up to 10% of its net assets in
illiquid securities. Illiquid securities are those that may not be sold or
disposed of in the ordinary course of business within seven days at
approximately the price at which they are valued. Under the supervision of the
Board of Trustees, the Advisor determines the liquidity of the Fund's
investments. The absence of a trading market can make it difficult to ascertain
a market value for illiquid investments. Disposing of illiquid securities
before maturity may be time consuming and expensive, and it may be difficult or
impossible for the Fund to sell illiquid investments promptly at an acceptable
price. Included within the category of illiquid securities will also be
restricted securities, which cannot be sold to the public without registration
under the federal securities laws. Unless registered for sale, these securities
can only be sold in privately negotiated transactions or pursuant to an
exemption from registration.
Forward Commitments and When-Issued Securities. The Fund may purchase when-
issued securities and commit to purchase securities for a fixed price at a
future date beyond customary settlement time. The Fund is required to hold and
to maintain in a segregated account until the settlement date cash, U.S.
Government Securities, or high-grade debt obligations in an amount sufficient to
meet the purchase price. Purchasing securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines prior to the settlement date; this risk is in addition to the
risk of decline in value of the Fund's other assets. In addition, no income
accrues to the purchaser of when-issued securities during the period prior to
issuance. Although the Fund would generally purchase securities on a when-issued
or forward commitment basis with the intention of acquiring securities for its
portfolio, the Fund may dispose of a when-issued security or forward commitment
prior to settlement if the Advisor deems it appropriate to do so. The Fund may
realize short-term gains or losses upon such sales.
INVESTMENT LIMITATIONS
To limit exposure to risk, the Fund has adopted certain investment limitations.
Some of these limitations are that the Fund will not: (1) issue senior
securities, borrow money, or pledge its assets, except that it may borrow from
banks as a temporary measure (a) for extraordinary or emergency purposes, in
amounts not exceeding 5% of the Fund's total assets, or (b) to meet redemption
requests which might otherwise require untimely disposition of portfolio
securities in amounts not exceeding 15% of its total assets (the Fund will not
make any investments if borrowing exceeds 5% of its total assets); (2) make
loans of money or securities, except that the Fund may invest in repurchase
agreements (but repurchase agreements having a maturity of longer than seven
days are subject to the limitation on investing in illiquid securities); (3)
invest more than 10% of its net assets in illiquid securities; (4) invest in
securities of issuers which have a record of less than three years' continuous
operation (including predecessors and, in the case of bonds, guarantors), if
more than 5% of its total assets would be invested in such securities; (5)
purchase or sell commodities, commodities' contracts, real estate (including
limited partnership interests, but excluding readily marketable interests in
real estate investment trusts or other securities secured by real estate or
interests therein or readily marketable securities issued by companies that
invest in real estate or interests therein), or interests in oil, gas, or other
mineral exploration or development programs or leases (although it may invest in
readily marketable securities of issuers that invest in or sponsor such programs
or leases); (6) with respect to 75% of Fund assets, invest more than 5% at cost
of its total assets in the securities of any one issuer or purchase more than
10% of the outstanding voting stock of any one issuer; and (7) write, purchase,
or sell puts, calls, straddles, spreads, or combinations thereof, or futures
contracts or related options. Investment limitations (1), (5), (6), and (7) are
deemed fundamental; that is, they may not be changed without shareholder
approval. See "Investment Limitations" in the Fund's Statement of Additional
Information for a complete list of investment limitations.
If the Board of Trustees of the Trust determines that the Fund's investment
objective can best be achieved by a substantive change in a non-fundamental
investment limitation, the Board can make such change without shareholder
approval and will disclose any such material changes in the then current
Prospectus. Any limitation that is not specified in the Fund's Prospectus, or
in the Statement of Additional Information, as being fundamental, is non-
fundamental. If a percentage limitation is satisfied at the time of investment,
a later increase or decrease in such percentage resulting from a change in the
value of the Fund's portfolio securities will not constitute a violation of such
limitation. To permit the sale of the Fund's shares in certain states, the Fund
may make commitments that are more restrictive than the investment policies and
limitations described above and in the Statement of Additional Information.
Such commitments may have an effect on the investment performance of the Fund.
Should the Fund determine that any such commitment is no longer in the best
interest of the Fund, it may revoke the commitment and terminate sales of its
shares in the state involved.
HOW NET ASSET VALUE IS DETERMINED
The net asset value for each Investor Share of the Fund is determined at 4:00
p.m., New York time, Monday through Friday, except on business holidays when the
New York Stock Exchange ("NYSE") is closed. The net asset value of the shares
of the Fund for purposes of pricing sales and redemptions is equal to the total
market value of its investments, less all of its liabilities, divided by the
number of its outstanding shares.
Securities that are listed on a securities exchange are valued at the last
quoted sales price at the time the valuation is made. Price information on
listed securities is taken from the exchange where the security is primarily
traded by the Fund. Securities that are listed on an exchange and which are not
traded on the valuation date are valued at the mean of the bid and asked prices.
Prices for securities traded on foreign exchanges will be converted to the
equivalent price in U.S. currency using the published currency exchange rates
available at the time of valuation. Unlisted securities for which market
quotations are readily available are valued at the latest quoted sales price, if
available, otherwise, at the latest quoted bid price. Temporary cash
investments with maturities of 60 days or less will be valued at amortized cost,
which approximates market value. Securities for which no current quotations are
readily available are valued at fair value as determined in good faith using
methods approved by the Board of Trustees of the Trust. Securities may be
valued on the basis of prices provided by a pricing service when such prices are
believed to reflect the fair market value of such securities.
PERFORMANCE DATA
From time to time the Fund may advertise its average annual total return for
each Class of Fund shares. The average annual total return refers to the
average annual compounded rates of return over 1-, 3-, 5-, and 10-year periods
that would equate an initial amount invested at the beginning of a stated period
to the ending redeemable value of the investment. The calculation assumes the
reinvestment of all dividends and distributions, includes all recurring fees
that are charged to all shareholder accounts, and deducts all nonrecurring
charges at the end of each period. The calculation further assumes the maximum
sales load is deducted from the initial payment. If the Fund has been operating
less than 1, 3, 5, or 10 years, the time period during which the Fund has been
operating is substituted.
In addition, the Fund may advertise total return performance data other than
average annual total return for each Class of Fund shares. Such data would show
a percentage rate of return encompassing all elements of return (i.e., income
and capital appreciation or depreciation) and would assume reinvestment of all
dividends and capital gain distributions. Such other total return data may be
shown for the same or different periods as those used for average annual total
return. These data may consist of a cumulative percentage rate of return,
actual year-by-year rates of return, or any combination thereof. A cumulative
percentage rate of return would show the cumulative change in value of an
investment in the Fund for various periods.
The total return of the Fund could be increased to the extent the Advisor may
waive all or a portion of its fees or reimburse all or a portion of the Fund's
expenses. It is not currently contemplated that the Advisor will waive portions
of its fees or reimburse Fund expenses except as provided under "Summary of Fund
Expenses." Total return figures are based on the historical performance of the
Fund, show the performance of a hypothetical investment, and are not intended to
indicate future performance. The Fund's quotations may from time to time be
used in advertisements, sales literature, shareholder reports, or other
communications to shareholders.
MANAGEMENT OF THE FUND
Trustees and Officers. The Fund is a diversified series of the Capital
Management Investment Trust (the "Trust"), a registered, open-end management,
investment company organized as a Massachusetts business trust on October 18,
1994. The Board of Trustees has overall responsibility for management of the
Fund under the laws of Massachusetts and the Declaration of Trust. The
Statement of Additional Information identifies the Trustees and officers of the
Trust, and the Fund and provides information about them. The Trustees of the
Trust and executive officers of the Fund and their principal occupations for the
last five years are set forth below:
TRUSTEES
Lucius E. Mr. Burch is Chairman and Chief Executive Officer of Massey
Burch, III Burch Investment Group, Inc., a large, southeastern venture
Trustee capital firm based in Nashville, Tennessee. After working
as a commercial banker at Morgan Guaranty Trust Co. in New
York City, he joined Massey Investment Company, the
predecessor of Massey Burch Investment Group, as a
financial analyst and portfolio manager in 1968. He has
extensive experience in management consulting, corporate
finance, and mergers and acquisitions. Mr. Burch currently
serves on the Board of Directors of Surgical Care
Affiliates, Inc., and QMS, Inc., both NYSE-listed
companies; Bio-Safe Systems, Inc.; and several private
companies. He is a graduate of the University of North
Carolina.
Thomas A. Mr. Saunders is a Partner of Saunders Karp & Co., L.P., a
Saunders, III New York-based merchant bank. From 1974 to 1989 he was a
Trustee Managing Director of Morgan Stanley & Co., Incorporated,
and from 1987 to 1989 he was Chairman of Morgan Stanley's
Leveraged Equity Fund II, L.P. Mr. Saunders received a
B.S. degree in Electrical Engineering from the Virginia
Military Institute and an M.B.A. degree from the University
of Virginia's Darden Graduate School of Business
Administration. He is Chairman of the Board of Trustees of
the Darden Graduate School, as well as a member of the
Board of Visitors of the Virginia Military Institute. Mr.
Saunders is also a member of the Board of Trustees of the
Cold Spring Harbor Laboratory. He serves as a Director to
numerous industrial, consumer, and healthcare companies in
the Saunders Karp portfolio.
David V. Shields Mr. Shields is a Managing Director of the Advisor. He has
Trustee been a member of the New York Stock Exchange since 1968,
specializing in institutional brokerage. Mr. Shields
served on the Board of Directors of the NYSE from 1986 to
1992, having served as Governor prior to that time. He has
served on various NYSE committees including the Audit,
Market Performance, and the Committee for Review. He is
past director of the Alliance of Floor Brokers of the NYSE
and served as its President from 1980 to 1986. Mr. Shields
has acted in various advisory capacities on capital markets
in Russia, Estonia, and Norway. He holds a B.S. degree in
Economics from the Wharton School of the University of
Pennsylvania and a Graduate Certificate from the London
School of Economics.
J. V. Shields, Jr. Mr. Shields is a Managing Director and Chairman of the
Trustee Advisor. He previously had been the Director of Corporate
Finance at H.N. Whitney, Goadby & Company. He is
responsible for development of the Advisor's corporate
policy and serves on the Investment Committee. He
currently serves as Chairman of the Board of Trustees of
the 59 Wall Street Trust, the Brown Brothers Harriman & Co.
mutual fund group, and serves on the Board of Directors of
Flowers Industries, Inc., a NYSE-listed, diversified, food
manufacturer. He received his B.S.B.A. degree in Finance
and Economics from Georgetown University.
Anthony J. Mr. Walton is Chief Executive Officer of and a partner of
Walton the Llama Company, a regional investment bank in
Trustee Fayetteville, Arkansas, which is owned by members of the
Walton family, founders of Wal-Mart Stores, Inc. Prior to
joining Llama, he was a Director of Westpac Banking
Corporation of Sidney, Australia, and served as Chief
General Manager of the combined Americas & Europe Group in
New York. From 1968 to 1983 Mr. Walton was with The Chase
Manhattan Bank, NA, in New York and London in various
executive positions. He holds a B.A. degree from Haverford
College and an M.B.A. degree in International Finance from
the University of Pennsylvania's Wharton Graduate School of
Finance.
EXECUTIVE
OFFICERS
C. Lennis Mr. Koontz joined the Advisor in 1992. From 1987 to 1992
Koontz, II he was associated with Smith Barney Capital Management as
President a senior portfolio manager and analyst. From 1976 until
1987 he was with Scudder, Stevens & Clark in New York where
he was a Managing Director, member of the stock strategy
group, and head of the employee benefit plans group. At
the Advisor he serves as a portfolio manager/analyst and
sits on the Investment Committee. Mr. Koontz received both
his B.S. and M.S. degrees from the University of Tennessee,
majoring in industrial management. He is a Chartered
Financial Analyst and member of the New York Society of
Security Analysts.
Joseph A. Zock Mr. Zock joined the Advisor when the firm was founded in
Vice President 1982. Prior to that he worked closely with the founders of
the Advisor at H.N. Whitney, Goadby & Company, where he had
served as portfolio manager and research analyst beginning
in 1980. He serves as a portfolio manager/analyst and sits
on the advisor's Investment Committee. He received his BA
degree in Political Science/Economics from the University
of New Hampshire, his J.D. degree from the University of
San Diego Law School, and a Certificate of International
Law from the University of London, Kings College School of
Law.
Investment Advisor. The Fund is advised by Capital Management Associates, Inc.
(the "Advisor"), pursuant to an advisory contract. Subject to the authority of
the Board of Trustees, the Advisor provides guidance and policy direction in
connection with its daily management of the Fund's assets. The Advisor manages
the investment and reinvestment of the Fund's assets in a manner consistent with
the investment objective and policies of the Fund. The Advisor is also
responsible for the selection of broker-dealers through which the Fund executes
portfolio transactions, subject to the brokerage policies established by the
Trustees, and it provides certain executive personnel to the Fund.
The Advisor, organized as a New York corporation in 1982, is controlled by its
officers and directors, with the principal shareholders being J.V. Shields, Jr.;
David V. Shields; and Richard B. Thatcher, who also comprise the Board of
Directors. An Investment Committee of the Advisor, comprised of J.V. Shields,
Jr.; Dimitri H. Kuriloff; Richard B. Thatcher; Joseph A. Zock; and C. Lennis
Koontz, II, CFA, select the investments for the Fund. Messrs. Shields,
Thatcher, and Zock have been affiliated with the Advisor since the firm's
inception in 1982. Mr. Kuriloff has been affiliated with the Advisor since 1982.
Mr. Koontz has been affiliated with the Advisor since 1992. While the Advisor
has no previous experience in managing investment companies, the Advisor has
been providing investment advice in a style identical to that of the Fund to
individuals, corporations, pension and profit sharing plans, endowments, and
other business and private accounts since 1982. The Advisor currently serves as
investment advisor to over $1 billion in assets, most of which is managed using
similar investment objectives to those employed by the Fund.
The Advisor's address is 71 Broadway, Suite 2201, New York, New York 10006.
As full compensation for the investment advisory services provided to the Fund,
the Fund pays the Advisor monthly compensation based on the Fund's daily average
net assets at the annual rate of 1.00% of the first $100 million of the Fund's
net assets, 0.90% of the next $150 million, 0.85% of the next $250 million and
0.80% of all assets over $500 million. Although the investment advisory fee is
higher than that paid by most other investment companies, the Board of Trustees
believes the fee is reasonable given the Fund's policy of investing in medium-
capitalization companies, which may require additional research and monitoring
by the Advisor. The Advisor has voluntarily waived its fee and reimbursed a
portion of the Fund's operating expenses for the fiscal period ended November
30, 1995. The total fees waived amounted to $12,413 and expenses reimbursed
amounted to $72,059.
Administrator and Transfer Agent. The Nottingham Company serves as the Fund's
administrator, transfer and dividend paying agent, and shareholder servicing
agent (the "Administrator"). The Administrator, subject to the authority of the
Board of Trustees, provides administrative and transfer agency services to and
is generally responsible for the overall management and day-to-day
administrative operations of the Fund, pursuant to a Fund Accounting, Dividend
Disbursing & Transfer Agent, and Administration Agreement (the "Administration
Agreement") with the Trust.
The Administrator, which was established as a North Carolina corporation in 1988
and converted to a limited liability company in 1995, has been operating (with
affiliates) as a financial services firm since 1985. Frank P. Meadows III,
Treasurer and Secretary of the Trust, is the firm's Managing Director and
controlling member.
The Administrator, whose address is 105 North Washington Street, Post Office
Drawer 69, Rocky Mount, North Carolina 27802-0069, provides the Fund with office
space and facilities; provides certain executive personnel to the Fund;
supervises the Fund's shareholder servicing operations; maintains the Fund's
accounting and shareholder records; computes daily the Fund's net asset value;
supervises the preparation of tax returns, financial reports, prospectuses, and
proxy statements; and monitors compliance with certain recordkeeping and
regulatory requirements.
Compensation of the Administrator, based upon the average daily net assets of
the Fund, is at the following annual rates: On the first $50 million of the
Fund's net assets, 0.20%; on the next $50 million, 0.175%; on all assets over
$100 million, 0.15%. In addition, the Administrator currently receives a
monthly fee of $2,000 for the first class of the Fund and $750 for each
additional class of the Fund for accounting and recordkeeping services for the
Fund. The Administrator also charges the Fund for certain costs involved with
the daily valuation of investment securities and is reimbursed for out-of-pocket
expenses. The Administrator charges a minimum fee of $3,000 per month for all of
its fees taken in the aggregate, analyzed monthly.
Distributor. Shields & Company (the "Distributor"), a New York corporation, is
the principal underwriter and distributor of the shares of the Fund pursuant to
a Distribution Agreement between the Trust and the Distributor. The Distributor
may sell Fund shares to or through qualified securities dealers and others. The
Distributor receives commissions consisting of that portion of the sales charge
for the sale of Investor Shares remaining after the discounts which it allows to
investment dealers. The Distributor may also receive payments from the Fund
with respect to Investor Shares pursuant to the Distribution and Service Plan
described below under "Distribution Plan."
J.V. Shields, Jr.; David V. Shields; and Richard B. Thatcher, affiliated persons
of the Fund, are also affiliated persons of the Advisor and the Distributor.
The principal business address of the Distributor is 71 Broadway, New York, New
York 10006.
Distribution Plan. The Fund has adopted a Distribution and Service Plan (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act for the Investor Shares.
Under the Plan, the Trustees may authorize the periodic payment of up to 0.75%
annually of the Investor Shares' average daily net asset value for each year
elapsed subsequent to adoption of the Plan. Such expenditures paid as service
fees to any person who sells Investor Shares may not exceed 0.25% of the
Investor Shares' average annual net asset value. Payments under the Plan will
be made to the Distributor and others to finance activities primarily intended
to result in the sale of Investor Shares, including but not limited to, the
servicing of shareholder accounts. The Plan may not be amended to increase
materially the amount to be spent for distribution and service fees without
approval of the shareholders of the Investor Shares. The continuation of the
Plan must be considered by the Board of Trustees annually. At least quarterly,
the Board of Trustees must review a written report of amounts expended pursuant
to the Plan and the purposes for which such expenditures were made.
Custodian. The custodian of the Fund's assets is Wachovia Bank of North
Carolina, N.A. (the "Custodian"). The Custodian's mailing address is 301 North
Main Street, Winston-Salem, North Carolina 27102. The Advisor, Administrator,
or interested persons thereof, may have banking relationships with the
Custodian.
Other Fund Costs. The Fund pays all expenses not assumed by the Advisor or the
Administrator. Fund expenses include the fees and expenses, if any, of the
Trustees and officers who are not affiliated persons of the Advisor; fees of the
Custodian; interest expense, taxes, brokerage fees, and commissions; fees and
expenses of the Fund's shareholder servicing operations; fees and expenses of
qualifying and registering the Fund's shares under federal and state securities
laws; expenses of preparing, printing, and distributing prospectuses and reports
to existing shareholders; auditing and legal expenses; insurance expense;
association dues; and the expense of shareholders' meetings and proxy
solicitations. The Fund is also liable for any nonrecurring expenses as may
arise such as litigation to which the Fund may be a party. The Fund may be
obligated to indemnify the Trustees and officers with respect to such
litigation. Any expenses relating only to a particular Class of shares of the
Fund will be borne solely by such Class of shares.
Brokerage. The Fund has adopted brokerage policies that allow the Advisor to
(a) prefer brokers which provide research services to the Advisor or (b) utilize
a brokerage firm affiliated with the Advisor or the Trust. In all cases, the
primary consideration for selection of broker-dealers will be to obtain the best
overall terms available for the Fund. Research services obtained through Fund
brokerage transactions may be used by the Advisor for its other clients, and
conversely, the Fund may benefit from research services obtained through the
brokerage transactions of the Advisor's other clients. More information about
the brokerage practices of the Fund is contained in the Statement of Additional
Information under the heading "Portfolio Transactions."
HOW TO PURCHASE SHARES
Shares in the Fund may be purchased through members of the National Association
of Securities Dealers, Inc., who are registered in the state where the purchase
is made and who have a sales agreement with the Distributor. After a
shareholder account is established and the investment dealer is recorded,
subsequent orders for shares may be mailed directly to the Fund. Such purchases
of shares are made at the public offering price.
Assistance in opening accounts and Fund Shares Applications may be obtained from
the Fund by calling 1-800-525-FUND, or by writing to the Fund at the address
shown below for regular mail orders. Investor Shares may be purchased by
individuals or organizations and may be appropriate for use in tax-sheltered
retirement plans and systematic withdrawal plans. Assistance is also available
through any broker-dealer authorized to sell shares in the Fund. Payment for
shares purchased may be made through your account at the broker-dealer
processing your application and order to purchase. The Fund's shares are
offered at the public offering price next determined after your order is
received by the Fund in proper order as indicated herein. The minimum initial
investment, unless stated otherwise herein, is $2,500. The minimum for
Individual Retirement Accounts ("IRAs"), Keogh Plans, 401(k) Plans, or purchases
under the Uniform Transfers to Minors Act is $1,000. The Fund may, in the
Advisor's sole discretion, accept certain accounts with less than the stated
minimum initial investment.
Payment must be made by check or money order drawn on a U.S. bank and payable in
U.S. dollars. Under certain circumstances the Fund, at the sole discretion of
the Advisor, may allow payment in kind for Fund shares purchased, by accepting
securities in lieu of cash. Any securities so accepted would be valued on the
date received and included in the calculation of net asset value of the Fund.
See the Statement of Additional Information for additional information on
purchases in kind.
If checks are returned unpaid due to nonsufficient funds, stop payment, or other
reasons, the Fund will charge $20. To recover any such loss or charge, the Fund
reserves the right, without further notice, to redeem shares of the Fund already
owned by any purchaser whose order is cancelled, and such a purchaser may be
prohibited from placing further orders unless investments are accompanied by
full payment by wire or cashier's check.
All orders received by the Fund, whether by mail, bank wire, or facsimile order
from a qualified broker-dealer, prior to 4:00 p.m. New York time will purchase
shares at the public offering price determined at that time. Otherwise, your
order will purchase shares as of 4:00 p.m. New York time on the next business
day. For orders placed through a qualified broker-dealer, such firm is
responsible for promptly transmitting purchase orders to the Administrator. All
purchases of shares are subject to acceptance and are not binding until
accepted. The Fund reserves the right to reject any application or investment.
Regular Mail Orders. Please complete and sign the Fund Shares Application
accompanying this Prospectus and mail it, with your check made payable to the
Fund, to:
Capital Management Equity Fund
Investor Shares
c/o The Nottingham Company
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
Applications must contain social security and Taxpayer Identification Numbers
("TINs"). If you have applied for a social security or TIN at the time of
completing your account application, the application should so indicate. Taxes
are not withheld from distributions to U.S. investors if certain IRS
requirements regarding TINs are met.
Bank Wire Orders. Investments can be made directly by bank wire. To establish
a new account or to add to an existing account by wire, please call the Fund at
1-800-525-FUND, before wiring funds, to advise it of the investment, the dollar
amount of the investment, and the account identification number. This
notification will ensure prompt and accurate handling of your investment.
Please have your bank use the following wire instructions to purchase by wire:
Wachovia Bank of North Carolina, N.A.
Winston-Salem, North Carolina
ABA # 053100494
For credit to the Rocky Mount Office
For the Capital Management Equity Fund - Investor Shares
Acct# 6768-021065
For further credit to (shareholder's name and SS# or EIN#)
It is important that the wire message contain all the relevant information and
that the Fund receive prior telephone notification to ensure proper credit.
Upon opening an account by wire order, you must, as soon as possible, complete
and mail your Fund Shares Application to the Fund as described under "Regular
Mail Orders" above. Investors should be aware that some banks may impose a wire
service fee.
Additional Investments. You may add to your account by mail or wire at any time
by purchasing shares at the then current public offering price. The minimum
additional investment is $500. Before adding funds by bank wire, please alert
the Fund by telephone at 1-800-525-FUND. Follow the wire order instructions set
forth above to send your wire order. When calling for any reason, please have
your account number ready, if known. Mail orders should include, when possible,
the "Invest by Mail" stub which is attached to your Fund confirmation statement.
Otherwise, be sure to identify your account in your letter.
Sales Charges. The public offering price per share for Investor Shares of the
Fund equals net asset value plus a sales charge, which is reduced on purchases
involving larger amounts as described below. The Distributor receives this
sales charge as Distributor and may reallow it in the form of dealer discounts
and brokerage commissions as follows:
Sales Sales
Charge As Charge As Dealers Discounts
% of Net % of Public and Brokerage
Amount of Transaction Amount Offering Commissions as % of
At Public Offering Price Invested Price Public Offering Price
Less than $250,000. . . . . . . . 3.09% 3.00% 2.80%
$250,000 but less than $500,000 . 2.56% 2.50% 2.30%
$500,000 or more. . . . . . . . . 2.04% 2.00% 1.80%
Investor Shares are subject to 12b-1 fees. See "Management of the Fund -
Distribution Plan" above.
At times the Distributor may reallow the entire sales charge to dealers. From
time to time dealers who receive dealer discounts and brokerage commissions from
the Distributor may reallow all or a portion of such dealer discounts and
brokerage commissions to other dealers or brokers. Pursuant to the terms of the
Distribution Agreement, the sales charge payable to the Distributor and the
dealer discounts may be suspended, terminated, or amended. Dealers who receive
90% or more of the sales charge may be deemed to be "underwriters" under the
Securities Act of 1933, as amended.
The dealer discounts and brokerage commissions schedule above applies to all
dealers who have agreements with the Distributor. The Distributor, at its
expense, may also provide additional compensation to dealers in connection with
sales of shares of the Fund. Compensation may include financial assistance to
dealers in connection with conferences, sales, or training programs for their
employees; seminars for the public; advertising campaigns regarding the Fund;
and/or other dealer-sponsored special events. In some instances, this
compensation may be made available only to certain dealers whose representatives
have sold or are expected to sell a significant amount of such shares.
Compensation may include payment for travel expenses, including lodging,
incurred in connection with trips taken by invited registered representatives
and members of their families to locations within or outside of the United
States for meetings or seminars of a business nature. Dealers may not use sales
of the Fund shares to qualify for this compensation to the extent such may be
prohibited by the laws of any state or any self-regulatory agency, such as the
National Association of Securities Dealers, Inc. None of the aforementioned
compensation is paid for by the Fund or its shareholders.
Reduced Sales Charges
Concurrent Purchases. For purposes of qualifying for a lower sales
charge for Investor Shares, investors have the privilege of combining concurrent
purchases of the Fund and one or more future series of the Trust affiliated with
the Advisor and sold with a sales charge. For example, if a shareholder
concurrently purchases shares in one of the future series of the Trust
affiliated with the Advisor and sold with a sales charge at the total public
offering price of $250,000, and Investor Shares in the Fund at the total public
offering price of $250,000, the sales charge would be that applicable to a
$500,000 purchase as shown in the appropriate table above. This privilege may
be modified or eliminated at any time or from time to time by the Trust without
notice thereof.
Rights of Accumulation. Pursuant to the right of accumulation,
investors are permitted to purchase Investor Shares at the public offering price
applicable to the total of (a) the total public offering price of the Investor
Shares of the Fund then being purchased plus (b) an amount equal to the then
current net asset value of the purchaser's combined holdings of the shares of
all of the series of the Trust affiliated with the Advisor and sold with a sales
charge. To receive the applicable public offering price pursuant to the right
of accumulation, investors must, at the time of purchase, provide sufficient
information to permit confirmation of qualification, and confirmation of the
purchase is subject to such verification. This right of accumulation may be
modified or eliminated at any time or from time to time by the Trust without
notice.
Letters of Intent. Investors may qualify for a lower sales charge for
Investor Shares by executing a letter of intent. A letter of intent allows an
investor to purchase Investor Shares of the Fund over a 13-month period at
reduced sales charges based on the total amount intended to be purchased plus an
amount equal to the then current net asset value of the purchaser's combined
holdings of the shares of all of the series of the Trust affiliated with the
Advisor and sold with a sales charge. Thus, a letter of intent permits an
investor to establish a total investment goal to be achieved by any number of
purchases over a 13-month period. Each investment made during the period
receives the reduced sales charge applicable to the total amount of the intended
investment.
The letter of intent does not obligate the investor to purchase, or the Fund to
sell, the indicated amount. If such amount is not invested within the period,
the investor must pay the difference between the sales charge applicable to the
purchases made and the charges previously paid. If such difference is not paid
by the investor, the Distributor is authorized by the investor to liquidate a
sufficient number of shares held by the investor to pay the amount due. On the
initial purchase of shares, if required (or subsequent purchases, if necessary),
shares equal to at least 5 percent of the amount indicated in the letter of
intent will be held in escrow during the 13-month period (while remaining
registered in the name of the investor) for this purpose. The value of any
shares redeemed or otherwise disposed of by the investor prior to termination or
completion of the letter of intent will be deducted from the total purchases
made under such letter of intent.
A 90-day back-dating period can be used to include earlier purchases at the
investor's cost (without a retroactive downward adjustment of the sales charge);
the 13-month period would then begin on the date of the first purchase during
the 90-day period. No retroactive adjustment will be made if purchases exceed
the amount indicated in the letter of intent. Investors must notify the
Administrator or the Distributor whenever a purchase is being made pursuant to a
letter of intent.
Investors electing to purchase shares pursuant to a letter of intent should
carefully read the letter of intent, which is included in the Fund Shares
Application accompanying this Prospectus, or is otherwise available from the
Administrator or the Distributor. This letter of intent option may be modified
or eliminated at any time or from time to time by the Trust without notice.
Reinvestments. Investors may reinvest, without a sales charge, proceeds
from a redemption of Investor Shares of the Fund in Investor Shares of the Fund
or in shares of another series of the Trust affiliated with the Advisor and sold
with a sales charge, within 90 days after the redemption. If the other series
charges a sales charge higher than the sales charge the investor paid in
connection with the shares redeemed, the investor must pay the difference. In
addition, the shares of the series to be acquired must be registered for sale in
the investor's state of residence. The amount that may be so reinvested may not
exceed the amount of the redemption proceeds, and a written order for the
purchase of such shares must be received by the Fund or the Distributor within
90 days after the effective date of the redemption.
If an investor realizes a gain on the redemption, the reinvestment will not
affect the amount of any federal capital gains tax payable on the gain. If an
investor realizes a loss on the redemption, the reinvestment may cause some or
all of the loss to be disallowed as a tax deduction, depending on the number of
shares purchased by reinvestment and the period of time that has elapsed after
the redemption; although for tax purposes, the amount disallowed is added to the
cost of the shares acquired upon the reinvestment.
Purchases by Related Parties and Groups. Reductions in sales charges
apply to purchases by a single "person," including an individual; members of a
family unit, consisting of a husband, wife, and children under the age of 21
purchasing securities for their own account; or a trustee or other fiduciary
purchasing for a single fiduciary account or single trust estate.
Reductions in sales charges also apply to purchases by individual members of a
"qualified group." The reductions are based on the aggregate dollar value of
shares purchased by all members of the qualified group and still owned by the
group plus the shares currently being purchased. For purposes of the paragraph,
a qualified group consists of a "company," as defined in the 1940 Act, which has
been in existence for more than six months and which has a primary purpose other
than acquiring Investor Shares of the Fund at a reduced sales charge, and the
"related parties" of such company. For purposes of this paragraph, a "related
party" of a company is: (i) any individual or other company who directly or
indirectly owns, controls, or has the power to vote 5 percent or more of the
outstanding voting securities of such company; (ii) any other company of which
such company directly or indirectly owns, controls, or has the power to vote 5
percent or more of its outstanding voting securities; (iii) any other company
under common control with such company; (iv) any executive officer, director, or
partner of such company or of a related party; and (v) any partnership of which
such company is a partner.
Sales at Net Asset Value. The Fund may sell Investor Shares at a
purchase price equal to the net asset value of such shares, without a sales
charge, to Trustees, officers, and employees of the Trust, the Fund, and the
Advisor, and to employees and principals of related organizations and their
families, and certain parties related thereto, including clients and related
accounts of the Advisor. The public offering price of Investor Shares of the
Fund may also be reduced to net asset value per share in connection with the
acquisition of the assets of or merger or consolidation with a personal holding
company or a public or private investment company.
Employees and Affiliates of the Fund. The minimum purchase requirement is not
applicable to accounts of Trustees, officers, or employees of the Fund or
certain parties related thereto. The minimum initial investment for such
accounts is $1,000. Investor Shares may also be sold to such persons at net
asset value without a sales charge. See the Statement of Additional Information
for further details.
Stock Certificates. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
which will show the number of shares owned.
Automatic Investment Plan. The automatic investment plan enables shareholders
to make regular monthly or quarterly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Administrator will automatically charge the checking account for
the amount specified ($100 minimum), which will be automatically invested in
shares at the public offering price on or about the 21st day of the month. The
shareholder may change the amount of the investment or discontinue the plan at
any time by writing to the Administrator.
HOW TO REDEEM SHARES
Shares of the Fund may be redeemed (the Fund will repurchase them from
shareholders) by mail or telephone. Any redemption proceeds may be more or less
than the purchase price of your shares, depending on the market value of the
Fund's portfolio securities. All redemption orders received in proper form, as
indicated herein, by the Fund, whether by mail or telephone, prior to 4:00 p.m.
New York time, will be made at the net asset value determined at that time.
Otherwise, your redemption order will be made as of 4:00 p.m. New York time on
the next business day. There is no charge for redemptions from the Fund. You may
also redeem your shares through a broker-dealer, which may charge a fee for its
services.
The Board of Trustees reserves the right to redeem involuntarily any account
having a net asset value of less than $1,000 (due to redemptions, exchanges, or
transfers, and not due to market action) upon 60-days' written notice. If the
shareholder brings his account net asset value up to at least $1,000 during the
notice period, the account will not be redeemed. Redemptions from retirement
plans may be subject to federal income tax withholding.
If you are uncertain of the requirements for redemption, please contact the Fund
at 1-800-525-FUND or write to the address shown below.
Regular Mail Redemptions. Your request should be addressed to Capital
Management Equity Fund, c/o The Nottingham Company, 105 North Washington Street,
Post Office Drawer 69, Rocky Mount, North Carolina 27802-0069. Your request for
redemption must include:
1) Your letter of instruction specifying the account number, and the
number of shares, or dollar amount to be redeemed. This request must
be signed by all registered shareholders in the exact names in which
they are registered;
2) Any required signature guarantees (see "Signature Guarantees" below);
and
3) Other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships,
pension or profit sharing plans, and other organizations.
Your redemption proceeds will be sent to you within seven days after receipt of
your redemption request. However, the Fund may delay forwarding a redemption
check for recently purchased shares while it determines whether the purchase
payment will be honored. Such delay (which may take up to fifteen days from the
date of purchase) may be reduced or avoided if the purchase is made by certified
check or wire transfer. In all cases, the net asset value next determined after
receipt of the request for redemption will be used in processing the redemption
request. The Fund may suspend redemption privileges or postpone the date of
payment (i) during any period that the NYSE is closed, or trading on the NYSE is
restricted as determined by the Securities and Exchange Commission (the
"Commission"); (ii) during any period when an emergency exists as defined by the
rules of the Commission, as a result of which it is not reasonably practicable
for the Fund to dispose of securities owned by it or to determine fairly the
value of its assets; and (iii) for such other periods as the Commission may
permit.
Telephone and Bank Wire Redemptions. The Fund offers shareholders the option of
redeeming shares by telephone and bank wire under certain limited conditions.
The Fund will redeem shares in this manner when so requested by the shareholder
only if the shareholder confirms redemption instructions in writing.
The Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 919-972-1908). The confirmation instructions must include:
1) Designation of Class (Institutional or Investor),
2) Shareholder name and account number,
3) Number of shares or dollar amount to be redeemed,
4) Instructions for transmittal of redemption funds to the shareholder,
and
5) Shareholder signature as it appears on the application then on file
with the Fund.
The net asset value used in processing the redemption request will be the net
asset value next determined after the telephone or bank wire request is
received. Redemption proceeds will not be distributed until written confirmation
of the redemption request is received, per the instructions above. You can
choose to have redemption proceeds mailed to you at your address of record, your
bank, or to any other authorized person, or you can have the proceeds sent by
bank wire to your bank ($5,000 minimum). Shares of the Fund may not be redeemed
by wire on days in which your bank is not open for business. You can change
your redemption instructions anytime you wish by filing a letter including your
new redemption instructions with the Fund. See "Signature Guarantees" below.
The Fund reserves the right to restrict or to cancel telephone and bank wire
redemption privileges for shareholders, without notice, if the Trustees believe
it to be in the best interest of the shareholders to do so. Shareholders would
be given at least 30-days' written notice prior to imposing any fees with
respect to telephone redemptions or bank wires. During drastic economic and
market changes, telephone redemption privileges may be difficult to implement.
There is currently no charge by the Administrator for wire redemptions.
However, the Administrator reserves the right, upon 30-days' written notice, to
make reasonable charges for wire redemptions. All charges will be deducted from
your account by redemption of shares in your account. Your bank or brokerage
firm may also impose a charge for processing the wire. If wire transfer of
funds is impossible or impractical, the redemption proceeds will be sent by mail
to the designated account.
You may redeem shares, subject to the procedures outlined above, by calling the
Fund at 1-800-525-FUND. Redemption proceeds will only be sent to the bank
account or person named in your Fund Shares Application currently on file with
the Fund. Telephone redemption privileges authorize the Fund to act on
telephone instructions from any person representing himself or herself to be the
investor and reasonably believed by the Fund to be genuine. The Fund will
employ reasonable procedures, such as requiring a form of personal
identification, to confirm that instructions are genuine, and if it does not
follow such procedures, the Fund will be liable for any losses due to fraudulent
or unauthorized instructions. The Fund will not be liable for following
telephone instructions reasonably believed to be genuine.
Signature Guarantees. To protect your account and the Fund from fraud,
signature guarantees are required to be sure that you are the person who has
authorized a change in registration, or standing instructions, for your account.
Signature guarantees are required for (1) change of registration requests, (2)
requests to establish or to change exchange privileges or telephone and bank
wire redemption service other than through your initial account application, and
(3) redemption requests in excess of $50,000. Signature guarantees are
acceptable from a member bank of the Federal Reserve System, a savings and loan
institution, credit union (if authorized under state law), registered
broker-dealer, securities exchange, or association clearing agency, and must
appear on the written request for change of registration, establishment or
change in exchange privileges, or redemption request.
Systematic Withdrawal Plan. A shareholder who owns shares of the Fund valued at
$10,000 or more at the current offering price may establish a Systematic
Withdrawal Plan to receive a monthly or quarterly check in a stated amount not
less than $100. Each month or quarter, as specified, the Fund will
automatically redeem sufficient shares from your account to meet the specified
withdrawal amount. The shareholder may establish this service whether dividends
and distributions are reinvested in shares of the Fund or paid in cash. Call or
write the Fund for an application form. See the Statement of Additional
Information for further details.
DIVIDENDS AND DISTRIBUTIONS
The Fund distributes substantially all of its net investment income, if any, in
the form of dividends. The Fund may pay dividends, if any, quarterly and will
distribute net realized capital gains, if any, at least annually.
Unless a shareholder elects to receive cash, dividends and capital gains will be
automatically reinvested in additional full and fractional Investor Shares of
the Fund at the net asset value per share next determined. Reinvested dividends
and capital gains are exempt from any sales load. Shareholders wishing to
receive their dividends or capital gains in cash may make their request in
writing to the Fund, c/o The Nottingham Company at 105 North Washington Street,
Post Office Drawer 69, Rocky Mount, North Carolina 27802-0069. That request
must be received by the Fund prior to the record date to be effective for the
next dividend. If cash payment is requested, checks will be mailed within five
business days after the last day of each quarter or the Fund's fiscal year end,
as applicable. Each shareholder of the Fund will receive a quarterly summary of
his or her account, including information regarding reinvested dividends from
the Fund. Tax consequences to shareholders of dividends and distributions are
the same if received in cash or in additional shares of the Fund.
To satisfy certain requirements of the Code, the Fund may declare special
year-end dividend and capital gains distribution during December. Such
distributions, if received by shareholders by January 31, are deemed to have
been paid by the Fund and received by shareholders on December 31 of the prior
year.
There is no fixed-dividend rate, and there can be no assurance regarding the
payment of any dividends or the realization of any gains. The Fund's net
investment income available for distribution to holders of Investor Shares will
be reduced by the amount of any expenses allocated to the Investor Shares,
including the distributor and service fees payable under the Fund's Distribution
and Service Plan.
FEDERAL INCOME TAX INFORMATION
Taxation of the Fund. The Internal Revenue Code of 1986, as amended (the
"Code"), treats the Fund, and any other series of the Trust, as a separate
regulated investment company. The Fund intends to remain qualified as a
regulated investment company under the Code by distributing substantially all of
its "net investment income" to shareholders and meeting other requirements of
the Code. For the purpose of calculating dividends, net investment income
consists of income accrued on portfolio assets, less accrued expenses. Upon
qualification, the Fund will not be liable for federal income taxes to the
extent earnings are distributed. The Board of Trustees retains the right for
the Fund, or any other series of the Trust, to determine for any particular year
if it is advantageous not to qualify as a regulated investment company.
Regulated investment companies, such as the Fund, are subject to a
non-deductible 4% excise tax to the extent they do not distribute the
statutorily required amount of investment income, determined on a calendar year
basis, and capital gain net income, using an October 31 year end measuring
period. The Fund intends to declare or distribute dividends during the calendar
year in an amount sufficient to prevent imposition of the 4% excise tax.
Taxation of Shareholders. For federal income tax purposes, any dividends and
distributions from short-term capital gains that a shareholder receives in cash
from the Fund or which are re-invested in additional shares will be taxable
ordinary income. If a shareholder is not required to pay a tax on income, he
will not be required to pay federal income taxes on the amounts distributed to
him. A dividend declared in October, November, or December of a year and paid
in January of the following year will be considered to be paid on December 31 of
the year of declaration.
Distributions paid by the Fund from long-term capital gains, whether received in
cash or reinvested in additional shares, are taxable as long-term capital gains,
regardless of the length of time an investor has owned shares in the Fund.
Capital gain distributions are made when the Fund realizes net capital gains on
sales of portfolio securities during the year. Dividends and capital gain
distributions paid by the Fund shortly after shares have been purchased,
although in effect a return of investment, are subject to federal income
taxation.
The sale of shares of the Fund is a taxable event and may result in a capital
gain or loss. Capital gain or loss may be realized from an ordinary redemption
of shares or an exchange of shares between two mutual funds (or two series of a
mutual fund).
The Trust will inform shareholders of the Fund of the source of their dividends
and capital gains distributions at the time they are paid and, promptly after
the close of each calendar year, will issue an information return to advise
shareholders of the federal tax status of such distributions and dividends.
Dividends and distributions may also be subject to state and local taxes.
Shareholders should consult their tax advisors regarding specific questions as
to federal, state or local taxes.
The Fund is required by federal law to withhold and remit to the IRS 31% of the
dividends, capital gains distributions, and in certain cases, proceeds of
redemptions paid to any shareholder who fails to furnish the Fund with a correct
taxpayer identification number, who under-reports dividend or interest income or
who fails to provide certification of tax identification number. Instructions
to exchange or to transfer shares held in established accounts will be refused
until the certification has been provided. To avoid this withholding
requirement, you must certify on your application, or on a separate W-9 Form
supplied by the Administrator, that your taxpayer identification number is
correct and that you are not currently subject to backup withholding, or you are
exempt from backup withholding. For individuals, your taxpayer identification
number is your social security number.
ORGANIZATION AND CAPITAL SHARES
The Fund is a series of the Capital Management Investment Trust the ("Trust"),
an open-end investment company that was organized in 1994 as a Massachusetts
business trust. The Trust is currently offering one series of shares,
representing the Fund, which shares are divided into two classes as described
below. The Board of Trustees may, in the future, authorize the issuance of
other series of capital shares (or classes of such shares) representing shares
of additional funds. All shares of the Trust, when issued, will be fully paid
and non-assessable.
The Declaration of Trust authorizes the Board of Trustees to classify and
reclassify any unissued shares into one or more classes of shares. Pursuant to
such authority, the Board of Trustees has authorized the issuance of an
unlimited number of shares in each of two classes ("Investor Shares" and
"Institutional Shares") representing equal pro rata interests in the Fund,
except that the classes bear different expenses that reflect the difference in
services provided to them.
Institutional Shares of the Fund are offered to certain institutions and other
investors described in the prospectus for such shares. Holders of Institutional
Shares will not be subject to an initial sales charge and bear no shareholder
servicing or distribution fees. Holders of Investor Shares bear an initial
sales charge and the distribution and service fees described under "Management
of the Fund - Distribution Plan" above. As a result of these different charges
and fees, the total return on the Fund's Investor Shares will generally be lower
than the total return on the Institutional Shares. Standardized total return
quotations are computed separately for each Class of shares of the Fund.
THIS PROSPECTUS RELATES TO THE FUND'S INVESTOR SHARES AND DESCRIBES ONLY THE
POLICIES, OPERATIONS, CONTRACTS, AND OTHER MATTERS PERTAINING TO THE INVESTOR
SHARES. THE FUND ALSO ISSUES A CLASS OF INSTITUTIONAL SHARES. SUCH OTHER CLASS
MAY HAVE DIFFERENT SALES CHARGES AND EXPENSES, WHICH MAY AFFECT PERFORMANCE.
INVESTORS MAY CALL THE FUND AT 1-800-525-3863 TO OBTAIN MORE INFORMATION
CONCERNING OTHER CLASSES AVAILABLE TO THEM. INVESTORS MAY OBTAIN INFORMATION
CONCERNING OTHER CLASSES FROM THEIR SALES REPRESENTATIVE, THE DISTRIBUTOR, THE
FUND, OR ANY OTHER PERSON WHICH IS OFFERING OR MAKING AVAILABLE TO THEM THE
SECURITIES OFFERED IN THIS PROSPECTUS.
VOTING RIGHTS
Each outstanding share of the Trust is entitled to one vote for each full share
and a fractional vote for each fractional share on all matters which concern the
Trust as a whole. The Trust's shareholders will vote in the aggregate and not
by fund or class, except where otherwise required by law or when the Board of
Trustees determines that the matter to be voted on affects only the interests of
the shareholders of a particular fund or class. Examples of matters that would
affect only a particular fund are any proposed change in the fundamental
investment objective or policies of that fund or a proposed change in the
investment advisory agreement for a fund. The shares of the Trust will have
noncumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of Trustees can elect all of the Trustees if
they so choose. The Trust may dispense with the annual meeting of shareholders
in any year in which it is not to call a meeting of shareholders for purposes of
voting on the removal of a Trustee or Trustees. Thus, there will normally be no
meeting of shareholders for the purpose of electing Trustees, and the Fund is
not expected to have an annual meeting of shareholders.
Shareholders representing 10 percent or more of the Trust's shares then
outstanding may call a meeting for the purpose of removing one or more of the
Trustees. If shareholders desire to call a meeting to consider the removal of
one or more Trustees, they will be assisted in communicating with other
shareholders. See "Capital Shares and Voting" in the Statement of Additional
Information for more information. Shareholder inquiries may be made in writing,
addressed to the Fund at the address shown on the cover of this document.
As of March 15, 1996, the following persons owned of record or beneficially more
than 25% of the Investor Shares of the Fund: Dillon Read & Company, 120 Wall
Street, New York, New York 10006, record owner with respect to 79.05% of the
Investor Shares. Accordingly this person is deemed to be a "controlling person"
of the Investor Shares of the Fund within the meaning of the 1940 Act.
OTHER INFORMATION
Accountants. KPMG Peat Marwick LLP serves as independent auditors for the
Trust. Its address is 1021 East Cary Street, Suite 1900, Richmond, Virginia
23219-4023.
Information on the Fund. The Fund provides annual and semi-annual reports to
all shareholders. The annual reports contain audited financial statements and
other information about the Fund.
No dealer, salesman, or other person
has been authorized to give any
information or to make any
representations, other than those
contained in this Prospectus, and if CAPITAL MANAGEMENT
given or made, such other information EQUITY FUND
or representations must not be relied
upon as having been authorized by the INVESTOR SHARES
Fund or the Advisor. This Prospectus
does not constitute an offering in
any state in which an offering may
not lawfully be made.
The Fund reserves the right in its
sole discretion to withdraw all or
any part of the offering made by this
Prospectus or to reject purchase
orders. All orders to purchase
shares are subject to acceptance by PROSPECTUS
the Fund and are not binding until
confirmed or accepted in writing.
Investment Advisor
Capital Management Associates, Inc.
New York, New York April 1, 1996
Distributor
Shields & Company
Member NYSE
New York, New York
Fund Administrator,
Transfer Agent & Shareholder
Servicing Agent
The Nottingham Company
Rocky Mount, North Carolina
1-800-525-3863
Independent Auditors
KPMG Peat Marwick LLP
Richmond, Virginia
Custodian
Wachovia Bank of North Carolina,
N.A.
Winston-Salem, North Carolina
STATEMENT OF ADDITIONAL INFORMATION
CAPITAL MANAGEMENT EQUITY FUND
April 1, 1996
A series of
CAPITAL MANAGEMENT INVESTMENT TRUST
Capital Management Associates, Inc.
71 Broadway, Suite 2201
New York, New York 10006
Telephone 1-800-525-FUND
Table of Contents
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . . . . . . . . . . . . 2
INVESTMENT LIMITATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ADDITIONAL INFORMATION ON PERFORMANCE . . . . . . . . . . . . . . . . . . . 8
PORTFOLIO TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SPECIAL SHAREHOLDER SERVICES. . . . . . . . . . . . . . . . . . . . . . . . 11
PURCHASE OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
REDEMPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
FUND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ADDITIONAL TAX INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . 14
CAPITAL SHARES AND VOTING . . . . . . . . . . . . . . . . . . . . . . . . . 16
CUSTODIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
INDEPENDENT AUDITORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
APPENDIX A - DESCRIPTION OF RATINGS . . . . . . . . . . . . . . . . . . . . 16
ANNUAL REPORT OF THE FUND FOR
THE FISCAL PERIOD ENDED NOVEMBER 30, 1995. . . . . . . . . . . . . ATTACHED
This Statement of Additional Information is not a prospectus and should only be
read in conjunction with the Prospectuses of the Capital Management Equity Fund
(the "Fund") dated April 1, 1996, relating to the Fund's Institutional Shares
and Investor Shares. The Prospectus for each such Class of shares of the Fund
may be obtained from the Fund at the address and phone shown above at no charge.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Fund are described in the
Prospectus for each Class of shares of the Fund. Supplemental information about
these policies is set forth below. Certain capitalized terms used herein are
defined in the Prospectus. The Fund, organized on October 18, 1994, has no
prior operating history.
Repurchase Agreements. The Fund may acquire U.S. Government obligations or
corporate debt securities subject to repurchase agreements. A repurchase
transaction occurs when, at the time the Fund purchases a security (normally a
U.S. Treasury obligation), it also resell it to the vendor (normally a member
bank of the Federal Reserve or a registered Government Securities dealer) and
must deliver the security (and/or securities substituted for them under the
repurchase agreement) to the vendor on an agreed upon date in the future. The
repurchase price exceeds the purchase price by an amount which reflects an
agreed upon market interest rate effective for the period of time during which
the repurchase agreement is in effect. Delivery pursuant to the resale will
occur within one to five days of the purchase.
Repurchase agreements are considered "loans" under the Investment Company Act of
1940, as amended (the "1940 Act"), collateralized by the underlying security.
The Trust will implement procedures to monitor on a continuous basis the value
of the collateral serving as security for repurchase obligations. Additionally,
the Advisor to the Fund will consider the creditworthiness of the vendor. If
the vendor fails to pay the agreed upon resale price on the delivery date, the
Fund will retain or attempt to dispose of the collateral. The Fund's risk is
that such default may include any decline in value of the collateral to an
amount which is less than 100% of the repurchase price, any costs of disposing
of such collateral, and any loss resulting from any delay in foreclosing on the
collateral. The Fund will not enter into any repurchase agreement which will
cause more than 10% of its net assets to be invested in repurchase agreements
which extend beyond seven days and other illiquid securities.
Description of Money Market Instruments. Money market instruments may include
U.S. Government obligations or corporate debt obligations (including those
subject to repurchase agreements), provided that they mature in thirteen months
or less from the date of acquisition and are otherwise eligible for purchase by
the Fund. Money market instruments also may include Banker's Acceptances and
Certificates of Deposit of domestic branches of U.S. banks, Commercial Paper,
and Variable Amount Demand Master Notes ("Master Notes"). Banker's Acceptances
are time drafts drawn on and "accepted" by a bank. When a bank "accepts" such a
time draft, it assumes liability for its payment. When the Fund acquires a
Banker's Acceptance, the bank which "accepted" the time draft is liable for
payment of interest and principal when due. The Banker's Acceptance carries the
full faith and credit of such bank. A Certificate of Deposit ("CD") is an
unsecured, interest bearing debt obligation of a bank. Commercial Paper is an
unsecured, short-term debt obligation of a bank, corporation, or other borrower.
Commercial Paper maturity generally ranges from two to 270 days and is usually
sold on a discounted basis rather than as an interest bearing instrument. The
Fund will invest in Commercial Paper only if it is rated one of the top two
rating categories by Moody's Investors Service, Inc. ("Moody's"), Standard &
Poor's Ratings Group ("S&P"), Fitch Investors Service, Inc. ("Fitch"), or Duff &
Phelps ("D&P"), or if not rated, of equivalent quality in the Advisor's opinion.
Commercial Paper may include Master Notes of the same quality. Master Notes are
unsecured obligations which are redeemable upon demand of the holder and which
permit the investment of fluctuating amounts at varying rates of interest.
Master Notes are acquired by the Fund only through the Master Note program of
the Fund's custodian bank, acting as administrator thereof. The Advisor will
monitor, on a continuous basis, the earnings' power, cash flow, and other
liquidity ratios of the issuer of a Master Note held by the Fund.
Illiquid Investments. The Fund may invest up to 10% of its net assets in
illiquid securities, which are investments that cannot be sold or disposed of in
the ordinary course of business within seven days at approximately the prices at
which they are valued. Under the supervision of the Board of Trustees, the
Advisor determines the liquidity of the Fund's investments, and through reports
from the Advisor, the Board monitors investments in illiquid instruments. In
determining the liquidity of the Fund's investments, the Advisor may consider
various factors including (1) the frequency of trades and quotations, (2) the
number of dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including any
demand or tender features), and (5) the nature of the marketplace for trades
(including the ability to assign or offset the Fund's rights and obligations
relating to the investment). If through a change in values, net assets, or
other circumstances, the Fund were in a position where more than 10% of its net
assets were invested in illiquid securities, it would seek to take appropriate
steps to protect liquidity.
Restricted Securities. Within its limitation on investment in illiquid
securities, the Fund may purchase restricted securities that generally can be
sold in privately negotiated transactions, pursuant to an exemption from
registration under the federal securities laws, or in a registered public
offering. Where registration is required, the Fund may be obligated to pay all
or part of the registration expense and a considerable period may elapse between
the time it decides to seek registration and the time the Fund may be permitted
to sell a security under an effective registration statement. If during such a
period adverse market conditions were to develop, the Fund might obtain a less
favorable price than prevailed when it decided to seek registration of the
security.
Forward Commitment & When-Issued Securities. The Fund may purchase securities
on a when-issued basis or for settlement at a future date if the Fund holds
sufficient assets to meet the purchase price. In such purchase transactions,
the Fund will not accrue interest on the purchased security until the actual
settlement. Similarly, if a security is sold for a forward date, the Fund will
accrue the interest until the settlement of the sale. When-issued security
purchase and forward commitments have a higher degree of risk of price movement
before settlement due to the extended time period between the execution and
settlement of the purchase or sale. As a result, the exposure to the
counterparty of the purchase or sale is increased. Although the Fund would
generally purchase securities on a forward commitment or when-issued basis with
the intention of taking delivery, the Fund may sell such a security prior to the
settlement date if the Advisor felt such action was appropriate. In such a
case, the Fund could incur a short-term gain or loss.
INVESTMENT LIMITATIONS
The Fund has adopted the following investment limitations, which cannot be
changed without approval by holders of a majority of the outstanding voting
shares of the Fund. A "majority" for this purpose means the lesser of (i) 67%
of the Fund's outstanding shares represented in person or by proxy at a meeting
at which more than 50% of its outstanding shares are represented, or (ii) more
than 50% of its outstanding shares. Unless otherwise indicated, percentage
limitations apply at the time of purchase.
As a matter of fundamental policy, the Fund may not:
(1) Issue senior securities, borrow money, or pledge its assets, except that
it may borrow from banks as a temporary measure (a) for extraordinary or
emergency purposes, in amounts not exceeding 5% of its total assets or (b)
to meet redemption requests in amounts not exceeding 15% of its total
assets. The Fund will not make any investments if borrowing exceeds 5% of
its total assets until such time as total borrowing represents less than
5% of Fund assets;
(2) With respect to 75% of its total assets, invest more than 5% of the value
of its total assets in the securities of any one issuer or purchase more
than 10% of the outstanding voting securities of any class of securities
of any one issuer (except that securities of the U.S. government, its
agencies, and instrumentalities are not subject to this limitation);
(3) Invest 25% or more of the value of its total assets in any one industry or
group of industries (except that securities of the U.S. Government, its
agencies, and instrumentalities are not subject to this limitation);
(4) Invest for the purpose of exercising control or management of another
issuer;
(5) Purchase or sell commodities or commodities contracts; real estate
(including limited partnership interests, but excluding readily marketable
interests in real estate investment trusts or other securities secured by
real estate or interests therein or readily marketable securities issued
by companies that invest in real estate or interests therein); or
interests in oil, gas, or other mineral exploration or development
programs or leases (although it may invest in readily marketable
securities of issuers that invest in or sponsor such programs or leases);
(6) Underwrite securities issued by others except to the extent that the
disposition of portfolio securities, either directly from an issuer or
from an underwriter for an issuer, may be deemed to be an underwriter
under the federal securities laws;
(7) Invest in warrants, valued at the lower of cost or market, exceeding more
than 5% of the value of the Fund's net assets. Included within this
amount, but not to exceed 2% of the value of the Fund's net assets, may be
warrants which are not listed on the New York or American Stock Exchange;
(8) Participate on a joint or joint and several basis in any trading account
in securities;
(9) Invest its assets in the securities of one or more investment companies
except to the extent permitted by the 1940 Act; or
(10) Write, purchase, or sell puts, calls, straddles, spreads, or combinations
thereof or futures contracts or related options.
With respect to investments permitted in other investment companies, see
"Investment Objective and Policies-Investment Companies" in the Prospectus,
which reflects certain limitations placed on such investments, including the
Advisor's waiver of duplicative advisory fees. During any time that shares of
the Fund may be registered in the State of California, and the State of
California so requires, it is a fundamental policy of the Fund that fees
incurred in connection with the purchase of shares of other investment companies
will not be duplicative, management fees will not be duplicated, and initial
sales charges incurred for such purchases will not exceed one percent (1%).
The following investment limitations are not fundamental and may be changed
without shareholder approval. As a matter of non-fundamental policy, the Fund
may not:
(1) Invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of
bonds, guarantors) if more than 5% of its total assets would be invested
in such securities;
(2) Invest more than 10% of its net assets in illiquid securities. For this
purpose, illiquid securities include, among others, (a) securities for
which no readily available market exists or which have legal or
contractual restrictions on resale, (b) fixed-time deposits that are
subject to withdrawal penalties and have maturities of more than seven
days, and (c) repurchase agreements not terminable within seven days;
(3) Invest in the securities of any issuer if those officers or Trustees of
the Trust and those officers and directors of the Advisor who individually
own more than 1/2 of 1% of the outstanding securities of such issuer
together own more than 5% of such issuer's securities;
(4) Make loans of money or securities, except that the Fund may invest in
repurchase agreements;
(5) Make short sales of securities or maintain a short position, except short
sales "against the box." (A short sale is made by selling a security the
Fund does not own. A short sale is "against the box" to the extent that
the Fund contemporaneously owns or has the right to obtain at no
additional cost securities identical to those sold short.)
MANAGEMENT
Trustees and Officers. Following are the Trustees and Officers of the Capital
Management Investment Trust (the "Trust"), their present position with the Trust
or the Fund, and their principal occupation during the past five years. Those
directors who are "interested persons" (as defined in the 1940 Act) by virtue of
their affiliation with either the Trust or the Advisor, are indicated by an
asterisk (*). Trustees and Officers of the Trust who are interested persons of
the Trust or the Advisor will receive no salary or fees from the Trust. Other
Trustees will receive $2,000 each year plus $250 per Fund per meeting attended
in person and $100 per Fund per meeting attended by telephone. The Trust will
also reimburse each Trustee for his or her travel and other expenses relating to
attendance at such meetings.
Name, Position(s) with Fund Principal Occupation(s)
and/or Trust, Age and Address During Past 5 Years
Lucius E. Burch, III 54 Chairman and Chief Executive Officer
Trustee Massey Burch Investment Group, Inc.
438 Rosemeade Lane New York, New York
Naples, Florida 33999
C. Lennis Koontz, II 53 Vice President
President Capital Management Associates, Inc.
71 Broadway New York, New York
New York, New York 10006 since 1992; previously,
Portfolio Manager
Smith Barney Capital Management
New York, New York
Frank P. Meadows III 34 Managing Director
Secretary and Treasurer The Nottingham Company
105 North Washington Street Rocky Mount, North Carolina
Rocky Mount, North Carolina 27802
Thomas A. Saunders, III 59 General Partner
Trustee Saunders, Karp & Company
667 Madison Avenue New York, New York
21st Floor since 1989; previously,
New York, New York 10021 Managing Director
Morgan Stanley & Company, Inc.
New York, New York
David V. Shields 56 Managing Director
Trustee Capital Management Associates, Inc.
71 Broadway New York, New York
New York, New York 10006
Joseph V. Shields, Jr. 57 Chairman
Chairman and Trustee Capital Management Associates, Inc.
71 Broadway New York, New York
New York, New York 10006
Anthony J. Walton 53 Chief Executive Officer
Trustee Armstrong Holdings Corporation
230 Park Avenue New York, New York
Suite 1440 since 1995; previously
New York, New York 10169 Chief Executive Officer
Llama Company
Fayetteville, Arkansas
C. Frank Watson III, 25 Compliance Officer
Assistant Secretary The Nottingham Company, Inc.
Assistant Treasurer Rocky Mount, North Carolina
105 North Washington Street since 1992; previously,
Rocky Mount, North Carolina 27802 Student
University of North Carolina
Chapel Hill, North Carolina
Joseph A. Zock 43 Senior Vice President
Vice President Capital Management Associates, Inc.
71 Broadway New York, New York
New York, New York 10006
Compensation Table.
Pension Total
Retirement Compensation
Aggregate Benefits Estimated from the
Compensation Accrued As Annual Trust
Name of Person, from the Part of Fund Benefits Upon Paid to
Position Trust Expenses Retirement Trustees
Lucius E. Burch, III $500 None None $500
Trustee
Thomas A. Saunders, III $500 None None $500
Trustee
David V. Shields None None None None
Trustee
Joseph V. Shields, Jr. None None None None
Trustee
Anthony J. Walton $350 None None $350
Trustee
Figures are for the fiscal period ended November 30, 1995.
Principal Holders of Voting Securities. As of March 15, 1996, the Trustees and
Officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) less than 1% of the then outstanding shares of the Fund. On
the same date the following shareholders owned of record more than 5% of the
outstanding shares of beneficial interest of the Fund. Except as provided
below, no person is known by the Trust to be the beneficial owner of more than
5% of the outstanding shares of the Fund as of March 15, 1996.
Institutional Class
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership* Percent
Shields Capital Corporation 401(k) 127,372.851 57.78%**
71 Broadway, Suite 2201
New York, New York 10006
Brookwood Endowment Fund 16,594.849 7.53%
***Address***
Investor Class
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership* Percent
Dillon Read & Company 37,314.41 79.05%
120 Wall Street
New York, New York 10006
* The shares indicated are believed by the Trust to be owned both of record and
beneficially, except shares held by Dillon Read & Company (owned of record for
the benefit of customers of such broker/dealer).
** Pursuant to applicable SEC regulations, this shareholder is deemed to control
the Class of shares of the Fund.
Investment Advisor. Information about Capital Management Associates, Inc., 71
Broadway, Suite 2201, New York, New York 10006 (the "Advisor") and its duties
and compensation as Advisor is contained in the Prospectus. The Advisor
supervises the Fund's investments pursuant to an Investment Advisory Agreement
(the "Advisory Agreement"). The Advisory Agreement is effective for a two-year
period and will be renewed thereafter only so long as such renewal and
continuance is specifically approved at least annually by the Board of Trustees
or by vote of a majority of the Fund's outstanding voting securities, provided
the continuance is also approved by a majority of the Trustees who are not
parties to the Advisory Agreement or interested persons of any such party. The
Advisory Agreement is terminable without penalty on 60-days' notice by the Board
of Trustees of the Trust or by vote of a majority of the outstanding voting
securities of the Fund. The Advisory Agreement provides that it will terminate
automatically in the event of its assignment.
The Advisor will receive a monthly management fee equal to an annual rate of
1.00% of the first $100 million of the Fund's net assets, 0.90% of the next $150
million, 0.85% of the next $250 million and 0.80% of all assets over $500
million. Restrictive limitations may be imposed on the Fund as a result of
changes in current state laws and regulations in those states where the Fund has
qualified its shares, or by a decision of the Trustees to qualify the shares in
other states having restrictive expense limitations. The Advisor has
voluntarily waived its fee and reimbursed a portion of the Fund's operating
expenses for the fiscal period ended November 30, 1995. The total fees waived
amounted to $12,413, and expenses reimbursed amounted to $72,059.
Under the Advisory Agreement, the Advisor is not liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the performance of such Agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services; or a
loss resulting from willful misfeasance, bad faith, or gross negligence on the
part of the Advisor in the performance of its duties; or from its reckless
disregard of its duties and obligations under the Agreement.
The employees of the Advisor control the Advisor. Affiliates of the Advisor
also control the Distributor.
The Administrator and Transfer Agent. The Trust has entered into a Fund
Accounting, Dividend Disbursing & Transfer Agent and Administration Agreement
with The Nottingham Company, L.L.C. (the "Administrator"), 105 North Washington
Street, Post Office Drawer 69, Rocky Mount, North Carolina 27802-0069, pursuant
to which the Administrator receives a fee at the following annual rates: on the
first $50 million of the Fund's net assets, 0.20%; on the next $50 million,
0.175%; on all assets over $100 million, 0.15%. For the fiscal period ended
November 30, 1995, the Fund paid an administrative fee of $7,352. In addition,
the Administrator currently receives a monthly fee of $2,000 for the first class
of the Fund and $750 for each additional class of the Fund for accounting and
recordkeeping services for the Fund. For the fiscal period ended November 30,
1995, the Administrator received $23,500 for such services. The Administrator
also charges the Fund for certain costs involved with the daily valuation of
investment securities and is reimbursed for out-of-pocket expenses. The
Administrator charges a minimum fee of $3,000 per month for all of its fees
taken in the aggregate, analyzed monthly.
The Administrator will perform the following services for the Fund: (1)
coordinate with the Custodian and monitor the services it provides to the Fund;
(2) coordinate with and monitor any other third parties furnishing services to
the Fund; (3) provide the Fund with necessary office space, telephones, and
other communications facilities and personnel competent to perform
administrative and clerical functions for the Fund; (4) supervise the
maintenance by third parties of such books and records of the Fund as may be
required by applicable federal or state law; (5) prepare or supervise the
preparation by third parties of all federal, state, and local tax returns and
reports of the Fund required by applicable law; (6) prepare and after approval
by the Trust file, and arrange for the distribution of proxy materials and
periodic reports to shareholders of the Fund as required by applicable law; (7)
prepare and, after approval by the Trust, arrange for the filing of such
registration statements and other documents with the Securities and Exchange
Commission and other federal and state regulatory authorities as may be required
by applicable law; (8) review and submit to the officers of the Trust for their
approval invoices or other requests for payment of Fund expenses and instruct
the Custodian to issue checks in payment thereof; and (9) take such other action
with respect to the Fund as may be necessary in the opinion of the Administrator
to perform its duties under the agreement.
The Administrator also serves as the Fund's transfer agent and dividend
disbursing agent and provides certain accounting and pricing services for the
Fund.
Distributor. Shields & Company (the "Distributor") is the principal underwriter
and distributor of Fund shares pursuant to a Distribution Agreement with the
Trust. The Distributor, which is affiliated with the Advisor, serves as
exclusive agent for the distribution of the shares of the Fund. The Distributor
may sell such shares to or through qualified securities dealers or others. The
Distributor receives commissions consisting of that portion of the sales charge
for Investor Shares remaining after the discounts which it allows to dealers.
For the fiscal period ended November 30, 1995, the aggregate dollar amount of
sales charges paid on the sale of Investor Shares was $****, of which the
Distributor retained $1,109, after reallowances to broker-dealers and sales
representatives.
J.V. Shields, Jr., and Richard B. Thatcher, affiliated persons of the Fund, are
also affiliated persons of the Advisor and the Distributor.
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 of
the 1940 Act for the Investor Shares (see "Management of the Fund - Distribution
Plan" in the Prospectus for the Investor Shares). As required by Rule 12b-1,
the Plan (together with the Distribution Agreement) has been approved by the
Board of Trustees and separately by a majority of the Trustees who are not
interested persons of the Trust and who have no direct or indirect financial
interest in the operation of the Plan and the Distribution Agreement.
Potential benefits of the Plan to the Fund include improved shareholder
services, savings to the Fund in transfer agency costs, savings to the Fund in
advisory fees and other expenses, benefits to the investment process through
growth and stability of assets, and maintenance of a financially healthy
management organization. The continuation of the Plan must be considered by the
Board of Trustees annually.
Under the Plan the Fund may expend up to 0.75% of the Investor Shares' average
daily net assets annually to finance any activity primarily intended to result
in the sale of Investor Shares and the servicing of shareholder accounts,
provided the Trust's Board of Trustees has approved the category of expenses for
which payment is being made. Such expenditures paid as service fees to any
person who sells Investor Shares may not exceed 0.25% of the Investor Shares'
average annual net asset value. For the fiscal period ended November 30, 1995,
the Fund paid distribution and service fees under the Plan in the amount of
$379.
ADDITIONAL INFORMATION ON PERFORMANCE
From time to time, the total return of the each Class of the Fund may be quoted
in advertisements, sales literature, shareholder reports, or other
communications to shareholders. The Fund computes the "average annual total
return" of each Class of the Fund by determining the average annual compounded
rates of return during specified periods that equate the initial amount invested
to the ending redeemable value of such investment. This is done by determining
the ending redeemable value of a hypothetical $1,000 initial payment. This
calculation is as follows:
P(1+T)n = ERV
Where: T = average annual total return.
ERV = ending redeemable value at the end of the period covered by
the computation of a hypothetical $1,000 payment made at the
beginning of the period.
P = hypothetical initial payment of $1,000 from which the maximum
sales load is deducted.
n = period covered by the computation, expressed in terms of
years.
The Fund may also compute the aggregate total return of each Class of the Fund,
which is calculated in a similar manner, except that the results are not
annualized.
The calculation of average annual total return and aggregate total return assume
that the maximum sales load is deducted from the initial $1,000 investment at
the time it is made and that there is a reinvestment of all dividends and
capital gain distributions on the reinvestment dates during the period. The
ending redeemable value is determined by assuming complete redemption of the
hypothetical investment and the deduction of all nonrecurring charges at the end
of the period covered by the computations. The Fund may also quote other total
return information that does not reflect the effects of the sales load.
The aggregate total return for the Investor Shares of the Fund for the period
from the inception of the Investor Shares of the Fund (April 7, 1995) through
November 30, 1995 was 6.93%. Without reflecting the effects of the maximum 3%
sales load, the aggregate total return for the Investor Shares for such fiscal
period was 10.24%. The aggregate total return for the Institutional Shares of
the Fund for the period from the inception of the Institutional Shares of the
Fund (January 27, 1995) through November 30, 1995 was 23.00%. These performance
quotations should not be considered as representative of the Fund's performance
for any specified period in the future. Aggregate total return is calculated
similarly to annual total return, except that the return is aggregated, rather
than annualized.
The Fund's performance may be compared in advertisements, sales literature,
shareholder reports, and other communications to the performance of other mutual
funds having similar objectives or to standardized indices or other measures of
investment performance. In particular, the Fund may compare its performance to
the S&P 500 Index, which is generally considered to be representative of the
performance of unmanaged common stocks that are publicly traded in the United
States securities markets. The Fund may also compare its performance to the S&P
Mid Cap 400 Index, which is designed to measure the investment performance of
medium-capitalization equities such as those in which the Fund investes, and the
Lipper Capital Appreciation Index, which ranks the performance of mutual funds
that have an objective of growth of capital. Comparative performance may also
be expressed by reference to a ranking prepared by a mutual fund monitoring
service or by one or more newspapers, newsletters, or financial periodicals.
The Fund may also occasionally cite statistics to reflect its volatility and
risk. Performance comparisons may be useful to investors who wish to compare the
Fund's past performance to that of other mutual funds and investment products.
Of course, past performance is not a guarantee of future results.
The Fund's performance fluctuates on a daily basis largely because net earnings
and net asset value per share fluctuate daily. Both net earnings and net asset
value per share are factors in the computation of total return as described
above.
As indicated, from time to time the Fund may advertise its performance compared
to similar funds or portfolios using certain indices, reporting services, and
financial publications. These may include the following:
- - Lipper Analytical Services, Inc. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends and
takes into account any change in net asset value over a specific period of
time.
- - Morningstar, Inc., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
Investors may use such indices in addition to the Fund's Prospectus to obtain a
more complete view of the Fund's performance before investing. Of course, when
comparing the Fund's performance to any index, factors such as composition of
the index and prevailing market conditions should be considered in assessing the
significance of such comparisons. When comparing funds using reporting
services, or total return, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price. Advertisements and
other sales literature for the Fund may quote total returns that are calculated
on non-standardized base periods. The total returns represent the historic
change in the value of an investment in the Fund based on monthly reinvestment
of dividends over a specified period of time.
From time to time the Fund may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the effects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation. The Fund may also disclose from time to
time information about its portfolio allocation and holdings at a particular
date (including ratings of securities assigned by independent rating services
such as S&P and Moody's). The Fund may also depict the historical performance
of the securities in which the Fund may invest over periods reflecting a variety
of market or economic conditions either alone or in comparison with alternative
investments, performance indices of those investments, or economic indicators.
The Fund may also include in advertisements and in materials furnished to
present and prospective shareholders statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
to meet specific financial goals, such as saving for retirement, children's
education, or other future needs.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Trust's Board of Trustees, the Advisor
is responsible for, makes decisions with respect to, and places orders for all
purchases and sales of portfolio securities for the Fund.
The annualized portfolio turnover rate for the Fund is calculated by dividing
the lesser of purchases or sales of portfolio securities for the reporting
period by the monthly average value of the portfolio securities owned during the
reporting period. The calculation excludes all securities whose maturities or
expiration dates at the time of acquisition are one year or less. Portfolio
turnover of the Fund may vary greatly from year to year as well as within a
particular year, and may be affected by cash requirements for redemption of
shares and by requirements that enable the Fund to receive favorable tax
treatment. Portfolio turnover will not be a limiting factor in making Fund
decisions, and the Fund may engage in short-term trading to achieve its
investment objectives.
Purchases of money market instruments by the Fund are made from dealers,
underwriters, and issuers. The Fund currently does not expect to incur any
brokerage commission expense on such transactions because money market
instruments are generally traded on a "net" basis by a dealer acting as
principal for its own account without a stated commission. The price of the
security, however, usually includes a profit to the dealer. Securities
purchased in underwritten offerings include a fixed amount of compensation to
the underwriter, generally referred to as the underwriter's concession or
discount. When securities are purchased directly from or sold directly to an
issuer, no commissions or discounts are paid.
Transactions on U.S. stock exchanges involve the payment of negotiated brokerage
commissions. On exchanges on which commissions are negotiated, the cost of
transactions may vary among different brokers. Transactions in the
over-the-counter market are generally on a net basis (i.e., without commission)
through dealers, or otherwise involve transactions directly with the issuer of
an instrument.
The Fund may participate, if and when practicable, in bidding for the purchase
of Fund securities directly from an issuer in order to take advantage of the
lower purchase price available to members of a bidding group. The Fund will
engage in this practice, however, only when the Advisor, in its sole discretion,
believes such practice to be otherwise in the Fund's interest.
In executing Fund transactions and selecting brokers or dealers, the Advisor
will seek to obtain the best overall terms available for the Fund. In assessing
the best overall terms available for any transaction, the Advisor shall consider
factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the commission, if any, both for
the specific transaction and on a continuing basis. The sale of Fund shares may
be considered when determining the firms that are to execute brokerage
transactions for the Fund. In addition, the Advisor is authorized to cause the
Fund to pay a broker-dealer which furnishes brokerage and research services a
higher commission than that which might be charged by another broker-dealer for
effecting the same transaction, provided that the Advisor determines in good
faith that such commission is reasonable in relation to the value of the
brokerage and research services provided by such broker-dealer, viewed in terms
of either the particular transaction or the overall responsibilities of the
Advisor to the Fund. Such brokerage and research services might consist of
reports and statistics relating to specific companies or industries; general
summaries of groups of stocks or bonds and their comparative earnings and
yields; or broad overviews of the stock, bond, and government securities
markets; and the economy.
Supplementary research information so received is in addition to, and not in
lieu of, services required to be performed by the Advisor and does not reduce
the advisory fees payable by the Fund. The Trustees will periodically review
any commissions paid by the Fund to consider whether the commissions paid over
representative periods of time appear to be reasonable in relation to the
benefits inuring to the Fund. It is possible that certain of the supplementary
research or other services received will primarily benefit one or more other
investment companies or other accounts for which investment discretion is
exercised by the Advisor. Conversely, the Fund may be the primary beneficiary
of the research or services received as a result of securities transactions
effected for such other account or investment company.
The Advisor may also utilize a brokerage firm affiliated with the Trust or the
Advisor if it believes it can obtain the best execution of transactions from
such broker. The Fund will not execute portfolio transactions through, acquire
securities issued by, make savings deposits in, or enter into repurchase
agreements with the Advisor or an affiliated person of the Advisor (as such term
is defined in the 1940 Act) acting as principal, except to the extent permitted
by the Securities and Exchange Commission ("SEC"). In addition, the Fund will
not purchase securities during the existence of any underwriting or selling
group relating thereto of which the Advisor, or an affiliated person of the
Advisor, is a member, except to the extent permitted by the SEC. Under certain
circumstances, the Fund may be at a disadvantage because of these limitations in
comparison with other investment companies that have similar investment
objectives but are not subject to such limitations.
Investment decisions for the Fund will be made independently from those for any
other series of the Trust, if any, and for any other investment companies and
accounts advised or managed by the Advisor. Such other investment companies and
accounts may also invest in the same securities as the Fund. To the extent
permitted by law, the Advisor may aggregate the securities to be sold or
purchased for the Fund with those to be sold or purchased for other investment
companies or accounts in executing transactions. When a purchase or sale of the
same security is made at substantially the same time on behalf of the Fund and
another investment company or account, the transaction will be averaged as to
price and available investments allocated as to amount in a manner which the
Advisor believes to be equitable to the Fund and such other investment company
or account. In some instances, this investment procedure may adversely affect
the price paid or received by the Fund or the size of the position obtained or
sold by the Fund.
For the fiscal period ended November 30, 1995, the Fund paid brokerage
commissions of $****.
SPECIAL SHAREHOLDER SERVICES
The Fund offers the following shareholder services:
Regular Account. The regular account allows for voluntary investments to be
made at any time. Available to individuals, custodians, corporations, trusts,
estates, corporate retirement plans, and others, investors are free to make
additions and withdrawals to or from their account as often as they wish. When
an investor makes an initial investment in the Fund, a shareholder account is
opened in accordance with the investor's registration instructions. Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a confirmation statement showing the current transaction and all
prior transactions in the shareholder account during the calendar year to date,
along with a summary of the status of the account as of the transaction date. As
stated in the Prospectus, share certificates are not issued.
Automatic Investment Plan. The automatic investment plan enables shareholders
to make regular monthly or quarterly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Administrator will automatically charge the checking account for
the amount specified ($100 minimum) which will be automatically invested in
shares at the public offering price on or about the 21st day of the month. The
shareholder may change the amount of the investment or discontinue the plan at
any time by writing to the Administrator.
Systematic Withdrawal Plan. Shareholders owning shares with a value of $10,000
or more for Investor Shares and $250,000 or more for Institutional Shares may
establish a Systematic Withdrawal Plan. A shareholder may receive monthly or
quarterly payments, in amounts of not less than $100 per payment, by authorizing
the Fund to redeem the necessary number of shares periodically (each month, or
quarterly in the months of March, June, September, and December) in order to
make the payments requested. The Fund has the capability of electronically
depositing the proceeds of the systematic withdrawal directly to the
shareholder's personal bank account ($5,000 minimum per bank wire). Instructions
for establishing this service are included in the Fund Shares Application,
enclosed in the Prospectus, or are available by calling the Fund. If the
shareholder prefers to receive his systematic withdrawal proceeds in cash, or if
such proceeds are less than the $5,000 minimum for a bank wire, checks will be
made payable to the designated recipient and mailed within seven days of the
valuation date. If the designated recipient is other than the registered
shareholder, the signature of each shareholder must be guaranteed on the
application (see "Signature Guarantees" in the Prospectus). A corporation (or
partnership) must also submit a "Corporate Resolution" (or "Certification of
Partnership") indicating the names, titles, and required number of signatures
authorized to act on its behalf. The application must be signed by a duly
authorized officer(s) and the corporate seal affixed. No redemption fees are
charged to shareholders under this plan. Costs in conjunction with the
administration of the plan are borne by the Fund. Shareholders should be aware
that such systematic withdrawals may deplete or use up entirely their initial
investment and may result in realized long-term or short-term capital gains or
losses. The Systematic Withdrawal Plan may be terminated at any time by the
Fund upon 60-days' written notice or by a shareholder upon written notice to the
Fund. Applications and further details may be obtained by calling the Fund at
1-800-525-FUND or by writing to:
Capital Management Equity Fund
c/o The Nottingham Company
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
Purchases in Kind. The Fund may accept securities in lieu of cash in payment
for the purchase of shares in the Fund. The acceptance of such securities is at
the sole discretion of the Advisor based upon the suitability of the securities
accepted for inclusion as a long-term investment of the Fund, the marketability
of such securities, and other factors which the Advisor may deem appropriate. If
accepted, the securities will be valued using the same criteria and methods as
described in "How Net Asset Value is Determined" in the Prospectus. Transactions
involving the issuance of shares in the Fund for securities in lieu of cash will
be limited to acquisitions of securities (except for municipal debt securities
issued by state political subdivisions or their agencies or instrumentalities)
which: (a) meet the investment objectives and policies of the Fund; (b) are
acquired for investment and not for resale; (c) are liquid securities which are
not restricted as to transfer either by law or liquidity of market; and (d) have
a value which is readily ascertainable (and not established only by evaluation
procedures) as evidenced by a listing on the American Stock Exchange, the New
York Stock Exchange, or NASDAQ.
Redemptions in Kind. The Fund does not intend, under normal circumstances, to
redeem its securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the Trustees,
make it undesirable for the Fund to pay for all redemptions in cash. In such
case the Board of Trustees may authorize payment to be made in readily
marketable portfolio securities of the Fund. Securities delivered in payment of
redemptions would be valued at the same value assigned to them in computing the
net asset value per share. Shareholders receiving them would incur brokerage
costs when these securities are sold. An irrevocable election has been filed
under Rule 18f-1 of the 1940 Act, wherein the Fund committed itself to pay
redemptions in cash, rather than in kind, to any shareholder of record of the
Fund who redeems during any 90-day period, the lesser of (a) $250,000 or (b) one
percent (1%) of the Fund's net asset value at the beginning of such period.
Transfer of Registration. To transfer shares to another owner, send a written
request to the Fund at the address shown herein. Your request should include
the following: (1) the Fund name and existing account registration; (2)
signature(s) of the registered owner(s) exactly as the signature(s) appear(s) on
the account registration; (3) the new account registration, address, social
security or taxpayer identification number, and how dividends and capital gains
are to be distributed; (4) signature guarantees (See the Prospectus under the
heading "Signature Guarantees"); and (5) any additional documents which are
required for transfer by corporations, administrators, executors, trustees,
guardians, etc. If you have any questions about transferring shares, call or
write the Fund.
PURCHASE OF SHARES
The purchase price of shares of the Fund is the net asset value next determined
after the order is received, plus a sales charge for the Investor Shares as more
fully described in the Prospectus for Investor Shares. An order received prior
to 4:00 p.m. New York time will be executed at the price computed as of 4:00
p.m. on the date of receipt, and an order received after 4:00 p.m. New York time
will be executed at the price computed as of that time on the next business day.
The basis for determining the sales charge applicable to a purchase of Investor
Shares and how the sales charge is distributed between the Distributor and other
dealers is described in the Prospectus for the Investor Shares under "How to
Purchase Shares."
The Fund reserves the right in its sole discretion (i) to suspend the offering
of its shares, (ii) to reject purchase orders when in the judgment of management
such rejection is in the best interest of the Fund and its shareholders, and
(iii) to reduce or to waive the minimum for initial and subsequent investments
under circumstances where certain economies can be achieved in sales of Fund
shares.
Employees and Affiliates of the Fund. The Fund has adopted initial investment
minimums for the purpose of reducing the cost to the Fund (and consequently to
the shareholders) of communicating with and servicing its shareholders. In
keeping with this purpose, a reduced minimum initial investment of $1,000
applies to Trustees, officers, and employees of the Fund; the Advisor and
certain parties related thereto; including clients of the Advisor or any
sponsor, officer, committee member thereof, or the immediate family of any of
them. The Fund may also sell shares at net asset value without a sales charge
to such persons. In addition, accounts having the same mailing address may be
aggregated for purposes of the minimum investment if they consent in writing to
sharing a single mailing of shareholder reports, proxy statements (but each such
shareholder would receive his/her own proxy) and other Fund literature.
REDEMPTION OF SHARES
The Fund may suspend redemption privileges or postpone the date of payment (i)
during any period that the New York Stock Exchange (the "NYSE") is closed, or
that trading on the NYSE is restricted as determined by the Securities and
Exchange Commission (the "Commission"); (ii) during any period when an emergency
exists as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or to
determine fairly the value of its assets; and (iii) for such other periods as
the Commission may permit. Any redemption may be more or less than the
shareholder's cost depending on the market value of the securities held by the
Fund. No charge is made by the Fund for redemptions, although the Trustees
could impose a redemp- tion charge in the future.
NET ASSET VALUE
The net asset value per share of each Class of Shares of the Fund is determined
at 4:00 p.m., New York time, Monday through Friday, except on business holidays
when the New York Stock Exchange is closed. The New York Stock Exchange
recognizes the following holidays: New Year's Day, President's Day, Good
Friday, Memorial Day, Fourth of July, Labor Day, Thanksgiving Day, and Christmas
Day. Any other holiday recognized by the New York Stock Exchange will be
considered a business holiday on which the net asset value of each Class of
Shares of the Fund will not be calculated.
The net asset value per share of each Class of the Fund is calculated separately
by adding the value of the Fund's securities and other assets belonging to the
Fund and attributable to that Class, subtracting the liabilities charged to the
Fund and to that Class, and dividing the result by the number of outstanding
shares of such Class. "Assets belonging to" the Fund consist of the
consideration received upon the issuance of shares of the Fund together with all
net investment income, realized gains/losses and proceeds derived from the
investment thereof, including any proceeds from the sale of such investments,
any funds or payments derived from any reinvestment of such proceeds, and a
portion of any general assets of the Trust not belonging to a particular
investment Fund. Income, realized and unrealized capital gains and losses, and
any expenses of the Fund not allocated to a particular Class of the Fund will be
allocated to each Class of the Fund on the basis of the net asset value of that
Class in relation to the net asset value of the Fund. Assets belonging to the
Fund are charged with the direct liabilities of the Fund and with a share of the
general liabilities of the Trust, which are normally allocated in proportion to
the number of or the relative net asset values of all of the Trust's series at
the time of allocation or in accordance with other allocation methods approved
by the Board of Trustees. Certain expenses attributable to a particular Class
of shares (such as the distribution and service fees attributable to Investor
Shares) will be charged against that Class of shares. Certain other expenses
attributable to a particular Class of shares (such as registration fees,
professional fees, and certain printing and postage expenses) may be charged
against that Class of shares if such expenses are actually incurred in a
different amount by that Class or if the Class receives services of a different
kind or to a different degree than other Classes, and the Board of Trustees
approves such allocation. Subject to the provisions of the Declaration of
Trust, determinations by the Board of Trustees as to the direct and allocable
liabilities, and the allocable portion of any general assets, with respect to
the Fund and the Classes of the Fund are conclusive.
FUND EXPENSES
The Advisor may be required to reimburse the Fund if its annual ordinary
operating expenses exceed certain limits. This expense limitation is calculated
and administered with respect to the Fund in accordance with the requirements of
state securities authorities. Expenses which are not subject to this limitation
are interest, taxes, and extraordinary expenses. Expenditures, including costs
incurred in connection with the purchase or sale of portfolio securities, which
are capitalized in accordance with generally accepted accounting principles
applicable to investment companies, are accounted for as capital items and not
as expenses. Reimbursement, if any, will be on a monthly basis, subject to year
end adjustment. Unless it has otherwise agreed to do so, the Advisor, in its
discretion may, but would not be required to, reimburse the Fund an amount of
money in excess of its management fee. During any time that shares of the Fund
may be registered in the State of California, and the State of California so
requires, the Fund will comply with the investment company expense limits set
forth in Rule 260.140.84 of Title 10 of the California Code of Regulations.
For the fiscal period ended November 30, 1995, the total expenses of the Fund,
after voluntary fee waivers and expense reimbursements, were $4,149 (0.31% of
the average daily net assets of the Institutional Shares of the Fund and 1.06%
of the average daily net assets of the Investor Shares of the Fund).
ADDITIONAL TAX INFORMATION
The following summarizes certain additional tax considerations generally
affecting the Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders, and the discussion here and in the
Prospectus is not intended as a substitute for careful tax planning and is based
on tax laws and regulations that are in effect on the date hereof; such laws and
regulations may be changed by legislative, judicial, or administrative action.
Investors are advised to consult their tax advisors with specific reference to
their own tax situations.
The Fund, and any other series of the Trust, will be treated as a separate
corporate entity under the Code. The Fund intends to qualify and to remain
qualified as a regulated investment company. To so qualify, the Fund must elect
to be a regulated investment company or have made such an election for a
previous year and must satisfy, in addition to the distribution requirement
described in the Prospectus, certain requirements with respect to the source of
its income for a taxable year. At least 90% of the gross income of the Fund
must be derived from dividends; interest; payments with respect to securities
loans, gains from the sale or other disposition of stocks, securities, or
foreign currencies; and other income derived with respect to the Fund's business
of investing in such stock, securities, or currencies. Any income derived by
the Fund from a partnership or trust is treated as derived with respect to the
Fund's business of investing in stock, securities, or currencies only to the
extent that such income is attributable to items of income that would have been
qualifying income if realized by the Fund in the same manner as by the
partnership or trust.
Another requirement for qualification as a regulated investment company under
the Code is that less than 30% of the Fund's gross income for a taxable year
must be derived from gains realized on the sale or other disposition of the
following investments held for less than three months: (l) stock and securities
(as defined in Section 2(a) (36) of the 1940 Act); (2) options, futures, and
forward contracts other than those on foreign currencies; or (3) foreign
currencies (or options, futures, or forward contracts on foreign currencies)
that are not directly related to the Fund's principal business of investing in
stocks or securities (or options and futures with respect to stocks or
securities). Interest (including original issue discount and, with respect to
certain debt securities, accrued market discount) received by the Fund upon
maturity or disposition of a security held for less than three months will not
be treated as gross income derived from the sale or other disposition of such
security within the meaning of this requirement. However, any other income
which is attributable to realized market appreciation will be treated as gross
income from the sale or other disposition of securities for this purpose.
An investment company may not qualify as a regulated investment company for any
taxable year unless it satisfies certain requirements with respect to the
diversification of its investments at the close of each quarter of the taxable
year. In general, at least 50% of the value of its total assets must be
represented by cash, cash items, government securities, securities of other
regulated investment companies, and other securities which, with respect to any
one issuer, do not represent more than 5% of the total assets of the investment
company nor more than 10% of the outstanding voting securities of such issuer.
In addition, not more than 25% of the value of the investment company's total
assets may be invested in the securities (other than government securities or
the securities of other regulated investment companies) of any one issuer. The
Fund intends to satisfy all requirements on an ongoing basis for continued
qualification as a regulated investment company.
The Fund will designate any distribution of long-term capital gains as a capital
gain dividend in a written notice mailed to shareholders within 60 days after
the close of the Fund's taxable year. Shareholders should note that upon the
sale or exchange of Fund shares, if the shareholder has not held such shares for
at least six months, any loss on the sale or exchange of those shares will be
treated as long-term capital loss to the extent of the capital gain dividends
received with respect to the shares.
A 4% nondeductible excise tax is imposed on regulated investment companies that
fail to distribute currently an amount equal to specified percentages of their
ordinary taxable income and capital gain net income (excess of capital gains
over capital losses). The Fund intends to make sufficient distributions or
deemed distributions of its ordinary taxable income and any capital gain net
income prior to the end of each calendar year to avoid liability for this excise
tax.
If for any taxable year the Fund does not qualify for the special federal income
tax treatment afforded regulated investment companies, all of its taxable income
will be subject to federal income tax at regular corporate rates (without any
deduction for distributions to its shareholders). In such event, dividend
distributions (whether or not derived from interest on tax-exempt securities)
would be taxable as ordinary income to shareholders to the extent of the Fund's
current and accumulated earnings and profits.
The Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of taxable dividends or 31% of gross proceeds realized upon sale
paid to shareholders who have failed to provide a correct tax identification
number in the manner required, or who are subject to withholding by the Internal
Revenue Service for failure to include properly on their return payments of
taxable interest or dividends, or who have failed to certify to the Fund that
they are not subject to backup withholding when required to do so, or that they
are "exempt recipients."
Depending upon the extent of the Fund's activities in states and localities in
which its offices are maintained, in which its agents or independent contractors
are located, or in which it is otherwise deemed to be conducting business, the
Fund may be subject to the tax laws of such states or localities. In addition,
in those states and localities that have income tax laws, the treatment of the
Fund and its shareholders under such laws may differ from their treatment under
federal income tax laws.
Dividends paid by the Fund derived from net investment income or net short-term
capital gains are taxable to shareholders as ordinary income, whether received
in cash or reinvested in additional shares. Long-term capital gains
distributions, if any, are taxable as long-term capital gains, whether received
in cash or reinvested in additional shares, regardless of how long Fund shares
have been held.
Under current tax law, certain types of expenses incurred by the Fund must be
proportionately allocated as additional income to shareholders. As a result,
the amounts reportable by the Fund as taxable income, if any, may exceed the
dividends actually paid. Such proportionate allocation of Fund expenses, if
any, will be identified when tax information is distributed by the Fund. The
Fund will send shareholders information each year on the tax status of dividends
and disbursements. A dividend or capital gains distribution paid shortly after
shares have been purchased, although in effect a return of investment, is
subject to federal income taxation. Dividends from net investment income, along
with capital gains, will be taxable to shareholders, whether received in cash or
shares and no matter how long you have held Fund shares, even if they reduce the
net asset value of shares below your cost and thus, in effect, result in a
return of a part of your investment.
CAPITAL SHARES AND VOTING
The Trust's Declaration of Trust currently authorizes the issuance of shares in
one series: the Capital Management Equity Fund. These shares are divided into
two Classes ("Institutional Shares" and "Investor Shares") as described in the
Prospectus. Shares of the Fund, when issued, are fully paid and non-assessable
and have no preemptive or conversion rights. Shareholders are entitled to one
vote for each full share and a fractional vote for each fractional share held.
Shares have non-cumulative voting rights, which means that the holders of more
than 50% of the shares voting for the election of Trustees can elect 100% of the
Trustees, and in this event, the holders of the remaining shares voting will not
be able to elect any Trustees. The Trustees will hold office indefinitely,
except that: (1) any Trustee may resign or retire; and (2) any Trustee may be
removed: (a) any time by written instrument signed by at least two-thirds of the
number of Trustees prior to such removal; (b) at any meeting of shareholders of
the Trust by a vote of two-thirds of the outstanding shares of the Trust; or (c)
by a written declaration signed by shareholders holding not less than two-thirds
of the outstanding shares of the Trust and filed with the Trust's custodian.
Shareholders have certain rights, as set forth in the Declaration of Trust,
including the right to call a meeting of the shareholders. Shareholders holding
not less than 10% of the shares then outstanding may require the Trustees to
call a meeting, and the Trustees are obligated to provide certain assistance to
shareholders desiring to communicate with other shareholders in such regard
(e.g., providing access to shareholder lists, etc.). In case a vacancy or an
anticipated vacancy on the Board of Trustees shall for any reason exist, the
vacancy shall be filled by the affirmative vote of a majority of the remaining
Trustees, subject to certain restrictions under the 1940 Act. Otherwise, there
will normally be no meeting of shareholders for the purpose of electing
Trustees, and the Trust does not expect to have an annual meeting of
shareholders.
CUSTODIAN
Wachovia Bank of North Carolina, N.A. (the "Custodian"), 301 N. Main Street,
Winston-Salem, North Carolina 27040, serves as custodian for the Fund. The
Custodian holds all cash and securities of the Fund (either in its possession or
in its favor through "book entry systems" authorized by the Trustees in
accordance with the 1940 Act).
INDEPENDENT AUDITORS
The firm of KPMG Peat Marwick LLP, 1021 East Cary Street, Richmond, Virginia
23219-4023, serves as independent auditors for the Fund, and audits the annual
financial statements of the Fund, prepares the Fund's federal and state tax
returns, and consults with the Fund on matters of accounting and federal and
state income taxation.
The financial statements of the Fund are audited at least once each year by the
independent auditors. Shareholders will receive annual audited and semi-annual
(unaudited) reports when published and written confirmation of all transactions
in their account. A copy of the most recent Annual Report will accompany the
Statement of Additional Information whenever it is requested by a shareholder or
a prospective investor.
APPENDIX A
DESCRIPTION OF RATINGS
The Fund will normally be at least 90% invested in equities. As a temporary
defensive position, however, when the Advisor determines that market conditions
warrant such investments, the Fund may invest up to 100% of its assets in
investment grade bonds, U.S. Government Securities, repurchase agreements, or
money market instruments ("Investment-Grade Debt Securities"). When the Fund
invests in Investment-Grade Debt Securities as a temporary defensive measure, it
is not pursuing its investment objective. Under normal circumstances, however,
the Fund may invest in money market instruments as described in the Prospectus.
The various ratings used by the nationally recognized securities rating services
are described below.
A rating by a rating service represents the service's opinion as to the credit
quality of the security being rated. However, the ratings are general and are
not absolute standards of quality or guarantees as to the creditworthiness of an
issuer. Consequently, the Advisor believes that the quality of fixed-income
securities in which the Fund may invest should be continuously reviewed and that
individual analysts give different weightings to the various factors involved in
credit analysis. A rating is not a recommendation to purchase, sell, or hold a
security because it does not take into account market value or suitability for a
particular investor. When a security has received a rating from more than one
service, each rating is evaluated independently. Ratings are based on current
information furnished by the issuer or obtained by the rating services from
other sources that they consider reliable. Ratings may be changed, suspended,
or withdrawn as a result of changes in or unavailability of such information, or
for other reasons.
Standard & Poor's Ratings Group. The following summarizes the highest four
ratings used by Standard & Poor's Ratings Group ("S&P") for bonds which are
deemed to be "Investment-Grade Debt Securities" by the Advisor:
AAA - This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay interest and to repay
principal.
AA - Debt rated AA is considered to have a very strong capacity to pay
interest and to repay principal and differs from AAA issues only in a
small degree.
A - Debt rated A has a strong capacity to pay interest and to repay
principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher-
rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and to repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and to repay principal for bonds in this category than for debt
in higher rated categories.
To provide more detailed indications of credit quality, the AA, A, and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
Bonds rated BB, B, CCC, CC, and C are not considered by the Advisor to be
"Investment-Grade Debt Securities" and are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While
such bonds may have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
Commercial paper rated A-1 by S&P indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted A-1+. Capacity for timely payment on
commercial paper rated A-2 is satisfactory, but the relative degree of safety is
not as high as for issues designated A-1.
The rating SP-1 is the highest rating assigned by S&P to municipal notes and
indicates very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics are given a
plus (+) designation.
Moody's Investors Service, Inc. The following summarizes the highest four
ratings used by Moody's Investors Service, Inc., ("Moody's") for bonds which are
deemed to be "Investment-Grade Debt Securities" by the Advisor:
Aaa - Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin, and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities, or
fluctuation of protective elements may be of greater amplitude, or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A - Debt which is rated A possesses many favorable investment attributes
and is to be considered as an upper-medium-grade obligation. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa - Debt which is rated Baa is considered as a medium-grade obligation,
i.e., it is neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present, but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such debt lacks outstanding
investment characteristics and, in fact, has speculative characteristics
as well.
Moody's applies numerical modifiers (l, 2 and 3) with respect to bonds rated Aa,
A, and Baa. The modifier 1 indicates that the bond being rated ranks in the
higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking, and the modifier 3 indicates that the bond ranks in the lower end of
its generic rating category.
Bonds which are rated Ba, B, Caa, Ca, or C by Moody's are not considered
"Investment-Grade Debt Securities" by the Advisor. Bonds rated Ba are judged to
have speculative elements because their future cannot be considered as well
assured. Uncertainty of position characterizes bonds in this class because the
protection of interest and principal payments often may be very moderate and not
well safeguarded.
Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the security over any long period for time may be small. Bonds
which are rated Caa are of poor standing. Such securities may be in default, or
there may be present elements of danger with respect to principal or interest.
Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
Bonds which are rated C are the lowest rated class of bonds, and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Issuers rated Prime-1 (or related supporting institutions) are considered to
have a superior capacity for repayment of short-term promissory obligations.
Issuers rated Prime-2 (or related supporting institutions) are considered to
have a strong capacity for repayment of short-term promissory obligations. This
will normally be evidenced by many of the characteristics of issuers rated
Prime-1 but to a lesser degree. Earnings' trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
The following summarizes the highest rating used by Moody's for short-term notes
and variable-rate, demand obligations:
MIG-l; VMIG-l - Obligations bearing these designations are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support, or demonstrated broad-based access to the market for
refinancing.
Duff & Phelps Credit Rating Co. The following summarizes the highest four
ratings used by Duff & Phelps Credit Rating Co. ("D&P") for bonds which are
deemed to be "Investment-Grade Debt Securities" by the Advisor:
AAA - Bonds that are rated AAA are of the highest credit quality. The
risk factors are considered to be negligible, being only slightly more
than for risk-free U.S. Treasury debt.
AA - Bonds that are rated AA are of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to
time because of economic conditions.
A - Bonds rated A have average but adequate protection factors. The risk
factors are more variable and greater in periods of economic stress.
BBB - Bonds rated BBB have below-average protection factors but are still
considered sufficient for prudent investment. There is considerable
variability in risk during economic cycles.
Bonds rated BB, B, and CCC by D&P are not considered "Investment-Grade Debt
Securities" and are regarded, on balance, as predominantly speculative with
respect to the issuer's ability to pay interest and to make principal payments
in accordance with the terms of the obligations. BB indicates the lowest degree
of speculation and CCC the highest degree of speculation.
The rating Duff l is the highest rating assigned by D&P for short-term debt,
including commercial paper. D&P employs three designations, Duff l+, Duff 1,
and Duff 1- within the highest rating category. Duff l+ indicates highest
certainty of timely payment. Short-term liquidity, including internal operating
factors and/or access to alternative sources of funds, is judged to be
"outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations." Duff 1 indicates very high certainty of timely payment. Liquidity
factors are excellent and supported by good fundamental protection factors. Risk
factors are considered to be minor. Duff 1- indicates high certainty of timely
payment. Liquidity factors are strong and supported by good fundamental
protection factors. Risk factors are very small.
Fitch Investors Service, Inc. The following summarizes the highest four ratings
used by Fitch Investors Service, Inc., ("Fitch") for bonds which are deemed to
be "Investment-Grade Debt Securities" by the Advisor:
AAA - Bonds are considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and to repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA - Bonds are considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and to repay principal is
very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A - Bonds that are rated A are considered to be investment grade and of
high credit quality. The obligor's ability to pay interest and to repay
principal is considered to be strong, but may be more vulnerable to
adverse changes in economic conditions and circumstances than bonds with
higher ratings.
BBB - Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and to
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have adverse
impact on these bonds and, therefore, impair timely payment. The
likelihood that the ratings of these bonds will fall below investment
grade is higher than for bonds with higher ratings.
To provide more detailed indications of credit quality, the AA, A, and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within a rating category.
Bonds rated BB, B, and CCC by Fitch are not considered "Investment-Grade Debt
Securities" and are regarded, on balance, as predominantly speculative with
respect to the issuer's ability to pay interest and to make principal payments
in accordance with the terms of the obligations. BB indicates the lowest degree
of speculation and CCC the highest degree of speculation.
The following summarizes the three highest ratings used by Fitch for short-term
notes, municipal notes, variable rate demand instruments, and commercial paper:
F-1+ - Instruments assigned this rating are regarded as having the
strongest degree of assurance for timely payment.
F-1 - Instruments assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-1+
F-2 - Instruments assigned this rating have satisfactory degree of
assurance for timely payment, but the margin of safety is not as great as
for issues assigned F-1+ and F-1 ratings.
January 26, 1996
Dear Follow Shareholders,
Welcome to the Capital Management Equity Fund. Nineteen Ninety-Five
was the startup year for your fund, and we are grateful that you chose to
place a portion of your investment portfolio in this vehicle. The fund's
institutional shares were available for purchase on January 27, 1995, but
most of the investment assets did not begin flowing in until after March.
Investor shares were not cleared for purchase until April. This gestation
phase is now complete, and the fund's portfolio is established and ongoing.
Now the question becomes, how do we see the investment landscape over the
coming year?
By any measure 1995 was a banner year for U.S. financial assets, but
equity indices posted particularly strong gains. The S&P 500 recorded its
best annual return since 1958 and its third-best performance in the post-war
period. Low inflation and declining interest rates provided an excellent
environment for financial instruments, and improved operating rates, stable
pricing, and stronger balance sheets propelled corporate America to record
profitability. Further enhancing shareholder value were a favorable
supply/demand situation created by share repurchases, significant merger and
restructuring activity, and strong flows into equity mutual funds.
While the broad averages were forging ahead to new highs, a major
internal shift began in the Fourth Quarter: big stocks were advancing while
smaller stocks were declining. Evidence of this crosscurrent is seen in the
performance differential between the S&P 500 in the quarter and the MidCap
400 (6% versus 1.4%, respectively). Since the S&P 500 is influenced by a few
large capitalization issues, the market has been rising on fewer shoulders,
and this is not a healthy sign going forward.
Two of last year's big winning groups were financial and technology.
Financial stocks were heavily represented in the fund, and continue to be,
while technology shares were not, purposely so. It seems that our caution
about this sector is paying off. Technology stocks are now struggling,
especially semiconductor shares, many of which have suffered price declines
in excess of 30% in the past six weeks due to disappointing earnings'
reports. These shortfalls in investor expectations were not surprising to
us. But it is a fact that we were too cautious on stocks in the latter part
of the year. The stock market's rise exceeded our expectations, principally
because interest rates fell more than we foresaw. Consequently, our
positions in energy, utilities, and one or two consumer cyclicals did not
keep pace.
As good as conditions were for the financial markets in 1995, we are
sounding a note of caution regarding the prospectus for U.S. stocks in 1996.
While stocks are not terribly overvalued, earnings' momentum has most likely
peaked for this cycle, and there is increasing reason to believe that the
economy may turn down. The consumer, who has given fuel to the economy this
year mainly through borrowing, is likely to curtail spending. As demand
fades, deflationary trends will accelerate which could lead to a mild
recession. This scenario would result in lower corporate earnings, and
certain market sectors would be more adversely affected than others.
Group movements in the equity markets are fundamentally driven by
relative shifts in profitability. The dominant force is the business cycle,
although on occasion secular changes in profitability have their impact such
as the oil embargo in the 1970's and the defence buildup in the '80's. As
profit margins approach their peak for this cycle, the key question becomes,
which industries can maintain margins when the change in direction is down?
The dynamics at this stage seem to favor consumer noncyclicals, finance,
utilities, and certain areas of the energy stocks, which we have emphasized
in your fund's portfolio.
C. Lennis Koontz, II CFA
President
January 26, 1996
CAPITAL MANAGEMENT EQUITY FUND
INSTITUTIONAL CLASS
Performance Update - $10,000 Investment
For the period from January 27, 1995 to November 30, 1995
[The following information is depicted in a graph]
Investor S&P Mid Cap Lipper Cap S&P
Shares 400 Apprec 500
1/27/95 10000.00 10000.00 10000.00 10000.00
1/31/95 10067.00 9972.00 9674.97 10005.00
2/28/95 10438.00 10494.53 10027.73 10395.20
3/31/95 11051.00 10677.14 10292.55 10701.85
4/30/95 11016.97 10891.75 10469.44 11016.49
5/31/95 11228.16 11154.24 10733.98 11457.15
6/30/95 11610.51 11608.22 11259.47 11722.95
7/31/95 12023.37 12214.17 11922.69 12112.16
8/31/95 12184.49 12440.13 12054.78 12142.44
9/30/95 12270.08 12741.18 12369.66 12654.85
10/31/95 11774.42 12413.73 12127.19 12609.29
11/30/95 12300.43 12956.21 12519.58 13162.84
This graph depicts the performance of the Capital Management Equity Fund-
Institutional Shares versus the S&P Mid Cap 400 Index, the Lipper Capital
Appreciation Index, and the S&P 500 Index. It is important to note the Capital
Management Equity Fund is a professionally managed mutual fund while the indexes
are not available for investment and are unmanaged. The comparison is shown for
illustrative purposes only.
Average Annual Total Return
January 27, 1995 No sales load
through 27.91%
November 30, 1995
- - The graph assumes an initial $10,000 investment at January 27, 1995.
All dividends and distributions are reinvested.
- - At November 30, 1995, the value of the Institutional Shares would have
grown to $12,300 - total investment return of 23.00% since January 27,
1995.
- - At November 30, 1995, a similar investment in the S&P Mid Cap 400 Index
would have been worth $12,956 - total investment return of 29.56% since
January 27, 1995; a similar investment in the Lipper Capital Appreciation
Index would have grown to $12,520 - total investment return of 25.20%; and
a similar investment in the S&P 500 Index would have grown to $13,163 -
total investment return of 31.63%.
- - Past performance is not a guarantee of future results. A mutual fund's
share price and investment return will vary with market conditions, and
the principal value of shares, when redeemed, may be worth more or less
than the original cost. Average annual total returns are historical in
nature and measure net investment income and capital gain or loss from
portfolio investments assuming reinvestments of dividends.
CAPITAL MANAGEMENT EQUITY FUND
INVESTOR CLASS
Performance Update - $10,000 Investment
For the period from April 7, 1995 to November 30, 1995
[The following information is depicted in a graph]
Investor S&P Mid Cap Lipper Cap S&P
Shares 400 Apprec 500
4/7/95 10000.00 10000.00 10000.00 10000.00
4/30/95 9644.78 9894.97 9848.50 9813.49
5/31/95 9825.35 10133.44 10097.35 10206.03
6/30/95 10134.78 10545.87 10591.68 10442.81
7/31/95 10485.78 11096.36 11215.55 10789.51
8/31/95 10618.06 11301.65 11339.81 10816.48
9/30/95 10693.03 11575.15 11636.02 11272.94
10/31/95 10250.80 11277.67 11407.93 11232.36
11/30/95 10693.03 11770.50 11777.04 11725.46
This graph depicts the performance of the Capital Management Equity Fund-
Investor Shares versus the S&P Mid Cap 400 Index, the Lipper Capital
Appreciation Index, and the S&P 500 Index. It is important to note the Capital
Management Equity Fund is a professionally managed mutual fund while the indexes
are not available for investment and are unmanaged. The comparison is shown for
illustrative purposes only.
Average Annual Total Return
With Maximum
Sales Load No Sales load
April 7, 1995
through 10.87% 16.20%
November 30, 1995
- - The graph assumes an initial $10,000 investment at April 7, 1995. All
dividends and distributions are reinvested.
- - At November 30, 1995, the value of the Investor Shares would have grown to
$10,693 - total investment return of 6.93% since April 7, 1995. Without
the deduction of the 3% maximum sales load, the value of the Investor
Shares would have grown to $11,024 - total investment return of 10.24%
since April 7, 1995. The sales load may be reduced or eliminated for
larger purchases.
- - At November 30, 1995, a similar investment in the S&P Mid Cap 400 Index
would have been worth $11,770 - total investment return of 17.70% since
April 7, 1995; a similar investment in the Lipper Capital Appreciation
Index would have grown to $11,777 - total investment return of 17.77%; and
a similar investment in the S&P 500 Index would have grown to $11,725 -
total investment return of 17.25%.
- - Past performance is not a guarantee of future results. A mutual fund's
share price and investment return will vary with market conditions, and
the principal value of shares, when redeemed, may be worth more or less
than the original cost. Average annual total returns are historical in
nature and measure net investment income and capital gain or loss from
portfolio investments assuming reinvestments of dividends.
CAPITAL MANAGEMENT EQUITY FUND
PORTFOLIO OF INVESTMENTS
November 30, 1995
Value
Shares (note 1)
COMMON STOCKS - 70.05%
Auto Parts - Replacement Equipment - 2.60%
Echlin, Inc. 1,700 $62,050
Broadcast - Radio & Television - 2.25%
Comcast Corporation 2,800 53,725
Chemicals - 5.63%
Air Products and Chemicals, Inc. 450 24,975
Hanna (M.A.) Company 2,300 61,813
Rohm & Haas Company 785 47,296
134,084
Computer Software & Services - 2.28%
Adobe Systems, Inc. 800 54,400
Electrical Equipment - 0.91%
Belden, Inc. 800 21,600
Electronics - 0.87%
Harman International
Industries, Inc. 472 20,709
Environmental Control - 1.96%
Browning-Ferris Industries, Inc. 1,550 46,694
Financial - Banks, Commercial - 5.51%
Barnett Banks, Inc. 1,075 64,634
Fleet Financial Group, Inc. 1,600 66,800
131,434
Financial - Savings/Loans/Thrifts - 1.40%
H. F. Ahmanson & Company 1,250 33,437
Food - Processing - 3.01%
Hershey Foods Corporation 1,160 71,630
Food - Wholesale - 2.01%
Richfood Holdings, Inc. 1,700 47,813
Homebuilders - 2.08%
Pulte Corporation 800 24,800
(a) U.S. Home Corporation 950 24,700
49,500
Insurance - Multiline - 2.24%
Chubb Corporation 550 53,487
(Continued)
CAPITAL MANAGEMENT EQUITY FUND
PORTFOLIO OF INVESTMENTS
November 30, 1995
(Continued)
Value
Shares (note 1)
COMMON STOCKS (Continued)
Medical - Hospital Management & Service - 2.22%
Caremark International, Inc. 2,700 $52,987
Miscellaneous - Manufacturing - 2.05%
Fisher Scientific International 1,500 48,938
Office & Business Equipment - 1.69%
Pitney-Bowes, Inc. 900 40,275
Oil & Gas - Domestic - 3.71%
Quaker State Corporation 3,200 43,200
Sonat, Inc. 1,400 45,150
88,350
Oil & Gas - Exploration - 6.04%
Louisiana Land and Exploration Co 830 32,370
Parker & Parsley Petroleum 1,075 20,156
Snyder Oil Corporation 4,000 46,500
Sonat Offshore Drilling Company 1,300 44,850
143,876
Publishing - Printing - 5.26%
Deluxe Corporation 1,200 33,150
McGraw-Hill Companies, Inc. 550 46,063
R.R. Donnelley & Sons Company 1,200 46,050
125,263
Retail - Department Stores - 2.17%
(a) Federated Department Stores, Inc 1,750 50,969
Kmart Corporation 100 775
51,744
Shoes - Leather - 1.53%
Reebok International Ltd. 1,400 36,400
Toys - 1.88%
Mattel, Inc. 1,600 44,800
Transportation - Rail - 1.25%
(a) Southern Pacific Rail Corp. 1,246 29,748
Utilities - Electric - 5.12%
Houston Industries, Inc. 800 36,600
Idaho Power Company 1,850 53,187
Montana Power Company 1,430 32,354
122,141
(Continued)
CAPITAL MANAGEMENT EQUITY FUND
PORTFOLIO OF INVESTMENTS
November 30, 1995
(Continued)
Value
Shares (note 1)
COMMON STOCKS (Continued)
Utilities - Gas - 4.38%
Brooklyn Union Gas Company 1,900 $53,675
Pacific Enterprises 1,900 50,825
104,500
Total Common Stocks (Cost $1,470,587) 1,669,585
Principal
Amount
REPURCHASE AGREEMENT (b) - 29.82%
Wachovia Bank
5.85%, due December 1, 1995 $710,590 710,590
(Cost $710,590)
Total Value of Investments (Cost $2,181,177 (c)) 99.87% 2,380,175
Other Assets Less Liabilities 0.13% 3,146
Net Assets 100.00% $2,383,321
(a) Non-income producing investment.
(b) Joint repurchase agreement entered into November 30, 1995, with a
maturity value of $22,915,232 collateralized by $22,546,000 U.S. Treasury
Notes, 6.50%, due August 15, 1997. The aggregate market value of the
collateral at November 30, 1995 was $23,381,213. The Fund's pro rata
interest in the market value of the collateral at November 30, 1995 was
$725,145. The Fund's pro rata interest in the joint repurchase agreement
collateral is taken into possession by the Fund's custodian upon entering
into the repurchase agreement. The collateral is marked to market daily
to ensure its market value is at least 102 percent of the sales price of
the repurchase agreement.
(c) Aggregate cost for federal income tax purposes is the same as for
financial reporting purposes. Unrealized appreciation (depreciation) of
investments for financial reporting and federal income tax purposes is as
follows:
Unrealized appreciation $225,391
Unrealized depreciation (26,393)
Net unrealized appreciation $198,998
See accompanying notes to financial statements
CAPITAL MANAGEMENT EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1995
ASSETS
Investments in common stocks at value (Cost $1,470,587) $1,669,585
Repurchase agreement 710,590
Cash 1,036
Dividends receivable 5,206
Interest receivable 852
Due from advisor (note 2) 24,195
Other assets 201
Total assets $2,383,321
LIABILITIES
Accrued expenses 28,344
NET ASSETS $2,383,321
NET ASSETS CONSIST OF:
Capital stock ($0.01 par value) $1,963
Additional paid-in capital 2,138,353
Undistributed net investment income 10,252
Undistributed net realized gain on investments 33,755
Net unrealized appreciation on investments 198,998
$2,383,321
INSTITUTIONAL CLASS
Net asset value and offering price per share
($1,832,507 / 150,725 shares outstanding) $12.16
INVESTOR CLASS
Net asset value ($550,814 / 45,557 shares outstanding) $12.09
Maximum offering price per share (100 / 97 of $12.09) $12.46
See accompanying notes to financial statements
CAPITAL MANAGEMENT EQUITY FUND
STATEMENT OF OPERATIONS
For the period from January 27, 1995
(commencement of operations)
to November 30, 1995
INVESTMENT INCOME
Income
Dividends $27,664
Interest 6,257
Total income 33,921
Expenses
Fund accounting fees (note 2) 23,500
Professional fees 14,791
Investment advisory fees (note 2) 12,413
Fund administration fees (note 2) 7,352
Custodian fees 4,925
Securities pricing fees 2,844
Registration and filing administration fees 1,961
Distribution and service fees - Investor Class (note 3) 379
Shareholder recordkeeping fees 187
Trustee fees and meeting expenses 6,945
Printing expenses 4,912
Shareholder servicing expenses 3,302
Registration and filing expenses 955
Other operating expenses 4,155
Total expenses 88,621
Less:
Expense reimbursements (note 2) (72,059)
Investment advisory fees waived (note 2) (12,413)
Net expenses 4,149
Net investment income 29,772
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions 33,755
Increase in unrealized appreciation on investments 198,998
Net realized and unrealized gain on investments 232,753
Net increase in net assets resulting from operations $262,525
See accompanying notes to financial statements
CAPITAL MANAGEMENT EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the period from January 27, 1995
(commencement of operations)
to November 30, 1995
INCREASE IN NET ASSETS
Operations
Net investment income $29,772
Net realized gain from investment transactions 33,755
Increase in unrealized appreciation on investments 198,998
Net increase in net assets resulting from operations 262,525
Distributions to shareholders from
Net investment income - Institutional Class (19,101)
$419 $19,101
Net investment income - Investor Class (419)
Decrease in net assets resulting from distributions (19,520)
Capital share transactions
Increase in net assets resulting from
capital share transactions (a) 2,140,316
Net increase in net assets 2,383,321
NET ASSETS
Beginning of period 0
End of period $2,383,321
(a) A summary of capital share activity follows:
INSTITUTIONAL CLASS INVESTOR CLASS
For the period from
January 27, 1995 For the peirod from
(commencement of operations) April 7, 1995
to November 30, 1995 to November 30, 1995
Shares Value Shares Value
Shares sold 149,099 $1,574,589 45,533 $546,342
Shares issued for
reinvestment of
distributions 1,626 19,101 35 419
150,725 1,593,690 45,568 546,761
Shares redeemed 0 0 (11) (135)
Net increase 150,725 $1,593,690 45,557 $546,626
See accompanying notes to financial statements
CAPITAL MANAGEMENT EQUITY FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
INSTITUTIONAL INVESTOR
CLASS CLASS
For the
period from
January 27, 1995 For the
(commencement period from
of operations) April 7, 1995
to November 30, to November 30,
1995 1995
Net asset value, beginning of period initial $10.00 $11.07
Income from investment operations
Net investment income 0.20 0.11
Net realized and unrealized gain on in 2.10 1.02
Total from investment operations 2.30 1.13
Distributions to shareholders from
Net investment income (0.14) (0.11)
Net asset value, end of period $12.16 $12.09
Total return 23.00%(a) 10.24%(b)
Ratios/supplemental data
Net assets, end of period $1,832,507 $550,814
Ratio of expenses to average net assets
Before expense reimbursements and waivers 7.20%(c) 7.18%(c)
After expense reimbursements and waivers 0.31%(c) 1.06%(c)
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waivers (4.45)%(c) (4.23)%(c)
After expense reimbursements and waivers 2.44%(c) 1.89%(c)
Portfolio turnover rate 47.74% 47.74%
(a) Annualized total return is 27.91%.
(b) Total return does not reflect payment of a sales charge. Annualized total
return is 16.20%.
(c) Annualized.
See accompanying notes to financial statements
CAPITAL MANAGEMENT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
November 30, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Capital Management Equity Fund (the "Fund") is a diversified series of
shares of beneficial interest of the Capital Management Investment Trust
(the "Trust"). The Trust, an open-end investment company, was organized
on October 18, 1994 as a Massachusetts Business Trust and is registered
under the Investment Company Act of 1940. The Fund began operations on
January 27, 1995. The Fund has an unlimited number of authorized shares,
which are divided into two classes - Institutional Shares and Investor
Shares. Only Institutional Shares were offered by the Fund prior to April
7, 1995.
Each class of shares has equal rights as to assets of the Fund, and the
classes are identical except for differences in their sales charge
structures and ongoing distribution and service fees. Income, expenses
(other than distribution and service fees, which are only attributable to
the Investor Class), and realized and unrealized gains or losses on
investments are allocated to each class of shares based upon its relative
net assets. Investor Shares purchased are subject to a maximum sales
charge of three percent. Both classes have equal voting privileges, except
where otherwise required by law or when the Board of Trustees determines
that the matter to be voted on affects only the interests of the
shareholders of a particular class. The following is a summary of
significant accounting policies followed by the Fund.
A. Security Valuation - The Fund's investments in securities are
carried at market value. Securities listed on an exchange or
quoted on a national market system are valued at the last sales
price as of 4:00 p.m. New York time. Other securities traded in
the over-the-counter market and listed securities for which no
sale was reported on that date are valued at the most recent bid
price. Securities for which market quotations are not readily
available, if any, are valued by using an independent pricing
service or by following procedures approved by the Board of
Trustees. Short-term investments are valued at cost which
approximates market value.
B. Federal Income Taxes - No provision has been made for federal
income taxes since it is the policy of the Fund to comply with
the provisions of the Internal Revenue Code applicable to
regulated investment companies and to make sufficient
distributions of taxable income to relieve it from all federal
income taxes.
C. Investment Transactions - Investment transactions are recorded
on the trade date. Realized gains and losses are determined
using the specific identification cost method. Interest income
is recorded daily on the accrual basis. Dividend income and
distributions to shareholders are recorded on the ex-dividend
date.
D. Distributions to Shareholders - The Fund may declare dividends
quarterly, payable in March, June, September, and December on a
date selected by the Trust's Trustees. In addition,
distributions may be made annually in December out of net
realized gains through October 31 of that year. The Fund may
make a supplemental distribution subsequent to the end of its
fiscal year ending November 30.
CAPITAL MANAGEMENT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
November 30, 1995
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Capital Management
Associates, Inc. (the "Advisor"), provides the fund with a continuous
program of supervision of the Fund's assets, including the composition
of its portfolio, and furnishes advice and recommendations with respect
to investments, investment policies, and the purchase and sale of
securities. As compensation for its services, the Advisor receives a
fee at the annual rate of 1.00% of the first $100 million of the Fund's
average daily net assets, 0.90% of the next $150 million, 0.85% of the
next $250 million, and 0.80% of all assets over $500 million.
Currently, the Fund does not offer its shares for sale in states which
require limitations to be placed on its expenses. The Advisor
currently intends to voluntarily waive all or a portion of its fee and
reimburse expenses of the Fund to limit total Fund operating expenses
to a maximum of 1.50% of the average daily net assets of the Fund's
Institutional Class and a maximum of 2.25% of the average daily net
assets of the Fund's Investor Class. There can be no assurance that
the foregoing voluntary fee waivers or reimbursements will continue.
The Advisor has voluntarily waived its fee amounting to $12,413 ($0.10
per share) and reimbursed $72,059 of the operating expenses incurred
by the Fund for the period from January 27, 1995 to November 30, 1995.
All organization expenses of the Fund were incurred and paid by the
Advisor. At November 30, 1995 the Advisor owned 10,360 Institutional
Shares and 112 Investor Shares of the Fund.
The Fund's administrator, The Nottingham Company, L.L.C. (the
"Administrator"), provides administrative services to and is generally
responsible for the overall management and day-to-day operations of the
Fund pursuant to an accounting and administrative agreement with the
Trust. As compensation for its services, the Administrator receives
a fee at the annual rate of 0.20% of the Fund's first $50 million of
average daily net assets, 0.175% of the next $50 million, and 0.15% of
average daily net assets over $100 million. The Administrator also
receives a monthly fee of $2,000 for accounting and record keeping
services for the initial class of shares and $750 per month for each
additional class of shares. Additionally, the Administrator charges
the Fund for servicing of shareholder accounts and registration of the
Fund's shares. The contract with the Administrator provides that the
aggregate fees for the aforementioned administration, accounting, and
record keeping services shall not be less than $3,000 per month. The
Administrator also charges the Fund for certain expenses involved with
the daily valuation of portfolio securities.
Shields & Company, Inc. (the "Distributor"), an affiliate of the
Advisor, serves as the Fund's principal underwriter and distributor.
The Distributor receives any sales charges imposed on purchases of
Investor Shares and re-allocates a portion of such charges to dealers
through whom the sale was made, if any. For the period from January
27, 1995 to November 30, 1995, the Distributor retained sales charges
in the amount of $1,109. At November 30, 1995 the Distributor owned
127,373 Institutional Shares of the Fund.
Certain Trustees and officers of the Trust are also officers or
directors of the Advisor, the Distributor, or the Administrator.
CAPITAL MANAGEMENT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
November 30, 1995
NOTE 3 - DISTRIBUTION AND SERVICE FEES
The Board of Trustees, including the Trustees who are not "interested
persons" of the Trust as defined in the Investment Company Act of 1940
(the "Act"), adopted a distribution and service plan pursuant to Rule
12b-1 of the Act (the "Plan") applicable to the Investor Shares. The
Act regulates the manner in which a regulated investment company may
assume costs of distributing and promoting the sales of its shares and
servicing of its shareholder accounts.
The Plan provides that the Fund may incur certain costs, which may not
exceed 0.75% per annum of the Investor Shares' average daily net assets
for each year elapsed subsequent to adoption of the Plan, for payment
to the Distributor and others for items such as advertising expenses,
selling expenses, commissions, travel, or other expenses reasonably
intended to result in sales of Investor Shares in the Fund or support
servicing of Investor Share shareholder accounts. Such expenditures
incurred as service fees may not exceed 0.25% per annum of the Investor
Shares' average daily net assets. The Fund incurred $379 of such
expenses under the Plan for the period from January 27, 1995 to
November 30, 1995.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $2,043,532 and $606,700, respectively, for the period from
January 27, 1995 to November 30, 1995.
The Fund's prospectus provides that the Fund may enter into repurchase
agreements which do not extend beyond seven days for up to 25% of its
assets with member banks of the Federal Reserve system or certain non-
bank dealers. At November 30, 1995 repurchase agreements of $710,590
represented 29.46% of the Fund's assets.
Independent Auditors' Report
To the Board of Trustees and Shareholders
Capital Management Investment Trust:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Capital Management Equity Fund (the
"Fund"), a series of the Capital Management Investment Trust, as of November 30,
1995, and the related statement of operations, statement of changes in net
assets and financial highlights for the period from January 27, 1995
(commencement of operations) to November 30, 1995. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
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 financial
highlights 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 include confirmation of securities owned as of
November 30, 1995 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 financial highlights referred to
above present fairly, in all material respects, the financial position of the
Capital Management Equity Fund as of November 30, 1995, the results of its
operations, the changes in its net assets and the financial highlights for the
period from Janyary 27, 1995 (commencement of operations) to November 30, 1995
in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Richmond, Virginia
December 21, 1995
PART C
CAPITAL MANAGEMENT INVESTMENT TRUST
FORM N1-A
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
a) Financial Statements: The Annual Report for the Fiscal Period Ended
November 30, 1995 for the Capital Management Equity Fund is included
in Part B, with related Financial Highlights included in Part A
b) Exhibits*
(1) Declaration of Trust - Enclosed Exhibit 1
(2) By-Laws - Enclosed Exhibit 2
(3) Voting Trust Agreement - Not Applicable
(4) Specimens, etc. - Not Applicable - the series of the Registrant do not
issue certificates (see Exhibit 1 and 2 for the relevant portions of the
Declaration of Trust and By-Laws)
(5) Investment Advisory Agreement - Enclosed Exhibit 5
(6) Distribution Agreement - Enclosed Exhibit 6
(7) Retirements Plans Sponsored by Registrant - Not Applicable
(8) Custody Agreement - Enclosed Exhibit 8
(9) (a) Fund Accounting, Dividend Disbursing & Transfer Agent, and
Administration Agreement - Enclosed Exhibit 9(a)
(b) Amendment to the Fund Accounting, Dividend Disbursing & Transfer
Agent, and Administration Agreement dated October 1, 1995 - Enclosed
Exhibit 9(b)
(c) Amendment to the Fund Accounting, Dividend Disbursing & Transfer
Agent, and Administration Agreement dated January 25, 1996 -
Enclosed Exhibit 9(c)
(10) Opinion and Consent of Counsel - Enclosed Exhibit 10
(11) Opinion and Consent of Auditors - Enclosed Exhibit 11
(12) Financial Statements Omitted - Not Applicable
(13) Initial Capital Agreement - Enclosed Exhibit 13
(14) Prototype Plans - Not Applicable
(15) Plan of Distribution pursuant to Rule 12b-1 - Enclosed Exhibit 15
(16) Computation of Performance - Enclosed Exhibit 16
(17) Copies of Powers of Attorney - Enclosed Exhibit 17
(18) Copies of Rule 18f-3 Multi-Class Plan - Enclosed Exhibit 18
* All exhibits are being refiled herewith pursuant to the applicable
regulations under EDGAR.
ITEM 25. Persons Controlled by or Under Common Control with Registrant
No person is controlled by or under common control with Registrant.
ITEM 26. Number of Record Holders of Securities
As of March 15, 1996, the number of record holders of each class of
securities of Registrant was as follows:
Number of
Title of Class Record Holders
Capital Management Equity Fund - Institutional Shares 22
Capital Management Equity Fund - Investor Shares 25
ITEM 27. Indemnification
The Trust's Declaration of Trust, Investment Advisory Agreement, Administration
Agreement, and Distribution Agreement provide for indemnification of certain
persons acting on behalf of the Trust.
Article V, Section 5.4 of the Trust's Declaration of Trust states:
1. Subject only to the provisions hereof, every person who is or has been
a Trustee, officer, employee or agent of the Trust and every person who
serves at the Trustees request as director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise shall be indemnified by the Trust to the fullest extent
permitted by law against all liabilities and against all expenses
reasonably incurred or paid by him in connection with any debt, claim,
action, demand, suit, proceeding, judgment, decree, liability or
obligation of any kind in which he becomes involved as a party or
otherwise or is threatened by virtue of his being or having been a
Trustee, officer, employee or agent of the Trust or of another
corporation, partnership, joint venture, trust or other enterprise at
the request of the Trust and against amounts paid or incurred by him in
the compromise or settlement thereof.
2. The words "claim", "action", "suit", or "proceeding" shall apply to all
claims, actions, suits or proceedings (civil, criminal, administrative,
legislative, investigative or other, including appeals), actual or
threatened, and the words "liabilities" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
3. No indemnification shall be provided hereunder to a Trustee or officer:
a. against any liability to the Trust or the Shareholders by
reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his
office ("disabling conduct");
b. with respect to any matter as to which he shall, by the court
or other body by or before which the proceeding was brought or
engaged, have been finally adjudicated to be liable by reason
of disabling conduct;
c. in the absence of a final adjudication on the merits that such
Trustee or officer did not engage in disabling conduct, unless
a reasonable determination, based upon a review of the facts
that the person to be indemnified is not liable by reason of
such conduct, is made:
(A) by vote of a majority of a quorum of the Trustees
who are neither Interested Persons nor parties to
the proceedings; or
(B) by independent legal counsel, in a written opinion.
4. The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect
any other rights to which any Trustee, officer, employee or agent may
now or hereafter be entitled, shall continue as to a person who has
ceased to be such Trustee, officer, employee, or agent and shall inure
to the benefit of the heirs, executors and administrators of such a
person; provided, however, that no person may satisfy any right of
indemnity or reimbursement granted herein except out of the property of
the Trust, and no other person shall be personally liable to provide
indemnity or reimbursement hereunder (except an insurer or surety or
person otherwise bound by contract). a 5. Expenses in connection
with the preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in paragraph (a)
of this Section 5.4 may be paid by the Trust prior to final disposition
thereof upon receipt of a written undertaking by or on behalf of the
Trustee, officer, employee or agent to reimburse the Trust if it is
ultimately determined under this Section 5.4 that he is not entitled to
indemnification. Such undertaking shall be secured by a surety bond or
other suitable insurance or such security as the Trustees shall require
unless a majority of a quorum of the Trustees who are neither
Interested Persons nor parties to the proceeding, or independent legal
counsel in a written opinion, shall have determined, based on readily
available facts, that there is reason to believe that the indemnitee
ultimately will be found to be entitled to indemnification.
Section 8(b) of the Investment Advisory Agreement states:
"Subject to the limitations set forth in this Section 8(b), the Trust shall
indemnify, defend and hold harmless (from the assets of the Fund or Funds to
which the conduct in question relates) the Advisor against all loss, damage and
liability, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by the Advisor in connection
with the defense or disposition of any action, suit or other proceeding, whether
civil or criminal, before any court or administrative or legislative body,
related to or resulting from this Agreement or the performance of services
hereunder, except with respect to any matter as to which it has been determined
that the loss, damage or liability is a direct result of (i) a breach of
fiduciary duty on the part of the Advisor with respect to the receipt of
compensation for services; or (ii) willful misfeasance, bad faith or gross
negligence on the part of the Advisor in the performance of its duties or from
reckless disregard by it of its duties under this Agreement (either and both of
the conduct described in clauses (i) and (ii) above being referred to
hereinafter as "Disabling Conduct"). A determination that the Advisor is
entitled to indemnification may be made by (i) a final decision on the merits by
a court or other body before whom the proceeding was brought that the Advisor
was not liable by reason of Disabling Conduct, (ii) dismissal of a court action
or an administrative proceeding against the Advisor for insufficiency of
evidence of Disabling Conduct, or (iii) a reasonable determination, based upon a
review of the facts, that the Advisor was not liable by reason of Disabling
Conduct by, (a) vote of a majority of a quorum of Trustees who are neither
"interested persons" of the Trust as the quoted phrase is defined in Section
2(a)(19) of the 1940 Act nor parties to the action, suit or other proceeding on
the same or similar grounds that is then or has been pending or threatened (such
quorum of such Trustees being referred to hereinafter as the "Independent
Trustees"), or (b) an independent legal counsel in a written opinion. Expenses,
including accountants' and counsel fees so incurred by the Advisor (but
excluding amounts paid in satisfaction of judgments, in compromise or as fines
or penalties), shall be paid from time to time by the Fund or Funds to which the
conduct in question related in advance of the final disposition of any such
action, suit or proceeding; provided, that the Advisor shall have undertaken to
repay the amounts so paid unless it is ultimately determined that it is entitled
to indemnification of such expenses under this Section 8(b) and if (i) the
Advisor shall have provided security for such undertaking, (ii) the Trust shall
be insured against losses arising by reason of any lawful advances, or (iii) a
majority of the Independent Trustees, or an independent legal counsel in a
written opinion, shall have determined, based on a review of readily available
facts (as opposed to a full trial-type inquiry), that there is reason to believe
that the Advisor ultimately will be entitled to indemnification hereunder.
As to any matter disposed of by a compromise payment by the Advisor referred to
in this Section 8(b), pursuant to a consent decree or otherwise, no such
aindemnification either for said payment or for any other expenses shall be
provided unless such indemnification shall be approved (i) by a majority of the
Independent Trustees or (ii) by an independent legal counsel in a written
opinion. Approval by the Independent Trustees pursuant to clause (i) shall not
prevent the recovery from the Advisor of any amount paid to the Advisor in
accordance with either of such clauses as indemnification of the Advisor is
subsequently adjudicated by a court of competent jurisdiction not to have acted
in good faith in the reasonable belief that the Advisor's action was in or not
opposed to the best interests of the Trust or to have been liable to the Trust
or its Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in its conduct under the
Agreement.
The right of indemnification provided by this Section 8(b) shall not be
exclusive of or affect any of the rights to which the Advisor may be entitled.
Nothing contained in this Section 8(b) shall affect any rights to
indemnification to which Trustees, officers or other personnel of the Trust, and
other persons may be entitled by contract or otherwise under law, nor the power
of the Trust to purchase and maintain liability insurance on behalf of any such
person.
The Board of Trustees of the Trust shall take all such action as may be
necessary and appropriate to authorize the Trust hereunder to pay the
indemnification required by this Section 8(b) including, without limitation, to
the extent needed, to determine whether the Advisor is entitled to
indemnification hereunder and the reasonable amount of any indemnity due it
hereunder, or employ independent legal counsel for that purpose."
Section 8(b) of the Administration Agreement states:
"Indemnification of Administrator. Subject to the limitations set forth in this
Subsection 8(b), the Trust shall indemnify, defend and hold harmless (from the
assets of the Fund or Funds to which the conduct in question relates) the
Administrator against all loss, damage and liability, including but not limited
to amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and expenses, including reasonable accountants' and counsel fees,
incurred by the Administrator in connection with the defense or disposition of
any action, suit or other proceeding, whether civil or criminal, before any
court or administrative or legislative body, related to or resulting from this
Agreement or the performance of services hereunder, except with respect to any
matter as to which it has been determined that the loss, damage or liability is
a direct result of (i) a breach of fiduciary duty on the part of the
Administrator with respect to the receipt of compensation for services; or (ii)
willful misfeasance, bad faith or gross negligence on the part of the
Administrator in the performance of its duties or from reckless disregard by it
of its duties under this Agreement (either and both of the conduct described in
clauses (i) and (ii) above being referred to hereinafter as "Disabling
Conduct"). A determination that the Administrator is entitled to indemnification
may be made by (i) a final decision on the merits by a court or other body
before whom the proceeding was brought that the Administrator was not liable by
reason of Disabling Conduct, (ii) dismissal of a court action or an
administrative proceeding against the Administrator for insufficiency of
evidence of Disabling Conduct, or (iii) a reasonable determination, based upon a
review of the facts, that the Administrator was not liable by reason of
Disabling Conduct by, (a) vote of a majority of a quorum of Trustees who are
neither "interested persons" of the Trust as the quoted phrase is defined in
Section 2(a)(19) of the 1940 Act nor parties to the action, suit or other
proceeding on the same or similar grounds that is then or has been pending or
threatened (such quorum of such Trustees being referred to hereinafter as the
"Independent Trustees"), or (b) an independent legal counsel in a written
opinion. Expenses, including accountants' and counsel fees so incurred by the
Administrator (but excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), shall be paid from time to time by the
Fund or Funds to which the conduct in question related in advance of the final
disposition of any such action, suit or proceeding; provided, that the
Administrator shall have undertaken to repay the amounts so paid unless it is
ultimately determined that it is entitled to indemnification of such expenses
under this Subsection 8(b) and if (i) the Administrator shall have provided
security for such undertaking, (ii) the Trust shall be insured against losses
arising by reason of any lawful advances, or (iii) a majority of the Independent
Trustees, or an independent legal counsel in a written opinion, shall have
determined, based on a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the Administrator
ultimately will be entitled to indemnification hereunder.
As to any matter disposed of by a compromise payment by the Administrator
referred to in this Subsection 8(b), pursuant to a consent decree or otherwise,
no such indemnification either for said payment or for any other expenses shall
be provided unless such indemnification shall be approved (i) by a majority of
the Independent Trustees or (ii) by an independent legal counsel in a written
opinion. Approval by the Independent Trustees pursuant to clause (i) shall not
prevent the recovery from the Administrator of any amount paid to the
Administrator in accordance with either of such clauses as indemnification of
the Administrator is subsequently adjudicated by a court of competent
jurisdiction not to have acted in good faith in the reasonable belief that the
Administrator's action was in or not opposed to the best interests of the Trust
or to have been liable to the Trust or its Shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in its conduct under the Agreement.
The right of indemnification provided by this Subsection 8(b) shall not be
exclusive of or affect any of the rights to which the Administrator may be
entitled. Nothing contained in this Subsection 8(b) shall affect any rights to
indemnification to which Trustees, officers or other personnel of the Trust, and
other persons may be entitled by contract or otherwise under law, nor the power
of the Trust to purchase and maintain liability insurance on behalf of any such
person.
The Board of Trustees of the Trust shall take all such action as may be
necessary and appropriate to authorize the Trust hereunder to pay the
indemnification required by this Subsection 8(b) including, without limitation,
to the extent needed, to determine whether the Administrator is entitled to
indemnification hereunder and the reasonable amount of any indemnity due it
hereunder, or employ independent legal counsel for that purpose."
Section (6) of the Distribution Agreement states:
"that in absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Distributor, the
Trust agrees to indemnify Distributor and its officers and partners against any
and all claims, demands, liabilities and expenses which Distributor may incur
under the 1933 Act, or common law or otherwise, arising out of or based upon any
alleged untrue statement of a material fact contained in any registration
statement or prospectus (except a prospectus of the Funds prepared for use under
Rule 482 under the 1933 Act) or statement of additional information of the
Funds, or any omission to state a material fact therein, the omission of which
makes any statement contained therein misleading, unless such statement or
omission was made in reliance upon and in conformity with information furnished
to the Trust in connection therewith by or on behalf of Distributor. Nothing
herein contained shall require the Trust to take any action contrary to any
provision of its Agreement and Declaration of Trust or any applicable statute or
regulation."
ITEM 28. Business and other Connections of Investment Advisor
See the Statement of Additional Information section entitled
"Management" and the Investment Advisor's Form ADV filed with the
Commission for the activities and affiliations of the officers and
directors of the Investment Advisor of the Registrant. Except as so
provided, to the knowledge of Registrant, none of the directors or
executive officers of the Investment Advisor is or has been at any time
during the past two fiscal years engaged in any other business,
profession, vocation or employment of a substantial nature. The
Investment Advisor currently serve as investment advisor to numerous
institutional and individual clients.
ITEM 29. Principal Underwriter
(a) Shields & Company is underwriter and distributor for the
Capital Management Equity Fund.
(b)
Name and Principal Position(s) and Offices Position(s) and Offices
Business Address with Underwriter with Registrant
Joseph V. Shields, Jr. Chairman Trustee
71 Broadway
New York, New York 10006
David V. Shields President Trustee
71 Broadway
New York, New York 10006
Richard B. Thatcher Vice President, None
71 Broadway Secretary, Treasurer
New York, New York 10006
Joseph A. Zock Vice President Vice President
71 Broadway
New York, New York 10006
Bruce L. Graham, CFA Vice President None
71 Broadway
New York, New York 10006
Brian Keep Vice President None
71 Broadway
New York, New York 10006
(c) Not applicable
ITEM 30. Location of Accounts and Records
All account books and records not normally held by the
Custodian are held by the Registrant, in the offices of The
Nottingham Company, Administrator and Transfer Agent to the
Registrant, or in the offices of Capital Management Associates,
Inc., the Advisor.
The address of The Nottingham Company is 105 North Washington
Street, P.O. Drawer 69, Rocky Mount, North Carolina
27802-0069. The address of Capital Management Associates, Inc.
is 71 Broadway, 22nd Floor, New York, New York 10006.
ITEM 31. Management Services
The substantive provisions of the Fund Accounting, Dividend
Disbursing & Transfer Agent and Administration Agreement
between the Registrant and The Nottingham Company, Inc. are
discussed in Part B hereof.
ITEM 32. Undertakings
a. Registrant undertakes to furnish each person to whom a
Prospectus is delivered with a copy of the latest annual
report of each series of Registrant to shareholders upon
request and without charge.
b. Registrant undertakes to hold a special meeting of its
shareholders for the purpose of voting on the question of
removal of a Trustee or Trustees if requested in writing
by the holders of at least 10% of the Trust's outstanding
voting securities, and to assist in communicating with
other shareholders as required by Section 16(c) of the
Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Amendment to Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Rocky Mount, State of North
Carolina on the 25th day of March 1996.
CAPITAL MANAGEMENT INVESTMENT TRUST
By:
Frank P. Meadows III
Treasurer and Secretary, Board of Trustees
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
Registration Statement on Form N-1A has been signed below by the following
persons in the capacities and on the date indicated.
*
Trustee
Lucius E. Burch, III
Principal Financial Officer
Frank P. Meadows III and Principal Accounting Officer
*
Trustee
Thomas A. Saunders, III
*
Trustee
David V. Shields
*
Trustee and Chairman, Principal
J. V. Shields, Jr. Executive Officer
*
Trustee
Anthony J. Walton
* By: Dated: March 25, 1996
Frank P. Meadows III
Attorney-in-Fact
CAPITAL MANAGEMENT INVESTMENT TRUST
EXHIBIT INDEX
SEQUENTIAL PAGE
EXHIBIT NUMBER DESCRIPTION
Exhibit 99.B.1 Declaration of Trust
Exhibit 99.B.2 By-Laws
Exhibit 99.B.5 Investment Advisory Agreement
Exhibit 99.B.6 Distribution Agreement
Exhibit 99.B.8 Custody Agreement
Exhibit 99.B.9(a) Fund Accounting, Dividend Disbursing & Transfer Agent, and
Administration Agreement
Exhibit 99.B.9(b) Amendment to the Fund Accounting, Dividend Disbursing &
Transfer Agent, and Administration Agreement dated October
1, 1995
Exhibit 99.B.9(c) Amendment to the Fund Accounting, Dividend Disbursing &
Transfer Agent, and Administration Agreement dated January
25, 1996
Exhibit 99.B.10 Opinion and Consent of Counsel
Exhibit 99.B.11 Opinion and Consent of Auditors
Exhibit 99.B.13 Initial Capital Agreement
Exhibit 99.B.15 Plan of Distribution pursuant to Rule 12b-1
Exhibit 99.B.16 Computation of Performance
Exhibit 99.B.17 Copies of Powers of Attorney
Exhibit 99.B.18 Copies of Rule 18f-3 Multi-Class Plan
Exhibit 99.B.1
Declaration of Trust
DECLARATION OF TRUST
OF
CAPITAL MANAGEMENT INVESTMENT TRUST
TABLE OF CONTENTS
Page
ARTICLE I
The Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Management of the Trust. . . . . . . . . . . . . . . . . . . 2
2.2 Election of Trustees . . . . . . . . . . . . . . . . . . . . 2
2.3 Term of Office of Trustees . . . . . . . . . . . . . . . . . 3
2.4 Termination of Service and Appointment of Trustees . . . . . 3
2.5 Temporary Absence of Trustee . . . . . . . . . . . . . . . . 3
2.6 Number of Trustees . . . . . . . . . . . . . . . . . . . . . 3
2.7 Vacancy in Board of Trustees . . . . . . . . . . . . . . . . 3
2.8 Effect of Death, Resignation etc. of a Trustee . . . . . . . 3
2.9 Ownership of the Trust . . . . . . . . . . . . . . . . . . . 3
2.10 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.11 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.12 By-Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.13 Other Activities of Trustees . . . . . . . . . . . . . . . . 4
ARTICLE III
Powers of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Investments. . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Legal Title. . . . . . . . . . . . . . . . . . . . . . . . . 5
3.4 Issuance and Repurchase of Securities. . . . . . . . . . . . 6
3.5 Borrow Money . . . . . . . . . . . . . . . . . . . . . . . . 6
3.6 Delegation; Committees . . . . . . . . . . . . . . . . . . . 6
3.7 Collection and Payment . . . . . . . . . . . . . . . . . . . 6
3.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.9 Miscellaneous Powers . . . . . . . . . . . . . . . . . . . . 6
3.10 Further Powers . . . . . . . . . . . . . . . . . . . . . . . 7
3.11 Ownership of Shares by Trustees, Officers, and Agents. . . . 7
ARTICLE IV
Advisory, Service, Management and Distribution Arrangements. . . . . 7
4.1 Advisory, Service, and Management Arrangements . . . . . . . 7
4.2 Distribution Arrangements. . . . . . . . . . . . . . . . . . 7
4.3 Parties to Contract. . . . . . . . . . . . . . . . . . . . . 8
4.4 Provisions and Amendments. . . . . . . . . . . . . . . . . . 8
ARTICLE V
Limitations of Liability of Shareholders, Trustees and Others. . . . 8
5.1 Limitation of Personal Liability and Indemnification of
Shareholders . . . . . . . . . . . . . . . . . . . . . . . . 8
5.2 Limitation of Personal Liability of Trustees, Officers,
Employees or Agents of the Trust . . . . . . . . . . . . . . 8
5.3 Express Exculpatory Clauses and Instruments. . . . . . . . . 9
5.4 Mandatory Indemnification. . . . . . . . . . . . . . . . . . 9
5.5 No Bond Required of Trustees . . . . . . . . . . . . . . . . 10
5.6 No Duty of Investigation; Notice in Trust Instruments, etc . 10
5.7 Reliance on Experts, etc . . . . . . . . . . . . . . . . . . 10
ARTICLE VI
Shares of Beneficial Interest. . . . . . . . . . . . . . . . . . . . 11
6.1 Beneficial Interest. . . . . . . . . . . . . . . . . . . . . 11
6.2 Series Designation . . . . . . . . . . . . . . . . . . . . . 11
6.3 Rights of Shareholders . . . . . . . . . . . . . . . . . . . 12
6.4 Trust Only . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.5 Issuance of Shares . . . . . . . . . . . . . . . . . . . . . 12
6.6 Register of Shares . . . . . . . . . . . . . . . . . . . . . 13
6.7 Transfer Agent and Registrar . . . . . . . . . . . . . . . . 13
6.8 Transfer of Shares . . . . . . . . . . . . . . . . . . . . . 13
6.9 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VII
Custodians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.1 Appointment and Duties . . . . . . . . . . . . . . . . . . . 14
7.2 Action Upon Termination of Custodian Agreement . . . . . . . 14
7.3 Central Certificate System . . . . . . . . . . . . . . . . . 14
7.4 Acceptance of Receipts in Lieu of Certificates . . . . . . . 14
ARTICLE VIII
Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.1 Redemptions. . . . . . . . . . . . . . . . . . . . . . . . . 15
8.2 Redemption of Shares; Disclosure of Holding. . . . . . . . . 15
8.3 Redemptions of Accounts of Less than an Amount Specified by
the Trustees . . . . . . . . . . . . . . . . . . . . . . . . 15
8.4 Redemptions Pursuant to Constant Net Asset Value . . . . . . 15
8.5 Redemption in Kind . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IX
Determination of Net Asset Value, Net Income and Distributions . . . 16
9.1 Net Asset Value. . . . . . . . . . . . . . . . . . . . . . . 16
9.2 Distributions to Shareholders. . . . . . . . . . . . . . . . 16
9.3 Constant Net Asset Value; Reduction on Outstanding Shares. . 16
9.4 Power to Modify Foregoing Procedures . . . . . . . . . . . . 17
ARTICLE X
Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
10.1 Voting Powers. . . . . . . . . . . . . . . . . . . . . . . . 17
10.2 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . 17
10.3 Quorum and Required Vote . . . . . . . . . . . . . . . . . . 18
10.4 Record Date for Meetings . . . . . . . . . . . . . . . . . . 18
10.5 Proxies. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.6 Additional Provisions. . . . . . . . . . . . . . . . . . . . 18
10.7 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.8 Shareholder Action by Written Consent. . . . . . . . . . . . 18
10.9 Inspection of Records. . . . . . . . . . . . . . . . . . . . 18
ARTICLE XI
Duration; Termination of Trust; Amendment; Mergers; Etc. . . . . . . 19
11.1 Duration . . . . . . . . . . . . . . . . . . . . . . . . . . 19
11.2 Termination. . . . . . . . . . . . . . . . . . . . . . . . . 19
11.3 Merger, Consolidation and Sale of Assets . . . . . . . . . . 19
11.4 Amendment Procedure. . . . . . . . . . . . . . . . . . . . . 20
11.5 Incorporation. . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE XII
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
12.1 Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
12.2 Resident Agent . . . . . . . . . . . . . . . . . . . . . . . 21
12.3 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 21
12.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 21
12.5 Reliance by Third Parties. . . . . . . . . . . . . . . . . . 21
12.6 Provisions in Conflict With Law or Regulations . . . . . . . 22
DECLARATION OF TRUST
OF
CAPITAL MANAGEMENT INVESTMENT TRUST
THIS DECLARATION OF TRUST of CAPITAL MANAGEMENT INVESTMENT TRUST is
made as of the 14th day of October, 1994 by the parties signatory hereto, as
trustees (such persons, so long as they shall continue in office in accordance
with the terms of this Declaration of Trust, and all other persons who at the
time in question have been duly elected or appointed as trustees in accordance
with the provisions of this Declaration of Trust and are then in office, being
hereinafter called the "Trustees").
WHEREAS, the Trustees hereby established a trust fund under the laws of
Massachusetts for the investment and reinvestment of funds contributed thereto
under this Declaration of Trust;
NOW, THEREFORE, the Trustees hereby declare that all money and property
contributed to the trust fund under said Declaration of Trust shall be held and
managed under this Declaration of Trust as herein set forth below.
ARTICLE I
The Trust
1.1 Name. The name of the trust created hereby (the "Trust", which
term shall be deemed to include any Series of the Trust when the context
requires) shall be "CAPITAL MANAGEMENT INVESTMENT TRUST", and so far as may be
practicable the Trustees shall conduct the activities of the Trust, execute all
documents and sue or be sued under that name, which name (and the word "Trust"
wherever hereinafter used) shall refer to the Trustees as Trustees, and not
individually, and shall not refer to the officers, agents, employees or
Shareholders of the Trust or any Series thereof. Each Series of the Trust that
shall be established and designated by the Trustees pursuant to Section 6.2
shall conduct its activities under such name as the Trustees shall determine and
set forth in the instrument establishing such Series. Should the Trustees
determine that the use of the name of the Trust or any Series is not advisable,
they may select such other name for the Trust or such Series as they deem
proper, and the Trust or Series may conduct its activities under such other
name. Any name change shall be effective upon the execution by a majority of
the then Trustees (or by an officer of the Trust pursuant to the vote of a
majority of the then Trustees) of an instrument setting forth the new name. Any
such instrument shall have the status of an amendment to this Declaration.
1.2 Definitions. As used in this Declaration, the following terms
have the following meanings:
The terms "Affiliated Person", "Assignment", "Commission", "Interested
Person", "Investment Advisor", "Majority Shareholder" (the 67% or 50%
requirement of the third sentence of Section 2(a) (42) of the 1940 Act,
whichever may be applicable) and "Principal Underwriter" shall have the meanings
given them in the 1940 Act.
"By-Laws" shall mean the By-Laws of the Trust as amended from time to
time.
"Class" shall mean the separate classes into which the Shares of any
Series may be divided as provided in Section 6.2.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Declaration" shall mean this Declaration of Trust as amended from time
to time. References in this Declaration to "Declaration", "hereof", "herein"
and "hereunder" shall be deemed to refer to the Declaration rather than the
article or section in which such words appear.
"Net Asset Value" shall mean the net asset value of each Series or
Class of the Trust determined in the manner provided in Article IX, Section 9.1
hereof.
"Person" shall mean and include individuals, corporations,
partnerships, trusts, associations, limited liability companies, joint ventures
and other entities, whether or not legal entities, and governments and agencies
and political subdivisions thereof.
"Prospectus" shall mean the currently effective Prospectus of any
Series or Class of the Trust under the Securities Act of 1933, as amended.
"Series" shall mean the separate series that may be established and
designated pursuant to Section 6.2.
"Shareholders" shall mean as of any particular time all holders of
record of outstanding Shares at such time.
"Shares" shall mean the transferable units of interest into which the
beneficial interest in any Series or Class of the Trust shall be divided from
time to time and includes fractions of Shares as well as whole Shares. All
reference to Shares shall be deemed to be Shares of any or all Series or Classes
as the context may require.
"Trust" shall have the meaning set forth in Article I, Section 1.1
hereof.
"Trustees" shall mean the signatories to this Declaration of Trust, so
long as they shall continue in office in accordance with the terms hereof, and
all other persons who at the time in question have been duly elected or
appointed and have qualified as Trustees in accordance with the provisions
hereof and are then in office, and reference in this Declaration to a Trustee or
Trustees shall refer to such person or persons in their capacity as Trustees
hereunder.
"Trust Property" shall mean as of any particular time any and all
property, real or personal, tangible or intangible, which at such time is owned
or held by or for the account of the Trust, any Series thereof or the Trustees.
The "1940 Act" shall mean the Investment Company Act of 1940 and the
rules and regulations promulgated thereunder, as amended from time to time
including exemptions granted therefrom.
1.3 Purpose. The Trust is a Massachusetts business trust of the
type described in Section 1 of Chapter 102 of the General Law of the
Commonwealth of Massachusetts formed for the purpose of acting as a management
investment company under the 1940 Act; provided, however, that the Trust may
exercise all powers that are ordinarily exercised by or permissible for
Massachusetts business trusts.
ARTICLE II
Trustees
2.1 Management of the Trust. The business and affairs of the Trust
shall be managed by the Trustees, and they shall have all powers necessary and
desirable to carry out that responsibility. Each Trustee named herein (or his
successor appointed hereunder) shall serve until the election of Trustees at the
first meeting of Shareholders of the Trust called for the purpose of electing
Trustees after the date hereof, and until his successor is elected and
qualified, or until he sooner dies, resigns or is removed.
2.2 Election of Trustees. Shareholders of the Trust shall elect
Trustees at Shareholder meetings called for that purpose. The Trustees need not
be elected annually or at regular intervals. Except as provided in Section
10.2, the Trustees shall not be required to call a meeting of Shareholders for
the purpose of electing Trustees; provided, however, that if at any time, other
than the time preceding the first meeting of Shareholders for the purpose of
electing Trustees, less than a majority of the Trustees holding office at that
time were elected by the Shareholders, a meeting of the Shareholders for the
purpose of electing Trustees shall be held promptly and in any event within 60
days (unless the Commission shall by order extend such period). No election of
a Trustee shall become effective, however, until the person elected shall have
accepted such election and agreed in writing to be bound by the terms of this
Declaration. If re-elected, a Trustee may succeed himself. Trustees need not
own Shares. During any period in which the Trust may act as distributor of the
securities of which it is the issuer, the selection and nomination of Trustees
who are not interested persons shall be made by disinterested Trustees in
accordance with the 1940 Act.
2.3 Term of Office of Trustees. Each Trustee shall hold office
during the lifetime of this Trust and until its termination as hereinafter
provided or, if sooner, until the next meeting of Shareholders called for the
purpose of electing Trustees and the election and qualification of his
successor; except (a) that any Trustee may resign his trust by written
instrument signed by him and delivered to the other Trustees, which shall take
effect upon such delivery or upon such later date as is specified therein; (b)
that any Trustee may be removed at any time 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) that any Trustee who requests
in writing to be retired or who has become mentally or physically incapacitated
may be retired by written instrument signed by a majority of the other Trustees,
specifying the date of his retirement; and (d) a Trustee may be removed at any
meeting of Shareholders of the Trust by a vote of two-thirds of the outstanding
Shares.
2.4 Termination of Service and Appointment of Trustees. In case of
death, resignation, retirement, removal or mental or physical incapacity of any
of the Trustees, or in case a vacancy shall, by reason of an increase in number,
or for any other reason, exist, the remaining Trustees shall fill such vacancy
by appointing for the remaining term of the predecessor Trustee such other
person as they in their discretion shall see fit. Such appointment shall be
effective upon the signing of a written instrument by a majority of the Trustees
in office and the written acceptance to this Declaration by the appointee. An
appointment of a Trustee may be made by the Trustees then in office in
anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees and the written
acceptance of this Declaration by the appointee. As soon as any Trustee so
appointed shall have accepted this Trust, the trust estate shall vest in the new
Trustee or Trustees, together with the continuing Trustees, without any further
act or conveyance, and he shall be deemed a Trustee hereunder. Any appointment
authorized by this Section 2.4 is subject to the provisions of Section 16(a) of
the 1940 Act.
2.5 Temporary Absence of Trustee. Any Trustee may, by power of
attorney, delegate his power for a period not exceeding six months at any one
time to any other Trustee or Trustees, provided that in no case shall less than
two of the Trustees personally exercise the power hereunder except as herein
otherwise expressly provided.
2.6 Number of Trustees. The number of Trustees serving hereunder
at any time shall be determined by the Trustees themselves.
2.7 Vacancy in Board of Trustees. Whenever a vacancy on the Board
of Trustees shall occur and until such vacancy is filled, or while any Trustee
is physically or mentally incapacitated by reason of disease or otherwise, the
other Trustees, regardless of their number, shall have all the powers granted to
the Trustees and shall discharge all the duties imposed upon them by this
Declaration. The certificate of the other Trustees of such vacancy or
incapacity shall be conclusive.
2.8 Effect of Death, Resignation etc. of a Trustee. The death,
resignation, retirement, removal, or mental or physical 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.
2.9 Ownership 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 Trustee hereunder by the Trustees or by any successor Trustees. All of
the assets of the Trust shall at all times be considered as vested in the
Trustees. No Shareholder shall be deemed to have a severable ownership in any
individual asset of the Trust or any right of partition or possession thereof,
but each Shareholder shall have a proportionate undivided beneficial interest in
the Trust.
2.10 Meetings. Meetings of the Trustees shall be held from time to
time upon the call of the Chairman, the Secretary, such other officers as may be
thereunto authorized by the By-Laws or vote of the Trustees, or any two
Trustees, or pursuant to a vote of the Trustees adopted at a duly constituted
meeting of the Trustees. Regular meetings of the Trustees may be held without
call or notice at a time and place fixed by the By-Laws or by resolution of the
Trustees. Notice of any other meeting shall be mailed or otherwise given not
less than 48 hours before the meeting but may be waived in person or in writing
by any Trustee either before or after such meeting. The attendance of a Trustee
at a meeting shall constitute a waiver of notice of such meeting except where a
Trustee attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting has not been lawfully
called or convened. The Trustees may act with or without a meeting. A quorum
for all meetings of the Trustees shall be a majority of the Trustees. Unless
provided otherwise in this Declaration, any action of the Trustees may be taken
at a meeting by vote of a majority of the Trustees present (a quorum being
present) or without a meeting by written consents of a majority of the Trustees.
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, 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 written consent of a majority of the members.
With respect to actions of the Trustees and any committee of the
Trustees, Trustees who are Interested Persons of the Trust within the meaning of
Section 1.2 hereof or otherwise interested in any action to be taken may be
counted for quorum purposes under this Section and shall be entitled to vote to
the extent permitted by the 1940 Act.
All or any one or more Trustees may participate in a meeting of the
Trustees or any committee thereof by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to such
communications systems shall constitute presence in person at such meeting.
2.11 Officers. The Trustees shall elect such officers or agents,
who shall have such powers, duties, and responsibilities as the Trustees may
deem to be advisable, and as they shall specify by resolution or in the By-Laws.
Except as may be provided in the By-Laws, any officer or agent elected by the
Trustees may be removed at any time with or without cause. Any two or more
offices may be held by the same individual.
2.12 By-Laws. The Trustees may adopt, and from time to time amend
or repeal, By-Laws for the conduct of the business of the Trust.
2.13 Other Activities of Trustees. Trustees may also serve as
officers, employees, and agents of the Trust, and may hold multiple offices
within the Trust; and may hold any office or be employed by any other business
entity, and engage in any other business activity.
ARTICLE III
Powers of Trustees
3.1 General. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all acts and to make
and execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust. The
Trustees shall not be bound or limited by present or future laws or customs with
regard to investment by trustees or fiduciaries. The enumeration of any
specific power herein shall not be construed as limiting the aforesaid powers.
3.2 Investments. The Trustees shall have power to:
(a) conduct, operate and carry on the business of an
investment company, including any activity incidental to the business of an
investment company or conducive to or expedient for the benefit or protection of
the Trust or its Shareholders;
(b) subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer, exchange, lend,
mortgage, hypothecate, purchase or sell options on, lease, distribute or
otherwise deal in or dispose of any or all of the assets of the Trust,
including, but not limited to, cash, negotiable or non-negotiable instruments,
obligations, evidences of indebtedness, certificates of deposit or indebtedness,
commercial paper, repurchase agreements, reverse repurchase agreements, equity
securities, option contracts, futures contracts, indices of securities and other
securities, including, without limitation, those issued, guaranteed or sponsored
by any state, territory or possession of the United States and the District of
Columbia and their political subdivisions, agencies and instrumentalities, or by
the United States Government or its agencies or instrumentalities, or
international instrumentalities, or by any bank, savings institution,
corporation or other business entity organized under the laws of the United
States or organized under foreign laws; and to exercise any and all rights,
powers and privileges of ownership or interest in respect of any and all such
investments of every kind and description, including, without limitation, the
right to vote, execute and deliver proxies or powers of attorney, consent and
otherwise act with respect thereto, with power to designate one or more persons,
firms, associations or corporations to exercise any of said rights, powers and
privileges in respect of any of said instruments;
(c) 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;
(d) consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer, any
security or property of which is or was held in the Trust; to consent to any
contract, lease, mortgage, purchase or sale of property by such corporation or
issuer, and to pay calls or subscriptions with respect to any security held in
the Trust;
(e) 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;
(f) act as distributor of Shares, and as underwriter of,
or broker or dealer in, securities or other property.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust or any Series or Class, nor shall
the Trustees be limited by any law limiting the investments that may be made by
fiduciaries.
3.3 Legal Title. Legal title to all the Trust Property shall be
vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Trust or any Series thereof,
or in the name of any other Person as nominee, on such terms as the Trustees may
determine, provided that the interest therein of the Trust or any Series thereof
is appropriately protected.
The right, title and interest of the Trustees in the Trust Property
shall vest automatically in each person who may hereafter become a Trustee upon
his due election and qualification. Upon the resignation, removal or death of a
Trustee he shall automatically cease to have any right, title or interest in any
of the Trust Property, and the right, title and interest of such Trustee in the
Trust Property shall vest automatically in the remaining Trustees. Such vesting
and cessation of title shall be effective whether or not conveyancing documents
have been executed and delivered.
3.4 Issuance and Repurchase of Securities. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, dispose of, transfer, and otherwise deal in, Shares, including shares in
fractional denominations, and, subject to the more detailed provisions set forth
in Articles VIII and IX, to apply to any such repurchase, redemption,
retirement, cancellation or acquisition of Shares any funds or property of the
applicable Series of the Trust.
3.5 Borrow Money. The Trustees shall have power to borrow money or
otherwise obtain credit and to secure the same by mortgaging, pledging or
otherwise subjecting as security the assets of the Trust or any Series thereof,
including the lending of portfolio securities, and to endorse, guarantee, or
undertake the performance of any obligation, contract or engagement of any other
person, firm, association or corporation.
3.6 Delegation; Committees. The Trustees shall have power,
consistent with their continuing exclusive authority over the management of the
Trust and the Trust Property, to delegate from time to time to such of their
number or to officers, employees or agents of the Trust the doing of such things
and the execution of such instruments either in the name of the Trust or the
names of the Trustees or otherwise as the Trustees may deem expedient. The
Trustees may appoint committees consisting in each case of such number of
Trustees (but not less than the minimum required by any applicable law) and
having and exercising, to the extent permitted by law, such powers as the
Trustees may determine in the resolution appointing any such committees. The
Trustees shall have power to appoint members and alternate members of any such
committee, and, to the extent permitted by law, at any time to change the
members, alternate members, and powers of any such committee.
3.7 Collection and Payment. The Trustees shall have power to
collect all property due to the Trust or any Series thereof; to pay all claims,
including taxes, against the Trust Property; to prosecute, defend, compromise or
abandon any claims relating to the Trust Property; to foreclose any security
interest securing any obligations, by virtue of which any property is owed to
the Trust or any Series thereof; and to enter into releases, agreements and
other instruments.
3.8 Expenses. The Trustees shall have power to incur and pay any
expenses which in the opinion of the Trustees are necessary or incidental to
carry out any of the purposes of this Declaration, and to pay reasonable
compensation from the funds of the Trust to themselves as Trustees. The
Trustees shall fix the compensation of all officers, agents, employees and
Trustees. The Trustees may pay themselves such compensation for special
services, including legal, underwriting, syndicating and brokerage services, as
they in good faith may deem reasonable and reimbursement for expenses reasonably
incurred by themselves on behalf of the Trust.
3.9 Miscellaneous Powers. The Trustees shall have the power to:
(a) employ or contract with such Persons as the Trustees may deem desirable for
the transaction of the business of the Trust or any Series or Class thereof; (b)
enter into joint ventures, partnerships and any other combinations or
associations; (c) purchase, and pay for out of Trust Property, insurance
policies insuring the Shareholders, Trustees, officers, employees, agents,
investment advisors, distributors, selected dealers or independent contractors
of the Trust or any Series or Class thereof against all claims arising by reason
of holding any such position or by reason of any action taken or omitted by any
such Person in such capacity, whether or not constituting negligence, or whether
or not the Trust would have the power to indemnify such Person against such
liability; (d) establish pension, profit-sharing, share purchase, and other
retirement, incentive and benefit plans for any Trustees, officers, employees
and agents of the Trust; (e) make donations, irrespective of benefit to the
Trust, for charitable, religious, educational, scientific, civic or similar
purposes; (f) guarantee indebtedness or contractual obligations of others; (g)
determine and change the fiscal year of the Trust and the method in which its
accounts shall be kept; (h) act as distributor of Shares and as underwriter of,
or broker or dealer in, securities or other property; (i) 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; (j) remove officers and terminate agents as the Trustees deem
appropriate; (k) adopt a seal for the Trust but the absence of such seal shall
not impair the validity of any instrument executed on behalf of the Trust; and
(l) engage in any other lawful activity in which trusts organized under
Massachusetts General Laws, Chapter 182, or any successor statute thereto, may
engage.
3.10 Further Powers. The Trustees shall have power to conduct the
business of the Trust or any Series thereof and carry on its operations in any
and all of its branches and maintain offices both within and without the
Commonwealth of Massachusetts, in any and all states of the United States of
America, in the District of Columbia, and in any and all commonwealths,
territories, dependencies, colonies, 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 or any Series or Class
thereof although such things are not herein specifically mentioned. Any
determination as to what is in the interests of the Trust or any Series or Class
thereof 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 Trustees will not be required to obtain any court
order to deal with the Trust Property. No Trustee shall be required to give any
bond or other security for the performance of any of his duties hereunder.
3.11 Ownership of Shares by Trustees, Officers, and Agents. Any
Trustee, officer or other agent of the Trust may acquire, own and dispose of
Shares to the same extent as if he were not a Trustee, officer or agent; and the
Trustees may issue and sell or cause to be issued and sold Shares to and buy
such Shares from any such person or any firm or company in which he is
interested, subject only to the general limitations herein contained as to the
sale and purchase of such Shares; and all subject to any restrictions which may
be contained in the By- Laws.
ARTICLE IV
Advisory, Service, Management and
Distribution Arrangements
4.1 Advisory, Service, and Management Arrangements. The Trustees
may in their discretion from time to time enter into advisory, service,
administration or management contracts whereby the other party to such contract
shall undertake to furnish the Trustees such advisory, administrative,
management or other services, with respect to one or more Series or Classes as
the Trustees shall from time to time consider desirable and all upon such terms
and conditions as the Trustees may in their discretion determine, subject to
Majority Shareholder Vote to the extent required by the 1940 Act. The
investment advisor may enter into a sub-investment advisory contract to receive
investment advice from a sub-investment advisor upon such terms and conditions
and for such compensation as the Trustees may in their discretion approve,
subject to Majority Shareholder Vote to the extent required by the 1940 Act.
Notwithstanding any provisions of this Declaration, the Trustees may authorize
any advisor, sub-investment advisor, administrator or manager (subject to such
general or specific instructions as the Trustees may from time to time adopt) to
effect purchases, sales, loans or exchanges of portfolio securities of any
Series of the Trust on behalf of the Trustees or may authorize any officer,
employee or Trustee to effect such purchases, sales, loans or exchanges pursuant
to recommendations of any such advisor, sub-investment advisor, administrator or
manager (and all without further action by the Trustees). Any such purchases,
sales, loans and exchanges shall be deemed to have been authorized by all of the
Trustees.
4.2 Distribution Arrangements. The Trustees may in their
discretion from time to time enter into a contract providing for the sale of the
Shares of the Trust or any Series or Class of the Trust to net the Trust not
less than the par value per share, whereby the Trust may either agree to sell
the Shares to the other party to the contract or appoint such other party its
sales agent for such Shares. In either case, the contract shall be on such
terms and conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Article IV or the By-Laws; and such
contract may also provide for the repurchase or sale of Shares by such other
party as principal or as agent of the Trust and may provide that such other
party may enter into selected dealer agreements with registered securities
dealers to further the purpose of the distribution or repurchase of the Shares.
4.3 Parties to Contract. Any contract of the character described
in Sections 4.1 and 4.2 of this Article IV or in Article VII hereof may be
entered into with any corporation, firm, company, trust or association, although
one or more of the Trustees or officers of the Trust may be an officer,
director, trustee, shareholder, manager, or member of such other party to the
contract, and no such contract shall be invalidated or rendered voidable by
reason of the existence of any such relationship, nor shall any person holding
such relationship be liable merely by reason of such relationship for any loss
or expense to the Trust under or by reason of said contract or accountable for
any profit realized directly or indirectly therefrom, provided that the contract
when entered into was reasonable and fair and not inconsistent with the
provisions of this Article IV or the By-Laws. The same person (including a
firm, corporation, trust, company, or association) may be the other party to
contracts entered into pursuant to Sections 4.1 and 4.2 above or Article VII,
and any individual may be financially interested or otherwise affiliated with
persons who are parties to any or all of the contracts mentioned in this Section
4.3.
4.4 Provisions and Amendments. Any contract entered into pursuant
to Sections 4.1 and 4.2 of this Article IV shall be consistent with and subject
to the requirements of the 1940 Act with respect to its continuance in effect,
its termination, and the method of authorization and approval of such contract
or renewal thereof, and any amendment to any contract entered into pursuant to
Section 4.1 shall be assented to by a Majority Shareholder Vote of the
applicable Series or Class to the extent required by the 1940 Act.
ARTICLE V
Limitations of Liability of
Shareholders, Trustees and Others
5.1 Limitation of Personal Liability and Indemnification of
Shareholders. The Trustees, officers, employees or agents of the Trust 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 agree to pay by way of subscription to any
Shares or otherwise.
No Shareholder or former Shareholder of the Trust shall be liable
solely by reason of his being or having been a Shareholder for any debt, claim,
action, demand, suit, proceeding, judgment, decree, liability or obligation of
any kind, against, or with respect to, the Trust arising out of any action taken
or omitted for or on behalf of the Trust, and the Trust shall be solely liable
therefor and resort shall be had solely to the Trust Property for the payment or
performance thereof.
Each Shareholder or former Shareholder of the Trust (or their heirs,
executors, administrators or other legal representatives or, in case of a
corporate entity, its corporate or general successor) shall be entitled to
indemnity and reimbursement out of the Trust Property to the full extent of such
liability and the costs of any litigation or other proceedings in which such
liability shall have been determined, including, without limitation, the fees
and disbursements of counsel if, contrary to the provisions hereof, such
Shareholder or former Shareholder of the Trust shall be held to personal
liability.
5.2 Limitation of Personal Liability of Trustees, Officers,
Employees or Agents of the Trust. No Trustee, officer, employee or agent of the
Trust shall have the power to bind any other Trustee, officer, employee or agent
of the Trust personally. The Trustees, officers, employees or agents of the
Trust in incurring any debts, liabilities or obligations, or in taking or
omitting any other actions for or in connection with the Trust, are, and each
shall be deemed to be, acting as Trustee, officer, employee or agent of the
Trust and not in his own individual capacity.
Provided they have acted under the belief that their actions are in the
best interest of the Trust, the Trustees and officers shall not be responsible
for or liable in any event for neglect or wrongdoing by them or any officer,
agent, employee, investment advisor or principal underwriter of the Trust or of
any entity providing administrative services for the Trust, but nothing herein
contained shall protect any Trustee or officer against any liability to which he
would otherwise be subject by reason of willful malfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.
5.3 Express Exculpatory Clauses and Instruments. The Trustees
shall use every reasonable means to assure that all persons having dealings with
the Trust shall be informed that the property of the Shareholders and the
Trustees, officers, employees and agents of the Trust shall not be subject to
claims against or obligations of the Trust to any extent whatsoever. The
Trustees shall cause to be inserted in any written agreement, undertaking or
obligation made or issued on behalf of the Trust (including certificates, if
any, for Shares of the Trust) an appropriate reference to this Declaration,
providing that neither the Shareholders, the Trustees, the officers, the
employees nor any agent of the Trust shall be liable thereunder, and that the
other parties to such instrument shall look solely to the Trust Property for the
payment of any claim thereunder or for the performance thereof; but the omission
of such provisions from any such instrument shall not render any Shareholder,
Trustee, officer, employee or agent liable, nor shall the Trustees, or any
officer, agent or employee of the Trust be liable, to anyone for such omission.
If, notwithstanding this provision, any Shareholder, Trustee, officer, employee
or agent shall be held liable to any other person by reason of the omission of
such provision from any such agreement, undertaking or obligation, the
Shareholder, Trustee, officer, employee or agent shall be entitled to indemnity
and reimbursement out of the Trust Property, as provided in this Article V.
5.4 Mandatory Indemnification.
(a) Subject only to the provisions hereof, every person
who is or has been a Trustee, officer, employee or agent of the Trust and every
person who serves at the Trustees request as director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise shall be indemnified by the Trust to the fullest extent permitted by
law against all liabilities and against all expenses reasonably incurred or paid
by him in connection with any debt, claim, action, demand, suit, proceeding,
judgment, decree, liability or obligation of any kind in which he becomes
involved as a party or otherwise or is threatened by virtue of his being or
having been a Trustee, officer, employee or agent of the Trust or of another
corporation, partnership, joint venture, trust or other enterprise at the
request of the Trust and against amounts paid or incurred by him in the
compromise or settlement thereof.
(b) The words "claim", "action", "suit", or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil, criminal,
administrative, legislative, investigative or other, including appeals), actual
or threatened, and the words "liabilities" and "expenses" shall include, without
limitation, attorneys' fees, costs, judgments, amounts paid in settlement,
fines, penalties and other liabilities.
(c) No indemnification shall be provided hereunder to a
Trustee or officer:
(i) against any liability to the Trust or the
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office ("disabling conduct");
(ii) with respect to any matter as to which he
shall, by the court or other body by or before which the proceeding was
brought or engaged, have been finally adjudicated to be liable by
reason of disabling conduct;
(iii) in the absence of a final adjudication on the
merits that such Trustee or officer did not engage in disabling
conduct, unless a reasonable determination, based upon a review of the
facts that the person to be indemnified is not liable by reason of such
conduct, is made:
(A) by vote of a majority of a quorum of
the Trustees who are neither Interested Persons nor parties to
the proceedings; or
(B) by independent legal counsel, in a
written opinion.
(d) The rights of indemnification herein provided may be
insured against by policies maintained by the Trust, shall be severable, shall
not affect any other rights to which any Trustee, officer, employee or agent may
now or hereafter be entitled, shall continue as to a person who has ceased to be
such Trustee, officer, employee, or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person; provided, however, that no
person may satisfy any right of indemnity or reimbursement granted herein except
out of the property of the Trust, and no other person shall be personally liable
to provide indemnity or reimbursement hereunder (except an insurer or surety or
person otherwise bound by contract).
(e) Expenses in connection with the preparation and
presentation of a defense to any claim, action, suit or proceeding of the
character described in paragraph (a) of this Section 5.4 may be paid by the
Trust prior to final disposition thereof upon receipt of a written undertaking
by or on behalf of the Trustee, officer, employee or agent to reimburse the
Trust if it is ultimately determined under this Section 5.4 that he is not
entitled to indemnification. Such undertaking shall be secured by a surety bond
or other suitable insurance or such security as the Trustees shall require
unless a majority of a quorum of the Trustees who are neither Interested Persons
nor parties to the proceeding, or independent legal counsel in a written
opinion, shall have determined, based on readily available facts, that there is
reason to believe that the indemnitee ultimately will be found to be entitled to
indemnification.
5.5 No Bond Required of Trustees. No Trustee shall, as such, be
obligated to give any bond or surety or other security for the performance of
any of his duties hereunder.
No Duty of Investigation; Notice in Trust Instruments, etc. No
purchaser, lender, transfer agent or other person dealing with the Trustees or
any officer, employee or agent of the Trust shall be bound to make any inquiry
concerning the validity of any transaction purporting to be made by the Trustees
or by said officer, employee or agent or be liable for the application of money
or property paid, loaned, or delivered to or on the order of the Trustees or of
said officer, employee or agent. Every obligation, contract, undertaking,
instrument, certificate, Share, other security of the Trust or any Series or
Class, and every other act or thing whatsoever executed in connection with the
Trust or any Series or Class shall be conclusively taken to have been executed
or done by the executors thereof only in their capacity as Trustees under this
Declaration or in their capacity as officers, employees or agents of the Trust.
Every written obligation, contract, undertaking, instrument, certificate, Share,
other security of the Trust or any Series or Class made or issued by the
Trustees or by any officers, employees or agents of the Trust, in their capacity
as such, shall contain an appropriate recital to the effect that the
Shareholders, Trustees, officers, employees and agents of the Trust shall not
personally be bound by or liable thereunder, nor shall resort be had to their
private property for the satisfaction of any obligation or claim thereunder, and
appropriate references shall be made therein to this Declaration, and may
contain any further recital which they may deem appropriate, but the omission of
such recital shall not operate to impose personal liability on any of the
Trustees, Shareholders, officers, employees or agents of the Trust. The
Trustees may maintain insurance for the protection of the Trust Property, its
Shareholders, Trustees, officers, employees and agents in such amount as the
Trustees shall deem adequate to cover possible tort liability, and such other
insurance as the Trustees in their sole judgment shall deem advisable.
5.7 Reliance on Experts, etc. Each Trustee and officer or employee
of the Trust shall, in the performance of his 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, or upon reports made to the Trust by any of
its officers or employees or by any advisor, administrator, manager,
distributor, selected dealer, accountant, appraiser or other expert or
consultant selected with reasonable care by the Trustees, officers or employees
of the Trust, regardless of whether such counsel or expert may also be a
Trustee.
ARTICLE VI
Shares of Beneficial Interest
6.1 Beneficial Interest. The interest of the beneficiaries
hereunder shall be divided into transferable shares of beneficial interest with
par value $.01 per share. The number of such shares of beneficial interest
authorized hereunder is unlimited. All Shares issued hereunder including,
without limitation, Shares issued in connection with a dividend in Shares or a
split of Shares, shall be fully paid and nonassessable.
6.2 Series Designation. The Trustees, in their discretion from
time to time and without Shareholder approval, may authorize the division of
Shares into two or more Series, each Series relating to a separate portfolio of
investments; and may further authorize the division of the Shares of any Series
into two or more Classes. The different Series and Classes shall be established
and designated, and the variations in the relative rights and preferences as
between the different Series and Classes shall be fixed and determined, by the
Trustees; provided, that all Shares shall be identical except that there may be
variations between different Series and Classes as to purchase price,
determination of net asset values, the price terms and manner of redemption,
special and relative rights as to dividends and on liquidation, conversion
rights, and conditions under which the several Series and Classes shall have
separate voting rights. All references to Shares in this Declaration shall be
deemed to be shares of any or all Series or Classes as the context may require.
If the Trustees shall divide the Shares into two or more Series, or
divide the Shares of any Series into two or more Classes, the following
provisions shall be applicable:
(a) The number of Shares of each Series and Class that may
be issued shall be unlimited.
(b) The power of the Trustees to invest and reinvest the
Trust Property of each Series that may be established shall be governed
by Section 3.2 of this Declaration.
(c) All consideration received by the Trust for the issue
or sale of Shares of a particular Series, together with all assets in
which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in whatever
form the same may be, shall irrevocably belong to that Series for all
purposes, subject only to the rights of creditors, and shall be so
recorded upon the books of account of the Trust. If there are any
assets, income, earnings, profits, and proceeds thereof, funds, or
payments that are not readily identifiable as belonging to any
particular Series, the Trustees shall allocate them among any one or
more of the Series established and designated from time to time in such
manner and on such basis as they, in their sole discretion, deem fair
and equitable. Each such allocation by the Trustees shall be
conclusive and binding upon the Shareholders of all Series for all
purposes.
(d) The assets belonging to each particular Series shall
be charged with the liabilities of the Trust in respect of that Series
and all expenses, costs, charges and reserves attributable to that
Series, and any general liabilities, expenses, costs, charges or
reserves of the Trust that are not readily identifiable as belonging to
any particular Series shall be allocated and charged by the Trustees to
and among any one or more of the Series established and designated from
time to time in such manner and on such basis as the Trustees in their
sole discretion deem fair and equitable. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees
shall be conclusive and binding upon the holders of all Series for all
purposes. The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items shall be
treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding upon the
Shareholders.
(e) To the extent necessary or appropriate to give effect
to the relative rights and preferences of the Classes of Shares into
which any Series may be divided, the income, earnings, profits, and
proceeds thereof, or the liabilities, expenses, costs, charges and
reserves, belonging to any Series may be allocated to a particular
Class of Shares, or apportioned among two or more Classes of Shares, of
that Series. Each such allocation or apportionment by the Trustees
shall be conclusive and binding upon the Shareholders of all Classes
for all purposes.
(f) The power of the Trustees to pay dividends and make
distributions with respect to any one or more Series or Classes shall
be governed by Section 9.2 of this Declaration. Dividends and
distributions on Shares of a particular Series or Class may be paid
with such frequency as the Trustees may determine, which may be daily
or otherwise, pursuant to a standing resolution or resolutions adopted
only once or with such frequency as the Trustees may determine, to the
holders of Shares of that Series or Class, from such of the income and
capital gains, accrued or realized, from the assets belonging to that
Series (or attributable to that Class, as the case may be), as the
Trustees may determine, after providing for actual and accrued
liabilities belonging to that Series (or attributable to that Class).
All dividends and distributions on Shares of a particular Series shall
be distributed pro rata to the holders of that Series in proportion to
the number of Shares of that Series held by such holders at the date
and time of record established for the payment of such dividends or
distributions, except to the extent otherwise required or permitted by
the relative rights and preferences of any Classes of that Series, and
any dividends and distributions on shares of a particular Class shall
be distributed pro rata to the holders of that Class in proportion to
the number of Shares of that Class held by such holders at the date and
time of record established for the payment of such dividends or
distributions.
Without limiting the authority of the Trustees to establish and
designate further Series, there is hereby established the following Series:
Capital Management Equity Fund. The establishment and designation of any
further Series or Class of Shares shall be effective upon the execution by a
majority of the then Trustees (or by an officer of the Trust pursuant to the
vote of a majority of the then Trustees) of an instrument setting forth the
establishment and designation of such Series or Class. Such instrument shall
also set forth any rights and preferences of such Series or Class that are in
addition to the rights and preferences of Shares set forth in this Declaration.
At any time that there are no Shares outstanding of any particular Series or
Class previously established and designated, the Trustees may by an instrument
executed by a majority of their number (or by an officer of the Trust pursuant
to the vote of a majority of the then Trustees) abolish that Series or Class and
the establishment and designation thereof.
6.3 Rights of Shareholders. The ownership of the Trust Property of
every description and the right to conduct any business hereinbefore described
are vested exclusively in the Trustees, and the Shareholders shall have no
interest therein other than the beneficial interest conferred by their Shares
with respect to a particular Series or Class, 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 share or 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 in this
Declaration specifically set forth. The Shares shall not entitle the holder to
preference, preemptive, appraisal, conversion or exchange rights.
6.4 Trust Only. It is the intention of the Trustees to create only
the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to
create a general partnership, limited partnership, joint stock association,
corporation, limited liability company, bailment or any form of legal
relationship other than a business trust. Nothing in this Declaration shall be
construed to make the Shareholders, either by themselves or with the Trustees,
partners or members of a joint stock association.
6.5 Issuance of Shares. The Trustees, in their discretion, may
from time to time without vote of the Shareholders issue Shares with respect to
any Series or Class that may have been established pursuant to Section 6.2, in
addition to the then issued and outstanding Shares and Shares held in the
treasury, to such party or parties and for such amount not less than par value
and type of consideration, including cash or property, at such time or times
(including, without limitation, each business day in accordance with the
maintenance of a constant net asset value per share as set forth in Section 9.3
hereof), and on such terms as the Trustees may deem best, and may in such manner
acquire other assets (including the acquisition of assets subject to, and in
connection with the assumption of, liabilities) and businesses. In connection
with any issuance of Shares, the Trustees may issue fractional Shares. The
Trustees may from time to time divide or combine the Shares of any Series or
Class into a greater or lesser number without thereby changing the proportionate
beneficial interests in such Series or Class of the Trust. Reductions in the
number of outstanding Shares may be made pursuant to the constant net asset
value per share formula set forth in Section 9.3. Contributions to the Trust
may be accepted for, and Shares shall be redeemed as, whole Shares and/or
1/1,000ths of a Share or multiples thereof.
6.6 Register of Shares. A register shall be kept at the Trust or
any transfer agent duly appointed by the Trustees under the direction of the
Trustees that shall contain the names and addresses of the Shareholders and the
number of Shares (with respect to each Series and Class that may have been
established) held by them respectively and a record of all transfers thereof.
Separate registers shall be established and maintained for each Series and Class
of the Trust. Each such register shall be conclusive as to who are the holders
of the Shares of the applicable Series or Class and who shall be entitled to
receive dividends or distributions or otherwise to exercise or enjoy the rights
of Shareholders. No Shareholder shall be entitled to receive payment of any
dividend or distribution, nor to have notice given to him as herein provided,
until he has given his address to a transfer agent or such other officer or
agent of the Trustees as shall keep the register for entry thereon. It is not
contemplated that certificates will be issued for the Shares; however, the
Trustees, in their discretion, may authorize the issuance of share certificates
and promulgate appropriate rules and regulations as to their use.
6.7 Transfer Agent and Registrar. The Trustees shall have power to
employ a transfer agent or transfer agents, and a registrar or registrars, with
respect to the Shares of the various Series and Classes. The transfer agent or
transfer agents may keep the applicable register and record therein the original
issues and transfers, if any, of the said Shares of the applicable Series or
Class. Any such transfer agent and registrars shall perform the duties usually
performed by transfer agents and registrars of certificates of stock in a
corporation, except as modified by the Trustees.
6.8 Transfer of Shares. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by his agent thereto
duly authorized in writing, upon delivery to the Trustees or a transfer agent of
the Trust of a duly executed instrument of transfer, together with such evidence
of the genuineness of each such execution and authorization and of other matters
as may reasonably be required. Upon such delivery the transfer shall be
recorded on the applicable register of the Trust. Until such record is made,
the Shareholder of record shall be deemed to be the holder of such Shares for
all purposes hereof, and neither the Trustees nor any transfer agent or
registrar nor any officer, employee or agent of the Trust shall be affected by
any notice of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the applicable register of Shares as the holder of
such Shares upon production of the proper evidence thereof to the Trustees or a
transfer agent of the Trust, but until such record is made, the Shareholder of
record shall be deemed to be the holder of such Shares for all purposes hereof,
and neither the Trustees nor any transfer agent or registrar nor any officer or
agent of the Trust shall be affected by any notice of such death, bankruptcy or
incompetence, or other operation of law.
6.9 Notices. Any and all notices to which any Shareholder
hereunder amy be entitled and any and all communications shall be deemed duly
served or given if mailed, postage prepaid, addressed to any Shareholder of
record at his last known address as recorded on the applicable register of the
Trust.
ARTICLE VII
Custodians
7.1 Appointment and Duties. The Trustees shall at all times employ
a custodian or custodians, meeting the qualifications for custodians for
portfolio securities of investment companies contained in the 1940 Act, as
custodian or custodians with respect to each Series of the Trust. Separate
custodians may but need not be employed for the different Series of the Trust.
Each Series may, but need not, employ more than one custodian. Any custodian,
acting with respect to one or more Series, or portions thereof, shall have
authority as agent of the Trust or the Series with respect to which it is
acting, but subject to such restrictions, limitations and other requirements, if
any, as may be contained in the By-Laws and the 1940 Act:
(1) to hold the securities owned by the Trust or the
Series and deliver the same upon written order;
(2) to receive and receipt for any moneys due to the Trust
or the Series and deposit the same in its own banking department (if a
bank) or elsewhere as the Trustees may direct;
(3) to disburse such funds upon orders or vouchers;
(4) if authorized by the Trustees, to keep the books and
accounts of the Trust or the Series or any Class and furnish clerical
and accounting services; and
(5) if authorized to do so by the Trustees, to compute the
net income of the Trust or the Series or any Class;
all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian. If so directed by a Majority Shareholder Vote of any Series
with respect to which the custodian is acting, the custodian shall deliver and
pay over all property of the Trust held by it as specified in such vote.
The Trustees may also authorize each custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian and upon such terms and conditions, as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees, provided that in
every case such sub-custodian shall meet the qualifications for custodians
contained in the 1940 Act.
7.2 Action Upon Termination of Custodian Agreement. Upon
termination of any custodian agreement with respect to any Series or inability
of any custodian to continue to serve, the Trustees shall promptly appoint a
successor custodian, but if no successor custodian can be found who has the
required qualifications and is willing to serve, the Trustees shall call as
promptly as possible a special Shareholders' meeting to determine whether said
Series shall function without a custodian or shall be liquidated.
7.3 Central Certificate System. Subject to such rules, regulations
and orders as the Commission may adopt, the Trustees may direct the custodian to
deposit all or any part of the securities owned by the Trust or any Series in a
system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, or such other person as
may be permitted by the Commission, or otherwise in accordance with the 1940
Act, pursuant to which system all securities of any particular class or series
of any issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust or its duly authorized agents (which may include an
investment advisor).
7.4 Acceptance of Receipts in Lieu of Certificates. Subject to
such rules, regulations and orders as the Commission may adopt, the Trustees may
direct the custodian to accept written receipts or other written evidences
indicating purchases of securities held in book-entry form in the Federal
Reserve System in accordance with regulations promulgated by the Board of
Governors of the Federal Reserve System, and the local Federal Reserve Banks in
lieu of receipt of certificates representing such securities.
ARTICLE VIII
Redemption
8.1 Redemptions. All outstanding Shares of any Series of the Trust
may be redeemed at the option of the holders thereof, upon and subject to the
terms and conditions provided in this Article VIII. The Trust shall, upon
application of any Shareholder or pursuant to authorization from any Shareholder
of a particular Series, redeem or repurchase from such Shareholder outstanding
Shares of such Series or Class for an amount per share determined by the
application of a formula adopted for such purpose by the Trustees with respect
to such Series or Class (which formula shall be consistent with the 1940 Act);
provided that (a) such amount per Share shall not exceed the cash equivalent of
the proportionate interest of each Share in the assets of the Series or of the
assets of that Series attributable to the Shares of the particular Class) of the
Trust at the time of the purchase or redemption and (b) if so authorized by the
Trustees, the Trust may, at any time and from time to time, charge fees for
effecting such redemption, at such rates as the Trustees may establish, as and
to the extent permitted under the 1940 Act, and may, at any time and from time
to time, pursuant to such Act, suspend such right of redemption. The procedures
for effecting redemption shall be as set forth in the Prospectus with respect to
the applicable Series or Class from time to time.
8.2 Redemption of Shares; Disclosure of Holding. If the Trustees
shall, at any time and in good faith, be of the opinion that direct or indirect
ownership of Shares or other securities of the Trust has or may become
concentrated in any person to an extent that would disqualify the Trust as a
regulated investment company under the Internal Revenue Code, then the Trustees
shall have the power by lot or other means deemed equitable by them (i) to call
for redemption a number, or principal amount, of Shares or other securities of
the Trust sufficient, in the opinion of the Trustees, to maintain or bring the
direct or indirect ownership of Shares or other securities of the Trust into
conformity with the requirements for such qualification and (ii) to refuse to
transfer or issue Shares or other securities of the Trust to any Person whose
acquisition of the Shares or other securities of the Trust in question would in
the opinion of the Trustees result in such disqualification. The redemption
shall be effected at a redemption price determined in accordance with Section
8.1.
The holders of Shares or other securities of the Trust shall upon
demand disclose to the Trustees in writing such information with respect to
direct and indirect ownership of Shares or other securities of the Trust as the
Trustees deem necessary to comply with the provisions of the Internal Revenue
Code, or to comply with the requirements of any other taxing authority.
8.3 Redemptions of Accounts of Less than an Amount Specified by the
Trustees. Due to the relatively high cost of maintaining small investment
accounts, the Trustees shall have the power to redeem shares at a redemption
price determined in accordance with Section 8.1 if at any time the total
investment in such account does not have a value in excess of any minimum
account size that the Trustees may from time to time establish; provided,
however, that the Trustees may not exercise such power with respect to Shares of
any Series or Class if the Prospectus of such Series or Class does not describe
such power. If the Trustees determine to exercise their power to redeem Shares
provided in this Section 8.3, Shareholders shall be notified that the value of
their account is less than the minimum account size then in effect and allowed
at least 14 days to make an additional investment before redemption is
processed.
8.4 Redemptions Pursuant to Constant Net Asset Value. The Trust
may also reduce the number of outstanding Shares of any Series or Class pursuant
to the provisions of Section 9.3.
8.5 Redemption in Kind. Subject to any generally applicable
limitation imposed by the Trustees, any payment on redemption, purchase or
repurchase by the Trust of Shares may, if authorized by the Trustees, be made
wholly or partly in kind, instead of in cash. Such payment in kind shall be
made by distributing securities or other property, constituting, in the opinion
of the Trustees, a fair representation of the various types of securities and
other property then held by the Series of Shares being redeemed, purchased or
repurchased (but not necessarily involving a portion of each of the Series'
holdings) and taken at their value used in determining the net asset value of
the Shares in respect of which payment is made.
ARTICLE IX
Determination of Net Asset Value,
Net Income and Distributions
9.1 Net Asset Value. The net asset value of each outstanding Share
of each Series and Class of the Trust shall be determined at such time or times
on such days as the Trustees may determine, in accordance with the 1940 Act,
with respect to each Series and Class. The method of determination of net asset
value shall be determined by the Trustees and shall be as set forth in the
Prospectus with respect to the applicable Series or Class. The power and duty
to make the daily calculations for any Series or Class may be delegated by the
Trustees to the advisor, administrator, manager, custodian, transfer agent or
such other person as the Trustees may determine. The Trustees may suspend the
daily determination of net asset value to the extent permitted by the 1940 Act.
9.2 Distributions to Shareholders. The Trustees may from time to
time distribute among the Shareholders of any Series or Class such proportion of
the assets belonging to such Series (or attributable to the particular Class)
held by the Trustees as they may deem proper. Such distribution may be made in
cash or property (including without limitation any type of obligations of the
Trust or any assets thereof), and the Trustees may distribute among the
Shareholders of any Series or Class additional Shares of such Series or Class in
such manner, at such times, and on such terms as the Trustees may deem proper.
Such distributions may be among the Shareholders of record at the time of
declaring a distribution or among the Shareholders of record at such later date
as the Trustees shall determine. Except as necessary or appropriate to give
effect to the relative rights and preferences of the Classes of Shares into
which any Series may be divided, all distributions shall be made ratably among
the Shareholders of the relative Series or Class based on the number of Shares
of the relative Series or Class held by such Shareholder. The Trustees may
always retain such amount as they may deem necessary to pay the debts or
expenses of the Trust or to meet obligations of the Trust, or as they may deem
desirable to use in the conduct its affairs or to retain for future requirements
or extensions of the business. The Trustees may adopt and offer to Shareholders
of any Series or Class such dividend reinvestment plans, cash dividend payout
plans or related plans at the Trustees shall deem appropriate for such Series or
Class.
Inasmuch as the computation of net income and gains for Federal income
tax purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust to avoid or reduce liability for taxes.
The Trustees shall be authorized to withhold from the payment of any
dividend an amount necessary to pay the expenses of the Trust that are not
deductible for Federal income tax purposes or otherwise to afford the Trust the
full tax benefits of a regulated investment company as defined in the Internal
Revenue Code of 1986.
9.3 Constant Net Asset Value; Reduction on Outstanding Shares. The
Trustees shall have the power, but shall not be required, to determine the net
income of any Series or Class of the Trust on each day the net asset value of
such Series or Class is determined as provided in Section 9.1 and at each such
determination declare such net income for such Series or Class as dividends with
the result that the net asset value per share of the Series or Class of the
Trust, taking into account withholdings authorized by Section 9.2 hereof, shall
remain at a constant dollar value. The determination of net income and the
resultant declaration of dividends shall be as set forth in the Prospectus. In
such event fluctuations in value may be effected in the number of outstanding
Shares in each Shareholder's account. It is expected that each Series or Class
of the Trust will have a positive net income at the time of each determination.
If for any reason such net income is a negative amount, the Trust may offset
such amount against dividends accrued in the account of the Shareholder of the
applicable Series or Class. If and to the extent such negative amount exceeds
such accrued dividends, the Trust shall have authority to reduce the number of
outstanding Shares of the Series or Class. Such reduction will be effected by
having each Shareholder proportionately contribute to the Series or Class
capital the necessary Shares that represent the amount of the excess upon such
determination. Each Shareholder will be deemed to have agreed to such
contribution in these circumstances by his investment in the Series or Class of
the Trust. This procedure will permit the net asset value per share of the
Series or Class of the Trust to be maintained at a constant dollar value per
share.
The Trustees, by resolution, may discontinue or amend the practice of
maintaining the net asset value per share at a constant dollar amount with
respect to any Series or Class at any time, and such modification shall be
evidenced by appropriate changes in the Prospectus.
9.4 Power to Modify Foregoing Procedures. Notwithstanding any of
the foregoing provisions of this Article IX, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the per
share net asset value of the Trust's Shares or net income, or the declaration
and payment of dividends and distributions as they may deem necessary or
desirable to enable the Trust to comply with any provision or rule of the 1940
Act, or any securities association registered under the Securities Exchange Act
of 1934, or any order of exemption issued by the Commission, all as in effect
now or hereafter amended or modified.
ARTICLE X
Shareholders
10.1 Voting Powers. The Shareholders shall have the power to vote
(i) for the election of Trustees as provided in Article II, Section 2.2; (ii)
for the removal of Trustees as provided in Article II, Section 2.3(d); (iii)
with respect to any investment advisor as provided in Article IV, Section 4.1;
(iv) with respect to the amendment of this Declaration as provided in Article
XI, Section 11.4; (v) to the same extent as the shareholders of a Massachusetts
business corporation as to whether or not a court action, proceeding or claim
should be brought or maintained derivatively or as a class action on behalf of
the Trust or the Shareholders (except that a Shareholder of a particular Series
shall not in any event be entitled to maintain a derivative or class action on
behalf of any other Series or the Shareholders thereof); and (vi) with respect
to such additional matters relating to the Trust as may be required by law, by
this Declaration, or the By-Laws of the Trust or any regulation of the Trust by
the Commission or any State, or as the Trustees may consider desirable. Any
matter affecting a particular Series, including, without limitation, matters
affecting the investment advisory arrangements or investment policies or
restrictions of a Series, shall not be deemed to have been effectively acted
upon unless approved by the required vote of the Shareholders of such Series. To
the extent required by the 1940 Act or necessary or appropriate to give effect
to the relative rights and preferences of the Classes of Shares into which any
Series may be divided, any matter affecting a particular Class (unless the
interests of each Class of such Series in the matter are substantially
identical), including, without limitation, matters affecting the distribution
plan of that Class shall not be deemed to have been effectively acted upon
unless approved by the required vote of the Shareholders of such Class.
Notwithstanding the foregoing, to the extent permitted by the 1940 Act, each
Series and Class shall not be required to vote separately on the selection of
independent public accountants, the election of Trustees and any submission with
respect to a contract with a principal underwriter or distributor. Each whole
Share shall be entitled to one vote as to any matter on which it is entitled to
vote, and each fractional Share shall be entitled to a proportionate fractional
vote. There shall be no cumulative voting in the election of Trustees. Until
Shares are issued, the Trustees may exercise all rights of Shareholders and may
take any action to be taken by Shareholders which is required or permitted by
law, this Declaration or any By-Laws of the Trust.
10.2 Meetings. Shareholder meetings shall be held as specified in
the By-Laws and in Section 2.2 hereof at the principal office of the Trust or at
such other place as the Trustees may designate. Meetings of the Shareholders
may be called by the Trustees or by officers of the Trust given such authority
in the By-Laws and shall be called by the Trustees at a place designated by them
upon written request specifying the purpose of such meeting and submitted by
Shareholders of any Series or Class holding in the aggregate not less than 10%
of the outstanding Shares of such Series or Class having voting rights.
10.3 Quorum and Required Vote. Except as otherwise provided by law,
the holders of a majority of the outstanding Shares of the Trust, or, as to any
matter to be voted on by a Series or Class, a majority of the outstanding Shares
of such Series or Class, present in person or by proxy shall constitute a quorum
for the transaction of any business at any meeting of Shareholders. If a
quorum, as above defined, shall not be present for the purpose of any vote that
may properly come before the meeting, the Shareholders present in person or by
proxy and entitled to vote at such meeting on such matter holding a majority of
the Shares present entitled to vote on such matter may vote to adjourn the
meeting from time to time to be held at the same place without further notice
than by announcement to be given at the meeting until a quorum, as above
defined, entitled to vote on such matter shall be present, whereupon any such
matter may be voted upon at the meeting as though held when originally convened.
Subject to any applicable requirement of law, this Declaration or the By-Laws, a
plurality of the votes cast shall elect a Trustee and all other matters shall be
decided by a majority of the votes cast entitled to vote thereon.
10.4 Record Date for Meetings. For the purpose of determining the
Shareholders who are entitled to notice of and to vote at any meeting, or to
participate in any distribution, or for the purpose of any other action, the
Trustees may from time to time close the transfer books for such period, not
exceeding 30 days, as the Trustees may determine; or without closing the
transfer books the Trustees may fix a date not more than 90 days prior to the
date of any meeting of Shareholders or declaration of daily dividends or other
action as a record date for the determination of the persons to be treated as
Shareholders of record for such purposes, except for dividend payments, which
shall be governed by Section 9.2 hereof.
10.5 Proxies. Any vote by a Shareholder of the Trust may be made in
person or by proxy, provided that no proxy shall be voted at any meeting unless
it shall have been placed on file with the Trustees or their designee prior to
the time the vote is taken. Pursuant to a resolution of a majority of the
Trustees, proxies may be solicited in the name of one or more Trustees or one or
more officers of the Trust. Only Shareholders of record shall be entitled to
vote. A proxy purporting to be executed by or on behalf of a Shareholder shall
be deemed valid unless challenged at or prior to its exercise, and the burden of
proving invalidity shall rest on the challenger.
10.6 Additional Provisions. The By-Laws may include further
provisions for Shareholders, votes, meetings and related matters.
10.7 Reports. The Trustees shall cause to be prepared with respect
to each Series and Class at least annually a report of operations containing a
balance sheet and statement of income and undistributed income of the applicable
Series or Class of the Trust prepared in conformity with generally accepted
accounting principles and an opinion of an independent public accountant on such
financial statements. It is contemplated that separate reports may be prepared
for the various Series and Classes. Copies of such reports shall be mailed to
all Shareholders of record of the applicable Series or Class within the time
required by the 1940 Act. The Trustees shall, in addition, furnish to the
Shareholders at least semiannually, interim reports containing an unaudited
balance sheet of the Series or Class as of the end of such period and an
unaudited statement of income and surplus for the period from the beginning of
the current fiscal year to the end of such period.
10.8 Shareholder Action by Written Consent. Any action that may be
taken by Shareholders may be taken without a meeting if a majority of
Shareholders of each Series or Class entitled to vote on the matter (or such
larger proportion thereof as shall be required by any express provision of this
Declaration) 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.
10.9 Inspection of Records. The Trustees shall from time to time
determine whether and to what extent, and at what times and places, and under
what conditions and regulations, the accounts and books of the Trust or any of
them shall be open to the inspection of the Shareholders, and no Shareholder
shall have any right to inspect any account or book or document of the Trust
except as conferred by law or otherwise by the Trustees.
ARTICLE XI
Duration; Termination of Trust;
Amendment; Mergers; Etc.
11.1 Duration. Subject to the provisions of Sections 11.2 and 11.3
hereof, the Trust created hereby shall continue without limitation of time.
11.2 Termination.
(a) The Trust may be terminated by the affirmative vote of
the holders of not less than a majority of the Shares of each Series of
the Trust at any meeting of Shareholders or by an instrument in
writing, without a meeting, signed by a majority of the Trustees (or by
an officer of the Trust pursuant to a vote of a majority of the
Trustees) and consented to by the holders of not less than a majority
of such Shares. Any Series or Class may be so terminated by vote or
written consent of not less than a majority of the Shares of such
Series or Class. Upon the termination of the Trust or any Series or
Class:
(i) The Trust or such Series or Class shall carry
on no business except for the purpose of winding up its
affairs.
(ii) The Trustees shall proceed to wind up the
affairs of the Trust or such Series or Class and all of the
powers of the Trustees under this Declaration shall continue
until the affairs of the Trust or such Series or Class shall
have been wound up, including the power to fulfill or discharge
the contracts of the Trust or such Series or Class, collect its
assets, sell, convey, assign, exchange, transfer or otherwise
dispose of all or any part of the remaining Trust Property 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, discharge or pay its liabilities,
and do all other acts appropriate to liquidate its business;
provided that any sale, conveyance, assignment, exchange,
transfer or other disposition of all or substantially all the
Trust Property shall require approval of the consideration by
vote or consent of the holders of a majority of the Shares
entitled to vote; and
(iii) After paying or adequately providing for the
payment of all liabilities, and upon receipt of such releases,
indemnities and refunding agreements, as they deem necessary
for their protection, the Trustees may distribute remaining
Trust Property of any Series (or attributable to the Shares of
any Class), in cash or in kind or partly each, among the
Shareholders of such Series or Class according to their
respective rights.
(b) After termination of the Trust or any Series or Class
and distribution to the Shareholders as herein provided, a majority of
the Trustees (or an officer of the Trust pursuant to a vote of a
majority of the Trustees) shall execute and lodge among the records of
the Trust an instrument in writing setting forth the fact of such
termination. Upon termination of the Trust, the Trustees shall
thereupon be discharged from all further liabilities and duties
hereunder, and the rights and interests of all Shareholders shall
thereupon cease. Upon termination of any Series or Class, the Trustees
shall thereupon be discharged from all further liabilities and duties
with respect to such Series or Class, and the rights and interests of
all Shareholders of such Series or Class shall thereupon cease.
11.3 Merger, Consolidation and Sale of Assets. The Trust may merge
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 at any meeting of Shareholders called
for that purpose by the affirmative vote of the holders of not less than a
majority of the Shares of each Series, or by an instrument or instruments in
writing without a meeting, consented to by the holders of not less than a
majority of such Shares of each Series. Any Series may so merge, consolidate or
effect a sale or exchange of assets by the vote or written consent of not less
than a majority of the Shares of such Series.
11.4 Amendment Procedure.
(a) This Declaration may be amended by the affirmative
vote of the holders of not less than a majority of the Shares at any
meeting of Shareholders or by an instrument in writing, without a
meeting, signed by a majority of the Trustees (or by an officer of the
Trust pursuant to the vote of a majority of the Trustees) and consented
to by the holders of not less than a majority of such Shares. The
Shareholders of each Series and Class shall have the right to vote
separately on amendments to this Declaration to the extent provided by
Section 10.1. The Trustees may also amend this Declaration at any time
(whether or not related to the rights of Shareholders) without the vote
or consent of Shareholders if they deem it necessary to conform this
Declaration to the requirements of applicable federal laws or
regulations or 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), or for any other reason determined by the
Trustees so long as such amendment does not adversely affect the rights
of any Shareholder with respect to matters to which such amendment is
or purports to be applicable and so long as such amendment is not in
contravention of applicable law, including the 1940 Act.
(b) All rights granted to the Shareholders under this
Declaration are granted subject to the reservation of the right to
amend this Declaration as hereinabove provided, subject to the
following limitations. No amendment may be made, under Section 11.4(a)
above, which would change any rights with respect to all Shares of the
Trust by reducing the amount payable thereon upon liquidation of the
Trust, by diminishing or eliminating any voting rights pertaining
thereto, or by otherwise adversely affecting the rights of
Shareholders, except with the vote or consent of the holders of a
majority of all the Shares of the Trust without regard to Series, or if
said amendment adversely affects the rights of the Shareholders of less
than all of the Series, except with the vote or consent of the holders
of a majority of all the Shares of each Series or Class so affected. An
instrument establishing and designating any Series or Class of Shares
and authorizing the Shares thereof shall not constitute an amendment to
this Declaration that adversely affects the rights of any Shareholder.
Nothing contained in this Declaration shall permit the amendment of
this Declaration to impair the exemption from personal liability of the
Shareholders, Trustees, officers, employees and agents of the Trust or
to permit assessments upon Shareholders (otherwise than as permitted
under Section 9.3).
(c) A certification in recordable form signed by a
majority of the Trustees (or by an officer of the Trust pursuant to the
vote of a majority of the Trustees) setting forth an amendment and
reciting that it was duly adopted by the Shareholders or by the
Trustees as aforesaid or a copy of the Declaration, as amended, in
recordable form, and executed by a majority of the Trustees, shall be
conclusive evidence of such amendment when lodged among the records of
the Trust.
Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of Shares of the Trust shall have become effective,
this Declaration may be terminated or amended in any respect by the affirmative
vote of a majority of the Trustees or by an instrument signed by an officer of
the Trust pursuant to the vote of a majority of the Trustees.
11.5 Incorporation. With the approval of the holders of a majority
of the Shares, the Trustees may cause to be organized or assist in organizing a
corporation or corporations under the laws of any jurisdiction or any other
trust, partnership, association or other organization to take over all of the
Trust Property or to carry on any business in which the Trust shall directly or
indirectly have any interest, and to sell, convey and transfer the Trust
Property to any such corporation, trust, association or organization in exchange
for the shares or securities thereof or otherwise and to lend money to,
subscribe for the 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 corporation, trust, partnership, association or organization, or any
corporation, partnership, trust, association or organization in which the Trust
holds or is about to acquire shares or any other interest. The Trustees may
also cause a merger or consolidation between the Trust or any successor thereto
and any such corporation, trust, partnership, association or other organization
if and to the extent permitted by law, as provided under the law then in effect.
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
organizations or entities.
ARTICLE XII
Miscellaneous
12.1 Filing. This Declaration and any amendment hereto shall be
filed in the office of the Secretary of the Commonwealth of Massachusetts and in
such other places as may be required under the laws of Massachusetts and may
also be filed or recorded in such other places as the Trustees deem appropriate.
Each amendment so filed shall be accompanied by a certificate signed and
acknowledged by a Trustee or officer of the Trust stating that such action was
duly taken in a 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,
containing the original Declaration and all amendments theretofore made, may be
executed from time to time by a majority of the Trustees and shall, upon filing
with the Secretary of the Commonwealth of Massachusetts, be conclusive evidence
of all amendments contained therein and may thereafter be referred to in lieu of
the original Declaration and the various amendments thereto.
12.2 Resident Agent. The Trust shall maintain a resident agent in
the Commonwealth of Massachusetts, which agent shall initially be CT Corporation
System, Two Oliver Street, Boston, Massachusetts 02109. The Trustees may
designate a successor resident agent; provided, however, that such appointment
shall not become effective until written notice thereof is delivered to the
office of Secretary of the Commonwealth of Massachusetts.
12.3 Governing Law. This Declaration is executed by the Trustees
and delivered in the Commonwealth of Massachusetts and with reference to the
laws thereof, and the rights of all parties and the validity and construction of
every provision hereof shall be subject to and construed according to the laws
of said Commonwealth, and reference shall be specifically made to the business
corporation law of the Commonwealth of Massachusetts as to the construction of
matters not specifically covered herein or as to which an ambiguity exists.
12.4 Counterparts. This Declaration may be simultaneously executed
in several counterparts, each of which shall be deemed to be an original, and
such counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any such original counterpart.
12.5 Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust, or of any recording
office in which this Declaration may be recorded, appears to be a Trustee
hereunder, certifying to: (a) the number or identity of Trustees or
Shareholders, (b) the name of the Trust or any Series or Class thereof, (c) the
establishment of any Series or Class, (d) the due authorization of the execution
of any instrument or writing, (e) the form of any vote passed at a meeting of
Trustees or Shareholders, (f) the fact that the number of Trustees or
Shareholders present at any meeting or executing any written instrument
satisfies the requirements of this Declaration, (g) the form of any By-Laws
adopted by or the identity of any officers elected by the Trustees, or (h) the
existence of any fact or facts that in any manner relate to the affairs of the
Trust or any Series or Class, shall be conclusive evidence as to the matters so
certified in favor of any person dealing with the Trustees and their successors.
12.6 Provisions in Conflict With Law or Regulations.
(a) The provisions of this Declaration are severable, and
if the Trustees shall determine, with the advice of counsel, that any
of such provisions is in conflict with 1940 Act, the regulated
investment company provisions of the Internal Revenue Code or with
other applicable laws and regulations, the conflicting provision shall
be deemed never to have constituted a part of this Declaration;
provided however, that such determination shall not affect any of the
remaining provisions of this Declaration or render invalid or improper
any action taken or omitted prior to such determination.
(b) If any provision of this Declaration 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 in any
jurisdiction.
This Declaration of Trust establishing Capital Management Investment
Trust provides that the name Capital Management Investment Trust refers to the
Trustees under the Declaration collectively as Trustees, but not as individuals
or personally; and no Trustee, shareholder, officer, employee or agent of
Capital Management Investment Trust, shall be held to any personal liability,
nor shall resort be had to their private property for the satisfaction of any
obligation or claim or otherwise in connection with the affairs of Capital
Management Investment Trust, but the Trust Property only shall be liable.
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
___________________________________
Frank P. Meadows III
___________________________________
___________________________________
___________________________________
___________________________________
The address of the principal place of business of the Trust is:
105 North Washington Street
PO Drawer 69
Rocky Mount, North Carolina 27802
Exhibit 99.B.2
By-Laws
BYLAWS
OF
CAPITAL MANAGEMENT INVESTMENT TRUST
TABLE OF CONTENTS
Page
ARTICLE I TRANSACTION CONFIRMATIONS, ACCOUNT STATEMENTS,
CERTIFICATES AND DIVIDEND DISTRIBUTIONS . . . . . . . . . . 1
ARTICLE II FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE III SEAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE IV SHAREHOLDER MEETINGS. . . . . . . . . . . . . . . . . . . . . 2
ARTICLE V TRUSTEES. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE VI COMMITTEES. . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE VII NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE VIII OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE IX INVESTMENT AND OTHER RESTRICTIONS . . . . . . . . . . . . . . 8
ARTICLE X CUSTODIAN . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE XI INVESTMENT ADVISOR. . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE XII DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE XIII TRANSACTIONS OF TRUSTEES, OFFICERS AND OTHERS . . . . . . . . 11
ARTICLE XIV INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE XV AUDITOR . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE XVI AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE XVII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 14
BYLAWS
OF
CAPITAL MANAGEMENT INVESTMENT TRUST
ARTICLE I
TRANSACTION CONFIRMATIONS, ACCOUNT STATEMENTS,
CERTIFICATES AND DIVIDEND DISTRIBUTIONS
1. Every shareholder of record will receive a confirmation of each
new transaction in their account with the Trust, and an account statement at
least quarterly, which will show the total number of shares of the Trust owned
by the shareholder and being held by the transfer agent for the account of the
shareholder. Shareholders may rely on these confirmations and statements in
lieu of certificates, which will not be issued, except as may be authorized from
time to time as determined by the Board of Trustees of the Trust for any
particular series of the Trust.
2. Certificates evidencing shares of a particular series of the
Trust shall be in the form prescribed by the Board of Trustees and shall be
signed by the Chairman and the Secretary or Treasurer or such officers as the
Board of Trustees may designate in authorizing such certificates. The signature
of any officer of the Trust and the seal of the Trust thereon may be facsimiles.
3. In the event any officer authorized to sign certificates of
shares shall die, resign or be removed from office, otherwise valid certificates
bearing the signature, or facsimile thereof, of such officer shall remain valid
and may be issued.
ARTICLE II
FISCAL YEAR
The fiscal year of the Trust or any particular series of the Trust
shall be as provided by the Board of Trustees.
ARTICLE III
SEAL
The Trust seal shall, subject to alteration by the Board of Trustees,
consist of a flat-faced circular die upon which shall be engraved or cut the
word, "Massachusetts," together with the name of the particular series of the
Trust and the year of its Declaration (Viz., 1994).
ARTICLE IV
SHAREHOLDER MEETINGS
1. Meetings of shareholders will only be held as necessary to
approve fundamental policy changes, elect trustees and other matters requiring
approval of the shareholders in accordance with the Investment Company Act of
1940, as amended.
2. Meetings of shareholders of the Trust shall be held at such
time and on such day as shall be designated in the notice of said meeting. At
such meetings, shareholders may elect a Board of Trustees or transact such other
business as may properly be brought before the meeting and which is stated in
the notice of the meeting.
3. Special meetings of shareholders of the Trust, or of any
particular series of the Trust, unless otherwise prescribed by statute, rule or
regulation, may be called for any purpose or purposes by the Chairman of the
Board, any Vice Chairman, or the President of the particular series of the Trust
in question at any time and shall be called by the Chairman of the Board, any
Vice Chairman, or the President of the particular series of the Trust in
question at the request of a majority of the Board of Trustees, or at the
request in writing of one or more shareholders who collectively hold at least
ten percent (10%) of the shares of a particular series of the Trust issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the meeting. Business transacted at all special meetings shall be
confined to the objects stated in the notice of such meeting.
4. Written notice of every meeting of the shareholders, stating
the time, place and purpose or purposes for which the meeting is called, shall
be given by the Secretary to each shareholder entitled to vote thereat and to
any shareholder entitled by law to such notice. Such notice shall be given to
each shareholder by mailing the same, postage prepaid, to the address of the
shareholder as it appears on the books of the Trust not less than ten (10) days
nor more than forty-five (45) days before the time fixed for such meeting.
5. The holders of a majority of the shares issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
be requisite and shall constitute a quorum at all meetings of the shareholders
for the transaction of business, except as otherwise provided by statute. If
such quorum shall not be present or represented at any meeting of the
shareholders, the shareholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from time to time
(provided no adjournment shall be for more than three (3) months) without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall the present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified.
When a quorum is present at any meeting, the vote of the
holders of a majority of the shares having the right to vote thereat, present in
person or represented by proxy, shall determine any question brought before such
meeting, unless the question is one upon which, by express provision of the
applicable statutes, rules and regulations, Declaration of Trust or these
Bylaws, a different vote is required, in which case such express provision shall
control.
7. At any meeting of the shareholders, every shareholder having
the right to vote shall be entitled to vote in person or by proxy appointed by
an instrument in writing subscribed by such shareholder and bearing a date not
more than eleven (11) months prior to said meeting, which instrument shall be
filed with the secretary of the meeting before being voted. Each shareholder
shall have one vote or fraction thereof for each share or fraction thereof held.
8. The Board of Trustees may fix a record date, not more than
ninety (90) nor less than ten (10) days prior to the date for which a meeting is
called, as of which the shareholders entitled to vote at such meeting or any
adjournment thereof, shall be determined, notwithstanding any transfer or the
issue of any share occurring after such record date.
ARTICLE V
TRUSTEES
1. The number of trustees which shall constitute the entire Board
of Trustees of the Trust shall be such number as shall be fixed from time to
time by a vote adopted by a majority of the then Trustees. Any trustee may be
removed by a two-thirds (2/3) majority of all trustees, at a regular or special
meeting called for that purpose, for cause by them deemed sufficient. Subject
to death, resignation or removal, each trustee shall hold office indefinitely
and until his successor is elected and qualified. Trustees need not be
shareholders of the Trust.
2. If the office of any trustee or trustees becomes vacant for any
reason, a majority of the remaining trustees, though less than a quorum, may
choose a successor or successors, who shall hold office for the unexpired term
in respect to which such vacancy occurred or until the next election of
trustees, provided that, immediately after filling any such vacancy, at least
two-thirds (2/3) of the trustees then holding office shall have been elected to
such office by the shareholders of the Trust entitled to vote; otherwise such
vacancy shall be filled by vote of the shareholders at a special meeting called
for such purpose.
3. The property and business of the Trust shall be managed by its
Board of Trustees which may exercise all powers of the Trust and do all lawful
acts and things as are not by applicable statute, rule or regulation, the
Declaration of Trust or these Bylaws prohibited, or directed or required to be
exercised or done by the shareholders.
4. The Board of Trustees may hold their meetings and keep the
books of the Trust at the office of the Trust in the City of Rocky Mount, State
of North Carolina, or at such other places as they may from time to time
determine, and telephone meetings may be held except that the Board of Trustees
may not hold telephone meetings to approve or renew an investment advisory
agreement or any rule 12b-1 plan or any agreements relating to such plan. The
original or duplicate stock ledger shall be kept at the office of the Trust in
the City of Rocky Mount, State of North Carolina or at the office of any
transfer agent which may be employed by the Trust.
5. The first meeting of the newly elected Board of Trustees shall
be held at the place of, and immediately following the meeting of the
shareholders at which such Board of Trustees was elected, either within or
without the State of North Carolina; provided the trustees may hold their
meeting at such other place and time as they may determine. No notice of such
meeting shall be necessary to the newly elected trustees in order to legally
constitute the meeting, provided a quorum shall be present. Regular meetings of
the Board of Trustees shall be held without notice at such time and place,
either within or without the State of North Carolina as shall from time to time
be determined by the board.
6. Special meetings of the Board of Trustees may be held at any
time when called by the Chairman, any Vice Chairman, any President, the
Secretary or any two (2) trustees (or if there shall be fewer than three (3)
trustees, by any trustee). Not less than twenty-four (24) hours' notice of any
special meeting shall be given by the Secretary or other officer calling such
meeting to each trustee either in person, by telephone, by mail or by telegram.
Such notice may be waived by any trustee either in person or in writing or by
telegram. Such special meetings shall be held at such time and place, within or
without the State of North Carolina, as the notice thereof or waiver shall
specify. Unless otherwise specified in the notice thereof, any and all business
may be transacted at any meeting of the Board of Trustees.
7. At all meetings of the Board of Trustees, a majority of the
trustees shall be necessary and sufficient to constitute a quorum for the
transaction of business, and the act of the majority of trustees present at any
meeting at which there is a quorum shall be the act of the Board of Trustees,
except as may be otherwise specifically provided by an applicable statute, rule,
or regulation, by the Declaration of Trust or by these Bylaws. If a quorum
shall not be present at any meeting of the Board of Trustees, the trustees
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
ARTICLE VI
COMMITTEES
The Board of Trustees may elect from their own number, by resolution or
resolutions passed by a majority of the board, an executive committee to consist
of two (2) or more trustees, which shall have the power to conduct the current
and ordinary business of the Trust while the Board of Trustees is not in
session. The Board of Trustees may also in the same manner elect from their own
number from time to time other committees, the number composing such committees
and the powers conferred thereon to be determined from the resolution creating
the same.
ARTICLE VII
NOTICES
1. Whenever, under the provisions of an applicable statute, rule,
or regulation, the Declaration of Trust or these Bylaws, notice is required to
be given to any shareholder or trustee, it shall not be construed to mean
personal notice unless the context otherwise provides such notice may be given
in writing, by mail, by depositing the same in a post office or letter box, in a
postage prepaid envelope, addressed to such shareholder or trustee at such
address as appears on the books of the Trust, and such notice shall be deemed to
be given at the time when the same shall be thus mailed.
2. Whenever any notice is required to be given under the
provisions of an applicable statute, rule or regulation, the Declaration of
Trust or by these Bylaws, a waiver thereof in writing signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be equivalent thereto.
ARTICLE VIII
OFFICERS
1. The Board of Trustees shall elect officers of the Trust for
such term in office, which may be indefinite, as determined by the board. The
Board of Trustees shall elect one of its own members as Chairman of the Board
and shall elect a Secretary and Treasurer of the Trust and a President for each
series of the Trust. The Treasurer shall be the Chief Accounting Officer of the
Trust. The Board of Trustees may also elect or appoint or authorize the
Chairman, the Vice Chairman, if any, or any President to appoint such other
officers, including a Vice Chairman, Vice Presidents and one or more Assistant
Secretaries and Assistant Treasurers, as the Board of Trustees deems advisable.
Two or more offices may be held by the same person. The Chairman of the Trust
and any Vice Chairman shall be a trustee. All other officers may be, but need
not be, trustees.
2. The Board of Trustees may appoint such other officers, agents
and representatives of the Trust as shall be deemed necessary, with such powers
for such term and to perform such acts and duties on behalf of the Trust as the
Board of Trustees may see fit to the extent authorized or permitted by statute,
rule, or regulation, the Declaration of Trust and these Bylaws.
3. The Chairman of the Board shall preside at all meetings of the
shareholders and Board of Trustees. In addition, the Chairman shall be the
chief executive officer of the Trust and shall have general charge and
supervision of the business, property, and affairs of the Trust and such other
powers and duties as the Board of Trustees may from time to time prescribe.
4. If the trustees shall elect one or more Vice Chairmen, the Vice
Chairman or if there shall be more than one, such Vice Chairmen in the order of
their seniority or as designated by the Board of Trustees, in the absence of the
Chairman, shall preside at meetings of the shareholders and Board of Trustees
and shall exercise such other powers and duties as the Chairman shall determine.
5. The President of each series of the Trust shall be the chief
executive officer of the Trust for matters pertaining to that particular series
and shall have general charge and supervision of the business, property and
affairs of the series and such other powers and duties as the Board of Trustees
shall from time to time prescribe.
6. The Vice Presidents of each series of the Trust, in the order
of their seniority or as designated by the Board of Trustees, 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 Board of
Trustees or the President of such series may from time to time prescribe.
7. The Secretary shall record all votes and proceedings of
meetings of the shareholders and of the Board of Trustees in the Trust records.
The Secretary shall give, or cause to be given, notice of all meetings of the
shareholders and meetings of the Board of Trustees when notice thereof is
required. The Secretary shall have custody of the seal of the Trust and may
affix the same to any instrument requiring the seal and attest to the same with
his or her signature. The Secretary shall perform such other duties as the
Board of Trustees may from time to time prescribe.
8. The Assistant Secretaries, in order of their seniority or as
directed by the Board of Trustees, 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 Board of Trustees may prescribe.
9. The Treasurer shall deliver all Trusts and securities of the
Trust which may come into the Treasurer's hands to such bank or trust company as
the Board of Trustees may designate as Custodian. The Treasurer shall keep such
records of the financial transactions of the Trust as the Board of Trustees
shall prescribe. The Treasurer shall perform such other duties as the Board of
Trustees may from time to time prescribe.
10. The Assistant Treasurers, in order of their seniority or as
directed by the Board of Trustees, 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 Board of Trustees may prescribe.
11. The officers of the Trust shall hold office until their
successors are chosen and qualified. Any officer elected or appointed by the
Board of Trustees may be removed at any time with or without cause by the
affirmative vote of a majority of the entire Board of Trustees. If the office
of any officer shall become vacant for any reason, the vacancy shall be filled
by the Board of Trustees.
ARTICLE IX
INVESTMENT AND OTHER RESTRICTIONS
The investment limitations for each particular series of the Trust are
set forth in each of the Trust's current Prospectuses or Statements of
Additional Information for the particular series as approved by the Trustees.
ARTICLE X
CUSTODIAN
1. The Trust shall employ a Custodian pursuant to a written
contract that shall contain in substance the following provisions:
(a) The Trust will cause all securities and Trusts owned
by the Trust to be delivered or paid to the Custodian.
(b) The Custodian will receive any monies due to the Trust
and deposit the same in an account in its own banking department or in
such other banking institution, if any, as the Board of Trustees may
direct.
(c) The Custodian shall release and deliver securities
owned by the Trust in the following cases only:
(1) Upon the sale of such securities for the
account of the company and the receipt of payment therefor;
(2) To the issuer thereof or its agent when such
securities are called, redeemed, retired or otherwise become
payable, provided that in any such case the cash proceeds
thereof shall be delivered to the Custodian;
(3) To the issuer thereof or its agent for
transfer into the name of the Trust or the Custodian, or a
nominee of either, or in exchange for a different number of
certificates representing the same number of shares or
aggregate face amount, provided that in any such case the new
securities replacing such securities are delivered to the
Custodian and approval of the Trust is received;
(4) To any broker selling the same for examination
in accord with the "street delivery" custom;
(5) For exchange or conversion pursuant to any
plan of merger, consolidation, reorganization, recapitalization
or readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, provided that in any such case the new
securities and cash, if any, are delivered to the Custodian;
(6) In the case of warrants, rights or similar
options, the surrender thereof shall be only for the exercise
of such warrants, rights or other options on behalf of the
Trust upon interim receipts or temporary securities for
definitive securities;
(7) For any other proper purpose approved by the
Trust.
(d) The Custodian shall pay out monies of the Trust only
upon the purchase of securities for the account of the Trust and the
delivery in due course of such securities to the Custodian, or in
connection with the conversion, exchange or surrender of securities
owned by the Trust as set forth herein, or for the repurchase of shares
issued by the Trust, or for the making of any disbursements authorized
by the Board of Trustees for expenses or liabilities incurred by the
Trust pursuant to all applicable statutes, rules and regulations.
(e) The Custodian shall make deliveries of securities and
payments of cash only upon proper written instructions signed by such
officer or officers or other agent or agents of the Trust, including
the investment advisor, as may be authorized to sign such instructions
by resolution of the Board of Trustees. The Trustees may, from time to
time, authorize different persons to sign proper instructions for
different purposes.
2. The contract between the Trust and the Custodian may contain
any other provisions not inconsistent with all applicable statutes, rules, and
regulations, the Declaration of Trust or with these Bylaws which the Board of
Trustees may approve.
3. Such contract shall be terminable by either party upon written
notice to the other; provided, however, that upon termination of the contract or
inability of the Custodian to continue to serve, the Custodian shall deliver and
pay over to such successor Custodian all securities and monies held by it for
the account of the Trust. In the event that the Custodian terminates its
contract with the Trust: (a) the Board of Trustees shall promptly appoint a
successor Custodian; (b) in the event that the Trust cannot find a successor
Custodian having the required qualifications and willing to serve, the Board of
Trustees shall promptly call a special meeting of the shareholders to determine
whether the Trust shall function without a Custodian or shall be liquidated; (c)
in the event that such vote of shareholders shall be held the Custodian shall
deliver and pay over all property of the Trust held by it as directed by, and in
accordance with, the vote of a majority of the outstanding shares of the Trust.
ARTICLE XI
INVESTMENT ADVISOR
The Board of Trustees, with the approval of the shareholders, as
provided by applicable statutes, rules and regulations, and consistent with the
Declaration of Trust, may enter into a contract or contracts with one or more
persons, firms or corporations to act as Investment Advisor or Investment
Advisors for each particular series of the Trust and to perform such duties and
render such services as shall be deemed necessary. Any such contract shall
provide that it may be terminated at any time by the Trust without penalty and
upon not more than sixty (60) days' written notice, and shall be automatically
terminated in the event of its assignment. Any such contract shall continue in
effect only if approved in accordance with the provisions of all applicable
statutes, rules, and regulations, the Declaration of Trust and these Bylaws.
ARTICLE XII
DISTRIBUTOR
The Board of Trustees, as consistent with all applicable statutes,
rules, and regulations, and the Declaration of Trust, may enter into a contract
or contracts with any one or more persons, firms or corporations to act as
Distributor or Distributors for the Trust, or any particular series of the
Trust, and to perform such other duties and render such other services as shall
be deemed necessary. Any such contract shall provide that it shall be
automatically terminated in the event of its assignment by such person, firm or
corporation, and that, if it shall continue in effect for a period of more than
two (2) years from the date of its execution, it shall be specifically approved
at least annually by vote of the outstanding voting securities of the Trust or
the particular series of the Trust in question or by the Board of Trustees in
accordance with all applicable statutes, rules and regulations. Such contract
may be exclusive, and may be, with the same person, firm or corporation that is
a party to an investment advisor's contract with the Trust. Such contract may
also contain any other provisions not inconsistent with all applicable statutes,
rules and regulations, the Declaration of Trust and these Bylaws.
ARTICLE XIII
TRANSACTIONS OF TRUSTEES, OFFICERS AND OTHERS
1. No trustee or officer of the Trust, nor the Investment
Advisor(s), nor any member, officer, director, or shareholder of such Investment
Advisor(s) shall take a long or short position in the securities issued by any
series of the Trust, except that any trustee or officer of this Trust, or
member, officer, director or shareholder of the Investment Advisor(s) may
purchase from the Trust at any time, shares issued by any series of the Trust:
(a) at the price available to the public at the moment of such purchase; or (b)
to the extent that such person is a shareholder, at the price available to
shareholders generally at the moment of such purchase; or (c) at a price
determined as set forth in the Trust's current Prospectus for a particular
series of the Trust. In any event, such purchase shall not be in contravention
of any applicable federal or state statute, rule or regulation.
2. The Trust shall not lend any of its assets to the
Distributor(s) or Investment Advisor(s) or to any officer, director or trustee
of the Distributor(s) or the Investment Advisor(s) or the Trust and shall not
permit any officer or trustee, or any officer or director of the Distributor(s)
or the Investment Advisor(s), to deal for or on behalf of the Trust with himself
as principal or agent, or with any partnership, association or corporation in
which he has a financial interest. The foregoing provisions shall not prevent:
(a) officers and trustees of the Trust from buying, holding or selling shares in
any series of the Trust, or from being partners, officers or directors of or
otherwise financially interested in the Distributor(s) or the Investment
Advisor(s); (b) employment of legal counsel, registrar, transfer agent, dividend
disbursing agent or custodian who is, or has a partner, shareholder, officer or
director who is, an officer or trustee of the Trust, if only customary fees are
charged for services to the Trust; or (c) purchases or sales of securities or
other property if such transaction is permitted by or is exempted under any
applicable statute, rule or regulation.
3. Any officer, trustee or agent of the Trust may acquire, own and
dispose of shares of any series of the Trust to the same extent as if he or she
were not such officer, trustee or agent. The Board of Trustees may issue,
purchase and sell or cause to be issued, purchased and sold shares of any series
of the Trust and from any person, or to and from any firm or company of which
such person is an officer, director, trustee or shareholder subject only to all
applicable statutes, rules, and regulations, any limitations contained in the
Declaration of Trust and the limitations and restrictions in these Bylaws.
ARTICLE XIV
INDEMNIFICATION
1. The Trust shall indemnify each trustee and officer to the full
extent permitted by applicable federal, state and local statutes, rules and
regulations and the Declaration of Trust, as amended from time to time.
2. With respect to a proceeding against a trustee or officer
brought by or on behalf of the Trust to obtain a judgment or decree in its
favor, the Trust shall provide the officer or trustee with the same
indemnification, after the same determination, as it is required to provide with
respect to a proceeding not brought by or on behalf of the Trust.
3. The Board of Trustees, in its discretion, may authorized or
provide the above-described indemnification to an employee or agent.
4. Any indemnification provided by this Article:
(a) Continues as to a trustee, officer, employee or agent
who has ceased to be such, and inures to the benefit of his heirs and
personal representative; and
(b) Does not exclude any other rights to which a person is
or may be entitled by any applicable statute, rule, regulation,
agreement, vote of shareholders or disinterested trustees, or
otherwise, as to:
(1) Actions in his official capacity; and
(2) Actions in any other capacity while holding such
office.
5. The indemnification provided by this Article shall be provided
with respect to an action, suit or proceeding arising from an act or omission or
alleged act or omission, whether occurring before or after the adoption of this
Article.
6. Nothing in this Article protects, or purports to protect, or
may be interpreted or construed to protect, any trustee or officer 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 office.
ARTICLE XV
AUDITOR
The independent auditor of the particular series of the Trust shall be
selected annually in accordance with all applicable statutes, rules and
regulations.
ARTICLE XVI
AMENDMENTS
The Board of Trustees may make, amend, alter or repeal these Bylaws, at
any meeting duly held; provided, that the provisions concerning investment and
other restrictions contained in Article IX of these Bylaws shall only be
amended, altered or repealed by the vote of a majority of the outstanding voting
securities of the particular series of the Trust involved, as defined in the
Investment Company Act of 1940, or as otherwise provided by any applicable
statute, rule or regulations.
ARTICLE XVII
MISCELLANEOUS
1. When used in these Bylaws, the term "applicable statutes, rules
and regulations" shall mean any and all federal and state statutes, rules and
regulations that are applicable to, govern or otherwise regulate the conduct of
the Trust's business as a regulated, diversified, open-end investment company of
the management type. Such statutes, rules and regulations shall include, but
are not limited to: The Investment Company Act of 1940, the Investment Advisors
Act of 1940, the Securities Act of 1933, the Securities Exchange Act of 1934,
all as amended to date and as may be hereafter amended, and all rules and
regulations promulgated by the Securities and Exchange Commission thereunder;
Subchapter M of the Internal Revenue Code, and all rules and regulations
promulgated by the Internal Revenue Service thereunder; the Annotated Code of
Massachusetts, and all rules and regulations promulgated by any commission,
organization, or division of such, which has been authorized by the State of
Massachusetts to formulate or to enforce same; and any and all other statutes,
rules or regulations enacted or promulgated by any state, commission or division
that shall or may be deemed to govern or regulate the conduct of the Trust.
2. Each Article, section or portion of these Bylaws shall be
deemed severable, and the invalidity of any such Article, section or portion
shall not affect the validity of the remainder of these Bylaws.
Exhibit 99.B.5
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, entered into as of the date the registration statement of the
Capital Management Equity Fund of the Capital Management Investment Trust
becomes effective with the Securities and Exchange Commission, by and between
CAPITAL MANAGEMENT INVESTMENT TRUST (the "Trust"), a Massachusetts Business
Trust, and CAPITAL MANAGEMENT ASSOCIATES, INC., a New York corporation (the
"Advisor"), registered as an investment advisor under the Investment Advisors
Act of 1940, as amended (the "Advisors Act").
WHEREAS, the Trust is registered as a diversified, open-end management
investment company of the series type under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, the Trust desires to retain the Advisor to furnish investment advisory
and administrative services to CAPITAL MANAGEMENT EQUITY FUND series of the
Trust, and the Advisor is willing to so furnish such services;
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. Appointment. The Trust hereby appoints the Advisor to act as
Investment Advisor to CAPITAL MANAGEMENT EQUITY FUND (the "Fund")
series of the Trust for the period and on the terms set forth in this
Agreement. The Advisor accepts such appointment and agrees to furnish
the services herein set forth, for the compensation herein provided.
2. Delivery of Documents. The Trust has furnished the Investment Advisor
with copies properly certified or authenticated of each of the
following:
(a) The Trust's Declaration of Trust, as filed with the State of
Massachusetts (such Declaration, as presently in effect and as
it shall from time to time be amended, is herein called the
"Declaration");
(b) The Trust's By-Laws (such By-Laws, as presently in effect and as
they shall from time to time be amended, are herein called the
"By-Laws");
(c) Resolutions of the Trust's Board of Trustees and the resolution
approved by a majority of the outstanding shares of the Fund
authorizing the appointment of the Advisor and approving this
Agreement;
(d) The Trust's Registration Statement on Form N-1A under the 1940
Act and under the Securities Act of 1933 as amended, (the "1933
Act"), relating to shares of beneficial interest of the Fund
(herein called the "Shares") as filed with the Securities and
Exchange Commission ("SEC") and all amendments thereto;
(e) The Fund's Prospectus (such Prospectus, as presently in effect
and all amendments and supplements thereto are herein called the
"Prospectus").
The Trust will furnish the Advisor from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements to the foregoing at the same time as such documents are
required to be filed with the SEC.
3. Management. Subject to the supervision of the Trust's Board of
Trustees, the Advisor will provide a continuous investment program for
the Fund, including investment research and management with respect to
all securities, investments, cash and cash equivalents in the Fund. The
Advisor will determine from time to time what securities and other
investments will be purchased, retained or sold by the Fund. The
Advisor will provide the services under this Agreement in accordance
with the Fund's investment objectives, policies and restrictions as
stated in its Prospectus. The Advisor further agrees that it:
(a) Will conform its activities to all applicable Rules and
Regulations of the Securities and Exchange Commission and will,
in addition, conduct its activities under this Agreement in
accordance with regulations of any other Federal and State
agencies which may now or in the future have jurisdiction over
its activities under this Agreement;
(b) Will place orders pursuant to its investment determinations for
the Fund either directly with the issuer or with any broker or
dealer. In placing orders with brokers or dealers, the Advisor
will attempt to obtain the best net price and the most favorable
execution of its orders. Consistent with this obligation, when
the Advisor believes two or more brokers or dealers are
comparable in price and execution, the Advisor may prefer: (i)
brokers and dealers who provide the Fund with research advice
and other services, or who recommend or sell Trust shares, and
(ii) brokers who are affiliated with the Fund or its Advisor;
provided, however, that in no instance will portfolio securities
be purchased from or sold to the Advisor or any affiliated
person of the Advisor in principal transactions;
(c) Will provide certain executive personnel for the Fund as may be
mutually agreed upon from time to time with the Board of
Trustees, the salaries and expenses of such personnel to be
borne by the Advisor unless otherwise mutually agreed upon; and
(d) Will provide, at its own cost, all office space, facilities and
equipment necessary for the conduct of its advisory activities
on behalf of the Fund.
4. Services Not Exclusive. The advisory services furnished by the Advisor
hereunder are not to be deemed exclusive, and the Advisor shall be free
to furnish similar services to others so long as its services under
this Agreement are not impaired thereby; provided, however, that
without the written consent of the Trustees, the Advisor will not serve
as investment advisor to any other investment company having a similar
investment objective to that of the Fund.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Advisor hereby agrees that all records which it
maintains for the benefit of the Fund are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records
upon the Fund's request. The Advisor further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act the records
required to be maintained by it pursuant to Rule 31a-1 under the 1940
Act that are not maintained by others on behalf of the Fund.
6. Expenses. During the term of this Agreement, the Advisor will pay all
expenses incurred by it in connection with its investment advisory
services pertaining to the Fund. In the event that there is no
distribution plan under Rule 12b-1 of the 1940 Act in effect for the
Fund, the Advisor will pay, out of the Advisor's resources generated
from sources other than fees received from the Fund, the entire cost of
the promotion and sale of Trust shares.
Notwithstanding the foregoing, the Fund shall pay the expenses and
costs of the following:
(a) Taxes, interest charges and extraordinary expenses;
(b) Brokerage fees and commissions with regard to portfolio
transactions of the Fund;
(c) Fees and expenses of the custodian of the Fund's portfolio
securities;
(d) Fees and expenses of the Fund's administrator, transfer and
dividend disbursing agent and the Fund's fund accounting agent
or, if the Fund performs any such services without an agent, the
costs of the same;
(e) Auditing and legal expenses;
(f) Cost of maintenance of the Fund's existence as a legal entity;
(g) Compensation of trustees who are not interested persons of the
Advisor as that term is defined by law;
(h) Costs of Trust meetings;
(i) Federal and State registration or qualification fees
and expenses;
(j) Costs of setting in type, printing and mailing Prospectuses,
reports and notices to existing shareholders;
(k) The investment advisory fee payable to the Advisor, as provided
in paragraph 7 herein; and
(l) Plan of Distribution expenses, but only in accordance with the
Plan of Distribution as approved by the shareholders of the
Fund.
It is understood that the Trust may desire to register the Fund's
shares for sale in certain states which impose expense limitations on
mutual funds. The Trust agrees that it will register the Fund's shares
in such states only with the prior written consent of the Advisor.
7. Compensation. The Trust will pay the Advisor and the Advisor will
accept as full compensation an investment advisory fee, based upon the
daily average net assets of each Fund, computed at the end of each
month and payable within five (5) business days thereafter, based upon
the schedule attached hereto as Exhibit A.
8.(a) Limitation of Liability. The Advisor shall not be liable for any error
of judgment, mistake of law or for any other loss whatsoever suffered
by the Fund in connection with the performance of this Agreement,
except a loss resulting from a breach of fiduciary duty with respect to
the receipt of compensation for services or a loss resulting from
wilful misfeasance, bad faith or gross negligence on the part of the
Advisor in the performance of its duties or from reckless disregard by
it of its obligations and duties under this Agreement.
8.(b) Indemnification of Advisor. Subject to the limitations set forth in
this Subsection 8(b), the Fund shall indemnify, defend and hold
harmless (from the assets of the Trust or Trusts to which the conduct
in question relates) the Advisor against all loss, damage and
liability, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses,
including reasonable accountants' and counsel fees, incurred by the
Advisor in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, before any court
or administrative or legislative body, related to or resulting from
this Agreement or the performance of services hereunder, except with
respect to any matter as to which it has been determined that the loss,
damage or liability is a direct result of (i) a breach of fiduciary
duty with respect to the receipt of compensation for services; or (ii)
willful misfeasance, bad faith or gross negligence on the part of the
Advisor in the performance of its duties or from reckless disregard by
it of its duties under this Agreement (either and both of the conduct
described in clauses (i) and (ii) above being referred to hereinafter
as "Disabling Conduct"). A determination that the Advisor is entitled
to indemnification may be made by (i) a final decision on the merits by
a court or other body before whom the proceeding was brought that the
Advisor was not liable by reason of Disabling Conduct, (ii) dismissal
of a court action or an administrative proceeding against the Advisor
for insufficiency of evidence of Disabling Conduct, or (iii) a
reasonable determination, based upon a review of the facts, that the
Advisor was not liable by reason of Disabling Conduct by, (a) vote of a
majority of a quorum of Trustees who are neither "interested persons"
of the Fund as the quoted phrase is defined in Section 2(a)(19) of the
1940 Act nor parties to the action, suit or other proceeding on the
same or similar grounds that is then or has been pending or threatened
(such quorum of such Trustees being referred to hereinafter as the
"Independent Trustees"), or (b) an independent legal counsel in a
written opinion. Expenses, including accountants' and counsel fees so
incurred by the Advisor (but excluding amounts paid in satisfaction of
judgments, in compromise or as fines or penalties), may be paid from
time to time by the Fund or Trust to which the conduct in question
related in advance of the final disposition of any such action, suit or
proceeding; provided, that the Advisor shall have undertaken to repay
the amounts so paid if it is ultimately determined that indemnification
of such expenses is not authorized under this Subsection 8(b) and if
(i) the Advisor shall have provided security for such undertaking, (ii)
the Fund shall be insured against losses arising by reason of any
lawful advances, or (iii) a majority of the Independent Trustees, or an
independent legal counsel in a written opinion, shall have determined,
based on a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the Advisor
ultimately will be entitled to indemnification hereunder.
As to any matter disposed of by a compromise payment by the Advisor
referred to in this Subsection 8(b), pursuant to a consent decree or
otherwise, no such indemnification either for said payment or for any
other expenses shall be provided unless such indemnification shall be
approved (i) by a majority of the Independent Trustees or (ii) by an
independent legal counsel in a written opinion. Approval by the
Independent Trustees pursuant to clause (i) shall not prevent the
recovery from the Advisor of any amount paid to the Advisor in
accordance with either of such clauses as indemnification of the
Advisor is subsequently adjudicated by a court of competent
jurisdiction not to have acted in good faith in the reasonable belief
that the Advisor's action was in or not opposed to the best interest of
the Fund or to have been liable to the Fund or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in its conduct under the Agreement.
The right of indemnification provided by this Subsection 8(b) shall not
be exclusive of or affect any of the rights to which the Advisor may be
entitled. Nothing contained in this Subsection 8(b) shall affect any
rights to indemnification to which Trustees, officers or other
personnel of the Fund, and other persons may be entitled by contract or
otherwise under law, nor the power of the Fund to purchase and maintain
liability insurance on behalf of any such person.
The Board of Trustees of the Trust shall take all such action as may be
necessary and appropriate to authorize the Fund hereunder to pay the
indemnification required by this Subsection 8(b) including, without
limitation, to the extent needed, to determine whether the Advisor is
entitled to indemnification hereunder and the reasonable amount of any
indemnity due it hereunder, or employ independent legal counsel for
that purpose.
8.(c) The provisions contained in Section 8 shall survive the expiration or
other termination of this Agreement, shall be deemed to include and
protect the Advisor and its directors, officers, employees and agents
and shall inure to the benefit of its/their respective successors,
assigns and personal representatives.
9. Duration and Termination. This Agreement shall become effective upon
the date the registration statement of the Trust containing the Fund's
Prospectus is declared effective by the Securities and Exchange
Commission and, unless sooner terminated as provided herein, shall
continue in effect for two years. Thereafter, this Agreement shall be
renewable for successive periods of one year each, provided such
continuance is specifically approved annually:
(a) By the vote of a majority of those members of the Board of
Trustees who are not parties to this Agreement or interested
persons of any such party (as that term is defined in the 1940
Act), cast in person at a meeting called for the purpose of
voting on such approval; and
(b) By vote of either the Board of Trustees or a majority (as that
term is defined in the 1940 Act) of the outstanding voting
securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated by the
Fund or by the Advisor at any time on sixty (60) days' written notice,
without the payment of any penalty, provided that termination by the
Fund must be authorized either by vote of the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund.
This Agreement will automatically terminate in the event of its
assignment (as that term is defined in the 1940 Act).
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by a written
instrument signed by the party against which enforcement of the change,
waiver, discharge or termination is sought. No material amendment of
this Agreement shall be effective until approved by vote of the holders
of a majority of the Fund's outstanding voting securities (as defined
in the 1940 Act).
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby. This Agreement shall be
binding and shall inure to the benefit of the parties hereto and their
respective successors.
12. Applicable Law. This Agreement shall be construed in accordance with,
and governed by, the laws of the State of North Carolina.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
ATTEST: CAPITAL MANAGEMENT INVESTMENT TRUST
By: By:
Title: Title:
ATTEST: CAPITAL MANAGEMENT ASSOCIATES, INC.
By: By:
Title: Title:
EXHIBIT A
INVESTMENT ADVISOR'S COMPENSATION SCHEDULE
For the services delineated in the INVESTMENT ADVISORY AGREEMENT, the Investment
Advisor shall be compensated monthly, as of the last day of each month, within
five business days of the month end, a fee based upon net assets according to
the following schedule.
Annual
Net Assets Fee
On the first $100 million 1.00%
On the next $150 million 0.90%
On the next $250 million 0.85%
On all assets over $500 million 0.80%
Exhibit 99.B.6
DISTRIBUTION AGREEMENT
AGREEMENT entered into as of the date the registration statement of the Capital
Management Equity Fund of Capital Management Investment Trust becomes effective
with the Securities and Exchange Commission, by and between Capital Management
Investment Trust, an unincorporated business trust organized under the laws of
The Commonwealth of Massachusetts (the "Trust"), and Shields & Company, Inc., a
New York corporation ("Distributor").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is so registered under the Investment Company Act of 1940, as
amended (the "1940 Act") ; and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest, par value $0 per share, in separate series representing the
interests in separate funds of securities and other assets; and
WHEREAS, the Trust intends to offer a series of shares (the "Shares")
representing interests in the Capital Management Equity Fund (the "Fund") of the
Trust and is registering the Shares under the Securities Act of 1933, as amended
(the "1933 Act"), pursuant to a registration statement on Form N-1A (the
"Registration Statement"), including a prospectus (the "Prospectus") and a
statement of additional information (the "Statement of Additional Information");
and
WHEREAS, the Trust has adopted a Distribution Plan pursuant to Rule 12b-1 under
the 1940 Act (the "Distribution Plan") and may enter into related agreements
providing for the distribution of Shares of the Fund; and
WHEREAS, Distributor has agreed to act as distributor of the shares of the Fund
for the period of this Agreement;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. Appointment of Distributor.
(a) The Trust hereby appoints Distributor its exclusive agent for the
distribution of the Shares of the Fund in jurisdictions wherein such Shares may
be legally offered for sale; provided, however, that the Trust in its absolute
discretion may issue Shares of the Fund in connection with (i) the payment or
reinvestment of dividends or distributions, (ii) any merger or consolidation of
the Trust or of the Fund with any other investment company or trust or any
personal holding company, or the acquisition of the assets of any such entity or
another fund of the Trust; or (iii) any offer of exchange permitted by Section
11 of the 1940 Act.
(b) Distributor hereby accepts such appointment as exclusive agent for
the distribution of the Shares of the Fund and agrees that it will sell the
Shares as agent for the Trust at prices determined as hereinafter provided and
on the terms hereinafter set forth, all according to applicable federal and
state laws and regulations and to the Agreement and Declaration of Trust of the
Trust.
(c) Distributor may sell Shares of the Fund to or through qualified
dealers or others. Distributor will require each dealer to conform to the
provisions hereof, the Registration Statement and the Prospectus and Statement
of Additional Information, and applicable law; and neither Distributor nor any
such dealers shall withhold the placing of purchase orders for Shares so as to
make a profit thereby.
(d) Distributor shall order Shares of the Fund from the Trust only to
the extent that it shall have received purchase orders therefor. Distributor
will not make, or authorize any dealers or others to make: (i) any short sales
of Shares; or (ii) any sales of Shares to any Trustee or officer of the Trust or
to any officer or director of Distributor or of any corporation or association
furnishing investment advisory, managerial or supervisory services to the Trust,
or to any such corporation or association, unless such sales are made in
accordance with the then current Prospectus and Statement of Additional
Information.
(e) Distributor is not authorized by the Trust to give any information
or make any representations regarding the Shares of the Fund, except such
information or representations as are contained in the Registration Statement or
in the current Prospectus or Statement of Additional Information of the Fund, or
in sales literature prepared by or on behalf of the Trust for Distributor's use.
(f) Notwithstanding any provision hereof, the Trust may terminate,
suspend or withdraw the offering of Shares of the Fund whenever, in its sole
discretion, it deems such action to be desirable.
2. Offering Price of Shares. All Fund Shares sold under this
Agreement shall be sold at the public offering price per Share in effect at the
time of the sale, as described in the then current Prospectus of the Fund;
provided, however, that any public offering price for the Shares shall be the
net asset value per Share. Distributor shall be entitled to commissions and
other fees and payments under the Distribution Plan. At no time shall the Trust
receive less than the full net asset value of the Shares, determined in the
manner set forth in the then current Prospectus and Statement of Additional
Information.
3. Furnishing of Information. The Trust shall furnish to Distributor
copies of any information, financial statements and other documents that
Distributor may reasonably request for use in connection with the sale of shares
of the Fund under this Agreement. The Trust shall also make available a
sufficient number of copies of the Fund's current Prospectus and Statement of
Additional Information for use by the Distributor.
4. Expenses. (a) The Trust will pay or cause to be paid the following
expenses: (i) preparation, printing and distribution to shareholders of the
Prospectus and Statement of Additional Information; (ii) preparation, printing
and distribution of reports and other communications to shareholders; (iii)
registration of the Shares under the federal securities laws; (iv) qualification
of the Shares for sale in certain states; (v) qualification of the Trust as a
dealer or broker under state law as well as qualification of the Trust as an
entity authorized to do business in certain states; (vi) maintaining facilities
for the issue and transfer of Shares; (vii) supplying information, prices and
other data to be furnished by the Trust under this Agreement; and (viii) certain
taxes applicable to the sale or delivery of the Shares or certificates therefor.
(b) Except to the extent such expenses are borne by the Trust pursuant
to the Distribution Plan, Distributor will pay or cause to be paid the following
expenses: (i) payments to sales representatives of the Distributor and to
securities dealers and others in respect of the sale of Shares of the Fund; (ii)
payment of compensation to and expenses of employees of the Distributor and any
of its affiliates to the extent they engage in or support distribution of Fund
Shares or render shareholder support services not otherwise provided by the
Trust's transfer agent, including, but not limited to, office space and
equipment, telephone facilities and expenses, answering routine inquiries
regarding the Fund, processing shareholder transactions, and providing such
other shareholder services as the Trust may reasonably request; (iii)
formulation and implementation of marketing and promotional activities,
including, but not limited to, direct mail promotions and television, radio,
newspaper, magazine and other mass media advertising; (iv) preparation, printing
and distribution of sales literature and of Prospectuses and Statements of
Additional Information and reports of the Trust for recipients other than
existing shareholders of the Fund; and (v) obtaining such information, analyses
and reports with respect to marketing and promotional activities as the Trust
may, from time to time, reasonably request.
(c) Distributor in connection with the Distribution Plan shall prepare
and deliver reports to the Trustees of the Trust on a regular basis, at least
quarterly, showing the expenditures with respect to the Fund pursuant to the
Distribution Plan and the purposes therefor, as well as any supplemental reports
as the Trustees of the Trust, from time to time, may reasonably request.
5. Repurchase of Shares. Distributor as agent and for the account of
the Trust may repurchase Shares of the Fund offered for resale to it and redeem
such Shares at their net asset value.
6. Indemnification by the Trust. In absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of Distributor, the Trust agrees to indemnify Distributor
and its officers and partners against any and all claims, demands, liabilities
and expenses that Distributor may incur under the 1933 Act, or common law or
otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in any registration statement or prospectus (except a
prospectus of the Fund prepared for use under Rule 482 under the 1933 Act) or
statement of additional information of the Fund, or any omission to state a
material fact therein, the omission of which makes any statement contained
therein misleading, unless such statement or omission was made in reliance upon
and in conformity with information furnished to the Trust in connection
therewith by or on behalf of Distributor. Nothing herein contained shall
require the Trust to take any action contrary to any provision of its Agreement
and Declaration of Trust or any applicable statute or regulation.
7. Indemnification by Distributor. Distributor agrees to indemnify
the Trust and its officers and Trustees against any and all claims, demands,
liabilities and expenses which the Trust may incur under the 1933 Act, or common
law or otherwise, arising out of or based upon (i) any alleged untrue statement
of a material fact contained in any registration statement or prospectus or
statement of additional information of the Fund, or any omission to state a
material fact therein if such statement or omission was made in reliance upon
and in conformity with information furnished to the Trust in connection
therewith by or on behalf of Distributor; (ii) any act or deed of Distributor or
its sales representatives which has not been authorized by the Trust in any
prospectus or statement of additional information of the Fund or by this
Agreement ; or (iii) any alleged untrue statement of a material fact contained
in any prospectus of the Fund prepared for use under Rule 482 under the 1933
Act, or any omission to state a material fact therein.
8. Term and Termination.
(a) This Agreement shall become effective upon the date the
registration statement of the Trust containing the Fund's Prospectus is declared
effective by the Securities and Exchange Commission and, unless sooner
terminated as provided herein, shall continue in effect for two years thereafter
and shall continue in full force and effect for successive periods of one year
thereafter, but only so long as each such continuance is approved (i) by either
the Trustees of the Trust or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Fund and, in either event, (ii)
by vote of a majority of the Trustees of the Trust who are not parties to this
Agreement or interested persons (as defined in the 1940 Act) of any such party
and who have no direct or indirect financial interest in this Agreement or in
the operation of the Distribution Plan or in any agreement related thereto
("Independent Trustees"), cast at a meeting called for the purpose of voting on
such approval.
(b) This Agreement may be terminated at any time without the payment of
any penalty by vote of the Trustees of the Trust or a majority of the
Independent Trustees or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Fund or by Distributor, on sixty
days' written notice to the other party.
(c) This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
9. Limitation of Liability. It is expressly agreed that the
obligations of the Trust hereunder shall not be binding upon any of the
Trustees, officers or shareholders of the Trust personally, but shall bind only
the assets and property of the Trust. The term "Capital Management Investment
Trust" means and refers to the Trustees from time to time serving under the
Agreement and Declaration of Trust of the Trust dated October 8, 1990, a copy of
which is on file with the Secretary of The Commonwealth of Massachusetts. The
execution and delivery of this Agreement has been authorized by the Trustees,
and this Agreement has been signed on behalf of the Trust by an authorized
officer of the Trust, acting as such and not individually, and neither such
authorization by such Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the assets and property
of the Trust as provided in the Agreement and Declaration of Trust.
IN WITNESS THEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above.
CAPITAL MANAGEMENT INVESTMENT TRUST
Attest:
By:
SHIELDS & COMPANY
Attest:
By:
Exhibit 99.B.8
CUSTODY AGREEMENT
(Mutual Funds)
THIS AGREEMENT is made as of __________________, 199__, by and between CAPITAL
MANAGEMENT INVESTMENT TRUST (the "Trust"), a Massachusetts business trust, with
respect to its existing series as of the date of this Agreement, and such other
series as shall be designated from time to time by the Trust (the "Fund" or
"Funds"), and WACHOVIA BANK OF NORTH CAROLINA, N.A., a national banking
association (the "Custodian").
The Trust desires that its securities and funds shall be hereafter held and
administered by the Custodian pursuant to the terms of this Agreement, and,
pursuant to a separate agreement, The Nottingham Company, Inc., a North Carolina
corporation ("Nottingham"), has agreed to perform the duties of Transfer Agent,
Accounting Services Agent, Dividend Disbursing Agent and Administrator for the
Fund.
In consideration of the mutual agreements herein, the Trust and the Custodian
agree as follows:
1. DEFINITIONS.
As used herein, the following words and phrases shall have the meanings
shown in this Section 1:
"Securities" includes stocks, shares, bonds, debentures, bills, notes,
mortgages, certificates of deposit, bank time deposits, bankers'
acceptances, commercial paper, scrip, warrants, participation
certificates, evidences of indebtedness, or other obligations and any
certificates, receipts, warrants or other instruments representing
rights to receive, purchase, or subscribe for the same, or evidencing
or representing any other rights or interests therein, or in any
property or assets.
"Oral Instructions" shall mean an authorization, instruction, approval,
item or set of data, or information of any kind transmitted to the
Custodian in person or by telephone, telegram, telecopy or other
mechanical or documentary means lacking original signature, by an
officer or employee of the Trust or an employee of Nottingham in its
capacity as Transfer Agent, Accounting Services Agent, Administrator
and Dividend Disbursing Agent who has been authorized by a resolution
of the Board of Trustees of the Trust or the Board of Directors of
Nottingham, as the case may be, to give Written Instructions on behalf
of the Trust.
"Written Instructions" shall mean an authorization, instruction,
approval, item or set of data, or information of any kind transmitted
to the Custodian containing original signatures or a copy of such
document transmitted by telecopy including transmission of such
signature, reasonably believed by the Custodian to be the signature of
an officer or employee of the Trust or an employee of Nottingham in its
capacity as Transfer Agent, Accounting Services Agent, Administrator or
Dividend Disbursing Agent who has been authorized by a resolution of
the Board of Trustees of the Trust or Board of Directors of Nottingham,
as the case may be, to give Written Instructions on behalf of the
Trust.
"Securities Depository" shall mean a system for the central handling of
securities where all securities of any particular class or series of
any issuer deposited within the system are treated as fungible and may
be transferred or pledged by bookkeeping entry without physical
delivery of securities.
"Officers' Certificate" shall mean a direction, instruction or
certification in writing signed in the name of the Trust by the
President, Secretary or Assistant Secretary, or the Treasurer or
Assistant Treasurer of the Trust, or any other persons duly authorized
to sign by the Board of Trustees or the Executive Committee of the
Trust.
"Book-Entry Securities" shall mean securities issued by the Treasury of
the United States of America and federal agencies of the United States
of America which are maintained in the book-entry system as provided in
Subpart O of Treasury Circular No. 300, 31 CFR 306, Subpart B of 31 CFR
Part 350, and the book-entry regulations of federal agencies
substantially in the form of Subpart O, and the term Book-Entry Account
shall mean an account maintained by a Federal Reserve Bank in
accordance with the aforesaid Circular and regulations.
2. DOCUMENTS TO BE FILED BY TRUST.
The Trust shall from time to time file with the Custodian a certified
copy of each resolution of its Board of Trustees authorizing execution
of Written Instructions and the number of signatories required,
together with certified signatures of the officers and other
signatories authorized to sign, which shall constitute conclusive
evidence of the authority of the officers and other signatories
designated therein to act, and shall be considered in full force and
effect and the Custodian shall be fully protected in acting in reliance
thereon until it receives a new certified copy of a resolution adding
or deleting a person or persons with authority to give Written
Instructions. If the certifying officer is authorized to sign Written
Instructions, the certification shall also be signed by a second
officer of the Trust. The Trust also agrees that the Custodian may
rely on Written Instructions received from Nottingham as Agent for the
Trust if those Written Instructions are given by persons having
authority pursuant to resolutions of the Board of Trustees of the
Trust.
The Trust shall from time to time file with the Custodian a certified
copy of each resolution of the Board of Trustees authorizing the
transmittal of Oral Instructions and specifying the person or persons
authorized to give Oral Instructions in accordance with this Agreement.
The Trust agrees that the Custodian may rely on Oral Instructions
received from Nottingham, as agent for the Trust, if those instructions
are given by persons reasonably believed by the Custodian to have such
authority. Any resolution so filed with the Custodian shall be
considered in full force and effect and the Custodian shall be fully
protected in acting in reliance thereon until it actually receives a
new certified copy of a resolution adding or deleting a person or
persons with authority to give Oral Instructions. If the certifying
officer is authorized to give Oral Instructions, the certification
shall also be signed by a second officer of the Trust.
3. RECEIPT AND DISBURSEMENT OF FUNDS.
(a) The Custodian shall open and maintain a separate account or
accounts in the name of each Fund of the Trust, subject only to
draft or order by the Custodian acting pursuant to the terms of
this Agreement. The Custodian shall hold in safekeeping in such
account or accounts, subject to the provisions hereof, all funds
received by it from or for the account of the Trust. The Trust
will deliver or cause to be delivered to the Custodian all funds
owned by the Trust, including cash received for the issuance of
its shares during the period of this Agreement. The Custodian
shall make payments of funds to, or for the account of, the
Trust from such funds only:
(i) for the purchase of securities for the portfolio of
the Trust upon the delivery o f such securities to the
Custodian (or to any bank, banking firm or trust
company doing business in the United States and
designated by the Custodian as its sub-custodian or
agent for this purpose or any foreign bank qualified
under Rule 17f- 5 of the Investment Company Act of
1940 an d acting as sub-custodian), registered (if
registerable) in the name of the Trust or of the
nominee of the Custodian referred t o in Section 8 or
in proper form for transfer, or, in the case of
repurchase agreements entered into between the Trust
and the Custodian or other bank or broker dealer (A)
against delivery of the securities either in
certificate form or through an entity crediting the
Custodian' s account at the Federal Reserve Bank with
such securities or (B) upon delivery of th e receipt
evidencing purchase by the Trust of securities owned
by the Custodian along with written evidence of the
agreement by the Custodian bank to repurchase such
securities from the Trust;
(ii) for the payment of interest, dividends, taxes,
management or supervisory fees, or operating expenses
(including, without limitation, Board of Trustees'
fees and expenses, and fees for legal, accounting and
auditing services) and for redemption or repurchase of
shares of the Trust;
(iii) for payments in connection with the conversion,
exchange or surrender of securities owned or
subscribed to by the Trust held by or to be delivered
to the Custodian;
(iv) for the payment to any bank of interest on all or any
portion of the principal of any loan made by such bank
to the Trust;
(v) for the payment to any person, firm or corporation who
has borrowed the Trust's portfolio securities the
amount deposited with the Custodian as collateral for
such borrowing upon the delivery of such securities to
the Custodian, registered (i f registerable) in the
name of the Trust o r of the nominee of the Custodian
referred to in Section 8 or in proper form for
transfer; or
(vi) for other proper purposes of the Trust.
Before making any such payment the Custodian shall receive (and
may rely upon) Written Instructions or Oral Instructions
directing such payment and stating that it is for a purpose
permitted under the terms of this subsection (a). In respect of
item (vi), the Custodian will take such action only upon receipt
of an Officers' Certificate and a certified copy of a resolution
of the Board of Trustees or the Executive Committee of the Trust
signed by an officer of the Trust and certified by the Secretary
or an Assistant Secretary, specifying the amount of such
payment, setting forth the purpose for which such payment is to
be made. In respect of item (v), the Custodian shall make
payment to the borrower of securities loaned by the Trust of
part of the collateral deposited with the Custodian upon receipt
of Written Instructions from the Trust or Nottingham stating
that the market value of the securities loaned has declined and
specifying the amount to be paid by the Custodian without
receipt or return of any of the securities loaned by the Trust.
In respect of item (i), in the case of repurchase agreements
entered into with a bank which is a member of the Federal
Reserve System, the Custodian may transfer funds to the account
of such bank, which may be itself, prior to receipt of written
evidence that the securities subject to such repurchase
agreement have been transferred by book-entry to the Custodian's
non-proprietary account at the Federal Reserve Bank, or in the
case of repurchase agreements entered into with the Custodian,
of the safekeeping receipt and repurchase agreement, provided
that such securities have in fact been so transferred by
book-entry, or in the case of repurchase agreements entered into
with the Custodian, the safekeeping receipt is received prior to
the close of business on the same day.
(b) Notwithstanding anything herein to the contrary, the Custodian
may at any time or times with the written approval of the Board
of Trustees, appoint (and may at any time remove without the
written approval of the Trust) any other bank or trust company
as its sub-custodian or agent to carry out such of the
provisions of Subsection (a) of this Section 3 as instructions
from the Trust may from time to time request; provided, however,
that the appointment of such sub-custodian or agent shall not
relieve the Custodian of any of its responsibilities hereunder;
and provided, further, that the Custodian shall not enter into
any arrangement with any subcustodian unless such sub-custodian
meets the requirements of Section 26 of the Investment Company
Act of 1940 and Rule 17f-5 thereunder, if applicable.
(c) The Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money received
by the Custodian for the accounts of the Trust.
4. RECEIPT OF SECURITIES.
(a) The Custodian shall hold in safekeeping in a separate account,
and physically segregated at all times from those of any other
persons, firms, corporations or trusts or any other series of
the Trust, pursuant to the provisions hereof, all securities
received by it from or for the account of each series of the
Trust, and the Trust will deliver or cause to be delivered to
the Custodian all securities owned by the Trust. All such
securities are to be held or disposed of by the Custodian under,
and subject at all times to the instructions pursuant to, the
terms of this Agreement. The Custodian shall have no power or
authority to assign, hypothecate, pledge, lend or otherwise
dispose of any such securities and investments, except pursuant
to instructions and only for the account of the Trust as set
forth in Section 5 of this Agreement.
(b) Notwithstanding anything herein to the contrary, the Custodian
may at any time or times with the written approval of the Board
of Trustees, appoint (and may at any time without the written
approval of such Board of Trustees remove) any other bank or
trust company as its sub-custodian or agent to carry out such of
the provisions of Subsection (a) of this Section 4 and of
Section 5 of this Agreement, as instructions may from time to
time request, provided, however, that the appointment of such
sub-custodian or agent shall not relieve the Custodian of any of
its responsibilities hereunder, and provided, further, that the
Custodian shall not enter into arrangement with any
sub-custodian unless such sub-custodian meets the requirements
of Section 26 of the Investment Company Act of 1940 or Rule
17f-5 thereunder, if applicable.
5. TRANSFER, EXCHANGE, REDELIVERY, ETC. OF SECURITIES.
The Custodian shall have sole power to release or deliver any
Securities of the Trust held by it pursuant to this Agreement. The
Custodian agrees to transfer, exchange or deliver Securities held by it
on behalf of the Trust hereunder only:
(a) for sales of such Securities for the account of the Trust upon
receipt by the Custodian of Payment therefor;
(b) when such securities mature or are called, redeemed or retired
or otherwise become payable;
(c) for examination by any broker selling any such securities in
accordance with "street delivery" custom;
(d) in exchange for or upon conversion into other Securities alone
or other securities and cash whether pursuant to any plan of
merger, consolidation, reorganization, recapitalization or
readjustment, or otherwise;
(e) upon conversion of such Securities pursuant to their terms into
other Securities;
(f) upon exercise of subscription, purchase or other similar rights
represented by such Securities;
(g) for the purpose of exchanging interim receipts for temporary
Securities for definitive securities;
(h) for the purpose of effecting a loan of the portfolio Securities
to any person, firm, corporation or trust upon the receipt by
the Custodian of cash or cash equivalent collateral at least
equal to the market value of the securities loaned;
(i) to any bank for the purpose of collateralizing the obligation of
the Trust to repay any moneys borrowed by the Trust from such
bank; provided, however, that the Custodian may at the option of
such lending bank keep such collateral in its possession,
subject to the rights of such bank given to it by virtue of any
promissory note or agreement executed and delivered by the Trust
to such bank; or
(j) for other proper purposes of the Trust.
As to any deliveries made by the Custodian pursuant to items (a), (b),
(c), (d), (e), (f), (g) and (h), Securities or funds receivable in
exchange therefor shall be deliverable to the Custodian. Before making
any such transfer, exchange or delivery, the Custodian shall receive
(and may rely upon) instructions requesting such transfer, exchange, or
delivery and stating that it is for a purpose permitted under the terms
(a), (b), (c), (d), (e), (f), (g), (h), or (i) of this Section 5, and,
in respect of item (j), upon receipt of instructions of a certified
copy of a resolution of the Board of Trustees of the Trust, signed by
an officer of the Trust and certified by its Secretary or an Assistant
Secretary, specifying the Securities to be delivered, setting forth the
purpose for which such delivery is to be made, declaring such purpose
to be a proper purpose of the Trust, and naming the person or persons
to whom delivery of such Securities shall be made. In respect of item
(h), the instructions shall state the market value of the Securities to
be loaned and the corresponding amount of collateral to be deposited
with the Custodian; thereafter, upon receipt of instructions stating
that the market value of the Securities loaned has increased and
specifying the amount of increase, the Custodian shall collect from the
borrower additional cash collateral in such amount.
6. FEDERAL RESERVE BOOK-ENTRY SYSTEM.
Notwithstanding any other provisions of this Agreement, it is expressly
understood and agreed that the Custodian is authorized in the
performance of its duties hereunder to deposit in the book-entry
deposit system operated by the Federal Reserve Bank (the "System"),
United States government, instrumentality and agency securities and any
other Securities deposited in the System and to use the facilities of
the System, as permitted by Rule 17f-4 under the Investment Company Act
of 1940, in accordance with the following terms and provisions:
(a) The Custodian may keep Securities of the Trust in the System
provided that such Securities are represented in an account
("Account") of the Custodian's in the System which shall not
include any assets of the Custodian other than assets held in a
fiduciary or custodian capacity.
(b) The records of the Custodian with respect to the participation
in the System through the Custodian shall identify by Book-Entry
Securities belonging to the Trust which are included with other
Securities deposited in the Account and shall at all times
during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of
the Trust and employees and agents of the Securities and
Exchange Commission.
(c) The Custodian shall pay for Securities purchased for the account
of the Trust upon:
(i) receipt of advice from the System that suc h
Securities have been transferred to the Account; and
(ii) the making of an entry on the records of the Custodian
to reflect such payment and transfer for the account
of the Trust. Th e Custodian shall transfer
Securities sold for the account of the Trust upon:
(1) receipt of advice from the System that
payment for such Securities has been
transferred to the Account; and
(2) the making of an entry on the records of the
Custodian to reflect such transfer and
payment for the account of the Trust. The
Custodian shall send the Trust a confirmation
of any transfers to or from the account of
the Trust.
(d) The Custodian will provide the Trust with any report obtained by
the Custodian on the System's accounting system, internal
accounting control and procedures for safeguarding Securities
deposited in the System. The Custodian will provide the Trust
with reports by independent public accountants on the accounting
system, internal accounting control and procedures for
safeguarding Securities, including Securities deposited in the
System relating to the services provided by the Custodian under
this Agreement; such reports shall detail material inadequacies
disclosed by such examination, and, if there are no such
inadequacies, shall so state, and shall be of such scope and in
such detail as the Trust may reasonably require and shall be of
sufficient scope to provide reasonable assurance that any
material inadequacies would be disclosed.
7. USE OF CLEARING FACILITIES.
Notwithstanding any other provisions of the Agreement, the Custodian
may, in connection with transactions in portfolio Securities by the
Trust, use the facilities of the Depository Trust Company ("DTC"), and
the Participants Trust Company ("PTC"), as permitted by Rule 17f-4
under the Investment Company Act of 1940, if such facilities have been
approved by the Board of Trustees of the Trust in accordance with the
following:
(a) DTC and PTC may be used to receive and hold eligible Securities
owned by the Trust;
(b) payment for Securities purchased may be made through the
clearing medium employed by DTC and PTC for transactions of
participants acting through them;
(c) Securities of the Trust deposited in DTC and PTC will at all
times be segregated from any assets and cash controlled by the
Custodian in other than a fiduciary or custodian capacity but
may be commingled with other assets held in such capacities.
Subject to the provisions of the Agreement with regard to
instructions, the Custodian will pay out money only upon receipt
of Securities or notification thereof and will deliver
Securities only upon the receipt of money or notification
thereof;
(d) all books and records maintained by the Custodian which relate
to the participation in DTC and PTC shall identify by Book-Entry
Securities belonging to the Trust which are deposited in DTC and
PTC and shall at all times during the Custodian's regular
business hours be open to inspection by the duly authorized
officers, employees, agents and auditors, and the Trust will be
furnished with all the information in respect of the services
rendered to it as it may require;
(e) the Custodian will make available to the Trust copies of any
internal control reports concerning DTC and PTC delivered to it
by either internal or external auditors within ten days after
receipt of such a report by the Custodian; and
(f) confirmations of transactions using the facilities of DTC and
PTC shall be provided as set forth in Rule 17f-4 of the
Investment Company Act of 1940.
8. CUSTODIAN'S ACTS WITHOUT INSTRUCTIONS.
Unless and until the Custodian receives instructions to the contrary,
the Custodian shall on behalf of the Trust:
(a) Present for payment all coupons and other income items held by
it for the account of the Trust which call for payment upon
presentation and hold the funds received by it upon such payment
for the Trust;
(b) collect interest and cash dividends received, with notice to the
Trust, for the accounts of the Trust;
(c) hold for the accounts of the Trust hereunder all stock
dividends, rights and similar Securities issued with respect to
any securities held by it hereunder;
(d) execute as agent on behalf of the Trust all necessary ownership
certificates required by the Internal Revenue Code or the Income
Tax Regulations of the United States Treasury Department or
under the laws of any state now or hereafter in effect,
inserting the name of such certificates as the owner of the
Securities covered thereby, to the extent it may lawfully do so;
(e) transmit promptly to the Trust all reports, notices and other
written information received by the Custodian from or concerning
issuers of the portfolio Securities; and
(f) collect from the borrower the Securities loaned and delivered by
the Custodian pursuant to item (h) of Section 5 hereof, any
interest or cash dividends paid on such Securities, and all
stock dividends, rights and similar Securities issued with
respect to any such loaned Securities.
With respect to Securities of foreign issuers, it is expected that the
Custodian will use its best efforts to effect collection of dividends,
interest and other income, and to notify the Trust of any call for
redemption, offer of exchange, right of subscription, reorganization,
or other proceedings affecting such Securities, or any default in
payments due thereon. It is understood, however, that the Custodian
shall be under no responsibility for any failure or delay in effecting
such collections or giving such notice with respect to Securities of
foreign issuers, regardless of whether or not the relevant information
is published in any financial service available to it unless (a) such
failure or delay is due to the Custodians' or any sub-custodians'
negligence or (b) any relevant sub-custodian has acted in accordance
with established industry practices. Collections of income in foreign
currency are, to the extent possible, to be converted into United
States dollars unless otherwise instructed in writing, and in effecting
such conversion the Custodian may use such methods or agencies as it
may see fit, including the facilities of its own foreign division at
customary rates. All risk and expenses incident to such collection and
conversion is for the accounts of the Trust and the Custodian shall
have no responsibility for fluctuations in exchange rates affecting any
such conversion.
9. REGISTRATION OF SECURITIES.
Except as otherwise directed by instructions, the Custodian shall
register all Securities, except such as are in bearer form, in the name
of a registered nominee of the Custodian, as defined in the Internal
Revenue Code and any Regulation of the Treasury Department issued
thereunder or in any provision of any subsequent Federal tax law
exempting such transaction from liability for stock transfer taxes, and
shall execute and deliver all such certificates in connection therewith
as may be required by such laws or Regulations or under the laws of any
State. The Custodian shall use its best efforts to the end that the
specific securities held by it hereunder shall be at all times
identifiable in its records.
The Trust or Nottingham shall from time to time furnish to the
Custodian appropriate instruments to enable the Custodian to hold or
deliver in proper form for transfer, or to register in the name of its
registered nominee, any securities which it may hold for the accounts
of the Trust and which may from time to time be registered in the name
of the Trust.
10. SEGREGATED ACCOUNT.
The Custodian shall upon receipt of written instructions from the Trust
or Nottingham establish and maintain a segregated account or accounts
for and on behalf of the Trust, into which account or accounts may be
transferred cash and/or Securities, including Securities maintained in
an account by the Custodian pursuant to Section 4 hereof,
(i) in accordance with the provisions of any agreement
among the Trust, the Custodian and a broker-dealer
registered under the Securities and Exchange Act of
1934 and a member of the NASD (or any futures
commission merchant registered under the Commodity
Exchange Act), relating to compliance with the rules
of The Options Clearing Corporation and of any
registered national securities exchange (or the
commodity Futures Trading Commission or an y
registered contract market), or of any similar
organization or organizations, regarding escrow or
other arrangements in connection with transactions by
the Trust;
(ii) for purposes of segregating cash or government
securities in connection with options purchased, sold
or written by the Trust or commodity futures contracts
or options thereon purchased or sold by the Trust;
(iii) for the purposes of compliance by the Trus t with the
procedures required by the Investment Company Act
Release No. 10666, or any subsequent release or
releases of the Securities and Exchange Commission
relating to the maintenance of segregated accounts by
registered investment companies; and
(iv) for other proper corporate purposes, but only, in the
case of clause (iv), upon receipt of, in addition to
an Officer's Certificate, a certified copy of a
resolution of the Board of Trustees signed by an
officer of the Trust and certified b y the Secretary
or an Assistant Secretary, setting forth the purpose
or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
11. VOTING AND OTHER ACTIONS.
Neither the Custodian nor any nominee of the Custodian shall vote any
of the Securities held hereunder by or for the accounts of the Trust,
except in accordance with instructions. The Custodian shall execute
and deliver, or cause to be executed and delivered, to the appropriate
investment advisor of each series of the Trust, all notices, proxies
and proxy soliciting materials with relation to such Securities
(excluding any Securities loaned and delivered by the Custodian
pursuant to item (h) of Section 5 hereof), such proxies to be executed
by the registered holder of such Securities (if registered otherwise
than in the name of the Trust), but without indicating the manner in
which such proxies are to be voted. Such proxies shall be delivered by
regular mail to the appropriate investment advisor of each series of
the Trust.
12. TRANSFER TAX AND OTHER DISBURSEMENTS.
The Trust shall pay or reimburse the Custodian from time to time for
any transfer taxes payable upon transfers of securities made hereunder
and for all other necessary and proper disbursements and expenses made
or incurred by the Custodian in the performance of this Agreement. The
Custodian shall execute and deliver such certificates in connection
with Securities delivered to it or by it under this Agreement as may be
required under the provisions of the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, or under the
laws of any State, to exempt from taxation any exemptible transfers
and/or deliveries of any such securities.
13. CONCERNING THE CUSTODIAN.
(a) The Custodian's compensation shall be paid by the Trust. The
Custodian shall not be liable for any action taken in good faith
upon receipt of instructions as herein defined or a certified
copy of any resolution of the Board of Trustees, and may rely on
the genuineness of any such document which it may in good faith
believe to have been validly executed.
(b) The Custodian shall not be liable for any loss or damage,
resulting from its action or omission to act or otherwise,
except for any such loss or damage arising out of its own
negligence or willful misconduct and except that the Custodian
shall be responsible for the acts of any sub-custodian, or agent
appointed hereunder and approved by the Board of Trustees of the
Trust. At any time, the Custodian may seek advice from legal
counsel for the Trust whose legal fees shall be paid at the sole
expense of the Trust, with respect to any matter arising in
connection with this Agreement, and it shall not be liable for
any action taken or not taken or suffered by it in good faith in
accordance with the opinion of counsel for the Trust. The Trust
and not the Custodian shall be responsible for any fee or
charges by counsel for the Trust in connection with any such
opinion rendered to the Custodian.
(c) Without limiting the generality of the foregoing, the Custodian
shall be under no duty or obligation to inquire into, and shall
not be liable for:
(i) The validity of the issue of any Securitie s purchased
by or for the Trust, the legality of the purchase
thereof, or the propriety of the amount paid therefor;
(ii) The legality of the issue or sale of any Securities by
or for the Trust, or the propriety of the amount for
which the same are sold;
(iii) The legality of the issue or sale of any shares of the
Trust, or the sufficiency of the amount to be received
therefor;
(iv) The legality of the redemption of any shares of the
Trust, or the propriety of the amount to be paid
therefor;
(v) The legality of the declaration of any dividend or
distribution by the Trust, or the legality of the
issue of any Securitie s of the Trust in payment of
any dividend or distribution in shares;
(vi) The legality of the delivery of any Securities held
for the Trust for the purpose of collateralizing the
obligation of the Trust to repay any moneys borrowed
by the Trust; or
(vii) The legality of the delivery of any Securities held
for the Trust for the purpose of lending said
securities to any person, firm or corporation.
(d) The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount, if the Securities
upon which such amount is payable are in default, or if payment
is refused after due demand or presentation by the Custodian on
behalf of the Trust, unless and until
(i) the Custodian shall be directed to take such action by
written instructions signed in the name of the Trust
on behalf of the Trust by one of its executive
officers; and
(ii) the Custodian shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection
with any such action.
(e) The Custodian shall not be under any duty or obligation to
ascertain whether any securities at any time delivered to or
held by it for the account of the Trust, are such as may
properly be held by the Trust under the provisions of the
Trust's Declaration of Trust or By-Laws as amended from time to
time.
(f) The Trust agrees to indemnify and hold harmless the Custodian
and its nominees, sub-custodians, depositories and agent from
all taxes, charges, expenses, assessments, liabilities, and
losses (including counsel fees) incurred or assessed against it
or its nominees, sub-custodians, depositories and agents in
connection with the performance of this Agreement, except such
as may arise from its or its nominee's, sub-custodian's,
depositories' and agent's own negligent action, negligent
failure to act, breach of this agreement or willful misconduct.
The Custodian is authorized to charge any account of the Trust
for such items; provided, however, that, except for overdrafts
as to which the Custodian shall have the immediate right of
offset, prior to charging any such account for such items, the
Custodian shall first have forwarded an invoice for such item to
the Trust and 30 days shall have elapsed from the date of such
invoice to the Trust without payment of the same having been
received by the Custodian. In the event of any advance of funds
for any purpose made by the Custodian resulting from orders or
instructions of the Trust, or in the event that the Custodian or
its nominees, sub-custodians, depositories and agents shall
incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this
Agreement, except such as may arise from its or its nominee's
own negligent action, negligent failure to act or willful
misconduct any property at any time held for the accounts of the
Trust shall be security therefor. Nothing in this paragraph,
however, shall be deemed to apply to transaction and asset
holding fees or out of pocket expenses of the Custodian which
are payable by Nottingham, and as to such fees and expenses the
Custodian shall have no right of offset or security under this
paragraph.
(g) The Custodian agrees to indemnify and hold harmless the Trust
and Trust's Trustees and officers from all taxes, charges,
expenses, assessments, claims liabilities, and losses (including
counsel fees) incurred or assumed against any of them as a
result of any breach or violation of this Agreement by the
Custodian or any act or omission by the Custodian or its
Trustees, officers, employees and agents and resulting from
their negligence or willful misconduct.
(h) In the event that, pursuant to this Agreement, instructions
direct the Custodian to pay for securities on behalf of the
Trust, the Trust hereby grants to the Custodian a security
interest in such Securities, until the Custodian has been
reimbursed by the Trust in immediately available funds. The
instructions designating the Securities to be paid for shall be
considered the requisite description and designation of the
Securities pledged to the Custodian for purposes of the
requirements of the Uniform Commercial Code.
(i) The Custodian represents that it is qualified to act
as such under section 26(a) of the Investment Company
Act of 1940.
14. REPORTS BY THE CUSTODIAN.
(a) The Custodian shall furnish the Trust and the appropriate
investment advisor of each series of the Trust, daily with a
statement summarizing all transactions and entries for the
accounts of the Trust. The Custodian shall furnish the Trust at
the end of every month with a list of the portfolio Securities
held by it as Custodian for the Trust, adjusted for all
commitments confirmed by instructions as of such time. The
books and records of the Custodian pertaining to its actions
under this Agreement shall be open to inspection and audit at
reasonable times by officers of the Trust, its independent
public accountants and officers of its investment advisers.
(b) The Custodian will maintain such books and records relating to
transactions effected by it as are required by the Investment
Company Act of 1940, as amended, and any rule or regulation
thereunder; or by any other applicable provision of the law to
be maintained by the Trust or its Custodian, with respect to
such transactions, and preserving or causing to be preserved,
any such books and records for such periods as may be required
by any such rule or regulation.
15. TERMINATION OR ASSIGNMENT.
This agreement may be terminated by the Trust, or by the Custodian, on
sixty (60) days' notice, given in writing and sent by registered mail
to the Custodian, or to the Trust, as the case may be, at the address
hereinafter set forth. Upon any termination of this Agreement, pending
appointment by the Trust of a successor to the Custodian or a vote of
the shareholders of the Trust to dissolve or to function without a
Custodian of its funds, the Custodian shall not deliver funds,
Securities or other property of the Trust to the Trust, but may deliver
them to a bank or trust company of its own selection having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report of not less than ten million dollars ($10,000,000) and
otherwise qualified to act as a custodian to a registered investment
company as a Custodian for the Trust to be held under terms similar to
those of this Agreement; provided, however, that the Custodian shall
not be required to make any such delivery or payment until full payment
shall have been made to the Custodian of all its contractual fees,
compensations, costs and expenses, except for fees and expenses all as
set forth in Section 13 of this Agreement.
16. MISCELLANEOUS.
(a) Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian, shall
be sufficiently given if addressed to the Custodian and mailed
or delivered to it at its office at Wachovia Bank of North
Carolina, 301 North Main Street, Winston-Salem, North Carolina
27150, Attention: Corporate Custody (Mail Code NC31013), or at
such other place as the Custodian may from time to time
designate in writing.
(b) Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Trust, shall be
sufficiently given if addressed to the Trust and mailed or
delivered to it at 105 N. Washington Street, Rocky Mount, North
Carolina 27802, or at-such other place as the Trust may from
time to time designate in writing.
(c) This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties with the
same formality as this Agreement, and authorized or approved by
a resolution of the Board of Trustees of the Trust.
(d) This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns,
provided, however, that this Agreement shall not be assignable
by the Trust without the written consent of the Custodian or by
the Custodian without the written consent of the Trust,
authorized or approved by a resolution of its Board of Trustees.
(e) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such
counterparts shall, together, constitute but one instrument.
(f) This Agreement and the rights and obligations of the Trust and
the Custodian hereunder shall be construed and interpreted in
accordance with the laws of the State of North Carolina.
(g) The Declaration of Trust of the Trust has been filed with the
Secretary of State of the Commonwealth of Massachusetts. The
obligations of the Trust on behalf of the Funds are not
personally binding upon, nor shall resort be had to the private
property of any of the Trustees, shareholders, officers,
employees or agents of the Trust, but only the Trust's property
shall be bound.
IN WITNESS WHEREOF, the Trust and the Custodian have caused this Agreement to be
signed and witnessed by duly authorized persons as of the date first written
above. Executed in several counterparts, each of which is an original.
Attest: WACHOVIA BANK OF NORTH CAROLINA, N.A.
___________________________________
By:________________________________
Title:_____________________________
Attest: CAPITAL MANAGEMENT INVESTMENT TRUST
___________________________________
By:________________________________
Title:_____________________________
Exhibit 99.B.9(a)
FUND ACCOUNTING,
DIVIDEND DISBURSING & TRANSFER AGENT,
AND ADMINISTRATION AGREEMENT
THIS AGREEMENT, made and entered into as of the date the registration statement
of the Capital Management Equity Fund of the Capital Management Investment Trust
becomes effective with the Securities and Exchange Commission, by and between
CAPITAL MANAGEMENT INVESTMENT TRUST, a Massachusetts business trust (the
"Trust"), and THE NOTTINGHAM COMPANY, INC., a North Carolina corporation (the
"Administrator").
WHEREAS, the Trust is an open-end management investment company of the series
type which is registered under the Investment Company Act of 1940 (the "1940
Act"); and
WHEREAS, the Administrator is in the business of providing administrative
services to investment companies.
NOW THEREFORE, the Trust and the Administrator do mutually promise and agree as
follows:
1. Employment. The Trust hereby employs Administrator to act as fund
accountant, dividend disbursing and transfer agent and fund administrator for
each Fund of the Trust, unless the Administrator and an individual Fund of the
Trust determine it is in the best interests of that individual Fund to negotiate
a separate Schedule of Compensation under Exhibit C. Administrator, at its own
expense, shall render the services and assume the obligations herein set forth
subject to being compensated therefore as herein provided.
2. Delivery of Documents. The Trust has furnished the Administrator with
copies properly certified or authenticated of each of the following:
(a) The Trust's Declaration of Trust, as filed with the State of
Massachusetts (such Declaration, as presently in effect and as
it shall from time to time be amended, is herein called the
"Declaration");
(b) The Trust's By-Laws (such By-Laws, as presently in effect and as
they shall from time to time be amended, are herein called the
"By-Laws");
(c) Resolutions of the Trust's Board of Trustees authorizing the
appointment of the Administrator and approving this Agreement;
and
(d) The Trust's Registration Statement on Form N-1A under the 1940
Act and under the Securities Act of 1933 as amended, (the "1933
Act"), including all exhibits, relating to shares of beneficial
interest of, and containing the Prospectus of, each Fund of the
Trust (herein called the "Shares") as filed with the Securities
and Exchange Commission and all amendments thereto.
The Trust will furnish the Administrator with copies, properly certified or
authenticated, of all amendments of or supplements to the foregoing.
3. Duties of the Administrator. Subject to the policies and direction of the
Trust's Board of Trustees, the Administrator will provide a continuous executive
management program and day to day supervision for each of the Trust's Funds.
Services to be provided shall be in accordance with the Trust's organizational
and registration documents as listed in paragraph 2 hereof and with the
Prospectus of each Fund of the Trust. The Administrator further agrees that it:
(a) Will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission and will, in addition,
conduct its activities under this Agreement in accordance with
regulations of any other Federal and State agencies which may
now or in the future have jurisdiction over its activities;
(b) Will maintain, except as may be required to be maintained by
third parties hired by the Trust under Rule 31a-3 of the 1940
Act, the account books and records of the Trust and each Fund of
the Trust as required by Rule 31a-1 of the 1940 Act and will
preserve such records in accordance with Rule 31a-2 of the 1940
Act;
(c) Will provide, at its expense the necessary non-executive
personnel and data processing equipment and software to perform
the Portfolio Accounting Services, Expense Accrual and Payment
Services, Fund Valuation and Financial Reporting Services, Tax
Accounting Services, Compliance Control Services Registration
Services, SEC Filing Services, Drafting of Board of Trustee
Meeting Minutes, and Proxy Material Services shown on Exhibit A
hereof;
(d) Will provide, at its expense the non-executive personnel and
data processing equipment and software necessary to perform the
Shareholder Servicing functions shown on Exhibit B hereof;
(e) Will provide, at its expense, certain executive personnel for
the Trust as may be agreed upon from time to time with the Board
of Trustees; and
(f) Will provide all office space and general office equipment
necessary for the activities of the Trust except as may be
provided by third parties pursuant to separate agreements with
the Trust.
Notwithstanding anything contained in this Agreement to the contrary, the
Administrator (including its directors, officers, employees and agents) shall
not be required to perform any of the duties of, assume any of the obligations
or expenses of, or be liable for any of the acts or omissions of, any investment
advisor of a Fund of the Trust or other third party subject to separate
agreements with the Trust. The Administrator shall not be responsible hereunder
for the administration of the Code of Ethics of the Trust which shall be under
the responsibility of the investment advisors, except insofar as the Code of
Ethics applies to the personnel of the Administrator. It is the express intent
of the parties hereto that the Administrator shall not have control over or be
responsible for the placement (except as specifically directed by a Shareholder
of the Trust), investment or reinvestment of the assets of any Fund of the
Trust. The Administrator may from time to time, subject to the approval of the
Trustees, obtain at its own expense the services of consultants or other third
parties to perform part or all of its duties hereunder, and such parties may be
affiliates of the Administrator.
4. Services Not Exclusive. The management and administrative services
furnished by the Administrator hereunder are not to be deemed exclusive, and the
Administrator shall be free to furnish similar services to others so long as its
services under this Agreement are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Administrator hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request.
6. Expenses. During the term of this Agreement, the Administrator will pay all
expenses incurred by it in connection with the performance of its obligations
under this Agreement.
Notwithstanding the foregoing, the Trust shall pay the expenses and costs of the
following:
(a) Taxes;
(b) Brokerage fees and commissions with regard to portfolio
transaction of the Funds;
(c) Interest charges, fees and expenses of the custodian of the
Funds' portfolio securities;
(d) Fees and expenses of the Trust's dividend disbursing and
transfer agent, fund accounting agent and administrator, in
accordance with paragraph 7 herein;
(e) Costs, as may be allocable to and agreed upon in advance by the
Trustees and the Administrator, of all non-executive and
clerical personnel and all data processing equipment and
software in connection with the provision of fund accounting and
recordkeeping services and shareholder servicing functions as
contemplated herein;
(f) Auditing and legal expenses of the Trust;
(g) Cost of maintenance of the Trust's existence as a legal entity;
(h) Cost of special forms, stationery and telephone services (but
not telephone equipment) for the Trust;
(i) Compensation of Independent Trustees who are not interested
persons of the Trust as that term is defined by law;
(j) Costs of Trust meetings;
(k) Federal and State registration fees and expenses;
(l) Costs of setting in type, printing and mailing Prospectuses,
reports and notices to existing shareholders;
(m) The Advisory fees payable to each Funds' Investment Advisor;
(o) Direct out-of-pocket costs in connection with Trust activities,
such as the costs of long distance telephone and wire charges,
postage and the printing of special forms and stationery,
copying charges, financial publications used in connection with
Trust activities, etc., and
(p) Other actual out-of-pocket expenses of the Administrator as may
be agreed upon in writing from time to time by the Administrator
and the Trustees.
7. Compensation. For the services provided and the expenses assumed by
the Administrator pursuant to this Agreement, the Trust will pay the
Administrator and the Administrator will accept as full compensation the
administrative fees and expenses as set forth on Exhibit C attached hereto.
Special projects, not included herein and requested in writing by the Trustees,
shall be completed by the Administrator and invoiced to the Trust as mutually
agreed upon.
8.(a) Limitation of Liability. The Administrator shall not be liable for any
loss, damage or liability related to or resulting from the placement (except as
specifically directed by a Shareholder of the Trust), investment or reinvestment
of assets in any Fund of the Trust or the acts or omissions of any Fund's
investment advisor or any other third party subject to separate agreements with
the Trust. Further, the Administrator shall not be liable for any error of
judgment or mistake of law or for any loss or damage suffered by the Trust in
connection with the performance of this Agreement or any agreement with a third
party, except a loss resulting directly from (i) a breach of fiduciary duty on
the part of the Administrator with respect to the receipt of compensation for
services; or (ii) willful misfeasance, bad faith or gross negligence on the part
of the Administrator in the performance of its duties or from reckless disregard
by it of its duties under this Agreement.
8.(b) Indemnification of Administrator. Subject to the limitations set forth
in this Subsection 8(b), the Trust shall indemnify, defend and hold harmless
(from the assets of the Fund or Funds to which the conduct in question relates)
the Administrator against all loss, damage and liability, including but not
limited to amounts paid in satisfaction of judgments, in compromise or as fines
and penalties, and expenses, including reasonable accountants' and counsel fees,
incurred by the Administrator in connection with the defense or disposition of
any action, suit or other proceeding, whether civil or criminal, before any
court or administrative or legislative body, related to or resulting from this
Agreement or the performance of services hereunder, except with respect to any
matter as to which it has been determined that the loss, damage or liability is
a direct result of (i) a breach of fiduciary duty on the part of the
Administrator with respect to the receipt of compensation for services; or (ii)
willful misfeasance, bad faith or gross negligence on the part of the
Administrator in the performance of its duties or from reckless disregard by it
of its duties under this Agreement (either and both of the conduct described in
clauses (i) and (ii) above being referred to hereinafter as "Disabling
Conduct"). A determination that the Administrator is entitled to indemnification
may be made by (i) a final decision on the merits by a court or other body
before whom the proceeding was brought that the Administrator was not liable by
reason of Disabling Conduct, (ii) dismissal of a court action or an
administrative proceeding against the Administrator for insufficiency of
evidence of Disabling Conduct, or (iii) a reasonable determination, based upon a
review of the facts, that the Administrator was not liable by reason of
Disabling Conduct by, (a) vote of a majority of a quorum of Trustees who are
neither "interested persons" of the Trust as the quoted phrase is defined in
Section 2(a)(19) of the 1940 Act nor parties to the action, suit or other
proceeding on the same or similar grounds that is then or has been pending or
threatened (such quorum of such Trustees being referred to hereinafter as the
"Independent Trustees"), or (b) an independent legal counsel in a written
opinion. Expenses, including accountants' and counsel fees so incurred by the
Administrator (but excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), shall be paid from time to time by the
Fund or Funds to which the conduct in question related in advance of the final
disposition of any such action, suit or proceeding; provided, that the
Administrator shall have undertaken to repay the amounts so paid unless it is
ultimately determined that it is entitled to indemnification of such expenses
under this Subsection 8(b) and if (i) the Administrator shall have provided
security for such undertaking, (ii) the Trust shall be insured against losses
arising by reason of any lawful advances, or (iii) a majority of the Independent
Trustees, or an independent legal counsel in a written opinion, shall have
determined, based on a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the Administrator
ultimately will be entitled to indemnification hereunder.
As to any matter disposed of by a compromise payment by the Administrator
referred to in this Subsection 8(b), pursuant to a consent decree or otherwise,
no such indemnification either for said payment or for any other expenses shall
be provided unless such indemnification shall be approved (i) by a majority of
the Independent Trustees or (ii) by an independent legal counsel in a written
opinion. Approval by the Independent Trustees pursuant to clause (i) shall not
prevent the recovery from the Administrator of any amount paid to the
Administrator in accordance with either of such clauses as indemnification of
the Administrator is subsequently adjudicated by a court of competent
jurisdiction not to have acted in good faith in the reasonable belief that the
Administrator's action was in or not opposed to the best interests of the Trust
or to have been liable to the Trust or its Shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in its conduct under the Agreement.
The right of indemnification provided by this Subsection 8(b) shall not be
exclusive of or affect any of the rights to which the Administrator may be
entitled. Nothing contained in this Subsection 8(b) shall affect any rights to
indemnification to which Trustees, officers or other personnel of the Trust, and
other persons may be entitled by contract or otherwise under law, nor the power
of the Trust to purchase and maintain liability insurance on behalf of any such
person.
The Board of Trustees of the Trust shall take all such action as may be
necessary and appropriate to authorize the Trust hereunder to pay the
indemnification required by this Subsection 8(b) including, without limitation,
to the extent needed, to determine whether the Administrator is entitled to
indemnification hereunder and the reasonable amount of any indemnity due it
hereunder, or employ independent legal counsel for that purpose.
8.(c) The provisions contained in Section 8 shall survive the expiration or
other termination of this Agreement, shall be deemed to include and protect the
Administrator and its directors, officers, employees and agents and shall inure
to the benefit of its/their respective successors, assigns and personal
representatives.
9. Duration and Termination. This Agreement shall become effective as of
the date of the registration statement of the Trust containing the Fund's
Prospectus is declared effective by the Securities and Exchange Commission, and
shall continue in force and effect for a period of two year thereafter and shall
be continued on its terms from year to year thereafter unless sooner terminated
as permitted herein. This Agreement may be terminated at any time, without
payment of any penalty, by the Trust or the Administrator upon ninety days'
written notice to the other party.
10. Amendment. This Agreement may be amended by mutual written consent of
the parties. If, at any time during the existence of this Agreement, the Trust
deems it necessary or advisable in the best interests of the Trust that any
amendment of this Agreement be made in order to comply with the recommendations
or requirements of the Securities and Exchange Commission or state regulatory
agencies or other governmental authority, or to obtain any advantage under state
or federal laws, and shall notify the Administrator of the form of Amendment
which it deems necessary or advisable and the reasons therefor, and if the
Administrator declines to assent to such amendment, the Trust may terminate this
Agreement forthwith.
11. Notice. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be in writing, addressed or
delivered, or mailed postpaid to the other party at the principal place of
business of such party.
12. Construction. This Agreement shall be governed and enforced in
accordance with the laws of the State of North Carolina. If any provision of
this Agreement, or portion thereof, shall be determined to be void or
unenforceable by any court of competent jurisdiction, then such determination
shall not affect any other provision of this Agreement, or portion thereof, all
of which other provisions and portions thereof shall remain in full force and
effect. If any provision of this Agreement, or portion thereof, is capable of
two interpretations, one of which would render the provision, or portion
thereof, void and the other of which would render the provision, or portion
thereof, valid, then the provision, or portion thereof, shall have the meaning
which renders it valid.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their duly authorized officers effective as of the date indicated above.
Attest: CAPITAL MANAGEMENT INVESTMENT TRUST
By:
(SEAL)
Attest: THE NOTTINGHAM COMPANY, INC.
By:
(SEAL)
Exhibit A
FUND ACCOUNTING AND RECORDKEEPING SERVICES
Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date basis using security
trade information communicated from the investment manager on a
timely basis.
(2) For each valuation date, obtain prices from a pricing source
approved by the Board of Trustees and apply those prices to the
portfolio positions. For those securities where market
quotations are not readily available, the Board of Trustees
shall approve, in good faith, the method for determining the
fair market value for such securities.
(3) Identify interest and dividend accrual balances as of each
valuation date and calculate gross earnings on investments for
the accounting period.
(4) Determine gain/loss on security sales and identify them as to
short- short, short or long term status. Account for periodic
distributions of gain to shareholders and maintain undistributed
gain or loss balances as of each valuation date.
Expense Accrual and Payment Services:
(5) For each valuation date, calculate the expense accrual amounts
as directed by the Trust as to methodology, rate, or dollar
amount.
(6) Issue payments for Fund expenses upon receipt of funds from the
Trust's Custodian.
(7) Account for Fund expenditures and maintain expense accrual
balances at the level of accounting detail specified by the
Fund.
(8) Support periodic expense accrual review, i.e., comparison of
actual expense activity versus accrual amounts.
(9) Provide expense accrual and payment reporting.
Fund Valuation and Financial Reporting Services:
(10) Account for Fund share purchases, sales, exchanges,
transfers, dividend reinvestments, and other Fund
share activity, for each of the Funds, as reported by
the Trust on a timely basis.
(11) Determine net investment income (earnings) for each of
the Funds as of each valuation date. Account for
periodic distributions of earnings to shareholders and
maintain undistributed net investment income balances
as of each valuation date.
(12) Maintain a general ledger for each of the Funds in the
form defined by the Trust and produce a set of
financial statements as may be agreed upon from time
to time as of each valuation date.
(13) For each day the Funds are opened as defined in the
prospectuses, determine the net asset value of each of
the Funds according to the accounting policies and
procedures set forth in the prospectuses.
(14) Calculate per share net asset value, per share net
earnings, and other per share amounts reflective of
fund operation at such time as required by the nature
and characteristics of the Funds. Perform the
calculations using the number of shares outstanding
reported by the Trust to be applicable at the time of
calculation.
(15) Communicate, at an agreed upon time, the per share
price for each valuation date to parties as agreed
upon from time to time.
(16) Prepare monthly reports which document the adequacy of
accounting detail to support month-end ledger
balances.
Tax Accounting Services:
(17) Maintain tax accounting records for each of the Funds'
investment portfolio so as to support tax reporting
required for IRS defined regulated investment
companies.
(18) Maintain tax lot detail for the investment portfolio.
(19) Calculate taxable gain/loss on security sales using
the tax cost basis defined for each Fund.
(20) Report the taxable components of income and capital
gains distributions to the Trust to support tax
reporting to the shareholders.
Compliance Control Services:
(21) Maintain accounting records to support compliance
monitoring by the Trust.
(22) Support reporting to regulatory bodies and support
financial statement preparation by making the Fund
accounting records available to the Trust, the
Securities and Exchange Commission, and the outside
auditors.
(23) Maintain accounting records according to the
Investment Company Act of 1940 and regulations
provided thereunder.
Registration Services
(24) Prepare all reports and filings required to maintain
the registration and qualification of the Fund and its
shares under federal and state securities laws,
including the annual amendment to its Registration
Statement on From N-1A containing an updated a
Prospectus and Statement of Additional Information.
SEC Filing Services
(25) Prepare and make periodic SEC filings, including From
N-SAR, annual and semi-annual shareholder reports,
other shareholder reports, and fidelity bond
amendments but not including preparation and filing of
any sales literature and preparation of President's
letter contained in shareholder reports.
Minutes, Proxy Material Services
(26) Preparation of minutes and other records of meetings
of the Board of Trustees.
(27) Preparation of any proxy material and related
shareholder meetings and records.
Exhibit B
SHAREHOLDER SERVICING FUNCTIONS
(1) Process new accounts.
(2) Process purchases, both initial and subsequent in accordance with
conditions set forth in the Fund's prospectus.
(3) Transfer shares of capital stock to an existing account or to a new
account upon receipt of required documentation in good order.
(4) Distribute dividends and/or capital gain distributions. This includes
disbursement as cash or reinvestment and to change the disbursement
option at the request of shareholders.
(5) Process exchanges between funds, (process and direct
purchase/redemption and initiate new account or process to existing
account).
(6) Make miscellaneous changes to records, including, but not necessarily
limited to, address changes and changes in plans (such as systematic
withdrawal, dividend reinvestment, etc.).
(7) Prepare and mail a year-to-date confirmation and statement as each
transaction is recorded in a shareholder account as follows: original
to shareholder. Duplicate confirmations to be available on request
within current year.
(8) Handle telephone calls and correspondence in reply to shareholder
requests except those items otherwise set forth herein.
(9) Daily control and reconciliation of Fund shares.
(10) Prepare address labels or confirmations for four reports to
shareholders per year.
(11) Mail and tabulate proxies for one Meeting of Shareholders annually,
including preparation of certified shareholder list and daily report to
Fund management, if required.
(12) Prepare and mail annual Form 1099, Form W-2P and 5498 to shareholders
to whom dividends or distributions are paid, with a copy for the IRS.
(13) Provide readily obtainable data which may from time to time be
requested for audit purposes.
(14) Replace lost or destroyed checks.
(15) Continuously maintain all records for active and closed accounts
according to the Investment Company Act of 1940 and regulations
provided thereunder.
(16) Furnish shareholder data information for a current calendar year in
connection with IRA and Keogh Plans in a format suitable for mailing to
shareholders.
Exhibit C
ADMINISTRATOR'S COMPENSATION SCHEDULE
For the services delineated in the FUND ACCOUNTING, DIVIDEND DISBURSING &
TRANSFER AGENT AND ADMINISTRATION AGREEMENT, the Administrator shall be
compensated monthly, as of the last day of each month, within five business days
of the month end, a base fee plus a fee based upon net assets according to the
following schedule. The fee is calculated based upon the average daily net
assets of each Fund:
Base Fee: $2,000 per month
Equity and Balanced Funds
Annual
Net Assets Fee
On the first $50 million 0.20%
On the next $50 million 0.175%
On all assets over $100 million 0.15%
Fixed Income Funds
Annual
Net Assets Fee
On all assets 0.15%
Shareholder Fee
$9.00 per shareholder per year
Securities Pricing
$0.20 per equity per pricing day
$0.20 per corporate bond, government bond, medium-term bond
and mortgage-backed security per pricing day
$0.40 per asset backed security per pricing day priced
$2.00 per equity per month for corporate action
Blue Sky Administration
$100 per fund per state registration per year
Minimum fee per year
Minimum fee of $3,000 per Fund of the Trust per month for all fees
taken in the aggregate as outlined above, analyzed monthly.
Exhibit 99.B.9(b)
AMENDMENT TO FUND ACCOUNTING,
DIVIDEND DISBURSING & TRANSFER AGENT
AND ADMINISTRATION AGREEMENT
THIS AMENDMENT, made and entered into effective as of the 1st day of October,
1995, by and between CAPITAL MANAGEMENT INVESTMENT TRUST, a Massachusetts
business trust (the "Trust"), and THE NOTTINGHAM COMPANY, INC., a North Carolina
corporation (the "Administrator").
WHEREAS, the parties have previously entered into that certain Amended and
Restated Fund Accounting, Dividend Disbursing & Transfer Agent and
Administration Agreement dated January 26, 1995 with respect to all series of
the Trust (the "Agreement").
WHEREAS, the parties desire amend Exhibit C thereof, all as provided herein.
NOW THEREFORE, the Trust and the Administrator do mutually promise and agree as
follows:
1. Amendments. The Agreement is hereby amended by deleting Exhibit
C thereof and substituting in lieu thereof a new Exhibit C in
the form attached hereto.
2. Ratification. Except as continued and provided above, the
Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be signed by their
duly authorized officers on the date first above written.
ATTEST: CAPITAL MANAGEMENT INVESTMENT TRUST
By:
(Seal)
ATTEST: THE NOTTINGHAM COMPANY, INC.
By:
(Seal)
Exhibit C
ADMINISTRATOR'S COMPENSATION SCHEDULE
For the services delineated in the FUND ACCOUNTING, DIVIDEND DISBURSING &
TRANSFER AGENT AND ADMINISTRATION AGREEMENT, the Administrator shall be
compensated monthly, as of the last day of each month, within five business days
of the month end, a base fee plus a fee based upon net assets according to the
following schedule. The fee is calculated based upon the average daily net
assets of each Fund:
Base Fee: $2,000 per month
Class Fee: $750 per month for each additional
Equity and Balanced Funds
Annual
Net Assets Fee
On the first $50 million 0.20%
On the next $50 million 0.175%
On all assets over $100 million 0.15%
Fixed Income Funds
Annual
Net Assets Fee
On all assets 0.15%
Blue Sky Administration
$100 per fund per state registration per year
Shareholder Fee
$9.00 per shareholder per year
Minimum fee per year
Minimum fee of $3,000 per Fund of the Trust per month for all fees taken in the
aggregate as outlined above, analyzed monthly.
Securities Pricing
$0.20 per equity security per pricing day
$0.20 per corporate bond, government bond, medium-term bond or mortgage
backed security per pricing day
$0.40 per CMO or asset backed securities per pricing day
$0.40 per municipal security per pricing day
$2.00 per equity per month for corporate action coverage
Exhibit 99.B.9(c)
AMENDMENT TO FUND ACCOUNTING,
DIVIDEND DISBURSING & TRANSFER AGENT
AND ADMINISTRATION AGREEMENT
THIS AMENDMENT, made and entered into effective as of the 25th day of January,
1996, by and between CAPITAL MANAGEMENT INVESTMENT TRUST, a Massachusetts
business trust (the "Trust"), and THE NOTTINGHAM COMPANY, INC., a North Carolina
corporation (the "Administrator").
WHEREAS, the parties have previously entered into that certain Amended and
Restated Fund Accounting, Dividend Disbursing & Transfer Agent and
Administration Agreement dated January 26, 1995 with respect to all series of
the Trust (the "Agreement").
WHEREAS, the parties desire amend Exhibit C thereof, all as provided herein.
NOW THEREFORE, the Trust and the Administrator do mutually promise and agree as
follows:
1. Amendments. The Agreement is hereby amended by deleting Exhibit
C thereof and substituting in lieu thereof a new Exhibit C in
the form attached hereto.
2. Ratification. Except as continued and provided above, the
Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be signed by their
duly authorized officers on the date first above written.
ATTEST: CAPITAL MANAGEMENT INVESTMENT TRUST
By:
(Seal)
ATTEST: THE NOTTINGHAM COMPANY, INC.
By:
(Seal)
Exhibit C
ADMINISTRATOR'S COMPENSATION SCHEDULE
For the services delineated in the FUND ACCOUNTING, DIVIDEND DISBURSING &
TRANSFER AGENT AND ADMINISTRATION AGREEMENT, the Administrator shall be
compensated monthly, as of the last day of each month, within five business days
of the month end, a base fee plus a fee based upon net assets according to the
following schedule. The fee is calculated based upon the average daily net
assets of each Fund:
Base Fee: $2,000 per month
Class Fee: $750 per month for each additional
Equity and Balanced Funds
Annual
Net Assets Fee
On the first $50 million 0.20%
On the next $50 million 0.175%
On all assets over $100 million 0.15%
Fixed Income Funds
Annual
Net Assets Fee
On all assets 0.15%
Blue Sky Administration
$100 per fund per state registration per year
Shareholder Fee
$9.00 per shareholder per year
Minimum fee per year
Minimum fee of $3,000 per Fund of the Trust per month for all fees taken in the
aggregate as outlined above, analyzed monthly.
Securities Pricing
$0.20 per equity security per pricing day
$0.20 per corporate bond, government bond, medium-term bond or mortgage
backed security per pricing day
$0.40 per CMO or asset backed securities per pricing day
$0.40 per municipal security per pricing day
$2.00 per equity per month for corporate action coverage
Exhibit 99.B.10
Opinion and Consent of Counsel
February 1, 1995
Capital Management Investment Trust
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
Ladies and Gentlemen:
This opinion is being delivered to you in connection with your Post Effective
Amendment No. 1 to the Registration Statement on Form N-1A under the Securities
Act of 1933, as amended (SEC File No. 33-53800; 811-7324) (the "Registration
Statement"), under which you have registered an indefinite number of shares of
beneficial interest (the "Shares"), relating to Capital Management Equity Fund,
pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended.
We have made such inquiry of your officers and trustees and have examined such
corporate documents, records and certificates and other documents and such
questions of law as we have deemed necessary for the purposes of this opinion.
In rendering this opinion, we have relied, with your approval, as to all
questions of fact material to this opinion, upon certificates of public
officials and of your officers and have assumed, with your approval, that the
signatures on all documents examined by us are genuine, which facts we have not
independently verified.
Based upon and subject to the foregoing, we are of the opinion that the Shares,
when issued for valid consideration, will be legally and validly issued, fully
paid and nonassessable.
With respect to the opinion stated above, we wish to point out that the
shareholders of a Massachusetts business trust may, under some circumstances, be
subject to assessment at the instance of creditors to pay the obligations of
such trust if its assets are insufficient for the purpose.
We hereby consent to your filing this opinion as an exhibit to the Registration
Statement. In giving such consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
POYNER & SPRUILL, L.L.P.
Exhibit 99.B.11
Opinion and Consent of Auditors
Independent Auditor's Consent
To the Board of Trustees and Shareholders
Capital Management Equity Fund
We consent to the use of our report dated December 21, 1995 included in the
registration statement on Form N-1A of the Capital Management Equity Fund, a
series of the Capital Management Investment Trust, and to the reference to our
firm under the heading "Financial Highlights" in the prospectus.
KPMG Peat Marwick LLP
Richmond, Virginia
March 25, 1996
Exhibit 99.B.13
Initial Capital Agreement
SUBSCRIPTION LETTER
Board of Trustees
Capital Management Investment Trust
105 North Washington Street
Rocky Mount, North Carolina 27804
Gentlemen:
This letter will serve to advise you that Capital Management Associates, Inc.
("CMA"), hereby subscribes for the purchase of the initial organizational shares
of the Capital Management Equity Fund (the "Fund") in the amount of 10,000
shares at the purchase price of $10.00 per share in cash, for an aggregate
investment of $100,000, and agrees to advance all registration and organization
costs of the Fund to the Trust upon the Trust's demand. In connection with its
subscription for shares of the Fund CMA acknowledges that the shares have not
been registered under federal or state securities laws and that the transfer of
such shares is restricted. CMA further represents that it is acquiring such
shares for investment purposes and without any intention to redeem or dispose of
such shares. Payment for such shares shall be made in cash prior to the
effective date of the Trust's Registration Statement with the SEC with respect
to the Fund. As initial subscriber for shares, CMA hereby approves the election
of Trustees of the Trust, the appointment of independent accountants for the
Trust, and the actions of the Trust in the organization of the Fund, including
the approval of the Investment Advisory Agreement, Administration Agreement,
Distribution Plan, and Distribution Agreement.
If the terms and conditions as stated herein are acceptable to the Board of
Trustees, please so signify by having an authorized officer or trustee sign a
copy of this letter.
Very truly yours,
Date: __________________ CAPITAL MANAGEMENT ASSOCIATES, INC.
By:_________________________________
Title:_______________________________
Accepted this _____ day of ___________________, 199____.
CAPITAL MANAGEMENT INVESTMENT TRUST
By:_________________________________
Title:_______________________________
Exhibit 99.B.15
DISTRIBUTION PLAN
WHEREAS, Capital Management Investment Trust, an unincorporated business trust
organized and existing under the laws of the Commonwealth of Massachusetts (the
"Trust"), engages in business as an open-end management investment company and
is registered as such under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate funds of securities and other assets; and
WHEREAS, the Trust offers a series of such Shares representing interests in the
Capital Management Equity Fund (the "Fund") of the Trust;
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Non-Interested Trustees"), having determined, in
the exercise of reasonable business judgment and in light of their fiduciary
duties under state law and under Section 36(a) and (b) of the 1940 Act, that
there is a reasonable likelihood that this Plan will benefit the Trust and its
shareholders, have approved this Plan by votes cast at a meeting called for the
purpose of voting hereon and on any agreements related hereto; and
NOW, THEREFORE, the Trust hereby adopts this Plan in accordance with Rule 12b-1
under the 1940 Act, on the following terms and conditions:
1. Distribution and Servicing Activities. Subject to the
supervision of the Trustees of the Trust, the Trust may, directly or indirectly,
engage in any activities primarily intended to result in the sale of Investor
Shares of the Fund, which activities may include, but are not limited to, the
following: (a) payments to the Trust's Distributor and to securities dealers
and others in respect of the sale of Investor Shares of the Fund; (b) payment of
compensation to and expenses of personnel (including personnel of organizations
with which the Trust has entered into agreements related to this Plan) who
engage in or support distribution of Investor Shares of the Fund or who render
shareholder support services not otherwise provided by the Trust's transfer
agent, administrator, or custodian, including but not limited to, answering
inquiries regarding the Trust, processing shareholder transactions, providing
personal services and/or the maintenance of shareholder accounts, providing
other shareholder liaison services, responding to shareholder inquiries,
providing information on shareholder investments in the Investor Shares of the
Fund, and providing such other shareholder services as the Trust may reasonably
request; (c) formulation and implementation of marketing and promotional
activities, including, but not limited to, direct mail promotions and
television, radio, newspaper, magazine and other mass media advertising; (d)
preparation, printing and distribution of sales literature; (e) preparation,
printing and distribution of prospectuses and statements of additional
information and reports of the Trust for recipients other than existing
shareholders of the Trust; and (f) obtaining such information, analyses and
reports with respect to marketing and promotional activities as the Trust may,
from time to time, deem advisable. The Trust is authorized to engage in the
activities listed above, and in any other activities primarily intended to
result in the sale of Investor Shares of the Fund, either directly or through
other persons with which the Trust has entered into agreements related to this
Plan.
2. Maximum Expenditures. The expenditures to be made by the Trust
pursuant to this Plan and the basis upon which payment of such expenditures will
be made shall be determined by the Trustees of the Trust, but in no event may
such expenditures exceed an amount calculated at the rate of 0.75% per annum of
the average daily net asset value of the Investor Shares of the Fund for each
year or portion thereof included in the period for which the computation is
being made, elapsed since the inception of this Plan to the date of such
expenditures. Notwithstanding the foregoing, in no event may such expenditures
paid by the Trust as service fees exceed an amount calculated at the rate of
0.25% of the average annual net assets of the Investor Shares of the Fund, nor
may such expenditures paid as service fees to any person who sells Investor
Shares of the Fund exceed an amount calculated at the rate of 0.25% of the
average annual net asset value of such shares. Such payments for distribution
and shareholder servicing activities may be made directly by the Trust or to
other persons with which the Trust has entered into agreements related to this
Plan.
3. Term and Termination. (a) This Plan shall become effective as
of the date the registration statement of the Trust containing the Fund's
Prospectus is declared effective by the Securities and Exchange Commission.
Unless terminated as herein provided, this Plan shall continue in effect for one
year from the date hereof and shall continue in effect for successive periods of
one year thereafter, but only so long as each such continuance is specifically
approved by votes of a majority of both (i) the Trustees of the Trust and (ii)
the Non-Interested Trustees, cast at a meeting called for the purpose of voting
on such approval.
(b) This Plan may be terminated at any time with respect to the Fund
by a vote of a majority of the Non-Interested Trustees or by a vote of a
majority of the outstanding voting securities of the Investor Shares of the Fund
as defined in the 1940 Act.
4. Amendments. This Plan may not be amended to increase materially
the maximum expenditures permitted by Section 2 hereof unless such amendment is
approved by a vote of the majority of the outstanding voting securities of the
Investor Shares of the Fund as defined in the 1940 Act with respect to which a
material increase in the amount of expenditures is proposed, and no material
amendment to this Plan shall be made unless approved in the manner provided for
annual renewal of this Plan in Section 3(a) hereof.
5. Selection and Nomination of Trustees. While this Plan is in
effect, the selection and nomination of the Non-Interested Trustees of the Trust
shall be committed to the discretion of such Non-Interested Trustees.
6. Quarterly Reports. The Treasurer of the Trust shall provide to
the Trustees of the Trust and the Trustees shall review quarterly a written
report of the amounts expended pursuant to this Plan and any related agreement
and the purposes for which such expenditures were made.
7. Recordkeeping. The Trust shall preserve copies of this Plan and
any related agreement and all reports made pursuant to Section 6 hereof, for a
period of not less than six years from the date of this Plan. Any such related
agreement or such reports for the first two years will be maintained in an
easily accessible place.
8. Limitation of Liability. Any obligations of the Trust hereunder
shall not be binding upon any of the Trustees, officers or shareholders of the
Trust personally, but shall bind only the assets and property of the Trust. The
term "Capital Management Investment Trust" means and refers to the Trustees from
time to time serving under the Declaration of Trust of the Trust, a copy of
which is on file with the Secretary of The Commonwealth of Massachusetts. The
execution of this Plan has been authorized by the Trustees, and this Plan has
been signed on behalf of the Trust by an authorized officer of the Trust, acting
as such and not individually, and neither such authorization by such Trustees
nor such execution by such officer shall be deemed to have been made by any of
them individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the Trust as provided in the
Agreement and Declaration of Trust.
IN WITNESS THEREOF, the parties hereto have caused this Plan to be
executed effective as of the date first written above.
CAPITAL MANAGEMENT INVESTMENT TRUST
Attest:
By__________________________________
CAPITAL MANAGEMENT EQUITY FUND
Attest:
By__________________________________
Exhibit 99.B.16
Computation of Performance
CAPITAL MANAGEMENT EQUITY FUND
The Fund computes the "average annual total return" of each Class of the Fund by
determining the average annual compounded rates of return during specified
periods that equate the initial amount invested to the ending redeemable value
of such investment. This is done by determining the ending redeemable value of
a hypothetical $1,000 initial payment. This calculation is as follows:
P(1+T)n = ERV
Where: T = average annual total return.
ERV = ending redeemable value at the end of the period covered by
the computation of a hypothetical $1,000 payment made at the
beginning of the period.
P = hypothetical initial payment of $1,000 from which the maximum
sales load is deducted.
n = period covered by the computation, expressed in terms of
years.
The Fund may also compute the aggregate total return of each Class of the Fund,
which is calculated in a similar manner, except that the results are not
annualized.
The calculation of average annual total return and aggregate total return assume
that the maximum sales load is deducted from the initial $1,000 investment at
the time it is made and that there is a reinvestment of all dividends and
capital gain distributions on the reinvestment dates during the period. The
ending redeemable value is determined by assuming complete redemption of the
hypothetical investment and the deduction of all nonrecurring charges at the end
of the period covered by the computations. The Fund may also quote other total
return information that does not reflect the effects of the sales load.
Cumulative Total Return
(ERV - P)/P = TR
Where: ERV = ending redeemable value at the end of the period covered
by the computation of a hypothetical $1,000 payment made
at the beginning of the period
P = hypothetical initial payment of $1,000 from which the
maximum sales load is deducted
TR = total return
Cumulative Total Return for the Investor Shares since inception through November
30, 1995 including 3% sales load:
(1102.4 - 1000)/1000 = .1024
ERV = 1102.4
P = 1000
TR = 10.24%
Cumulative Total Return for the Investor Shares since inception through November
30, 1995 excluding 3% sales load:
(1069.3 - 1000)/1000 = .0693
ERV = 1069.3
P = 1000
TR = 6.93%
Cumulative Total Return for the Institutional Shares since inception through
November 30, 1995:
(1230.0 - 1000)/1000 = 0.1230
ERV = 1230.0
P = 1000
TR = 12.30%
Exhibit 99.B.17
Copies of Powers of Attorney
CAPITAL MANAGEMENT INVESTMENT TRUST
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned officer and/or trustee of
the Capital Management Investment Trust hereby appoints Frank P. Meadows III,
with full power of substitution, his true and lawful attorney to execute in his
name, place and stead and on his behalf a registration statement on Form N-1A
for the registration, pursuant to the Securities Act of 1933 and the Investment
Company Act of 1940, of said Trust's shares of beneficial interest, and any and
all amendments to said Registration Statement (including post-effective
amendments), and all instruments necessary or incidental in connection therewith
and to file the same with the U.S. Securities and Exchange Commission. Said
attorney shall have full power and authority to do and perform in the name and
on behalf of the undersigned every act whatsoever requisite or desirable to be
done in the premises, as fully and to all intents and purposes as the
undersigned might or could do, the undersigned hereby ratifying and approving
all such acts of such attorney.
IN WITNESS WHEREOF, the undersigned has executed this instrument this _________
day of _________________, 199__.
Lucius E. Burch, III
Thomas A. Saunders, III
David V. Shields
Joseph V. Shields, Jr.
Anthony J. Walton
Exhibit 99.B.18
Copies of Rule 18f-3 Multi-Class Plan
CAPITAL MANAGEMENT INVESTMENT TRUST
RULE 18f-3 MULTI-CLASS PLAN
I. Introduction.
Pursuant to Rule 18f-3 under the Investment Company Act
of 1940, as amended (the "1940 Act"), the following sets forth the
method for allocating fees and expenses among each class of shares
in the following series of the Capital Management Investment Trust
(the "Trust"): the Capital Management Equity Fund, and any other
fund of the Trust proposed to be brought hereunder in the future by
the Board of Trustees of the Trust. In addition, this Rule 18f-3
Multi-Class Plan (the "Plan") sets forth the shareholder servicing
arrangements, distribution arrangements, conversion features,
exchange privileges, and other shareholder services of each class
of shares in such series.
The Trust is an open-end series investment company
registered under the 1940 Act, the shares of which are registered
on Form N-1A under the Securities Act of 1933 (the "1933 Act").
Upon the effectiveness of applicable Post-Effective Amendments to
the Trust's Registration Statement under the 1933 Act filed in
conjunction with this Plan with respect to the shares of each of
the series listed above, the Trust hereby elects to offer multiple
classes of shares in such series pursuant to the provisions of Rule
18f-3 and this Plan.
The series of the Trust listed above (each a "Fund" or
collectively the "Funds") are authorized to issue the following
classes of shares representing interests in the Funds:
Institutional Shares and Investor Shares.
II. Allocation of Expenses.
Pursuant to Rule 18f-3 under the 1940 Act, the Trust
shall allocate to each class of shares in a Fund (i) any fees and
expenses incurred by the Trust in connection with the distribution
of such class of shares under a distribution plan (and related
agreements) adopted for such class of shares pursuant to Rule 12b-
1, and (ii) any fees and expenses incurred by the Trust under a
shareholder servicing plan (and related agreements) in connection
with the provision of shareholder services to the holders of such
class of shares. In addition, pursuant to Rule 18f-3, the Trust
may allocate the following fees and expenses to a particular class
of shares in a single Fund:
(i) transfer agency fees identified by the transfer
agent as being attributable to such class of
shares;
(ii) printing and postage expenses related to
preparing and distributing materials such as
shareholder reports, notices, prospectuses,
reports, and proxies to current shareholders of
such class of shares or to regulatory agencies
with respect to such class of shares;
(iii) blue sky registration or qualification fees
incurred by such class of shares;
(iv) Securities and Exchange Commission registration
fees incurred by such class of shares;
(v) the expense of administrative and personnel
services (including, but not limited to, those of
a portfolio accountant, custodian or dividend
paying agent charged with calculating net asset
values or determining or paying dividends) as
required to support the shareholders of such
class of shares;
(vi) litigation or other legal expenses relating
solely to such class of shares;
(vii) fees of the Trustees of the Trust incurred as a
result of issues relating to such class of
shares; and
(viii) independent accountants' fees relating solely to
such class of shares.
The initial determination of the class expenses that will
be allocated by the Trust to a particular class of shares and any
subsequent changes thereto will be reviewed by the Board of
Trustees of the Trust and approved by a vote of the Trustees of the
Trust, including a majority of the Trustees who are not interested
persons of the Trust.
Income, realized and unrealized capital gains and losses,
and any expenses of a Fund not allocated to a particular class of
such Fund pursuant to this Plan shall be allocated to each class of
the Fund on the basis of the net asset value of that class in
relation to the net asset value of the Fund.
III. Class Arrangements.
The following summarizes the front-end sales charges,
contingent deferred sales charges, Rule 12b-1 distribution fees,
shareholder servicing fees, conversion features, exchange
privileges and other shareholder services applicable to each class
of shares of the Funds. Additional details regarding such fees and
services are set forth in the relevant Fund's current Prospectus
and Statement of Additional Information.
A. Institutional Shares -- All Funds.
1. Initial Sales Load: None
2. Contingent Deferred Sales Charge: None
3. Rule 12b-1 Distribution Fees: None
4. Shareholder Servicing Fees: None
5. Conversion Features: None
6. Exchange Privileges: Institutional Shares of
a Fund may be exchanged for Institutional
Shares of any other series of the Trust
established by the Fund's investment advisor.
7. Other Shareholder Services: None
B. Investor Shares -- All Funds.
1. Maximum Initial Sales Load (as a percentage of
offering price): 3.00%
2. Contingent Deferred Sales Charge: None
3. Rule 12b-1 Distribution/Shareholder Servicing
Fees: Pursuant to a Distribution Plan adopted
under Rule 12b-1, Investor Shares of the Funds
may pay distribution and shareholder servicing
fees of up to 0.75% of the average daily net
assets of such shares.
4. Conversion Features: None
5. Exchange Privileges: Investor Shares of a
Fund may be exchanged for Investor Shares of
any other series of the Trust established by
the Fund's investment advisor, with the
payment of any differences in sales charges as
described in the prospectus for each Fund.
6. Other Shareholder Services: The Trust offers
a Systematic Withdrawal Plan and Automatic
Investment Plan to holders of Investor Shares
of the Funds.
IV. Board Review.
The Board of Trustees of the Trust shall review this
Plan as frequently as they deem necessary. Prior to any material
amendment(s) to this Plan, the Trust's Board of Trustees, including
a majority of the Trustees that are not interested persons of the
Trust, shall find that the Plan, as proposed to be amended
(including any proposed amendments to the method of allocating
class and/or fund expenses), is in the best interest of each class
of shares of each Fund individually and each Fund as a whole. In
considering whether to approve any proposed amendment(s) to the
Plan, the Trustees of the Trust shall request and evaluate such
information as they consider reasonably necessary to evaluate the
proposed amendment(s) to the Plan.
Adopted: Effective April 3, 1995, as amended on June 14, 1995
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<NAME> CAPITAL MANAGEMENT EQUITY FUND - INSTITUTIONAL SHARES
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<TABLE> <S> <C>
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<NAME> CAPITAL MANAGEMENT EQUITY FUND - INVESTOR SHARES
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<PERIOD-END> NOV-30-1995
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