As filed with the Securities and Exchange Commission on August 1, 1996
Securities Act Registration No. 33-________
Investment Company Act Registration No. 811-________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. ____ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. ___ [ ]
THE ROCKLAND FUNDS TRUST
(Exact Name of Registrant as Specified in Charter)
4001 Centerville Road
Greenville, Delaware 19807
(Address of Principal Executive (Zip Code)
Offices)
Registrant's Telephone Number, including Area Code: (302) 429-9799
Mr. Charles S. Cruice
The Rockland Funds Trust
4001 Centerville Road
Greenville, Delaware 19807
(Name and Address of Agent for Service)
Copies to:
Carol A. Gehl
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202
Approximate date of proposed offering: As soon as
practicable after the Registration Statement becomes effective.
In accordance with Rule 24f-2 under the Investment Company
Act of 1940, Registrant declares that an indefinite number of its
shares of beneficial interest are being registered by this
Registration Statement.
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective date
until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant
to said Section 8(a), may determine.
<PAGE>
CROSS REFERENCE SHEET
(Pursuant to Rule 481 showing the location in the Prospectus
and the Statement of Additional Information of the responses to
the Items of Parts A and B of Form N-1A)
Caption or Subheading in
Prospectus or Statement
Item No. on Form N-1A of Additional Information
PART A - INFORMATION REQUIRED IN PROSPECTUS - INSTITUTIONAL CLASS
1. Cover Page Cover Page
2. Synopsis Summary; Summary of Fund Expenses
3. Condensed Financial Information *
4. General Description of Fund Organization; Investment
Registrant Objective and Policies; Investment
Techniques and Risks
5. Management of the Fund Management; Fund Expenses
5A. Management's Discussion of Fund *
Performance
6. Capital Stock and Other Income Dividends, Capital Gains
Securities Distributions and Tax Status; Fund
Organization
7. Purchase of Securities Being How to Purchase Fund Shares;
Offered Determination of Net Asset Value
8. Redemption or Repurchase How to Redeem Shares; Calculation of
Net Asset Value
9. Pending Legal Proceedings *
Caption or Subheading in
Prospectus or Statement
Item No. on Form N-1A of Additional Information
PART A - INFORMATION REQUIRED IN PROSPECTUS - RETAIL CLASS
1. Cover Page Cover Page
2. Synopsis Summary; Summary of Fund Expenses
3. Condensed Financial Information *
4. General Description of Fund Organization; Investment
Registrant Objective and Policies; Investment
Techniques and Risks
5. Management of the Fund Management; Fund Expenses
5A. Management's Discussion of Fund *
Performance
6. Capital Stock and Other Income Dividends, Capital Gains
Securities Distributions and Tax Status; Fund
Organization
7. Purchase of Securities Being How to Purchase Fund Shares;
Offered Determination of Net Asset Value;
Distribution Plan
<PAGE>
8. Redemption or Repurchase How to Redeem Shares; Calculation
of Net Asset Value
9. Pending Legal Proceedings *
PART B - INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Included in Prospectuses under the
heading Fund Organization
13. Investment Objectives and Investment Restrictions;
Policies Investment Techniques and Risks
14. Management of the Fund Trustees and Officers
15. Control Persons and Principal Principal Shareholders; Trustees
Holders of Securities and Officers; Investment Advisor
16. Investment Advisory and Other Investment Advisor; Distribution
Services Plan; Management (in Prospectuses)
Custodian; Transfer Agent and
Dividend-Disbursing Agent;
Independent Accountants
17. Brokerage Allocation and Other Portfolio Transactions and
Practices Brokerage
18. Capital Stock and Other Included in Prospectuses under the
Securities heading Fund Organization
19. Purchase, Redemption and Included in Prospectuses under the
Pricing of Securities headings How to Purchase Fund
Being Offered Shares; Determination of Net Asset
Value; How to Redeem Shares; and
in the Statement of Additional
Information under the heading
Investment Advisor
20. Tax Status Included in Prospectuses under the
heading Income Dividends, Capital
Gains Distributions and Tax Status
21. Underwriters Underwriter
22. Calculations of Performance Performance Information
Data
23. Financial Statements Financial Statements
____________________________
*Answer negative or inapplicable
<PAGE>
PROSPECTUS
October___, 1996
Greenville Capital Management, Inc.
Presents
The Rockland Growth Fund
a Series of
The Rockland Funds Trust
P. O. Box 701
Milwaukee, Wisconsin 53201-0701
1-800-________
The Rockland Growth Fund (the "Fund") is a series of The Rockland
Funds Trust (the "Trust"), an open-end, diversified, management
investment company commonly referred to as a mutual fund. The
investment objective of the Fund is to seek capital appreciation.
The Fund will seek, under normal market conditions, to achieve its
investment objective by investing its assets primarily in equity
securities of domestic companies. The Fund is structured for
flexibility and risk reduction, but centered around investment in
high quality growth stocks with an emphasis on those companies
whose growth potential, in the opinion of the Fund's investment
adviser, Greenville Capital Management, Inc., has been overlooked
by Wall Street analysts.
This Prospectus sets forth concisely the information that you
should be aware of prior to investing in the Fund's Institutional
shares. Two classes of shares of the Fund are currently offered
to the public: Institutional shares and Retail shares. This
prospectus relates only to the Institutional shares. Information
about the Retail shares may be obtained by calling 1-800-________.
Please read this Prospectus carefully and retain it for future
reference. Additional information regarding the Fund is included
in the Statement of Additional Information dated October__, 1996,
which has been filed with the Securities and Exchange Commission
and is incorporated in this Prospectus by reference. A copy of
the Fund's Statement of Additional Information is available
without charge by writing to the Fund at the address listed above
or by calling 1-800-________.
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.
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SUMMARY OF FUND EXPENSES . . . . . . . . . . . . . . . . . . 5
Example . . . . . . . . . . . . . . . . . . . . . . . . 5
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . . . . . 6
INVESTMENT TECHNIQUES AND RISKS . . . . . . . . . . . . . . . 6
In General . . . . . . . . . . . . . . . . . . . . . . 6
Short-Term Fixed Income Securities . . . . . . . . . . 7
Illiquid Securities . . . . . . . . . . . . . . . . . . 7
ADRs . . . . . . . . . . . . . . . . . . . . . . . . . 7
Options and Futures Transactions . . . . . . . . . . . 8
Short Sales . . . . . . . . . . . . . . . . . . . . . . 8
Repurchase Agreements . . . . . . . . . . . . . . . . . 8
Convertible Securities . . . . . . . . . . . . . . . . 9
Portfolio Turnover . . . . . . . . . . . . . . . . . . 9
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 9
FUND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . 10
HOW TO PURCHASE FUND SHARES . . . . . . . . . . . . . . . . . 10
Initial Investment - Minimum $100,000 . . . . . . . . . 10
Telephone and Wire Purchases . . . . . . . . . . . . . 11
Subsequent Investments - Minimum $1,000 . . . . . . . . 11
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . 11
HOW TO REDEEM SHARES . . . . . . . . . . . . . . . . . . . . 12
In General . . . . . . . . . . . . . . . . . . . . . . 12
Written Redemption . . . . . . . . . . . . . . . . . . 12
Telephone Redemption . . . . . . . . . . . . . . . . . 12
SHAREHOLDER REPORTS . . . . . . . . . . . . . . . . . . . . . 13
TAX SHELTERED RETIREMENT PLANS . . . . . . . . . . . . . . . 13
Individual Retirement Account ("IRA") . . . . . . . . . 13
401(k) Plan . . . . . . . . . . . . . . . . . . . . . . 13
Defined Contribution Plan . . . . . . . . . . . . . . . 13
INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX
TREATMENT . . . . . . . . . . . . . . . . . . . . . . . 14
FUND ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . 14
ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . . . . . 15
CUSTODIAN, TRANSFER AGENT, AND FUND ACCOUNTANT . . . . . . . 15
DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . 15
COMPARISON OF INVESTMENT RESULTS . . . . . . . . . . . . . . 16
<PAGE>
No person has been authorized to give any information or to make
any representations other than those contained in this Prospectus
and the Statement of Additional Information, and if given or made,
such information or representations may not be relied upon as
having been authorized by the Fund. This prospectus does not
constitute an offer to sell securities in any state to any person
to whom it is unlawful to make such offer in such state.
<PAGE>
SUMMARY
Investment Objective
The investment objective of the Fund is to seek capital
appreciation. The Fund will seek to achieve its investment
objective by investing its assets primarily in equity securities
of domestic companies that, in the opinion of GCM, have been
overlooked by Wall Street analysts. The Fund's investments are
subject to market risk and the value of its shares will fluctuate
with changing market valuations of its portfolio holdings. See
"INVESTMENT OBJECTIVE AND POLICIES" and "INVESTMENT TECHNIQUES AND
RISKS."
Investment Advisor
GCM is the investment advisor to the Fund. GCM was
organized in 1989 and acts as the investment advisor to individual
and institutional clients with investment portfolios of
approximately $375 million. See "MANAGEMENT."
Purchase and Redemptions
Institutional shares of the Fund are sold and redeemed at
net asset value, without the imposition of any sales or redemption
charges. The minimum initial investment required by the Fund is
$100,000. The minimum subsequent investment is $1,000. These
minimums may be changed or waived at any time at the discretion of
the Fund. See "HOW TO PURCHASE SHARES" AND "HOW TO REDEEM
SHARES."
Shareholder Services
Questions regarding the Institutional shares or the Retail
shares may be directed to the Fund at the address and telephone
number on the front page of this Prospectus.
<PAGE>
SUMMARY OF FUND EXPENSES
Institutional
Class
Shareholder Transaction Expenses
Sales Load Imposed on Purchases NONE
Sales Load Imposed on Reinvested Dividends NONE
Deferred Sales Load Imposed on Redemptions NONE
Redemption Fees NONE
Annual Fund Operating Expenses (after waivers or
reimbursements) (as a percentage of average net assets)
Management Fee 1.00%
12b-1 Fees NONE
Other Expenses (net of reimbursement) 0.75%(1)
TOTAL FUND OPERATING EXPENSES 1.75%(1)
(after waivers or reimbursements)
_________________________
(1) The Fund's investment advisor, GCM, has voluntarily agreed
to waive its management fee and/or reimburse the Fund's
operating expenses to the extent necessary to ensure that
the Fund's Total Operating Expenses do not exceed 1.75% of
the Fund's average daily net assets. Since the Fund did not
commence operations until October __, 1996, other expenses
have been estimated and are presented net of reimbursements.
Absent these reimbursements, Other Expenses and Total Fund
Operating Expenses are estimated to be ___% and ___%,
respectively. The Fund's management fee is higher than that
paid by other similar investment companies. For additional
information concerning management fees and operating
expenses, see "MANAGEMENT."
There are certain charges associated with certain services offered
by the Fund, such as a service fee of $10.00 for redemptions
effected via wire transfer.
Example
You would pay the following expenses on a $1,000 investment,
assuming (i) 5% annual return, and (ii) redemption at the end of
each time period.
1 Year 3 Years
------ -------
$18 $55
The Example is based on the Total Operating Expenses
specified in the table above. The amounts in the Example may
increase absent the waivers or reimbursements. Please remember
that the Example should not be considered representative of past
or future expenses and that actual expenses may be greater or
lesser than those shown. The assumption in the Example of a 5%
annual rate of return is required by regulations of the Securities
and Exchange Commission ("SEC") applicable to all mutual funds.
This return is hypothetical and should not be considered
representative of past or future performance of the Institutional
shares.
INVESTMENT OBJECTIVE AND POLICIES
The Fund is the first and presently, the only series of
Trust, an open-end, diversified management company. The Fund's
investment objective is to seek capital appreciation. The
generation of investment income is not an investment objective
and, therefore, any income earned by the Fund will be incidental
to the Fund's objective. The Fund will seek, under normal market
conditions, to achieve its investment objective by investing its
<PAGE>
assets primarily in equity securities of domestic companies, which
include but are not limited to common stocks; preferred stocks;
warrants to purchase common stocks or preferred stocks; and
securities convertible into common or preferred stocks, such as
convertible bonds and debentures. The Fund may, when GCM deems a
more conservative approach is warranted, or pending investment or
reinvestment, invest up to 35% of its total assets in short-term,
fixed income securities. For temporary, defensive purposes the
Fund may invest up to 100% of its total assets in such securities.
Since the Fund's assets will, under normal market conditions,
consist primarily of equity securities, the net asset value of the
Institutional shares may be subject to greater principal
fluctuation than a portfolio containing a substantial amount of
fixed income securities.
The Fund is designed to take advantage of investment and
trading opportunities that investors might not otherwise have the
time, expertise or inclination to exploit themselves. The Fund is
structured for flexibility and risk reduction, but centered around
investment in high quality growth stocks with an emphasis on those
companies whose growth potential, in GCM's opinion, has been
overlooked by Wall Street analysts. In addition, the Fund may
sell short up to 25% of its portfolio. The Fund only intends to
use short positions for brief periods of time in smaller position
sizes to reduce the Fund's overall risk and to increase the Fund's
pool of potential investment ideas. (See "INVESTMENT TECHNIQUES
AND RISKS - Short Sales").
When making investment decisions, GCM utilizes information
and analyses from numerous sources regarding a company's sales and
earnings growth; earnings power, trends and predictability;
industry, economic and political trends; relative valuation; and
liquidity, to determine whether the security has the growth
potential suitable for the Fund. The Fund will generally invest
in companies with market capitalizations ranging from $100 million
to $2 billion. The Fund is only intended to be an investment
vehicle for that part of an investor's capital which can
appropriately be exposed to above average risk in anticipation of
greater rewards. The Fund is not designed to offer a balanced
investment program suitable for all investors.
Except for the Fund's investment objective and the
investment restrictions contained in the Statement of Additional
Information, the Fund's policies may be changed without a vote of
the Institutional class' shareholders.
INVESTMENT TECHNIQUES AND RISKS
In General
The Fund will not invest more than 5% of its net assets in
any one of the following types of investments: preferred stocks;
warrants; unseasoned companies; securities purchased on a when-
issued or delayed delivery basis; call and put options; and
futures and options on futures. The ability of the Fund to
effectively use put and call options and futures transactions is
largely dependent upon GCM's ability to correctly use these
instruments, which may involve different skills than are
associated with securities generally. For a more extensive
discussion of certain of these investments and techniques and
risks associated therewith, see the Fund's Statement of Additional
Information.
Short-Term Fixed Income Securities
When GCM believes that adverse economic or market conditions
justify such action, up to 100% of the Fund's assets may be held
temporarily in short-term fixed-income securities, including
without limitation: U.S. government securities, including bills,
notes and bonds, differing as to maturity and rate of interest,
which are either issued or guaranteed by the U.S. Treasury or by
U.S. governmental agencies or instrumentalities; certificates of
deposit issued against funds deposited in a U.S. bank or savings
and loan association; bank time deposits, which are monies kept on
deposit with U.S. banks or savings and loan associations for a
stated period of time at a fixed rate of interest; bankers'
acceptances which are short-term credit instruments used to
finance commercial transactions; repurchase agreements entered
into only with respect to obligations of the U.S. government, its
agencies or instrumentalities; or commercial paper and commercial
paper master notes (which are demand instruments without a fixed
maturity bearing interest at rates which are fixed to known
lending rates and automatically adjusted when such lending rates
change) rated A-1 or better by S&P, Prime-1 or better by Moody's,
Duff 2 or higher by D&P, or Fitch 2 or higher by Fitch.
<PAGE>
Illiquid Securities
The Fund may invest up to 10% of the value of its net assets
in illiquid securities, which include, but are not limited to,
restricted securities (securities the disposition of which is
restricted under the federal securities laws); securities which
may only be resold pursuant to Rule 144A under the Securities Act
of 1933; and repurchase agreements with maturities in excess of
seven days. Risks associated with restricted securities include
the potential obligation to pay all or part of the registration
expenses in order to sell restricted securities. A considerable
period of time may elapse between the time of the decision to sell
a restricted security and the time the Fund may be permitted to
sell under an effective registration statement or otherwise. If,
during such a period, adverse conditions were to develop, the Fund
might obtain a less favorable price than that which prevailed when
it decided to sell. The Board of Trustees of the Trust, or its
delegate, has the ultimate authority to determine, to the extent
permissible under the federal securities laws, which securities
are liquid or illiquid. The Board of Trustees has adopted
guidelines and delegated this determination to GCM.
ADRs
The Fund may invest up to 25% of the value of its net assets
in ADRs or other instruments denominated in U.S. dollars. ADRs
are receipts typically issued by a U.S. bank or trust company
evidencing ownership of the underlying foreign security and
denominated in U.S. dollars. Some institutions issuing ADRs may
not be sponsored by the issuer. A non-sponsored depository may
not provide the same shareholder information that a sponsored
depository is required to provide under its contractual
arrangements with the issuer, including reliable financial
statements.
Investments in securities of foreign issuers involve risks
which are in addition to the usual risks inherent in domestic
investment. In many countries there is less publicly available
information about issuers than is available in the reports and
ratings published about companies in the U.S. Additionally,
foreign companies are not subject to uniform accounting, auditing
and financial reporting standards. Other risks inherent in
foreign investment include expropriation; confiscatory taxation;
withholding taxes on dividends and interest; less extensive
regulation of foreign brokers, securities markets and issuers;
costs incurred in conversions between currencies; the possibility
of delays in settlement in foreign securities markets; limitations
on the use or transfer of assets (including suspension of the
ability to transfer currency from a given country); the difficulty
of enforcing obligations in other countries; diplomatic
developments; and political or social instability. Foreign
economies may differ favorably or unfavorably from the U.S.
economy in various respects, and many foreign securities are less
liquid and their prices are more volatile than comparable U.S.
securities. From time to time, foreign securities may be
difficult to liquidate rapidly without adverse price effects.
Certain costs attributable to foreign investing, such as custody
charges and brokerage costs, are higher than those attributable to
domestic investing.
Options and Futures Transactions
The Fund may engage in options and futures transactions
which are sometimes referred to as derivative transactions. The
Fund's options and futures transactions may include instruments
such as stock index options and futures contracts. Such
transactions may be used for several reasons, including hedging
unrealized portfolio gains. The Fund will only engage in futures
and options transactions which must, pursuant to regulations
promulgated by the Commodity Futures Trading Commission (the
"CFTC"), constitute bona fide hedging or other permissible risk
management transactions and will not enter into such transactions
if the sum of the initial margin deposits and premiums paid for
unexpired options exceeds 5% of the Fund's total assets. In
addition, the Fund will not enter into options and futures
transactions if more than 50% of the Fund's net assets would be
committed to such instruments. The Fund may hold a futures or
options position until its expiration, or it can close out such a
position before then at current value if a liquid secondary market
is available. If the Fund cannot close out a position, it may
suffer a loss apart from any loss or gain experienced at the time
the Fund decided to close the position. When required by
guidelines of the SEC or the CFTC, the Fund will set aside
permissible liquid assets in a segregated account to secure its
potential obligations under its futures or options positions.
Such liquid assets may include cash, U.S. government securities
and high-grade liquid debt securities. The ability of the Fund to
effectively use options and futures is largely dependent upon
GCM's ability to correctly use such instruments which may involve
different skills than are associated with securities generally.
For a further discussion of options and futures transactions,
please see the Statement of Additional Information.
Short Sales
The Fund may engage in short sale transactions in securities
listed on one or more national securities exchanges, or in
unlisted securities. Short selling involves the sale of borrowed
securities. At the time a short sale
<PAGE>
is effected, the Fund incurs
an obligation to replace the borrowed security at whatever its
price may be at the time the Fund purchases it for delivery to the
lender. When a short sale transaction is closed out, any gain or
loss on the transaction is taxable as a short term capital gain or
loss. All short sales will be fully collateralized, and no short
sale will be effected which would cause the aggregate market value
of all securities sold short to exceed 25% of the value of the
Fund's net assets. The Fund limits short sales of any one
issuer's securities to 2% of the Fund's total assets and to 2% of
any one class of the issuer's securities.
Repurchase Agreements
The Fund may invest up to 25% of its net assets in
repurchase agreements entered into with Federal Reserve Bank
member banks and certain non-bank dealers. In a repurchase
agreement, the Fund buys a security at one price, and at the time
of sale, the seller agrees to repurchase the obligation at a
mutually agreed upon time and price (usually seven days). The
repurchase agreement determines the yield during the purchaser's
holding period, while the seller's obligation to repurchase is
secured by the value of the underlying security. GCM will
monitor, on an ongoing basis, the value of the underlying
securities to ensure that the value always equals or exceeds the
repurchase price plus accrued interest. Repurchase agreements
could involve certain risks in the event of a default or
insolvency of the other party to the agreement including possible
delays or restrictions upon the Fund's ability to dispose of the
underlying securities. Although no definitive criteria are used,
GCM reviews the creditworthiness of the banks and non-bank dealers
with which the Fund enters into repurchase agreements to evaluate
those risks.
Convertible Securities
The Fund may invest up to 25% of its net assets in
securities convertible into common stocks. A convertible security
entitles the holder to receive interest normally paid or accrued
on the debt or the dividend paid on preferred stock until the
convertible security matures or is redeemed, converted, or
exchanged. Convertible securities have unique investment
characteristics in that they generally have higher yields than
common stocks, but lower yields than comparable non-convertible
securities, are less subject to fluctuation in value than the
underlying stock, and provide the potential for capital
appreciation if the market price of the underlying common stock
increases. A convertible security might be subject to redemption
at the option of the issuer at a price established in the
security's governing instrument. If a convertible security held
by the Fund is called for redemption, the Fund will be required to
permit the issuer to redeem the security, convert it into the
underlying common stock or sell it to a third party.
Portfolio Turnover
The portfolio turnover rate indicates changes in the Fund's
investments. The turnover rate may vary from year to year, as
well as within a year. Under normal market conditions, the Fund
anticipates that its portfolio turnover rate is not expected to
exceed 110% and is expected to range between 70 and 110%. A
turnover rate of 100% would occur, for example, if all of the
securities held by the Fund were replaced within one year. It may
be affected by sales of portfolio securities necessary to meet
cash requirements for redemption of shares. In the event the Fund
were to have a turnover rate of 100% or more in any year, it would
result in the payment by the Fund of above average transaction
costs and could result in the payment by Institutional
shareholders of above average amounts of taxes on realized
investment gains.
MANAGEMENT
Under the laws of the State of Delaware, the Board of
Trustees of the Trust is responsible for managing its business and
affairs. The Trust, on behalf of the Fund, has entered into an
investment advisory agreement with Greenville Capital Management,
Inc. ("GCM") pursuant to which Greenville manages the Fund's
investments and business affairs, subject to the supervision of
the Trust's Board of Trustees (the "Investment Advisory
Agreement"). The Board of Trustees also oversees duties required
by applicable state and federal law.
GCM, a growth equity capital management firm, is the
investment advisor to the Fund. GCM was founded in 1989 and is
located at 100 South Rockland Road, Rockland, Delaware 19732.
Under the Investment Advisory Agreement, the Trust, on behalf of
the Fund, compensates GCM for its investment advisory services at
the annual rate of 1.00% of the Fund's average daily net assets.
The Trust's Board of Trustees believes that this fee is reasonable
in light of the Fund's investment objective. GCM has voluntarily
agreed to waive its management fee
<PAGE>
and/or reimburse the operating
expenses to the extent necessary to ensure that the Institutional
class' total operating expenses do not exceed 1.75% of the Fund's
average daily net assets. Any such waiver or reimbursement will
have the effect of lowering the overall expense ratio for the
Institutional class and increasing the Institutional class'
overall return to investors at the time any such amounts were
waived and/or reimbursed.
The Fund is currently co-managed by Charles S. Cruice and
Richard H. Gould. Mr. Cruice has been the President of GCM since
1989. Mr. Cruice began his career at Dean Witter Reynolds, Inc.
in 1974 and joined Friess Associates Inc., an investment
management company, in 1978. Mr. Cruice holds a BA from the
University of Denver. Mr. Gould has been a Vice President of GCM
since 1994. Prior to joining GCM, Mr. Gould was an equity analyst
with PNC Investment Management and co-managed the PNC small Cap
Growth Fund. Mr. Gould is a Chartered Financial Analyst and a
Chartered Market Technician. Mr. Gould received his BS in 1982
from The Pennsylvania State University and his MBA in Finance in
1985.
GCM provides continuous advice and recommendations
concerning the Fund's investments, and is responsible for
selecting the broker-dealers who execute the portfolio
transactions for the Fund. GCM provides office space for the
Trust and pays the salaries, fees and expenses of all the Trust's
officers and Trustees who are interested persons of GCM. In
addition to providing investment advice to the Fund, GCM serves as
investment advisor to pension and profit-sharing plans, and other
Institutional and private investors. As of September ___, 1996,
GCM had approximately $375 million under management. Mr. Charles
S. Cruice owns shares representing more than 51% of the voting
rights of GCM.
FUND EXPENSES
The Trust, on behalf of the Fund, is responsible for all of
its expenses, including: interest charges; taxes; brokerage
commissions; organizational expenses; expenses of registering or
qualifying shares for sale with the states and the SEC; expenses
of issue, sale, repurchase or redemption of shares; expenses of
printing and distributing prospectuses to existing shareholders;
charges of custodians; expenses for accounting, administrative,
audit, and legal services; fees for Trustees who are not
interested persons of GCM; expenses of fidelity bond coverage and
other insurance; expenses of indemnification; extraordinary
expenses; and costs of shareholder and Trustee meetings.
HOW TO PURCHASE FUND SHARES
The minimum initial investment in the Fund's Institutional
class is $100,000. Subsequent investments in the amount of at
least $1,000 may be made by mail or by wire. For individual
retirement accounts ("IRAs"), the minimum initial investment is
$2,000. Applications will not be accepted unless they are
accompanied by payment in U.S. funds. Payment should be made by
check or money order drawn on a U.S. bank, savings and loan, or
credit union. Minimum investments are waived for employee benefit
plans qualified under Sections 401, 403(b)(7) or 457 of the
Internal Revenue Code. These minimums can be changed by the Fund
at any time. Shareholders will be given at least 30 days' notice
of any increase in the minimum dollar amount of subsequent
investments.
Initial Investment - Minimum $100,000
You may purchase Institutional class shares by completing
the enclosed application and mailing it along with a check or
money order payable to "The Rockland Growth Fund Institutional
Class," to your securities dealer, the Distributor or the
Transfer Agent, as the case may be. If mailing to the Transfer
Agent, please use the following address: Firstar Trust Company,
Mutual Fund Services, P. O. Box 701, Milwaukee, Wisconsin 53201-
0701. In addition, overnight mail should be sent to the following
address: The Rockland Growth Fund, Firstar Trust Company, Mutual
Fund Services, Third Floor, 615 East Michigan Street, Milwaukee,
Wisconsin 53202.
If your check does not clear, you will be charged a $20.00
service fee. You will also be responsible for any losses suffered
by the Institutional class as a result. Neither cash nor third-
party checks will be accepted. All applications to purchase
Institutional class shares are subject to acceptance by the Fund
and are not binding until so accepted. The Fund reserves the
right to decline or accept a purchase order application in whole
or in part.
<PAGE>
Telephone and Wire Purchases
You may purchase Institutional class shares by moving money
from your bank account to your Fund account. Only bank accounts
held at domestic financial institutions that are Automated
Clearing House (ACH) members can be used for telephone
transactions. To have your Institutional class shares purchased
at the net asset value determined as of the close of regular
trading on a given date, the Transfer Agent must receive both the
purchase order and payment by Electronic Funds Transfer through
the ACH System before the close of regular trading on such date.
Most transfers are completed within 3 business days. Telephone
transactions may not be used for initial purchases of
Institutional class shares.
You may also purchase Institutional class shares by wire.
The following instructions should be followed when wiring funds to
the Transfer Agent for the purchase of Fund shares:
Wire to: Firstar Bank
ABA Number 075000022
Credit: Firstar Trust Company
Account 112-952-137
Further Credit: The Rockland Growth Fund, Institutional class
(shareholder account number)
(shareholder name/account registration)
Please call 1-800-________ prior to wiring any funds to notify the
Transfer Agent that the wire is coming and to verify the proper
wire instructions so that the wire is properly applied when
received. The Fund is not responsible for the consequences of
delays resulting from the banking or Federal Reserve wire system.
Subsequent Investments - Minimum $1,000
Additions to your account may be made by mail or by wire.
When making an additional purchase by mail, enclose a check
payable to "The Rockland Growth Fund Institutional Class" along
with the Additional Investment Form provided on the lower portion
of your account statement. To make an additional purchase by
wire, please call 1-800-________ for complete wiring instructions.
You may also make additional purchases by telephone. Information
regarding this option can be obtained by calling 1-800-________.
DETERMINATION OF NET ASSET VALUE
The net asset value per share for the Institutional class is
determined as of the close of trading (currently 4:00 p.m. Eastern
Standard Time) on each day the New York Stock Exchange ("NYSE") is
open for business. Purchase orders received or shares tendered
for redemption on a day the NYSE is open for trading, prior to the
close of trading on that day, will be valued as of the close of
trading on that day. Applications for purchase of Institutional
shares and requests for redemption of Institutional shares
received after the close of trading on the NYSE will be valued as
of the close of trading on the next day the NYSE is open. Net
asset value is calculated by taking the fair value of the
Institutional class' total assets, including interest or dividends
accrued, but not yet collected, less all liabilities, and dividing
by the total number of shares outstanding. The result, rounded to
the nearest cent, is the net asset value per share. In
determining net asset value, expenses are accrued and applied
daily and securities and other assets for which market quotations
are available are valued at market value. Common stocks, other
equity-type securities, and securities sold short are valued at
the last sales price on the national securities exchange or NASDAQ
on which such securities are primarily traded; provided, however,
securities traded on an exchange or NASDAQ for which there were no
transactions on a given day, any security sold short for which
there were no transactions on a given day and securities not
listed on an exchange or NASDAQ, are valued at the most recent
mean between the bid and asked price. Options purchased or
written by the Fund are valued at the average of the current bid
and asked prices. Any securities or other assets for which market
quotations are not readily available are valued at fair value as
determined in good faith by the Board of Trustees. Debt
securities having remaining maturities of 60 days or less when
purchased are valued by the amortized cost method when the Board
of Trustees determines that the fair market value of such
securities is their amortized cost. Under this method of
valuation, a security is initially valued at its acquisition cost,
and thereafter, amortization of any discount or
<PAGE>
premium is assumed
each day, regardless of the impact of fluctuating interest rates
on the market value of the security.
HOW TO REDEEM SHARES
In General
Investors may request redemption of part or all of their
Institutional class shares at any time at the next determined net
asset value. See "DETERMINATION OF NET ASSET VALUE." The Fund
normally will mail your redemption proceeds the next business day
and, in any event, no later than seven business days after receipt
of a redemption request in good order. However, when a purchase
has been made by check, the Fund may hold payment on redemption
proceeds until it is reasonably satisfied that the check has
cleared, this may normally take up to seven days.
Redemptions may also be made through brokers or dealers.
Such redemptions will be effected at the net asset value next
determined after receipt by the Institutional class of the broker
or dealer's instruction to redeem shares. In addition, some
brokers or dealers may charge a fee in connection with such
redemptions.
Written Redemption
For most redemption requests, an investor need only furnish
a written, unconditional request to redeem his or her
Institutional class shares at net asset value to the Fund's
Transfer Agent: Firstar Trust Company, Mutual Fund Services, P.
O. Box 701, Milwaukee, Wisconsin 53201-0701. Overnight mail
should be sent to The Rockland Growth Fund, Firstar Trust Company,
Mutual Fund Services, Third Floor, 615 East Michigan Street,
Milwaukee, Wisconsin 53202. Requests for redemption must be
signed exactly as the Institutional class shares are registered,
including the signature of each joint owner. You must also
specify the number of shares or dollar amount to be redeemed.
Redemption proceeds made by written redemption request may also be
wired to a commercial bank that you have authorized on your
account application. The Transfer Agent may charge a $10.00
service fee for wire transactions. Additional documentation may
be requested from corporations, executors, administrators,
trustees, guardians, agents, or attorneys-in-fact.
Telephone Redemption
Institutional class shares may also be redeemed by calling
the Transfer Agent at 1-800-__________. In order to utilize this
procedure, a shareholder must have previously elected this option
in writing, which election will be reflected in the records of the
Transfer Agent, and the redemption proceeds must be mailed
directly to the shareholder or transmitted to the shareholder's
predesignated account. To change the designated account, send a
written request with signature(s) guaranteed to the Transfer
Agent.
The Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine.
Such procedures may include requiring some form of personal
identification prior to acting upon telephone instructions,
providing written confirmations of all such transactions, and/or
tape recording all telephone instructions. Assuming procedures
such as the above have been followed, the Fund will not be liable
for any loss, cost, or expense for acting upon an investor's
telephone instructionsor for anyunauthorized telephone redemption.
Signature Guarantees
Signature guarantees are required for: (i) redemption
requests to be mailed or wired to a person other than the
registered owner(s) of the shares and (ii) redemption requests to
be mailed or wired to other than the address of record. A
signature guarantee may be obtained from any eligible guarantor
institution, as defined by the SEC. These institutions include
banks, savings associations, credit unions, brokerage firms and
others.
Your account may be terminated by the Fund on not less than
30 days' notice if, at the time of any redemption of shares in
your account, the value of the remaining shares in the account
falls below $10,000. Upon any such termination, a check for the
redemption proceeds will be sent to the account of record within
seven days of the redemption.
<PAGE>
SHAREHOLDER REPORTS
You will be provided at least semi-annually with a report
showing the Fund's holdings and annually after the close of the
Trust's fiscal year, which ends September 30, 1996, with an annual
report containing audited financial statements. An individual
account statement will be sent to you by the Transfer Agent after
each purchase or redemption of Institutional class shares as well
as on a monthly basis. You will also receive an annual statement
after the end of the calendar year listing all of your
transactions in Institutional class shares during such year.
If you have questions about your account, you should call
the Transfer Agent at 1-800-________. Investors who have general
questions about the Fund or the __________ or desire additional
information should write to The Rockland Funds, P.O. Box 701,
Milwaukee, WI 53201-0701.
TAX SHELTERED RETIREMENT PLANS
The Fund offers through Firstar Trust Company, in its
capacity as custodian of Fund assets (the "Custodian"), several
qualified retirement plans for adoption by individuals and
employers. Participants in these plans can accumulate shares of
the Fund's Institutional class on a tax deferred basis.
Contributions to these plans are generally tax deductible and
earnings are tax deferred until distributed.
Individual Retirement Account ("IRA"). Individuals under age 70
1/2 with earned income, may contribute money to an IRA. You are
allowed to contribute up to the lesser of $2,000 or 100% of your
earned income each year to an IRA. Individuals who are covered by
existing retirement plans, or have spouses covered by such plans,
and whose income exceed certain amounts, are not permitted to
deduct their IRA contributions for income tax purposes. However,
whether or not an individual's contributions are deductible, the
earnings in his or her IRA are not taxed until the account is
distributed.
401(k) Plan. A 401(k) Plan is a type of profit sharing plan that
allows employees to have part of their salary contributed to a
retirement plan which will earn tax-deferred income. A 401(k)
Plan is funded by employee contributions, employer contributions,
or a combination of both.
Defined Contribution Plan. A Defined Contribution Plan, commonly
referred to as a Keogh Plan, allows self-employed individuals,
partners, or a corporation to provide retirement benefits for
themselves and their employees. There are three plan types:
profit sharing, money purchase pension and a paired plan. A
paired plan is a combination of a profit sharing plan and a money
purchase plan.
A complete description of the various plans, as well as a
description of the applicable service fees are available from the
Fund and may be obtained by calling 1-800-_____________ or writing
to the Fund at P. O. Box 701, Milwaukee, Wisconsin 53201-0701.
Please note that early withdrawals from a retirement plan
may result in adverse tax consequences.
INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX TREATMENT
The Trust intends to qualify for treatment as a "Regulated
Investment Company" under Subchapter M of the Internal Revenue
Code, and, if so qualified, will not be liable for federal income
taxes to the extent earnings are distributed on a timely basis.
For federal income tax purposes, all dividends paid by the
Trust, on behalf of the Fund's Institutional class, and net
realized short-term capital gains are taxable as ordinary income
whether reinvested or received in cash unless you are exempt from
taxation or entitled to a tax deferral. Dividends and other
distributions on both classes of Fund shares are calculated at the
same time and in the same manner. Dividends on Institutional
class shares are expected to be higher than those on the Retail
class because of the higher expenses resulting from the
distribution and sales charges borne by the Retail class shares.
Distributions paid by the Trust, on behalf of the Fund's
Institutional class, from net realized long-term capital gains,
whether received in cash or reinvested in additional shares, are
taxable as such. The capital gain holding period is determined by
the length of time the Institutional class has held the security
and not the length of time you have held shares in the
Institutional class. Investors are informed annually as to the
amount and nature of all dividends and capital gains paid during
<PAGE>
the prior year. Such gains and dividends may also be subject to
state or local taxes. If you are not required to pay taxes on
your income, you will not be required to pay federal income taxes
on the amounts distributed to you.
Dividends are usually paid, and capital gains, if any, are
usually distributed annually in December. When a dividend or
capital gain is distributed, the Institutional class' net asset
value will decrease by the amount of the payment. A dividend paid
shortly after the purchase of Institutional shares will reduce the
net asset value of the shares purchased by the amount of the
dividend. All dividends or capital gains distributions paid on
the Institutional class shares will automatically be reinvested in
additional shares of the Institutional class at the then
prevailing net asset value unless an investor specifically
requests that either dividends or capital gains or both be paid in
cash. The election to receive dividends or reinvest them may be
changed by writing to the Fund at P. O. Box 701, Milwaukee,
Wisconsin 53201-0701. Such notice must be received at least 10
days prior to the record date of any dividend or capital gain
distribution.
If you do not furnish the Fund with your correct social
security number or employer identification number, the Fund is
required by federal law to withhold federal income tax at a rate
of 31% from your distributions and redemption proceeds.
This section is not intended to be a full discussion of
federal income tax laws and the effect of such laws on you. There
may be other federal, state, or local tax considerations
applicable to a particular investor. You are urged to consult
your own tax advisor.
FUND ORGANIZATION
The Trust was organized as a Delaware business trust under
Delaware law by Certificate of Trust on July 31, 1996. The
Board of Trustees is authorized to issue an unlimited number of
shares of beneficial interest in separate series, par value $0.001
per share, and to create classes of shares within each series.
Currently the Fund is the only series of the Trust. Shares of the
Retail class are offered to investors through the Fund's
underwriter, subject to a $10,000 minimum initial investment and
certain sales charges. Each class of shares represent interests
in the assets of the Fund and have identical voting, dividend,
liquidation and other rights on the same terms and conditions,
except that the distribution fees related to the Retail class
shares are borne solely by that class. If the Trust issues
additional series, the assets belonging to each series of shares
will be held separately by the Custodian, and in effect each
series will be a separate fund.
Each share, irrespective of series or class, is entitled to
one vote on all questions, except that certain matters must be
voted on separately by the series or class of shares affected, and
matters affecting only one series or class are voted upon only by
that series or class. All 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 all of the
Trustees if they choose to do so, and in such event, the holders
of the remaining shares will not be able to elect any person or
persons to the Board of Trustees.
The Trust will not hold annual shareholders' meetings except
when required by the Investment Company Act of 1940. There will
normally be no meetings of shareholders for the purpose of
electing Trustees unless and until such time as less than a
majority of the Trustees holding office have been elected by the
shareholders, at which time the Trustees then in office will call
a shareholders' meeting for the election of Trustees. The Trust
has adopted procedures in its Bylaws for the removal of Trustees
by the shareholders. As of September ___, 1996, ___________ owned
a controlling interest in the Fund.
ADMINISTRATOR
Pursuant to the Fund Administration and Servicing Agreement,
Firstar Trust Company (the "Administrator"), Mutual Fund Services,
Third Floor, 615 East Michigan Street, Milwaukee, Wisconsin 53202,
prepares and files all federal and state tax returns, oversees the
Fund's insurance relationships, participates in the preparation of
the registration statement, proxy statements and reports, prepares
compliance filings relating to the registration of the securities
of the Institutional class pursuant to state securities laws,
compiles data for and prepares notices to the SEC, prepares the
financial statements for the annual and semi-annual reports to the
SEC and current investors, monitors the Institutional class'
expense accruals and performs securities valuations, monitors the
Trust's status as a registered investment company under Subchapter
M of the Internal Revenue
<PAGE>
Code and monitors compliance with the
Fund's investment policies and restrictions, from time to time,
and generally assists in the Fund's administrative operations.
The Administrator, at its own expense and without reimbursement
from the Fund, furnishes office space and all necessary office
facilities, equipment, supplies and clerical and executive
personnel for performing the services required to be performed by
it under the Fund Administration and Servicing Agreement. For the
foregoing services, the Administrator receives from the Fund a
fee, computed daily and payable monthly based on the Fund's
average net assets at the annual rate of .06 of 1% on the Fund's
average net assets, subject to an annual minimum of $30,000, plus
out-of-pocket expenses.
CUSTODIAN, TRANSFER AGENT, AND FUND ACCOUNTANT
Firstar Trust Company, Mutual Fund Services, Third Floor,
615 East Michigan Street, Milwaukee, Wisconsin 53202, acts as
custodian of the Fund's assets and as dividend-disbursing,
transfer agent, and fund accountant for the Fund.
DISTRIBUTOR
__________ acts as the principal distributor of the Fund's
Institutional and Retail shares.
COMPARISON OF INVESTMENT RESULTS
The Institutional class may from time to time compare its
investment results to various passive indices or other mutual
funds and cite such comparisons in reports to shareholders, sales
literature, and advertisements. The results may be calculated on
the basis of average annual total return, total return, or
cumulative total return.
Average annual total return and total return figures assume
the reinvestment of all dividends and measure the net investment
income generated by, and the effect of, any realized and
unrealized appreciation or depreciation of the underlying
investments in the Institutional class over a specified period of
time. Average annual total return figures are annualized and
therefore represent the average annual percentage change over the
specified period. Total return figures are not annualized and
represent the aggregate percentage or dollar value change over the
period. Cumulative total return simply reflects the Institutional
class' performance over a stated period of time.
Average annual total return, total return and cumulative
total return are based upon the historical results of the
Institutional class and are not necessarily representative of the
future performance of the Institutional class. Additional
information concerning the Institutional class' performance
appears in the Statement of Additional Information.
- - - --------------------------------
The Fund reserves the right to change any of its
policies, practices and procedures described in this
Prospectus, including the Statement of Additional
Information, without shareholder approval except in
those instances where shareholder approval is
expressly required.
<PAGE>
TRUSTEES
Mr. Charles S. Cruice
Mr. Richard Gould
Mr. Robert McLean
Dr. Peter Utsinger
OFFICERS
INVESTMENT ADVISOR
Greenville Capital Management, Inc.
100 South Rockland Road
Rockland, DE 19732
CUSTODIAN, ADMINISTRATOR, TRANSFER AGENT
AND DIVIDEND-DISBURSING AGENT
Firstar Trust Company
Mutual Fund Services
Third Floor
615 East Michigan Street
Milwaukee, WI 53202
INDEPENDENT ACCOUNTANTS
LEGAL COUNSEL
Godfrey & Kahn, S.C.
780 N. Water Street
Milwaukee, WI 53202
PROSPECTUS
October___, 1996
Greenville Capital Management, Inc.
Presents
The Rockland Growth Fund
a Series of
The Rockland Funds Trust
P. O. Box 701
Milwaukee, Wisconsin 53201-0701
1-800-________
The Rockland Growth Fund (the "Fund") is a series of The Rockland
Funds Trust (the "Trust"), an open-end, diversified, management
investment company commonly referred to as a mutual fund. The
investment objective of the Fund is to seek capital appreciation.
The Fund will seek, under normal market conditions, to achieve its
investment objective by investing its assets primarily in equity
securities of domestic companies. The Fund is structured for
flexibility and risk reduction, but centered around investment in
high quality growth stocks with an emphasis on those companies
whose growth potential, in the opinion of the Fund's investment
adviser, Greenville Capital Management, Inc., has been overlooked
by Wall Street analysts.
This Prospectus sets forth concisely the information that you
should be aware of prior to investing in the Fund's Retail shares.
Two classes of shares of the Fund are currently offered to the
public: Institutional shares and Retail shares. This prospectus
relates only to the Retail shares. Information about the
Institutional shares may be obtained by calling 1-800-________.
Please read this Prospectus carefully and retain it for future
reference. Additional information regarding the Fund is included
in the Statement of Additional Information dated October__, 1996,
which has been filed with the Securities and Exchange Commission
and is incorporated in this Prospectus by reference. A copy of
the Fund's Statement of Additional Information is available
without charge by writing to the Fund at the address listed above
or by calling 1-800-________.
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.
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . 4
SUMMARY OF FUND EXPENSES . . . . . . . . . . . . . . . 5
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . . 6
INVESTMENT TECHNIQUES AND RISKS . . . . . . . . . . . . 7
In General . . . . . . . . . . . . . . . . . . . 7
Short-Term Fixed Income Securities . . . . . . . 7
Illiquid Securities . . . . . . . . . . . . . . . 7
ADRs . . . . . . . . . . . . . . . . . . . . . . 7
Options and Futures Transactions . . . . . . . . 8
Short Sales . . . . . . . . . . . . . . . . . . . 8
Repurchase Agreements . . . . . . . . . . . . . . 9
Convertible Securities . . . . . . . . . . . . . 9
Portfolio Turnover . . . . . . . . . . . . . . . 9
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . 9
FUND EXPENSES . . . . . . . . . . . . . . . . . . . . . 10
HOW TO PURCHASE FUND SHARES . . . . . . . . . . . . . . 10
Offering Price . . . . . . . . . . . . . . . . . 11
Purchases at Net Asset Value . . . . . . . . . . 11
Initial Investment - Minimum $10,000 . . . . . . 11
Wire Purchases . . . . . . . . . . . . . . . . . 12
Automatic Investment Plan - Minimum $250 . . . . 12
Subsequent Investments - Minimum $250 . . . . . . 13
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . 13
HOW TO REDEEM SHARES . . . . . . . . . . . . . . . . . 14
In General . . . . . . . . . . . . . . . . . . . 14
Written Redemption . . . . . . . . . . . . . . . 14
Telephone Redemption . . . . . . . . . . . . . . 14
Signature Guarantees . . . . . . . . . . . . . . 14
DISTRIBUTION PLAN . . . . . . . . . . . . . . . . . . . 15
SHAREHOLDER REPORTS . . . . . . . . . . . . . . . . . . 15
TAX SHELTERED RETIREMENT PLANS . . . . . . . . . . . . 16
Individual Retirement Account ("IRA") . . . . . . 16
401(k) Plan . . . . . . . . . . . . . . . . . . . 16
Defined Contribution Plan . . . . . . . . . . . . 16
INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX
TREATMENT . . . . . . . . . . . . . . . . . . . . . . . 16
FUND ORGANIZATION . . . . . . . . . . . . . . . . . . . 17
ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . . 18
CUSTODIAN, TRANSFER AGENT, AND FUND ACCOUNTANT . . . . 18
DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . 18
<PAGE>
COMPARISON OF INVESTMENT RESULTS . . . . . . . . . . . 18
No person has been authorized to give any information or to make
any representations other than those contained in this Prospectus
and the Statement of Additional Information, and if given or made,
such information or representations may not be relied upon as
having been authorized by the Fund. This prospectus does not
constitute an offer to sell securities in any state to any person
to whom it is unlawful to make such offer in such state.
<PAGE>
SUMMARY
Investment Objective
The investment objective of the Fund is to seek capital
appreciation. The Fund will seek to achieve its investment
objective by investing its assets primarily in equity securities
of domestic companies that, in the opinion of GCM, have been
overlooked by Wall Street analysts. The Fund's investments are
subject to market risk and the value of its shares will fluctuate
with changing market valuations of its portfolio holdings. See
"INVESTMENT OBJECTIVE AND POLICIES" and "INVESTMENT TECHNIQUES AND
RISKS."
Investment Advisor
GCM is the investment advisor to the Fund. GCM was
organized in 1989 and acts as the investment advisor to individual
and institutional clients with investment portfolios of
approximately $375 million. See "MANAGEMENT."
Purchase and Redemptions
Retail class shares of the Fund are offered at net asset
value per share plus a maximum initial sales charge of 3.00% of
the offering price. See "HOW TO PURCHASE SHARES." In addition,
the Retail class adopted a distribution plan under Rule 12b-1 of
the Investment Company Act of 1940, as amended (the "Investment
Company Act"), which authorizes the Retail class to pay a
distribution fee of up to 0.25% per annum of the Retail class
average daily net assets. See "DISTRIBUTION PLAN." The minimum
initial investment required by the Retail class is $10,000. The
minimum subsequent investment is $250. The minimum initial
investment for individual retirement accounts is $2,000, and for
investors using the Automatic Investment Plan, the minimum initial
investment is $250. These minimums may be changed or waived at
any time at the discretion of the Fund. Shares may be redeemed
using either written or telephone redemption procedures at the
Retail class' net asset value per share without the imposition of
any redemption charges. See "HOW TO REDEEM SHARES."
Shareholder Services
Questions regarding the Institutional shares or the Retail
shares may be directed to the Fund at the address and telephone
number on the front page of this Prospectus.
<PAGE>
SUMMARY OF FUND EXPENSES
The purpose of the following table is to assist an investor
in understanding the various costs and expenses that an investor
in the Retail class will bear directly (shareholder transaction
expenses) and indirectly (annual fund operating expenses).
Fee Table
Retail Class
Shareholder Transaction Expenses
Sales Load Imposed on Purchases 3.00%(1),(2)
Sales Load Imposed on Reinvested Dividends NONE
Deferred Sales Load Imposed on Redemptions NONE
Redemption Fees NONE
Annual Fund Operating Expenses (after waivers or
reimbursements) (as a percentage of average net assets)
Management Fee 1.00%
12b-1 (Distribution Plan) Fees 0.25%(2),(3)
Other Expenses (net of reimbursement) 0.75%(4)
TOTAL FUND OPERATING EXPENSES 1.75%(4)
(after waivers or reimbursements)
_________________________
(1) Certain investors may be exempt from paying this load. See
"HOW TO PURCHASE SHARES."
(2) Consistent with the National Association of Securities
Dealers, Inc.'s (the "NASD") rules, it is possible that the
combination of the front-end sales load and Rule 12b-1 fees
could cause long-term investors of the Retail class to pay
more than the economic equivalent of the maximum front-end
sales charges permitted under those rules.
(3) See "DISTRIBUTION PLAN" for more details.
(4) The Fund's investment advisor, GCM, has voluntarily agreed
to waive its management fee and/or reimburse the Fund's
operating expenses to the extent necessary to ensure that
the Fund's Total Operating Expenses do not exceed 1.75% of
the Fund's average daily net assets. Since the Fund did not
commence operations until October __, 1996, other expenses
have been estimated and are presented net of reimbursements.
Absent these reimbursements, Other Expenses and Total Fund
Operating Expenses are estimated to be ___% and ___%,
respectively. The Fund's management fee is higher than that
paid by other similar investment companies. For additional
information concerning management fees and operating
expenses, see "MANAGEMENT."
There are certain charges associated with certain services offered
by the Fund, such as a service fee of $10.00 for redemptions
effected via wire transfer.
Example
You would pay the following expenses on a $1,000 investment,
assuming (i) 5% annual return, and (ii) redemption at the end of
each time period.
1 Year 3 Years
------ -------
$18 $55
<PAGE>
The Example is based on the Total Operating Expenses
specified in the table above. The amounts in the Example may
increase absent the waivers or reimbursements. Please remember
that the Example should not be considered representative of past
or future expenses and that actual expenses may be greater or
lesser than those shown. The assumption in the Example of a 5%
annual rate of return is required by regulations of the Securities
and Exchange Commission ("SEC") applicable to all mutual funds.
This return is hypothetical and should not be considered
representative of past or future performance of the Retail shares.
INVESTMENT OBJECTIVE AND POLICIES
The Fund is the first and presently, the only series of
Trust, an open-end, diversified management company. The Fund's
investment objective is to seek capital appreciation. The
generation of investment income is not an investment objective
and, therefore, any income earned by the Fund will be incidental
to the Fund's objective. The Fund will seek, under normal market
conditions, to achieve its investment objective by investing its
assets primarily in equity securities of domestic companies, which
include but are not limited to common stocks; preferred stocks;
warrants to purchase common stocks or preferred stocks; and
securities convertible into common or preferred stocks, such as
convertible bonds and debentures. The Fund may, when GCM deems a
more conservative approach is warranted, or pending investment or
reinvestment, invest up to 35% of its total assets in short-term,
fixed income securities. For temporary, defensive purposes the
Fund may invest up to 100% of its total assets in such securities.
Since the Fund's assets will, under normal market conditions,
consist primarily of equity securities, the net asset value of the
Retail shares may be subject to greater principal fluctuation than
a portfolio containing a substantial amount of fixed income
securities.
The Fund is designed to take advantage of investment and
trading opportunities that investors might not otherwise have the
time, expertise or inclination to exploit themselves. The Fund is
structured for flexibility and risk reduction, but centered around
investment in high quality growth stocks with an emphasis on those
companies whose growth potential, in GCM's opinion, has been
overlooked by Wall Street analysts. In addition, the Fund may
sell short up to 25% of its portfolio. The Fund only intends to
use short positions for brief periods of time in smaller position
sizes to reduce the Fund's overall risk and to increase the Fund's
pool of potential investment ideas. (See "INVESTMENT TECHNIQUES
AND RISKS - Short Sales").
When making investment decisions, GCM utilizes information
and analyses from numerous sources regarding a company's sales and
earnings growth; earnings power, trends and predictability;
industry, economic and political trends; relative valuation; and
liquidity, to determine whether the security has the growth
potential suitable for the Fund. The Fund will generally invest
in companies with market capitalizations ranging from $100 million
to $2 billion. The Fund is only intended to be an investment
vehicle for that part of an investor's capital which can
appropriately be exposed to above average risk in anticipation of
greater rewards. The Fund is not designed to offer a balanced
investment program suitable for all investors.
Except for the Fund's investment objective and the
investment restrictions contained in the Statement of Additional
Information, the Fund's policies may be changed without a vote of
the Retail class' shareholders.
INVESTMENT TECHNIQUES AND RISKS
In General
The Fund will not invest more than 5% of its net assets in
any one of the following types of investments: preferred stocks;
warrants; unseasoned companies; securities purchased on a when-
issued or delayed delivery basis; call and put options; and
futures and options on futures. The ability of the Fund to
effectively use put and call options and futures transactions is
largely dependent upon GCM's ability to correctly use these
instruments, which may involve different skills than are
associated with securities generally. For a more extensive
discussion of certain of these investments and techniques and
risks associated therewith, see the Fund's Statement of Additional
Information.
<PAGE>
Short-Term Fixed Income Securities
When GCM believes that adverse economic or market conditions
justify such action, up to 100% of the Fund's assets may be held
temporarily in short-term fixed-income securities, including
without limitation: U.S. government securities, including bills,
notes and bonds, differing as to maturity and rate of interest,
which are either issued or guaranteed by the U.S. Treasury or by
U.S. governmental agencies or instrumentalities; certificates of
deposit issued against funds deposited in a U.S. bank or savings
and loan association; bank time deposits, which are monies kept on
deposit with U.S. banks or savings and loan associations for a
stated period of time at a fixed rate of interest; bankers'
acceptances which are short-term credit instruments used to
finance commercial transactions; repurchase agreements entered
into only with respect to obligations of the U.S. government, its
agencies or instrumentalities; or commercial paper and commercial
paper master notes (which are demand instruments without a fixed
maturity bearing interest at rates which are fixed to known
lending rates and automatically adjusted when such lending rates
change) rated A-1 or better by S&P, Prime-1 or better by Moody's,
Duff 2 or higher by D&P, or Fitch 2 or higher by Fitch.
Illiquid Securities
The Fund may invest up to 10% of the value of its net assets
in illiquid securities, which include, but are not limited to,
restricted securities (securities the disposition of which is
restricted under the federal securities laws); securities which
may only be resold pursuant to Rule 144A under the Securities Act
of 1933; and repurchase agreements with maturities in excess of
seven days. Risks associated with restricted securities include
the potential obligation to pay all or part of the registration
expenses in order to sell restricted securities. A considerable
period of time may elapse between the time of the decision to sell
a restricted security and the time the Fund may be permitted to
sell under an effective registration statement or otherwise. If,
during such a period, adverse conditions were to develop, the Fund
might obtain a less favorable price than that which prevailed when
it decided to sell. The Board of Trustees of the Trust, or its
delegate, has the ultimate authority to determine, to the extent
permissible under the federal securities laws, which securities
are liquid or illiquid. The Board of Trustees has adopted
guidelines and delegated this determination to GCM.
ADRs
The Fund may invest up to 25% of the value of its net assets
in ADRs or other instruments denominated in U.S. dollars. ADRs
are receipts typically issued by a U.S. bank or trust company
evidencing ownership of the underlying foreign security and
denominated in U.S. dollars. Some institutions issuing ADRs may
not be sponsored by the issuer. A non-sponsored depository may
not provide the same shareholder information that a sponsored
depository is required to provide under its contractual
arrangements with the issuer, including reliable financial
statements.
Investments in securities of foreign issuers involve risks
which are in addition to the usual risks inherent in domestic
investment. In many countries there is less publicly available
information about issuers than is available in the reports and
ratings published about companies in the U.S. Additionally,
foreign companies are not subject to uniform accounting, auditing
and financial reporting standards. Other risks inherent in
foreign investment include expropriation; confiscatory taxation;
withholding taxes on dividends and interest; less extensive
regulation of foreign brokers, securities markets and issuers;
costs incurred in conversions between currencies; the possibility
of delays in settlement in foreign securities markets; limitations
on the use or transfer of assets (including suspension of the
ability to transfer currency from a given country); the difficulty
of enforcing obligations in other countries; diplomatic
developments; and political or social instability. Foreign
economies may differ favorably or unfavorably from the U.S.
economy in various respects, and many foreign securities are less
liquid and their prices are more volatile than comparable U.S.
securities. From time to time, foreign securities may be
difficult to liquidate rapidly without adverse price effects.
Certain costs attributable to foreign investing, such as custody
charges and brokerage costs, are higher than those attributable to
domestic investing.
Options and Futures Transactions
The Fund may engage in options and futures transactions
which are sometimes referred to as derivative transactions. The
Fund's options and futures transactions may include instruments
such as stock index options and futures contracts. Such
transactions may be used for several reasons, including hedging
unrealized portfolio gains. The Fund will only engage in futures
and options transactions which must, pursuant to regulations
<PAGE>
promulgated by the Commodity Futures Trading Commission (the
"CFTC"), constitute bona fide hedging or other permissible risk
management transactions and will not enter into such transactions
if the sum of the initial margin deposits and premiums paid for
unexpired options exceeds 5% of the Fund's total assets. In
addition, the Fund will not enter into options and futures
transactions if more than 50% of the Fund's net assets would be
committed to such instruments. The Fund may hold a futures or
options position until its expiration, or it can close out such a
position before then at current value if a liquid secondary market
is available. If the Fund cannot close out a position, it may
suffer a loss apart from any loss or gain experienced at the time
the Fund decided to close the position. When required by
guidelines of the SEC or the CFTC, the Fund will set aside
permissible liquid assets in a segregated account to secure its
potential obligations under its futures or options positions.
Such liquid assets may include cash, U.S. government securities
and high-grade liquid debt securities. The ability of the Fund to
effectively use options and futures is largely dependent upon
GCM's ability to correctly use such instruments which may involve
different skills than are associated with securities generally.
For a further discussion of options and futures transactions,
please see the Statement of Additional Information.
Short Sales
The Fund may engage in short sale transactions in securities
listed on one or more national securities exchanges, or in
unlisted securities. Short selling involves the sale of borrowed
securities. At the time a short sale is effected, the Fund incurs
an obligation to replace the borrowed security at whatever its
price may be at the time the Fund purchases it for delivery to the
lender. When a short sale transaction is closed out, any gain or
loss on the transaction is taxable as a short term capital gain or
loss. All short sales will be fully collateralized, and no short
sale will be effected which would cause the aggregate market value
of all securities sold short to exceed 25% of the value of the
Fund's net assets. The Fund limits short sales of any one
issuer's securities to 2% of the Fund's total assets and to 2% of
any one class of the issuer's securities.
Repurchase Agreements
The Fund may invest up to 25% of its net assets in
repurchase agreements entered into with Federal Reserve Bank
member banks and certain non-bank dealers. In a repurchase
agreement, the Fund buys a security at one price, and at the time
of sale, the seller agrees to repurchase the obligation at a
mutually agreed upon time and price (usually seven days). The
repurchase agreement determines the yield during the purchaser's
holding period, while the seller's obligation to repurchase is
secured by the value of the underlying security. GCM will
monitor, on an ongoing basis, the value of the underlying
securities to ensure that the value always equals or exceeds the
repurchase price plus accrued interest. Repurchase agreements
could involve certain risks in the event of a default or
insolvency of the other party to the agreement including possible
delays or restrictions upon the Fund's ability to dispose of the
underlying securities. Although no definitive criteria are used,
GCM reviews the creditworthiness of the banks and non-bank dealers
with which the Fund enters into repurchase agreements to evaluate
those risks.
Convertible Securities
The Fund may invest up to 25% of its net assets in
securities convertible into common stocks. A convertible security
entitles the holder to receive interest normally paid or accrued
on the debt or the dividend paid on preferred stock until the
convertible security matures or is redeemed, converted, or
exchanged. Convertible securities have unique investment
characteristics in that they generally have higher yields than
common stocks, but lower yields than comparable non-convertible
securities, are less subject to fluctuation in value than the
underlying stock, and provide the potential for capital
appreciation if the market price of the underlying common stock
increases. A convertible security might be subject to redemption
at the option of the issuer at a price established in the
security's governing instrument. If a convertible security held
by the Fund is called for redemption, the Fund will be required to
permit the issuer to redeem the security, convert it into the
underlying common stock or sell it to a third party.
Portfolio Turnover
The portfolio turnover rate indicates changes in the Fund's
investments. The turnover rate may vary from year to year, as
well as within a year. Under normal market conditions, the Fund
anticipates that its portfolio turnover rate is not expected to
exceed 110% and is expected to range between 70 and 110%. A
turnover rate of 100% would occur, for example, if all of the
securities held by the Fund were replaced within
<PAGE>
one year. It may
be affected by sales of portfolio securities necessary to meet
cash requirements for redemption of shares. In the event the Fund
were to have a turnover rate of 100% or more in any year, it would
result in the payment by the Fund of above average transaction
costs and could result in the payment by Retail shareholders of
above average amounts of taxes on realized investment gains.
MANAGEMENT
Under the laws of the State of Delaware, the Board of
Trustees of the Trust is responsible for managing its business and
affairs. The Trust, on behalf of the Fund, has entered into an
investment advisory agreement with Greenville Capital Management,
Inc. ("GCM") pursuant to which GCM manages the Fund's investments
and business affairs, subject to the supervision of the Trust's
Board of Trustees (the "Investment Advisory Agreement"). The
Board of Trustees also oversees duties required by applicable
state and federal law.
GCM, a growth equity capital management firm, is the
investment advisor to the Fund. GCM was founded in 1989 and is
located at 100 South Rockland Road, Rockland, Delaware 19732.
Under the Investment Advisory Agreement, the Trust, on behalf of
the Fund, compensates GCM for its investment advisory services at
the annual rate of 1.00% of the Fund's average daily net assets.
The Trust's Board of Trustees believes that this fee is reasonable
in light of the Fund's investment objective. GCM has voluntarily
agreed to waive its management fee and/or reimburse the operating
expenses to the extent necessary to ensure that the Retail class'
total operating expenses do not exceed 1.75% of the Fund's average
daily net assets. Any such waiver or reimbursement will have the
effect of lowering the overall expense ratio for the Retail class
and increasing the Retail class' overall return to investors at
the time any such amounts were waived and/or reimbursed.
The Fund is currently co-managed by Charles S. Cruice and
Richard H. Gould. Mr. Cruice has been the President of GCM since
1989. Mr. Cruice began his career at Dean Witter Reynolds, Inc.
in 1974 and joined Friess Associates Inc., an investment
management company, in 1978. Mr. Cruice holds a BA from the
University of Denver. Mr. Gould has been a Vice President of GCM
since 1994. Prior to joining GCM, Mr. Gould was an equity analyst
with PNC Investment Management and co-managed the PNC small Cap
Growth Fund. Mr. Gould is a Chartered Financial Analyst and a
Chartered Market Technician. Mr. Gould received his BS in 1982
from The Pennsylvania State University and his MBA in Finance in
1985.
GCM provides continuous advice and recommendations
concerning the Fund's investments, and is responsible for
selecting the broker-dealers who execute the portfolio
transactions for the Fund. GCM provides office space for the
Trust and pays the salaries, fees and expenses of all the Trust's
officers and Trustees who are interested persons of GCM. In
addition to providing investment advice to the Fund, GCM serves as
investment advisor to pension and profit-sharing plans, and other
institutional and private investors. As of September ___, 1996,
GCM had approximately $375 million under management. Mr. Charles
S. Cruice owns shares representing more than 51% of the voting
rights of GCM.
FUND EXPENSES
The Trust, on behalf of the Fund, is responsible for all of
its expenses, including: interest charges; taxes; brokerage
commissions; organizational expenses; expenses of registering or
qualifying shares for sale with the states and the SEC; expenses
of issue, sale, repurchase or redemption of shares; expenses of
printing and distributing prospectuses to existing shareholders;
charges of custodians; expenses for accounting, administrative,
audit, and legal services; fees for Trustees who are not
interested persons of GCM; expenses of fidelity bond coverage and
other insurance; expenses of indemnification; extraordinary
expenses; and costs of shareholder and Trustee meetings.
HOW TO PURCHASE FUND SHARES
Retail class shares of the Fund may be purchased at the
Offering Price (as defined below) through any dealer which has
entered into a sales agreement with , in its
capacity as principal underwriter of the Fund's Retail shares (the
"Distributor"), or through the Distributor directly. Firstar
Trust Company, the Fund's transfer agent (the "Transfer Agent"),
may also accept purchase applications.
<PAGE>
The minimum initial investment in the Fund's Retail class is
$10,000. Subsequent investments in the amount of at least $250
may be made by mail or by wire. For individual retirement
accounts ("IRAs"), the minimum initial investment is $2,000. For
investors using the Automatic Investment Plan, the minimum
investment is $250. Applications will not be accepted unless they
are accompanied by payment in U.S. funds. Payment should be made
by check or money order drawn on a U.S. bank, savings and loan, or
credit union. Minimum investments are waived for employee benefit
plans qualified under Sections 401, 403(b)(7) or 457 of the
Internal Revenue Code. These minimums can be changed by the Fund
at any time. Shareholders will be given at least 30 days' notice
of any increase in the minimum dollar amount of subsequent
investments.
Offering Price
Retail class shares are sold on a continual basis at the
next offering price (the "Offering Price"), which is the sum of
the net asset value per share (next computed following (i) receipt
of an order in proper form by a dealer, the Distributor or the
Transfer Agent, as the case may be, and (ii) acceptance of such
order by the Fund) and the sales charge as set forth below. Net
asset value per share is calculated once daily as of the close of
trading (currently 4:00 p.m., Eastern Standard Time) on each day
the New York Stock Exchange is open. See "DETERMINATION OF NET
ASSET VALUE." The sales charge imposed on purchases of Fund
shares is as follows:
<TABLE>
<S>
Amount of Sale As a Percentage of As a Percentage of Portion of Total
at Offering Offering Price of Net Asset Value of Offering Price
Price the Shares Purchased the Shares Purchased Retained by Dealers
<C> <C> <C>
Any amount 3.00% _____% 2.75%
</TABLE>
_______________
* At the discretion of the Distributor, all sales charges may at
times be paid to the securities dealer, if any, involved in
the trade. A securities dealer which is paid all or
substantially all of the sales charges may be deemed an
"underwriter" under the Securities Act of 1933, as amended.
Investors described under "Purchases at Net Asset Value,"
below, may purchase shares of the Retail class without the
imposition of a sales charge. In addition, no sales charge is
imposed on the reinvestment of dividends or capital gains. A
confirmation indicating the details of each purchase transaction
will be sent to you promptly following each transaction. If a
purchase order is placed through a dealer, the dealer must
promptly forward the order, together with payment, to the Transfer
Agent.
Purchases at Net Asset Value
Retail class shares may be purchased at net asset value
without the imposition of a sales charge, upon the written
assurance that the purchase is made for investment purposes and
that the shares will not be transferred or resold except through
redemption or repurchase by or on behalf of the Fund, by any of
the following: (i) employee benefit plans qualified under Section
401(k) of the Internal Revenue Code of 1986, as amended, subject
to minimum requirements with respect to the number of employees or
amount of purchase, which may be established by the Distributor.
Currently, those criteria require that the employer establishing
the plan have [1,000 or more] eligible employees; (ii) trustees,
officers, and full-time employees of the Fund, the Distributor,
and affiliates of such companies, and by spouses and family
members of such persons; (iii) registered securities brokers and
dealers which have entered into a sales agreement with the
Distributor, and their affiliates, for their investment account
only; and (iv) registered personnel and employees of such
securities brokers and dealers referred to in (iii) above, and
their spouses and family members, in accordance with the internal
policies and procedures of the employing securities dealer.
Please call 1-800-______________ for more information on
purchases at net asset value.
<PAGE>
Initial Investment - Minimum $10,000
You may purchase Retail class shares by completing the
enclosed application and mailing it along with a check or money
order payable to "The Rockland Growth Fund Retail Class," to your
securities dealer, the Distributor or the Transfer Agent, as the
case may be. If mailing to the Transfer Agent, please use the
following address: Firstar Trust Company, Mutual Fund Services,
P. O. Box 701, Milwaukee, Wisconsin 53201-0701. In addition,
overnight mail should be sent to the following address: The
Rockland Growth Fund, Firstar Trust Company, Mutual Fund Services,
Third Floor, 615 East Michigan Street, Milwaukee, Wisconsin 53202.
If the securities dealer you have chosen to purchase Retail
class shares through has not entered into a sales agreement with
the Distributor, such dealer may, nevertheless, offer to place
your order for the purchase of Fund shares. Purchases made
through such dealers will be affected at the Offering Price. Such
dealers may also charge a transaction fee, as determined by the
dealer. That fee will be in addition to the sales charge payable
by you upon purchase, and may be avoided if shares are purchased
through a dealer who has entered into a sales agreement with the
Distributor or through the Transfer Agent.
If your check does not clear, you will be charged a $20.00
service fee. You will also be responsible for any losses suffered
by the Retail class as a result. Neither cash nor third-party
checks will be accepted. All applications to purchase Retail
class shares are subject to acceptance by the Fund and are not
binding until so accepted. The Fund reserves the right to decline
or accept a purchase order application in whole or in part.
Wire Purchases
You may also purchase Retail class shares by wire. The
following instructions should be followed when wiring funds to the
Transfer Agent for the purchase of Retail class shares:
Wire to: Firstar Bank
ABA Number 075000022
Credit: Firstar Trust Company
Account 112-952-137
Further Credit: The Rockland Growth Fund, Retail Class
(shareholder account number)
(shareholder name/account registration)
Please call 1-800-________ prior to wiring any funds to notify the
Transfer Agent that the wire is coming and to verify the proper
wire instructions so that the wire is properly applied when
received. The Fund is not responsible for the consequences of
delays resulting from the banking or Federal Reserve wire system.
Automatic Investment Plan - Minimum $250
The Automatic Investment Plan ("AIP") allows you to make
regular, systematic investments in the Fund from your bank
checking or NOW account. The Fund will reduce the minimum initial
investment to $250 for investors using the AIP. To establish the
AIP, complete the appropriate section in the Fund's application.
Under certain circumstances (such as discontinuation of the AIP
before the Retail class minimum initial investment is reached, or,
after reaching the minimum initial investment, the account balance
is reduced to less than $500), the Fund reserves the right to
close the investor's account. Prior to closing any account for
failure to reach the minimum initial investment, the Fund will
give the investor written notice and 60 days in which to reinstate
the AIP or otherwise reach the minimum initial investment. You
should consider your financial ability to continue in the AIP
until the minimum initial investment amount is met because the
Fund has the right to close an investor's account for failure to
reach the minimum initial investment. Such closing may occur in
periods of declining share prices.
Under the AIP, you may choose to make investments on the
fifth and/or twentieth day of each month from your financial
institution in amounts of $250 or more. There is no service fee
for participating in the AIP. However, a service fee of $20 will
be deducted from your Fund account for any AIP purchase that does
not clear due to insufficient funds or, if prior to notifying the
Fund in writing or by telephone to terminate the plan,
<PAGE>
you close
your bank account or in any manner prevent withdrawal of funds
from the designated checking or NOW account. You can set up the
AIP with any financial institution that is a member of the
Automated Clearing House.
The AIP is a method of using dollar cost averaging which is
an investment strategy that involves investing a fixed amount of
money at a regular time interval. However, a program of regular
investment cannot ensure a profit or protect against a loss from
declining markets. By always investing the same amount, you will
be purchasing more shares when the price is low and fewer shares
when the price is high. Since such a program involves continuous
investment regardless of fluctuating share values, you should
consider your financial ability to continue the program through
periods of low share price levels.
Subsequent Investments - Minimum $250
Additions to your account may be made by mail or by wire.
When making an additional purchase by mail, enclose a check
payable to "The Rockland Growth Fund Retail Class" along with the
Additional Investment Form provided on the lower portion of your
account statement. To make an additional purchase by wire, please
call 1-800-________ for complete wiring instructions.
DETERMINATION OF NET ASSET VALUE
The net asset value per share for the Retail class is
determined as of the close of trading (currently 4:00 p.m. Eastern
Standard Time) on each day the New York Stock Exchange ("NYSE") is
open for business. Purchase orders received or shares tendered
for redemption on a day the NYSE is open for trading, prior to the
close of trading on that day, will be valued as of the close of
trading on that day. Applications for purchase of Retail shares
and requests for redemption of Retail shares received after the
close of trading on the NYSE will be valued as of the close of
trading on the next day the NYSE is open. Net asset value is
calculated by taking the fair value of the Retail class' total
assets, including interest or dividends accrued, but not yet
collected, less all liabilities, and dividing by the total number
of shares outstanding. The result, rounded to the nearest cent,
is the net asset value per share. In determining net asset value,
expenses are accrued and applied daily and securities and other
assets for which market quotations are available are valued at
market value. Common stocks, other equity-type securities, and
securities sold short are valued at the last sales price on the
national securities exchange or NASDAQ on which such securities
are primarily traded; provided, however, securities traded on an
exchange or NASDAQ for which there were no transactions on a given
day, any security sold short for which there were no transactions
on a given day and securities not listed on an exchange or NASDAQ,
are valued at the most recent mean between the bid and asked
price. Options purchased or written by the Fund are valued at the
average of the current bid and asked prices. Any securities or
other assets for which market quotations are not readily available
are valued at fair value as determined in good faith by the Board
of Trustees. Debt securities having remaining maturities of 60
days or less when purchased are valued by the amortized cost
method when the Board of Trustees determines that the fair market
value of such securities is their amortized cost. Under this
method of valuation, a security is initially valued at its
acquisition cost, and thereafter, amortization of any discount or
premium is assumed each day, regardless of the impact of
fluctuating interest rates on the market value of the security.
HOW TO REDEEM SHARES
In General
Investors may request redemption of part or all of their
Retail class shares at any time at the next determined net asset
value. See "DETERMINATION OF NET ASSET VALUE." The Fund normally
will mail your redemption proceeds the next business day and, in
any event, no later than seven business days after receipt of a
redemption request in good order. However, when a purchase has
been made by check, the Fund may hold payment on redemption
proceeds until it is reasonably satisfied that the check has
cleared, this may normally take up to seven days.
Redemptions may also be made through brokers or dealers.
Such redemptions will be effected at the net asset value next
determined after receipt by the Retail class of the broker or
dealer's instruction to redeem shares. In addition, some brokers
or dealers may charge a fee in connection with such redemptions.
<PAGE>
Written Redemption
For most redemption requests, an investor need only furnish
a written, unconditional request to redeem his or her Retail class
shares at net asset value to the Fund's Transfer Agent: Firstar
Trust Company, Mutual Fund Services, P. O. Box 701, Milwaukee,
Wisconsin 53201-0701. Overnight mail should be sent to The
Rockland Growth Fund, Firstar Trust Company, Mutual Fund Services,
Third Floor, 615 East Michigan Street, Milwaukee, Wisconsin 53202.
Requests for redemption must be signed exactly as the Retail class
shares are registered, including the signature of each joint
owner. You must also specify the number of shares or dollar
amount to be redeemed. Redemption proceeds made by written
redemption request may also be wired to a commercial bank that you
have authorized on your account application. The Transfer Agent
may charge a $10.00 service fee for wire transactions. Additional
documentation may be requested from corporations, executors,
administrators, trustees, guardians, agents, or attorneys-in-fact.
Telephone Redemption
Retail class shares may also be redeemed by calling the
Transfer Agent at 1-800-__________. In order to utilize this
procedure, a shareholder must have previously elected this option
in writing, which election will be reflected in the records of the
Transfer Agent, and the redemption proceeds must be mailed
directly to the shareholder or transmitted to the shareholder's
predesignated account. To change the designated account, send a
written request with signature(s) guaranteed to the Transfer
Agent.
The Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine.
Such procedures may include requiring some form of personal
identification prior to acting upon telephone instructions,
providing written confirmations of all such transactions, and/or
tape recording all telephone instructions. Assuming procedures
such as the above have been followed, the Fund will not be liable
for any loss, cost, or expense for acting upon an investor's
telephone instructions or for any unauthorized telephone
redemption.
Signature Guarantees
Signature guarantees are required for: (i) redemption
requests to be mailed or wired to a person other than the
registered owner(s) of the shares and (ii) redemption requests to
be mailed or wired to other than the address of record. A
signature guarantee may be obtained from any eligible guarantor
institution, as defined by the SEC. These institutions include
banks, savings associations, credit unions, brokerage firms and
others.
Shareholders who have an Individual Retirement Account
("IRA") or other retirement plan must indicate on their redemption
request whether or not to withhold federal income tax. Redemption
requests failing to indicate an election not to have federal tax
withheld will be subject to withholding.
Your account may be terminated by the Fund on not less than
30 days' notice if, at the time of any redemption of shares in
your account, the value of the remaining shares in the account
falls below $10,000. Upon any such termination, a check for the
redemption proceeds will be sent to the account of record within
seven days of the redemption.
DISTRIBUTION PLAN
The Fund has adopted a plan pursuant to Rule 12b-1 under the
Investment Company Act (the "Plan"), which requires the Retail
class to pay the Distributor a distribution fee of up to 0.25% of
its average daily net assets computed on an annual basis. Under
the terms of the Plan, the Distributor is authorized to, in turn,
pay all or a portion of this fee to any securities dealer,
financial institution or any other person (the "Recipient") who
renders assistance in distributing or promoting the sale of Retail
class shares pursuant to a written agreement (the "Rule 12b-1
Related Agreement"). To the extent such fee is not paid to such
persons, the Distributor may use the fee for its own distribution
expenses incurred in connection with the sale of the shares,
although it is the Distributor's current intention to pay out all
or most of the fee. A form of the 12b-1 Related Agreement
referred to above has been approved by a majority of the Board of
Trustees of the Trust, and of the members of the Board who are not
"interested persons" of the Fund as defined in the Investment
Company Act and who have no direct or indirect financial interest
in the operation of the Plan or any related agreements (the
<PAGE>
"Disinterested Trustees") voting separately. Accordingly, the
Distributor may enter into 12b-1 Related Agreements with
securities dealers, financial institutions or other persons
without further Board approval.
Payment of the distribution fee is to be made quarterly,
within 30 days after the close of the quarter for which the fee is
payable, upon the Distributor forwarding to the Board of Trustees
a written report of all amounts expensed pursuant to the Plan;
provided, however, that the aggregate payments by the Retail class
under the Plan in any month to the Distributor and all Recipients
may not exceed 0.25% of the Retail class average net assets for
that quarter; and provided further that no fee may be paid in
excess of the distribution expenses as set forth in the quarterly
written report. Thus, the Plan does not provide for the payment
of distribution fees in subsequent periods that relate to expenses
incurred in prior periods.
The Plan, and any Rule 12b-1 Related Agreement which is
entered into, will continue in effect for a period of more than
one year only so long as its continuance is specifically approved
at least annually by a vote of a majority of the Trust's Board of
Trustees, and of the Disinterested Trustees, cast in person at a
meeting called for the purpose of voting on the Plan, or the Rule
12b-1 Related Agreement, as applicable. In addition, the Plan,
and any Rule 12b-1 Related Agreement, may be terminated at any
time, without penalty, by vote of a majority of the outstanding
voting securities of the Retail class, or by vote of a majority of
Disinterested Trustees, on not more than sixty (60) days' written
notice.
SHAREHOLDER REPORTS
You will be provided at least semi-annually with a report
showing the Fund's holdings and annually after the close of the
Trust's fiscal year, which ends September 30, 1996, with an annual
report containing audited financial statements. An individual
account statement will be sent to you by the Transfer Agent after
each purchase or redemption of Retail class shares as well as on a
monthly basis. You will also receive an annual statement after
the end of the calendar year listing all of your transactions in
Retail class shares during such year.
If you have questions about your account, you should call
the Transfer Agent at 1-800-________. Investors who have general
questions about the Fund or the __________ or desire additional
information should write to The Rockland Funds, P.O. Box 701,
Milwaukee, WI 53201-0701.
TAX SHELTERED RETIREMENT PLANS
The Fund offers through Firstar Trust Company, in its
capacity as custodian of Fund assets (the "Custodian"), several
qualified retirement plans for adoption by individuals and
employers. Participants in these plans can accumulate shares of
the Fund's Retail class on a tax deferred basis. Contributions to
these plans are generally tax deductible and earnings are tax
deferred until distributed.
Individual Retirement Account ("IRA"). Individuals under age 70
1/2 with earned income, may contribute money to an IRA. You are
allowed to contribute up to the lesser of $2,000 or 100% of your
earned income each year to an IRA. Individuals who are covered by
existing retirement plans, or have spouses covered by such plans,
and whose income exceed certain amounts, are not permitted to
deduct their IRA contributions for income tax purposes. However,
whether or not an individual's contributions are deductible, the
earnings in his or her IRA are not taxed until the account is
distributed.
401(k) Plan. A 401(k) Plan is a type of profit sharing plan that
allows employees to have part of their salary contributed to a
retirement plan which will earn tax-deferred income. A 401(k)
Plan is funded by employee contributions, employer contributions,
or a combination of both.
Defined Contribution Plan. A Defined Contribution Plan, commonly
referred to as a Keogh Plan, allows self-employed individuals,
partners, or a corporation to provide retirement benefits for
themselves and their employees. There are three plan types:
profit sharing, money purchase pension and a paired plan. A
paired plan is a combination of a profit sharing plan and a money
purchase plan.
A complete description of the various plans, as well as a
description of the applicable service fees are available from the
Fund and may be obtained by calling 1-800-_____________ or writing
to the Fund at P. O. Box 701, Milwaukee, Wisconsin 53201-0701.
<PAGE>
Please note that early withdrawals from a retirement plan
may result in adverse tax consequences.
INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX TREATMENT
The Trust intends to qualify for treatment as a "Regulated
Investment Company" under Subchapter M of the Internal Revenue
Code, and, if so qualified, will not be liable for federal income
taxes to the extent earnings are distributed on a timely basis.
For federal income tax purposes, all dividends paid by the
Trust, on behalf of the Fund's Retail class, and net realized
short-term capital gains are taxable as ordinary income whether
reinvested or received in cash unless you are exempt from taxation
or entitled to a tax deferral. Dividends and other distributions
on both classes of Fund shares are calculated at the same time and
in the same manner. Dividends on Institutional class shares are
expected to be higher than those on the Retail class because of
the higher expenses resulting from the distribution and sales
charges borne by the Retail class shares. Distributions paid by
the Trust, on behalf of the Fund's Retail class, from net realized
long-term capital gains, whether received in cash or reinvested in
additional shares, are taxable as such. The capital gain holding
period is determined by the length of time the Fund has held the
security and not the length of time you have held shares in the
Retail class. Investors are informed annually as to the amount
and nature of all dividends and capital gains paid during the
prior year. Such gains and dividends may also be subject to state
or local taxes. If you are not required to pay taxes on your
income, you will not be required to pay federal income taxes on
the amounts distributed to you.
Dividends are usually paid, and capital gains, if any, are
usually distributed annually in December. When a dividend or
capital gain is distributed, the Retail class' net asset value
will decrease by the amount of the payment. A dividend paid
shortly after the purchase of Retail shares will reduce the net
asset value of the shares purchased by the amount of the dividend.
All dividends or capital gains distributions paid on the Retail
class shares will automatically be reinvested in additional shares
of the Retail class at the then prevailing net asset value unless
an investor specifically requests that either dividends or capital
gains or both be paid in cash. The election to receive dividends
or reinvest them may be changed by writing to the Fund at P.O. Box
701, Milwaukee, Wisconsin 53201-0701. Such notice must be
received at least 10 days prior to the record date of any dividend
or capital gain distribution.
If you do not furnish the Fund with your correct social
security number or employer identification number, the Fund is
required by federal law to withhold federal income tax at a rate
of 31% from your distributions and redemption proceeds.
This section is not intended to be a full discussion of
federal income tax laws and the effect of such laws on you. There
may be other federal, state, or local tax considerations
applicable to a particular investor. You are urged to consult
your own tax advisor.
FUND ORGANIZATION
The Trust was organized as a Delaware business trust under
Delaware law by Certificate of Trust on July 31, 1996. The
Board of Trustees is authorized to issue an unlimited number of
shares of beneficial interest in separate series, par value $0.001
per share, and to create classes of shares within each series.
Currently the Fund is the only series of the Trust. Shares of the
Retail class are offered to investors through the Fund's
underwriter, subject to a $10,000 minimum initial investment and
certain sales charges. Each class of shares represent interests
in the assets of the Fund and have identical voting, dividend,
liquidation and other rights on the same terms and conditions,
except that the distribution fees related to the Retail class
shares are borne solely by that class. If the Trust issues
additional series, the assets belonging to each series of shares
will be held separately by the Custodian, and in effect each
series will be a separate fund.
Each share, irrespective of series or class, is entitled to
one vote on all questions, except that certain matters must be
voted on separately by the series or class of shares affected, and
matters affecting only one series or class are voted upon only by
that series or class. All 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 all of the
Trustees if they choose to do so, and in such event, the holders
of the remaining shares will not be able to elect any person or
persons to the Board of Trustees.
<PAGE>
The Trust will not hold annual shareholders' meetings except
when required by the Investment Company Act of 1940. There will
normally be no meetings of shareholders for the purpose of
electing Trustees unless and until such time as less than a
majority of the Trustees holding office have been elected by the
shareholders, at which time the Trustees then in office will call
a shareholders' meeting for the election of Trustees. The Trust
has adopted procedures in its Bylaws for the removal of Trustees
by the shareholders. As of September ___, 1996, ___________ owned
a controlling interest in the Fund.
ADMINISTRATOR
Pursuant to the Fund Administration and Servicing Agreement,
Firstar Trust Company (the "Administrator"), Mutual Fund Services,
Third Floor, 615 East Michigan Street, Milwaukee, Wisconsin 53202,
prepares and files all federal and state tax returns, oversees the
Fund's insurance relationships, participates in the preparation of
the registration statement, proxy statements and reports, prepares
compliance filings relating to the registration of the securities
of the Retail class pursuant to state securities laws, compiles
data for and prepares notices to the SEC, prepares the financial
statements for the annual and semi-annual reports to the SEC and
current investors, monitors the Retail class' expense accruals and
performs securities valuations, monitors the Trust's status as a
registered investment company under Subchapter M of the Internal
Revenue Code and monitors compliance with the Fund's investment
policies and restrictions, from time to time, and generally
assists in the Fund's administrative operations. The
Administrator, at its own expense and without reimbursement from
the Fund, furnishes office space and all necessary office
facilities, equipment, supplies and clerical and executive
personnel for performing the services required to be performed by
it under the Fund Administration and Servicing Agreement. For the
foregoing services, the Administrator receives from the Fund a
fee, computed daily and payable monthly based on the Fund's
average net assets at the annual rate of .06 of 1% on the Fund's
average net assets, subject to an annual minimum of $30,000, plus
out-of-pocket expenses.
CUSTODIAN, TRANSFER AGENT, AND FUND ACCOUNTANT
Firstar Trust Company, Mutual Fund Services, Third Floor,
615 East Michigan Street, Milwaukee, Wisconsin 53202, acts as
custodian of the Fund's assets and as dividend-disbursing,
transfer agent, and fund accountant for the Fund.
DISTRIBUTOR
__________ acts as the principal distributor of the Fund's
Institutional and Retail shares.
COMPARISON OF INVESTMENT RESULTS
The Retail class may from time to time compare its
investment results to various passive indices or other mutual
funds and cite such comparisons in reports to shareholders, sales
literature, and advertisements. The results may be calculated on
the basis of average annual total return, total return, or
cumulative total return.
Average annual total return and total return figures assume
the reinvestment of all dividends and measure the net investment
income generated by, and the effect of, any realized and
unrealized appreciation or depreciation of the underlying
investments in the Retail class over a specified period of time.
Average annual total return figures are annualized and therefore
represent the average annual percentage change over the specified
period. Total return figures are not annualized and represent the
aggregate percentage or dollar value change over the period.
Cumulative total return simply reflects the Retail class'
performance over a stated period of time.
Average annual total return, total return and cumulative
total return are based upon the historical results of the Retail
class and are not necessarily representative of the future
performance of the Retail class. Additional information
concerning the Retail class' performance appears in the Statement
of Additional Information.
<PAGE>
The Fund reserves the right to change any of its
policies, practices and procedures described in this
Prospectus, including the Statement of Additional
Information, without shareholder approval except in
those instances where shareholder approval is
expressly required.
<PAGE>
TRUSTEES
Mr. Charles S. Cruice
Mr. Richard Gould
Mr. Robert McLean
Dr. Peter Utsinger
OFFICERS
INVESTMENT ADVISOR
Greenville Capital Management, Inc.
100 South Rockland Road
Rockland, DE 19732
CUSTODIAN, ADMINISTRATOR, TRANSFER AGENT
AND DIVIDEND-DISBURSING AGENT
Firstar Trust Company
Mutual Fund Services
Third Floor
615 East Michigan Street
Milwaukee, WI 53202
INDEPENDENT ACCOUNTANTS
LEGAL COUNSEL
Godfrey & Kahn, S.C.
780 N. Water Street
Milwaukee, WI 53202
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
The Rockland Growth Fund
a series of
The Rockland Funds Trust
sponsored by
Greenville Capital Management, Inc.
P. O. Box 701
Milwaukee, Wisconsin 53201-0701
1-800-____________
This Statement of Additional Information is not a prospectus
and should be read in conjunction with the Prospectus of The
Rockland Growth Fund (the "Fund"), a series of The Rockland Funds
Trust (the "Trust") dated ___________, 1996. Requests for copies
of the Prospectus should be made by writing to the Fund at the
address listed above or by calling 1-800-________.
This Statement of Additional Information is dated
________________, 1996.
<PAGE>
THE ROCKLAND GROWTH FUND
TABLE OF CONTENTS
Page No.
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . 4
INVESTMENT POLICIES AND TECHNIQUES . . . . . . . . . . . . . . . . 5
Illiquid Securities . . . . . . . . . . . . . . . . . . 5
Short-Term Fixed Income Securities . . . . . . . . . . 6
Hedging Strategies . . . . . . . . . . . . . . . . . . 8
General Description of Hedging Strategies . . . . 8
General Limitations on Futures and Options
Transactions . . . . . . . . . . . . . . . 8
Asset Coverage for Futures and Options
Positions . . . . . . . . . . . . . . . . . 8
Purchasing Put and Call Options . . . . . . . . . 9
Stock Index Options . . . . . . . . . . . . . . . 10
Short Sales, Short Sales Against the Box and
Writing Covered Call and Put Options . . . 11
Certain Considerations Regarding Options . . . . 14
Federal Tax Treatment of Options . . . . . . . . 14
Futures Contracts . . . . . . . . . . . . . . . . 14
Options on Futures . . . . . . . . . . . . . . . 17
Federal Tax Treatment of Futures Contracts . . . 18
Warrants . . . . . . . . . . . . . . . . . . . . . . . 19
When-Issued Securities . . . . . . . . . . . . . . . . 19
Repurchase Obligations . . . . . . . . . . . . . . . . 19
Unseasoned Companies . . . . . . . . . . . . . . . . . 20
TRUSTEES AND OFFICERS OF THE TRUST . . . . . . . . . . . . . . . . 20
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . 21
INVESTMENT ADVISOR . . . . . . . . . . . . . . . . . . . . . . . . 21
UNDERWRITER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
DISTRIBUTION PLAN . . . . . . . . . . . . . . . . . . . . . . . . . 22
Description of Plan . . . . . . . . . . . . . . . . . . 22
Anticipated Benefits to the Retail Class . . . . . . . 23
PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . . . . . 24
CUSTODIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT . . . . . . . . . . . 25
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . 25
SHAREHOLDER MEETINGS . . . . . . . . . . . . . . . . . . . . . . . 26
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . 27
INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . 29
<PAGE>
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . 29
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
No person has been authorized to give any information or
to make any representations other than those contained in this
Statement of Additional Information and the Prospectus dated
___________, 1996, and if given or made, such information or
representations may not be relied upon as having been authorized
by the Fund.
This Statement of Additional Information does not
constitute an offer to sell securities.
<PAGE>
INVESTMENT RESTRICTIONS
The investment objective of The Rockland Growth Fund (the
"Fund") is to seek capital appreciation. The Fund's investment
objective and policies are described in detail in the Prospectuses
for its two classes of shares under the caption "INVESTMENT
OBJECTIVE AND POLICIES." The following is a complete list of the
Fund's fundamental investment limitations which cannot be changed
without shareholder approval.
The Fund may not:
1. With respect to 75% of its total assets, purchase
securities of any issuer (except securities of the U.S.
government or any agency or instrumentality thereof) if, as
a result, (i) more than 5% of the Fund's total assets would
be invested in the securities of that issuer, or (ii) the
Fund would hold more than 10% of the outstanding voting
securities of that issuer.
2. Borrow money, except that the Fund may (i) borrow
money from banks for temporary or emergency purposes (but
not for leverage or the purchase of investments) and (ii)
make other investments or engage in other transactions
permissible under the Investment Company Act of 1940 which
may involve a borrowing, provided that the combination of
(i) and (ii) shall not exceed 33 1/3% of the value of the
Fund's total assets (including the amount borrowed), less
the Fund's liabilities (other than borrowings).
3. Act as an underwriter of another issuer's
securities, except to the extent that the Fund may be deemed
to be an underwriter within the meaning of the Securities
Act of 1933 in connection with the purchase and sale of
portfolio securities.
4. Make loans to other persons, except through (i)
the purchase of investments permissible under the Fund's
investment policies, (ii) repurchase agreements, or (iii)
the lending of portfolio securities, provided that no such
loan of portfolio securities may be made by the Fund if, as
a result, the aggregate of such loans would exceed 33 1/3%
of the value of the Fund's total assets.
5. Purchase or sell physical commodities unless
acquired as a result of ownership of securities or other
instruments (but this shall not prevent the Fund from
purchasing or selling options, futures contracts, or other
derivative instruments, or from investing in securities or
other instruments backed by physical commodities).
6. Purchase or sell real estate unless acquired as a
result of ownership of securities or other instruments (but
this shall not prohibit the Fund from purchasing or selling
securities or other instruments backed by real estate or of
issuers engaged in real estate activities).
7. Issue senior securities, except as permitted under
the Investment Company Act of 1940.
8. Purchase the securities of any issuer if, as a
result, more than 25% of the Fund's total assets would be
invested in the securities of issuers whose principal
business activities are in the same industry.
With the exception of the investment restriction set out in
item 2 above, if a percentage restriction is adhered to at the
time of investment, a later increase in percentage resulting from
a change in market value of the investment or the total assets
will not constitute a violation of that restriction.
The following investment limitations may be changed by the
Trust's Board of Trustees without shareholder approval.
The Fund may not:
1. Sell more than 25% of the Fund's assets short,
unless the Fund owns or has the right to obtain securities
equivalent in kind and amount to the securities sold short,
and provided that transactions in options, futures
contracts, options on futures contracts, or other derivative
instruments are not deemed to constitute selling securities
short.
2. Purchase securities on margin, except that the
Fund may obtain such short-term credits as are necessary for
the clearance of transactions; and provided that margin
deposits in connection with futures
<PAGE>
contracts, options on
futures contracts, or other derivative instruments shall not
constitute purchasing securities on margin.
3. Pledge, mortgage or hypothecate any assets owned
by the Fund except as may be necessary in connection with
permissible borrowings or investments and then such
pledging, mortgaging, or hypothecating may not exceed 33
1/3% of the Fund's total assets at the time of the borrowing
or investment.
4. Purchase the securities of any issuer (other than
securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a
result, more than 5% of its total assets would be invested
in the securities of issuers that, including predecessors or
unconditional guarantors, have a record of less than three
years of continuous operation. This policy does not apply
to securities of pooled investment vehicles or mortgage or
asset-backed securities.
5. Invest in illiquid securities if, as a result of
such investment, more than 10% of the Fund's net assets
would be invested in illiquid securities.
6. Purchase securities of open-end or closed-end
investment companies except in compliance with the
Investment Company Act of 1940 and applicable state law.
7. Enter into futures contracts or related options if
more than 50% of the Fund's net assets would be represented
by futures contracts or more than 5% of the Fund's net
assets would be committed to initial margin deposits and
premiums on futures contracts and related options.
8. Invest in direct interests in oil, gas or other
mineral exploration programs or leases; however, the Fund
may invest in the securities of issuers that engage in these
activities.
9. Purchase securities when borrowings exceed 5% of
its total assets.
INVESTMENT POLICIES AND TECHNIQUES
The following information supplements the discussion of the
Fund's investment objective, policies, and techniques that are
described in the Prospectus under the captions "INVESTMENT
OBJECTIVE AND POLICIES" and "INVESTMENT TECHNIQUES AND RISKS."
Illiquid Securities
The Fund may invest up to 10% of its net assets in illiquid
securities (i.e., securities that are not readily marketable).
For purposes of this restriction, illiquid securities include
restricted securities (securities the disposition of which is
restricted under the federal securities laws). The Board of
Trustees or its delegate has the ultimate authority to determine,
to the extent permissible under the federal securities laws, which
securities are liquid or illiquid for purposes of this 10%
limitation. Certain securities exempt from registration or issued
in transactions exempt from registration under the Securities Act
of 1933, as amended (the "Securities Act"), including securities
that may be resold pursuant to Rule 144A under the Securities Act,
may be considered liquid. The Board of Trustees of the Trust has
delegated to GCM the day-to-day determination of the liquidity of
any Rule 144A security, although it has retained oversight and
ultimate responsibility for such determinations. Although no
definitive liquidity criteria are used, the Board of Trustees has
directed GCM to look to such factors as (i) the nature of the
market for a security (including the institutional private resale
market), (ii) the terms of certain securities or other instruments
allowing for the disposition to a third party or the issuer
thereof (e.g., certain repurchase obligations and demand
instruments), (iii) the availability of market quotations (e.g.,
for securities quoted in the PORTAL system), and (iv) other
permissible relevant factors.
Restricted securities may be sold only in privately
negotiated transactions or in a public offering with respect to
which a registration statement is in effect under the Securities
Act. Where registration is required, the Fund may be obligated to
pay all or part of the registration expenses and a considerable
period may elapse between the time of the decision to sell 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 sell.
Restricted securities will be priced at fair value as determined
in good faith by the Board of Trustees of the Trust. If through
the appreciation of restricted securities
<PAGE>
or the depreciation of
unrestricted securities, the Fund should be in a position where
more than 10% of the value of its net assets are invested in
illiquid securities, including restricted securities which are not
readily marketable, the Fund will take such steps as is deemed
advisable, if any, to protect liquidity.
Short-Term Fixed Income Securities
The Fund may invest up to 100% of its assets in short-term
fixed income securities, including without limitation, the
following:
1. U.S. government securities, including bills, notes
and bonds differing as to maturity and rates of interest,
which are either issued or guaranteed by the U.S. Treasury
or by U.S. government agencies or instrumentalities. U.S.
government agency securities include securities issued by
(a) the Federal Housing Administration, Farmers Home
Administration, Export-Import Bank of the United States,
Small Business Administration, and the Government National
Mortgage Association, whose securities are supported by the
full faith and credit of the United States; (b) the Federal
Home Loan Banks, Federal Intermediate Credit Banks, and the
Tennessee Valley Authority, whose securities are supported
by the right of the agency to borrow from the U.S. Treasury;
(c) the Federal National Mortgage Association, whose
securities are supported by the discretionary authority of
the U.S. government to purchase certain obligations of the
agency or instrumentality; and (d) the Student Loan
Marketing Association, the Interamerican Development Bank,
and the International Bank for Reconstruction and
Development, whose securities are supported only by the
credit of such agencies. While the U.S. government provides
financial support to such U.S. government-sponsored agencies
or instrumentalities, no assurance can be given that it
always will do so since it is not so obligated by law. The
U.S. government, its agencies, and instrumentalities do not
guarantee the market value of their securities, and
consequently, the value of such securities may fluctuate.
2. Certificates of Deposit issued against funds
deposited in a bank or savings and loan association. Such
certificates are for a definite period of time, earn a
specified rate of return, and are normally negotiable. If
such certificates of deposit are non-negotiable, they will
be considered illiquid securities and be subject to the
Fund's 10% restriction on investments in illiquid
securities. Pursuant to the certificate of deposit, the
issuer agrees to pay the amount deposited plus interest to
the bearer of the certificate on the date specified thereon.
Under current FDIC regulations, the maximum insurance
payable as to any one certificate of deposit is $100,000;
therefore, certificates of deposit purchased by the Fund
will not generally be fully insured.
3. Bankers' acceptances which are short-term credit
instruments used to finance commercial transactions.
Generally, an acceptance is a time draft drawn on a bank by
an exporter or an importer to obtain a stated amount of
funds to pay for specific merchandise. The draft is then
"accepted" by a bank that, in effect, unconditionally
guarantees to pay the face value of the instrument on its
maturity date. The acceptance may then be held by the
accepting bank as an asset or it may be sold in the
secondary market at the going rate of interest for a
specific maturity.
4. Repurchase agreements which involve purchases of
debt securities. In such a transaction, at the time the
Fund purchases the security, it simultaneously agrees to
resell and redeliver the security to the seller, who also
simultaneously agrees to buy back the security at a fixed
price and time. This assures a predetermined yield for the
Fund during its holding period since the resale price is
always greater than the purchase price and reflects an
agreed-upon market rate. Such transactions afford an
opportunity for the Fund to invest temporarily available
cash. The Fund may enter into repurchase agreements only
with respect to obligations of the U.S. government, its
agencies or instrumentalities; certificates of deposit; or
bankers acceptances in which the Fund may invest.
Repurchase agreements may be considered loans to the seller,
collateralized by the underlying securities. The risk to
the Fund is limited to the ability of the seller to pay the
agreed-upon sum on the repurchase date; in the event of
default, the repurchase agreement provides that the Fund is
entitled to sell the underlying collateral. If the value of
the collateral declines after the agreement is entered into,
however, and if the seller defaults under a repurchase
agreement when the value of the underlying collateral is
less than the repurchase price, the Fund could incur a loss
of both principal and interest. GCM monitors the value of
the collateral at the time the transaction is entered into
and at all times during the term of the repurchase
agreement. GCM does so in an effort to determine that the
value of the collateral always equals or exceeds the agreed-
upon repurchase price to be paid to the
<PAGE>
Fund. If the seller
were to be subject to a federal bankruptcy proceeding, the
ability of the Fund to liquidate the collateral could be
delayed or impaired because of certain provisions of the
bankruptcy laws.
5. Bank time deposits, which are monies kept on
deposit with banks or savings and loan associations for a
stated period of time at a fixed rate of interest. There
may be penalties for the early withdrawal of such time
deposits, in which case the yields of these investments will
be reduced.
6. Commercial paper, which are short-term unsecured
promissory notes, including variable rate master demand
notes issued by corporations to finance their current
operations. Master demand notes are direct lending
arrangements between the Fund and the corporation. There is
no secondary market for the notes. However, they are
redeemable by the Fund at any time. GCM will consider the
financial condition of the corporation (e.g., earning power,
cash flow, and other liquidity ratios) and will continuously
monitor the corporation's ability to meet all of its
financial obligations, because the Fund's liquidity might be
impaired if the corporation were unable to pay principal and
interest on demand. Investments in commercial paper will be
limited to commercial paper rated in the two highest
categories by a major rating agency or unrated commercial
paper which is, in the opinion of GCM, of comparable
quality.
Hedging Strategies
General Description of Hedging Strategies
The Fund may engage in hedging activities in the future
without obtaining shareholder approval. GCM may cause the Fund to
utilize a variety of financial instruments, including options,
futures contracts (sometimes referred to as "futures") and options
on futures contracts to attempt to hedge the Fund's portfolio.
Hedging instruments on securities generally are used to
hedge against price movements in one or more particular securities
positions that the Fund owns or intends to acquire. Hedging
instruments on stock indices, in contrast, generally are used to
hedge against price movements in broad equity market sectors in
which the Fund has invested or expects to invest. The use of
hedging instruments is subject to applicable regulations of the
Securities and Exchange Commission (the "SEC"), the several
options and futures exchanges upon which they are traded, the
Commodity Futures Trading Commission (the "CFTC") and various
state regulatory authorities. In addition, the Fund's ability to
use hedging instruments will be limited by tax considerations.
General Limitations on Futures and Options Transactions
The Fund has filed a notice of eligibility for exclusion
from the definition of the term "commodity pool operator" with the
CFTC and the National Futures Association, which regulate trading
in the futures markets. Pursuant to Section 4.5 of the
regulations under the Commodity Exchange Act (the "CEA"), the
notice of eligibility for the Fund includes the following
representation that the Fund will use futures contracts and
related options solely for bona fide hedging purposes within the
meaning of CFTC regulations, provided that the Fund may hold other
positions in futures contracts and related options that do not
fall within the definition of bona fide hedging transactions if
aggregate initial margins and premiums paid do not exceed 5% of
the net asset value of the Fund. In addition, the Fund will not:
(i) enter into futures contracts and futures options transactions
if more than 5% of its net assets would be committed to such
instruments, (ii) write covered put or call options if the value
of the Fund's assets covering such options exceeds 5% of the
Fund's net assets, or (iii) purchase put or call options if the
amount of all premiums paid for such options exceeds 5% of the
Fund's net assets. The Fund will limit its option premiums and
assets covering open option positions to 5% of the Fund's net
assets. These limitations do not apply to options attached to or
acquired or traded together with an underlying security and do not
apply to securities that incorporate features similar to options.
The Fund will not purchase or write over-the-counter options.
The foregoing limitations are not fundamental policies of
the Fund and may be changed without shareholder approval as
regulatory agencies permit. Various exchanges and regulatory
authorities have undertaken reviews of options and futures trading
in light of market volatility. Among the possible transactions
that have been presented are proposals to adopt new or more
stringent daily price fluctuation limits for futures and options
transactions and proposals to increase the margin requirements for
various types of futures transactions.
<PAGE>
Asset Coverage for Futures and Options Positions
The Fund will comply with regulatory requirements of the SEC
and the CFTC with respect to coverage of options and futures
positions by registered investment companies and, if the
guidelines so require, will set aside cash and/or liquid assets
permitted by the SEC and CFTC in a segregated custodial account in
the amount prescribed. Securities held in a segregated account
cannot be sold while the futures or options position is
outstanding, unless replaced with other permissible assets and
will be market-to-market daily.
Purchasing Put and Call Options
Put Options. The Fund may purchase put options. As the
holder of a put option, the Fund would have the right to sell the
underlying security at the exercise price at any time during the
option period. The Fund may enter into closing sale transactions
with respect to such options, exercise them or permit them to
expire. The Fund may purchase put options for defensive purposes
in order to protect against an anticipated decline in the value of
its securities or to profit from a decline in the value of
securities it does not own. This protection is provided only
during the exercise period. For example, the Fund may purchase a
put option to protect unrealized appreciation of a security where
GCM deems it desirable to continue to hold the security because of
tax considerations. The premium paid for the put option and any
transaction costs would reduce any capital gain otherwise
available for distribution when the security is eventually sold.
The Fund may also purchase put options at a time when the
Fund does not own the underlying security. By purchasing put
options on a security it does not own, the Fund seeks to benefit
from a decline in the market price of the underlying security. If
the put option is not sold when it has remaining value, and if the
market price of the underlying security remains equal to or
greater than the exercise price during the life of the put option,
the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the
market price of the underlying security must decline sufficiently
below the exercise price to cover the premium and transaction
costs, unless the put option is sold in a closing sale
transaction.
The premium paid by the Fund when purchasing a put option
will be recorded as an asset of the Fund and will be adjusted
daily to the option's current market value, which will be the
latest sale price at the time at which the net asset value per
share of the Fund is computed (close of the New York Stock
Exchange), or, in the absence of such sale, the latest bid price.
This asset will be terminated upon exercise, the selling (writing)
of an identical option in a closing action, or the delivery of the
underlying security upon the exercise of the option.
Call Options. The Fund may purchase call options. As the
holder of a call option, the Fund would have the right to purchase
the underlying security at the exercise price at any time during
the exercise period. The Fund may enter into closing sale
transactions with respect to such options, exercise them or permit
them to expire. The Fund may purchase call options for the
purpose of hedging against a possible increase in the price of
securities at a time when the Fund has a significant cash
position. The Fund may also purchase call options in order to
acquire the underlying securities.
The Fund may purchase call options on underlying securities
owned by it. A call option may be purchased when tax
considerations make it inadvisable to realize gains through a
closing purchase transaction. Call options may also be purchased
at times to avoid realizing losses that would result in a
reduction of the Fund's current return. For example, where the
Fund has written a call option on an underlying security having a
current market value below the price at which such security was
purchased by the Fund, an increase in the market price would
result in the exercise of the call option written by the Fund and
the realization of a loss on the underlying security with the same
exercise price and expiration date as the option previously
written.
Call options may also be purchased by the Fund for the
purpose of acquiring the underlying securities for its portfolio.
Utilized in this fashion, the purchase of call options enables the
Fund to acquire the securities at the exercise price of the call
option plus the premium paid. At times the net cost of acquiring
securities in this manner may be less than the cost of acquiring
securities directly; the net cost may also exceed the cost of
acquiring securities directly. This technique may also be useful
to the Fund in purchasing a large block of securities that would
be more difficult to acquire by direct market purchases. So long
as the Fund holds such a call option rather than the underlying
security itself the Fund is partially protected from any
unexpected decline in the market price of the underlying security
and in such event could allow the call option to expire, incurring
a loss only to the extent of the premium paid for the option.
<PAGE>
Stock Index Options
The Fund may (i) purchase stock index options for any
purpose, (ii) sell stock index options in order to close out
existing positions, and/or (iii) write covered options on stock
indexes for hedging purposes. Stock index options are put options
and call options on various stock indexes. In most respects, they
are identical to listed options on common stocks. The primary
difference between stock options and index options occurs when
index options are exercised. In the case of stock options, the
underlying security, common stock, is delivered. However, upon
the exercise of an index option, settlement does not occur by
delivery of the securities comprising the index. The option
holder who exercises the index option receives an amount of cash
if the closing level of the stock index upon which the option is
based is greater than, in the case of a call, or less than, in the
case of a put, the exercise price of the option. This amount of
cash is equal to the difference between the closing price of the
stock index and the exercise price of the option expressed in
dollars times a specified multiple.
A stock index fluctuates with changes in the market values
of the stocks included in the index. For example, some stock
index options are based on a broad market index, such as the
Standard & Poor's 500 or the Value Line Composite Index or a
narrower market index, such as the Standard & Poor's 100. Indexes
may also be based on an industry or market segment, such as the
AMEX Oil and Gas Index or the Computer and Business Equipment
Index. Options on stock indexes are currently traded on the
following exchanges: the Chicago Board Options Exchange, the New
York Stock Exchange, the American Stock Exchange, the Pacific
Stock Exchange, and the Philadelphia Stock Exchange.
The Fund may purchase call and put options in an attempt to
either hedge against the risk of unfavorable price movements
adversely affecting the value of the Fund's securities, or
securities the Fund intends to buy or otherwise in furtherance of
the Fund's investment objective. The Fund will sell (write) stock
index options for hedging purposes or in order to close out
positions in stock index options which the Fund has purchased.
The Fund may only write covered options. The Fund may cover a
call option on a stock index it writes by, for example, having a
portfolio of securities which approximately correlates with the
stock index.
Put options may be purchased in order to hedge against an
anticipated decline in stock market prices that might adversely
affect the value of the Fund's portfolio securities or in an
attempt to capitalize on an anticipated decline in stock market
prices. If the Fund purchases a put option on a stock index, the
amount of the payment it receives upon exercising the option
depends on the extent of any decline in the level of the stock
index below the exercise price. Such payments would tend to
offset a decline in the value of the Fund's portfolio securities.
If, however, the level of the stock index increases and remains
above the exercise price while the put option is outstanding, the
Fund will not be able to profitably exercise the option and will
lose the amount of the premium and any transaction costs. Such
loss may be offset by an increase in the value of the Fund's
portfolio securities.
Call options on stock indexes may be purchased in order to
participate in an anticipated increase in stock market prices or
to hedge against higher prices for securities that the Fund
intends to buy in the future. If the Fund purchases a call option
on a stock index, the amount of the payment it receives upon
exercising the option depends on the extent of any increase in the
level of the stock index above the exercise price. Such payments
would in effect allow the Fund to benefit from stock market
appreciation even though it may not have had sufficient cash to
purchase the underlying stocks. Such payments may also offset
increases in the price of stocks that the Fund intends to
purchase. If, however, the level of the stock index declines and
remains below the exercise price while the call option is
outstanding, the Fund will not be able to exercise the option
profitably and will lose the amount of the premium and transaction
costs. Such loss may be offset by a reduction in the price the
Fund pays to buy additional securities for its portfolio.
The Fund's use of stock index options is subject to certain
risks. Successful use by the Fund of options on stock indexes
will be subject to the ability of the Fund's investment advisor to
correctly predict movements in the directions of the stock market.
This requires different skills and techniques than predicting
changes in the prices of individual securities. In addition, the
Fund's ability to effectively hedge all or a portion of the
securities in its portfolio, in anticipation of or during a market
decline through transactions in put options on stock indexes,
depends on the degree to which price movements in the underlying
index correlate with the price movements in the Fund's portfolio
securities. Inasmuch as the Fund's portfolio securities will not
duplicate the components of an index, the correlation will not be
perfect. Consequently, the Fund will bear the risk that the
prices of its portfolio securities being hedged will not move in
the same amount as the prices of the Fund's put options on the
stock indexes. It is also possible that there may be a negative
correlation between the index and the Fund's portfolio securities
which would result in a loss on both such portfolio securities and
the options on stock indexes acquired by the Fund.
<PAGE>
The hours of trading for options may not conform to the
hours during which the underlying securities are traded. To the
extent that the options markets close before the markets for the
underlying securities, significant price and rate movements can
take place in the underlying markets that cannot be reflected in
the options markets. The purchase of options is a highly
specialized activity which involves investment techniques and
risks different from those associated with ordinary portfolio
securities transactions. The purchase of stock index options
involves the risk that the premium and transaction costs paid by
the Fund in purchasing an option will be lost as a result of
unanticipated movements in prices of the securities comprising the
stock index on which the option is based.
Short Sales, Short Sales Against the Box and Writing Covered
Call and Put Options
Short Sales. The Fund may seek to realize gains through
short sale transactions in securities listed on one or more
national securities exchanges or on NASDAQ. Short selling
involves the sale of borrowed securities. At the time a short
sale is effected the Fund incurs an obligation to replace the
security borrowed at whatever its price may be at the time that
the Fund purchases it for delivery to the lender. When a short
sale transaction is closed out by delivery of the securities, any
gain or loss on the transaction is taxable as a short term capital
gain or loss. Since short selling can result in profits when
stock prices generally decline, the Fund in this manner, can, to a
certain extent, hedge the market risk to the value of its other
investments and protect its equity in a declining market.
However, the Fund could, at any given time, suffer both a loss on
the purchase or retention of one security, if that security should
decline in value, and a loss on a short sale of another security,
if the security sold short should increase in value. Moreover, to
the extent that in a generally rising market the Fund maintains
short positions in securities rising with the market, the net
asset value of the Fund would be expected to increase to a lesser
extent than the net asset value of an investment company that does
not engage in short sales.
Short Sales Against the Box. When GCM believes that the
price of a particular security in the Fund's portfolio may
decline, it may sell the security short against the box which
involves selling the security for delivery at a specified date in
the future. The Fund will limit its transactions in short sales
against the box to __% of its net assets. If, for example, the
Fund bought 100 shares of ABC at $40 per share in January and the
price appreciates to $50 in March, the Fund might "sell short" the
100 shares at $50 for delivery the following July. Thereafter, if
the price of the stock declines to $45, it will realize the full
$1,000 gain rather than the $500 gain it would have received had
it sold the stock in the market. On the other hand, if the price
appreciates to $55 per share, the Fund would be required to sell
at $50 and thus receive a $1,000 gain rather than the $1,500 gain
it would have received had it sold the stock in the market. The
Fund may also be required to pay a premium for short sales which
would partially offset its gain.
Covered Call Options. The Fund may write (sell) covered
call options and purchase options to close out options previously
written by the Fund. The purpose of writing covered call options
is to reduce the effect of price fluctuations of the securities
owned by the Fund (and involved in the options) on the Fund's net
asset value per share. Although premiums may be generated through
the use of covered call options, GCM does not consider the
premiums which may be generated as the primary reason for writing
covered call options.
A call option gives the holder (buyer) the right to purchase
a security at a specified price (the exercise price) at any time
until a certain date (the expiration date). So long as the
obligation of the writer of a call option continues, such writer
may be assigned an exercise notice by the broker-dealer through
whom such option was sold, requiring the writer to deliver the
underlying security against payment of the exercise price. This
obligation terminates upon the expiration of the call option, or
such earlier time at which the writer effects a closing purchase
transaction by repurchasing the option the writer previously sold.
To secure the writer's obligation to deliver the underlying
security in the case of a call option, the writer is required to
deposit in escrow the underlying security or other assets in
accordance with the rules of the clearing corporations and of the
exchanges.
Covered call options may also be used to hedge an unrealized
gain. For example, if the Fund wrote an option at $50 on the same
100 shares of ABC bought at $40 per share and now selling for $50
per share, it might receive a premium of approximately $600. If
the market price of the underlying security declined to $45, the
option would not be exercised and the Fund could offset the
unrealized loss of $500 by the $600 premium. On the other hand,
if the market price of the underlying security increased to $55,
the option would be exercised and the Fund will have foregone the
unrealized $1,500 gain for a $1,000 gain plus the $600 premium.
The Fund can also close out its position in the call option by
repurchasing the option contract separately and independent of any
transaction in the underlying security and, therefore, realize
capital gain or loss. If the Fund could not enter into such a
closing purchase transaction, it may be required to hold a
security that it may otherwise have sold to protect against
depreciation.
<PAGE>
Portfolio securities on which call options may be written
will be purchased solely on the basis of investment considerations
consistent with the Fund's investment objective. The writing of
covered call options is a conservative investment technique
believed to involve relatively little risk (in contrast to the
writing of naked or uncovered options, which the Fund will not
do), but capable of enhancing the Fund's total return. When
writing a covered call option, the Fund, in return for the
premium, gives up the opportunity for profit from a price increase
in the underlying security or other liquid assets above the
exercise price, but conversely retains the risk of loss should the
price of the security decline. If a call option which the Fund
has written expires, the Fund will realize a gain in the amount of
the premium; however, such gain may be offset by a decline in the
market value of the underlying security during the option period.
If the call option is exercised, the Fund will realize a gain or
loss from the sale of the underlying security. The securities or
other liquid assets covering the call option will be maintained in
a segregated account of the Fund's custodian. The Fund does not
consider a security covered by a call option to be "pledged" as
that term is used in the Fund's policy which limits the pledging
or mortgaging of its assets.
The premium received is the market value of an option. The
premium the Fund will receive from writing a call option, will
reflect, among other things, the current market price of the
underlying security, the relationship of the exercise price to
such market price, the historical price volatility of the
underlying security, the length of the option period, the general
supply of and demand for credit, and the general interest rate
environment. The premium received by the Fund for writing covered
call options will be recorded as a liability in the Fund's
statement of assets and liabilities. This liability will be
adjusted daily to the option's current market value, which will be
the latest sale price at the time at which the net asset value per
share of the Fund is computed (close of the New York Stock
Exchange), or, in the absence of such sale, the latest asked
price. The liability will be extinguished upon expiration of the
option, the purchase of an identical option in a closing
transaction, or delivery of the underlying security upon the
exercise of the option.
A closing transaction will be effected in order to realize a
profit or minimize a loss on an outstanding call option, to
prevent an underlying security from being called or put, or to
permit the sale of the underlying security. Furthermore,
effecting a closing transaction will permit the Fund to write
another call option on the underlying security with either a
different exercise price or expiration date or both. If the Fund
desires to sell a particular security from its portfolio on which
it has written a call option, or purchased a put option, it will
seek to effect a closing transaction prior to, or concurrently
with, the sale of the security. There is, of course, no assurance
that the Fund will be able to effect such closing actions at a
favorable price. If the Fund cannot enter into such a
transaction, it may be required to hold a security that it might
otherwise have sold, in which case it would continue to be at
market risk on the security. This could result in higher
transaction costs, including brokerage commissions. The Fund will
pay brokerage commissions in connection with the writing or
purchase of options to close out previously written options. Such
brokerage commissions are normally higher than the transaction
costs applicable to purchases and sales of portfolio securities.
Call options written by the Fund will normally have
expiration dates between three and nine months from the date
written. The exercise price of the options may be below, equal
to, or above the current market values of the underlying
securities at the time the options are written. From time to
time, the Fund may purchase an underlying security for delivery in
accordance with an exercise notice of a call option assigned to
it, rather than delivering such security from its portfolio. In
such cases additional transaction costs will be incurred.
Covered Put Options. The Fund may also write (sell) covered
put options and purchase options to close out options previously
written by the Fund. The Fund may write covered put options in
circumstances where it would like to acquire the underlying
security at a price lower than the then prevailing market price of
the security. Although premiums may be generated through the use
of covered put options, GCM does not consider the premiums which
may be generated as the primary reason for writing covered put
options.
A put option gives the purchaser of the option the right to
sell, and the writer (seller) has the obligation to buy, the
underlying security at the exercise price at any time until the
expiration date. So long as the obligation of the writer
continues, the writer may be assigned an exercise notice by the
broker-dealer through whom such option was sold requiring the
writer to make payment of the exercise price against delivery of
the underlying security. The operations of put options in other
respects, including related risks and rewards, are substantially
identical to that of call options.
The Fund will write put options only on a secured basis,
which means that the Fund would maintain a segregated account
consisting of cash or other permissible liquid assets in an amount
not less than the exercise price of the option or the Fund will
own an option to sell the underlying security subject to the
option having an exercise
<PAGE>
price equal to or greater than the
exercise price of the covered option at all times while the put
option is outstanding. The Fund will generally write covered put
options where it wishes to purchase a security for the Fund's
portfolio at a price less than the current market price. In this
event, the Fund would write a put option at an exercise price
which, reduced by the premium received on the options, reflects
the lower price it is willing to pay. Since the Fund may also
receive interest on the debt securities maintained to cover the
exercise price of the option, this technique could be used to
enhance current returns during periods of market uncertainty. The
risk in such a transaction would be that the market price of the
underlying security would decline below the exercise price less
the premiums received. Such a decline could be substantial and
result in a significant loss to the Fund. In addition, the Fund,
because it does not own the specific securities which it may be
required to purchase in the exercise of the put, cannot benefit
from appreciation, if any, with respect to such specific
securities.
Certain Considerations Regarding Options
There is no assurance that a liquid secondary market on an
options exchange will exist for any particular option, or at any
particular time, and for some options no secondary market on an
exchange or elsewhere may exist. If the Fund is unable to close
out a call option on securities that it has written before the
option is exercised, the Fund may be required to purchase the
optioned securities in order to satisfy its obligation under the
option to deliver such securities. If the Fund is unable to
effect a closing sale transaction with respect to options on
securities that it has purchased, it would have to exercise the
option in order to realize any profit and would incur transaction
costs upon the purchase and sale of the underlying securities.
The writing and purchasing of options is a highly
specialized activity which involves investment techniques and
risks different from those associated with ordinary portfolio
securities transactions. Imperfect correlation between the
options and securities markets may detract from the effectiveness
of attempted hedging. Options transactions may result in
significantly higher transaction costs and portfolio turnover for
the Fund.
Federal Tax Treatment of Options
Certain option transactions have special tax results for the
Fund. Expiration of a call option written by the Fund will result
in short-term capital gain. If the call option is exercised, the
Fund will realize a gain or loss from the sale of the security
covering the call option, and in determining such gain or loss the
option premium will be included in the proceeds of the sale.
If the Fund writes options other than "qualified covered
call options," as defined in Section 1092 of the Internal Revenue
Code of 1986, as amended (the "Code"), or purchases puts, any
losses on such options transactions, to the extent they do not
exceed the unrealized gains on the securities covering the
options, may be subject to deferral until the securities covering
the options have been sold.
In the case of transactions involving "nonequity options,"
as defined in Code Section 1256, the Fund will treat any gain or
loss arising from the lapse, closing out or exercise of such
positions as 60% long-term and 40% short-term capital gain or loss
as required by Section 1256 of the Code. In addition, such
positions must be marked-to-market as of the last business day of
the year, and gain or loss must be recognized for federal income
tax purposes in accordance with the 60%/40% rule discussed above
even though the position has not been terminated. A "nonequity
option" includes an option with respect to any group of stocks or
a stock index if there is in effect a designation by the CFTC of a
contract market for a contract based on such group of stocks or
indexes. For example, options involving stock indexes such as the
Standard & Poor's 500 and 100 indexes would be "nonequity options"
within the meaning of Code Section 1256.
Futures Contracts
The Fund may enter into futures contracts (hereinafter
referred to as "Futures" or "Futures Contracts"), including
interest rate and index Futures as a hedge against movements in
the equity markets and changes in prevailing levels of interest
rates, in order to establish more definitively the effective
return on securities held or intended to be acquired by the Fund
or for other purposes permissible under the CEA. The Fund's
hedging may include sales of Futures as an offset against the
effect of expected declines in stock prices or increases in
interest rates and purchases of Futures as an offset against the
effect of expected increases in stock prices and declines in
interest rates.
<PAGE>
The Fund will not enter into Futures Contracts which are
prohibited under the CEA and will, to the extent required by
regulatory authorities, enter only into Futures Contracts that are
traded on national futures exchanges and are standardized as to
maturity date and underlying financial instrument. The principal
interest rate Futures exchanges in the United States are the Board
of Trade of the City of Chicago and the Chicago Mercantile
Exchange. Futures exchanges and trading are regulated under the
CEA by the CFTC. Although techniques other than sales and
purchases of Futures Contracts could be used to reduce the Fund's
exposure to interest rate or portfolio market price fluctuations,
the Fund may be able to hedge its exposure more effectively and
perhaps at a lower cost through using Futures Contracts, since
Futures Contracts involve lower transaction costs (i.e., brokerage
costs only) than options on securities and stock index options,
which require the payment of brokerage costs and premiums.
An index Futures Contract is an agreement pursuant to which
the parties agree to take or make delivery of an amount of cash
equal to the difference between the value of the index at the
close of the last trading day of the contract and the price at
which the index Futures Contract was originally written. An
interest rate Futures Contract provides for the future sale by one
party and purchase by another party of a specified amount of a
specific financial instrument for a specified price at a
designated date, time, and place. Transactions costs are incurred
when a Futures Contract is bought or sold and margin deposits must
be maintained. A Futures Contract may be satisfied by delivery or
purchase, as the case may be, of the instrument or by payment of
the change in the cash value of the index. More commonly, Futures
Contracts are closed out prior to delivery by entering into an
offsetting transaction in a matching Futures Contract. Although
the value of an index might be a function of the value of certain
specified securities, no physical delivery of those securities is
made. If the offsetting purchase price is less than the original
sale price, the Fund realizes a gain; if it is more, the Fund
realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it
is less, the Fund realizes a loss. The transaction costs must
also be included in these calculations. There can be no
assurance, however, that the Fund will be able to enter into an
offsetting transaction with respect to a particular Futures
Contract at a particular time. If the Fund is not able to enter
into an offsetting transaction, the Fund will continue to be
required to maintain the margin deposits on the Futures Contract.
As an example of an offsetting transaction in which the
underlying financial instrument is not delivered pursuant to an
interest rate Futures Contract, the contractual obligations
arising from the sale of one Futures Contract of September
Treasury Bills on an exchange may be fulfilled at any time before
delivery is required (i.e., on a specified date in September, the
"delivery month") by the purchase of one Futures Contract of
September Treasury Bills on the same exchange. In such instance,
the difference between the price at which the Futures Contract was
sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to
the Fund.
Persons who trade in Futures Contracts may be broadly
classified as "hedgers" and "speculators." Hedgers, such as the
Fund, whose business activity involves investment or other
commitments in securities or other obligations, use the Futures
markets to offset unfavorable changes in value that may occur
because of fluctuations in the value of the securities or
obligations held or expected to be acquired by them. Debtors and
other obligors may also hedge the interest cost of their
obligations. The speculator, like the hedger, generally expects
neither to deliver nor to receive the financial instrument
underlying the Futures Contract; but, unlike the hedger, hopes to
profit from fluctuations in prevailing prices.
A public market exists in Futures Contracts covering a
number of indexes, including, but not limited to, the Standard &
Poor's 500 Index, the Standard & Poor's 100 Index, the NASDAQ 100
Index, the Value Line Composite Index and the New York Stock
Exchange Composite Index. A public market exists in interest rate
Futures Contracts primarily covering the following financial
instruments: U.S. Treasury bonds; U.S. Treasury notes; Government
National Mortgage Association ("GNMA") modified pass-through
mortgage-backed securities; three-month U.S. Treasury bills;
90-day commercial paper; bank certificates of deposit; and
Eurodollar certificates of deposit. The standard contract size is
generally $100,000 for Futures Contracts in U.S. Treasury bonds,
U.S. Treasury notes, and GNMA pass-through securities and
$1,000,000 for the other designated Contracts.
The Fund's Futures transactions will be entered into for
hedging purposes permissible under the CEA. For hedging purposes,
Futures Contracts may be sold to protect against a decline in the
price of securities that the Fund owns, or Futures Contracts may
be purchased to protect the Fund against an increase in the price
of securities it intends to purchase. As evidence of this hedging
intent, the Fund expects that approximately 75% of such Futures
Contract purchases will be "completed"; that is, upon the sale of
these long Futures Contracts, equivalent amounts of related
securities will have been or are then being purchased by the Fund
in the cash market. Alternatively, the Fund's purchases of long
Futures Contracts will not exceed 5% of the Fund's net asset
value.
<PAGE>
Margin is the amount of funds that must be deposited by the
Fund with its custodian in a segregated account in the name of the
futures commission merchant in order to initiate Futures trading
and to maintain the Fund's open positions in Futures Contracts. A
margin deposit is intended to ensure the Fund's performance of the
Futures Contract. The margin required for a particular Futures
Contract is set by the exchange on which the Futures Contract is
traded and may be significantly modified from time to time by the
exchange during the term of the Futures Contract. Futures
Contracts are customarily purchased and sold on margins that may
range upward from less than 5% of the value of the Futures
Contract being traded.
If the price of an open Futures Contract changes (by
increase in the case of a sale or by decrease in the case of a
purchase) so that the loss on the Futures Contract reaches a point
at which the margin on deposit docs not satisfy margin
requirements, the broker will require an increase in the margin.
However, if the value of a position increases because of favorable
price changes in the Futures Contract so that the margin deposit
exceeds the required margin, the broker will pay the excess to the
Fund. In computing daily net asset value, the Fund will mark to
market the current value of its open Futures Contracts. The Fund
expects to earn interest income on its margin deposits.
The prices of Futures Contracts are volatile and are
influenced, among other things, by actual and anticipated changes
in interest rates, which in turn are affected by fiscal and
monetary policies and national and international political and
economic events.
At best, the correlation between changes in prices of
Futures Contracts and of the securities being hedged can be only
approximate. The degree of imperfection of correlation depends
upon circumstances such as: variations in speculative market
demand for futures and debt securities, including technical
influences in Futures trading; differences between the financial
instruments being hedged and the instruments underlying the
standard Futures Contracts available for trading; and with respect
to interest rate Futures, maturities and creditworthiness of
issuers and, in the case of index futures contracts, the
composition of the index, including the issuers and the weighting
of each issue, may differ from the composition of the Fund's
portfolio. A decision of whether, when, and how to hedge involves
skill and judgment, and even a well-received hedge may be
unsuccessful to some degree because of unexpected market behavior
or interest rate trends.
Because of the low margin deposits required, Futures trading
involves an extremely high degree of leverage. As a result, a
relatively small price movement in a Futures Contract may result
in immediate and substantial loss, as well as gain, to the
investor. For example, if at the time of purchase, 10% of the
value of the Futures Contract is deposited as margin, a subsequent
10% decrease in the value of the Futures Contract would result in
a total loss of the margin deposit, before any deduction for the
transaction costs, if the account were then closed out. A 15%
decrease would result in a loss equal to 150% of the original
margin deposit, if the Futures Contract were closed out. Thus, a
purchase or sale of a Futures Contract may result in losses in
excess of the amount initially invested in the Futures Contract.
However, the Fund would presumably have sustained comparable
losses if, instead of the Futures Contract, it had invested in the
underlying financial instrument and sold it after the decline.
Most United States Futures exchanges limit the amount of
fluctuation permitted in Futures Contract prices during a single
trading day. The daily limit establishes the maximum amount that
the price of a Futures Contract may vary either up or down from
the previous day's settlement price at the end of a trading
session. Once the daily limit has been reached in a particular
type of Futures Contract, no trades may be made on that day at a
price beyond that limit. The daily limit governs only price
movement during a particular trading day and therefore does not
limit potential losses, because the limit may prevent the
liquidation of unfavorable positions. Futures Contract prices
have occasionally moved to the daily limit for several consecutive
trading days with little or no trading, thereby preventing prompt
liquidation of Futures positions and subjecting some Futures
traders to substantial losses.
There can be no assurance that a liquid market will exist at
a time when the Fund seeks to close out a Futures or futures
option position. The Fund would continue to be required to meet
margin requirements until the position is closed possibly
resulting in a decline in the Fund's net asset value. In
addition, many of the contracts discussed above are relatively new
instruments without a significant trading history. As a result,
there can be no assurance that an active secondary market will
develop or continue to exist.
<PAGE>
Options on Futures
The Fund may also purchase or write put and call options on
Futures Contracts and enter into closing transactions with respect
to such options to terminate an existing position. A futures
option gives the holder the right, in return for the premium paid,
to assume a long position (call) or short position (put) in a
Futures Contract at a specified exercise price prior to the
expiration of the option. Upon exercise of a call option, the
holder acquires a long position in the Futures Contract and the
writer is assigned the opposite short position. In the case of a
put option, the opposite is true. Prior to exercise or
expiration, a futures option may be closed out by an offsetting
purchase or sale of a futures option of the same series.
The Fund may use its options on Futures Contracts in
connection with hedging strategies. Generally, these strategies
would be employed under the same market and market sector
conditions in which the Fund uses put and call options on
securities or indexes. The purchase of put options on Futures
Contracts is analogous to the purchase of puts on securities or
indexes so as to hedge the Fund's portfolio of securities against
the risk of declining market prices. The writing of a call option
or the purchasing of a put option on a Futures Contract
constitutes a partial hedge against declining prices of the
securities which are deliverable upon exercise of the Futures
Contract. If the futures price at expiration of a written call
option is below the exercise price, the Fund will retain the full
amount of the option premium which provides a partial hedge
against any decline that may have occurred in the Fund's holdings
of securities. If the futures price when the option is exercised
is above the exercise price, however, the Fund will incur a loss,
which may be offset, in whole or in part, by the increase in the
value of the securities in the Fund's portfolio that were being
hedged. Writing a put option or purchasing a call option on a
Futures Contract serves as a partial hedge against an increase in
the value of the securities the Fund intends to acquire. If the
Futures Contract price at expiration of a put option the Fund has
written is above the exercise price, the Fund will retain the full
amount of the option premium which provides a partial hedge
against any increase that may have occurred in the price of the
securities the Fund intends to acquire. If the Futures Contract
price at expiration of a put option the Fund has written is below
the exercise price, however, the Fund will incur a loss, which may
be offset, in whole or in part, by the decrease in the price of
the securities the Fund intends to acquire.
As with investments in Futures Contracts, the Fund is also
required to deposit and maintain margin with respect to put and
call options on Futures Contracts written by it. Such margin
deposits will vary depending on the nature of the underlying
Futures Contract (and the related initial margin requirements),
the current market value of the option, and other futures
positions held by the Fund. The Fund will set aside in a
segregated account at the Fund's custodian liquid assets, such as
cash, U.S. government securities or other high grade debt
obligations equal in value to the amount due on the underlying
obligation. Such segregated assets will be marked to market
daily, and additional assets will be placed in the segregated
account whenever the total value of the segregated account falls
below the amount due on the underlying obligation.
The risks associated with the use of options on Futures
Contracts include the risk that the Fund may close out its
position as a writer of an option only if a liquid secondary
market exists for such options, which cannot be assured. The
Fund's successful use of options on Futures Contracts depends on
GCM's ability to correctly predict the movement in prices of
Futures Contracts and the underlying instruments, which may prove
to be incorrect. In addition, there may be imperfect correlation
between the instruments being hedged and the Futures Contract
subject to the option. (For additional information, see "Futures
Contracts.")
Federal Tax Treatment of Futures Contracts
For federal income tax purposes, the Fund is required to
recognize as income for each taxable year its net unrealized gains
and losses on Futures Contracts as of the end of the year, as well
as gains and losses actually realized during the year. Except for
transactions in Futures Contracts that are classified as part of a
"mixed straddle" under Code Section 1256, any gain or loss
recognized with respect to a Futures Contract is considered to be
60% long-term capital gain or loss and 40% short-term capital gain
or loss, without regard to the holding period of the Futures
Contract. In the case of a Futures transaction not classified as
a "mixed straddle," the recognition of losses may be deferred to a
later taxable year.
Sales of Futures Contracts that are intended to hedge
against a change in the value of securities held by the Fund may
affect the holding period of such securities and, consequently,
the nature of the gain or loss on such securities upon
disposition.
<PAGE>
The Fund intends to operate as a "Regulated Investment
Company" under Subchapter M of the Code, and therefore will not be
liable for federal income taxes to the extent earnings are
distributed on a timely basis. In addition, as a result of being
a Regulated Investment Company, net capital gains that the Fund
distributes to shareholders will retain their original capital
gain character in the shareholders' individual tax returns.
In order for the Fund to qualify for federal income tax
treatment as a Regulated Investment Company, at least 90% of its
gross income for a taxable year must be derived from qualifying
income; i.e., dividends, interest, income derived from loans of
securities and gains from the sale of securities, and other income
(including gains on options and futures contracts) derived with
respect to the Fund's business of investing in stock or
securities. In addition, gains realized on the sale or other
disposition of securities or Futures Contracts held for less than
three months must be limited to less than 30% of the Fund's annual
gross income. It is anticipated that any net gain realized from
the closing out of Futures Contracts will be considered gain from
the sale of securities and therefore will be qualifying income for
purposes of the 90% requirement. For purposes of applying these
tests, any increase in value on a position that is part of a
designated hedge will be offset by any decrease in value (whether
or not realized) on any other position that is part of such hedge.
It is anticipated that unrealized gains on Futures Contracts which
have been open for less than three months as of the end of the
Fund's fiscal year and which are recognized for tax purposes will
not be considered gains on securities held less than three months
for purposes of the 30% test.
The Fund will distribute to shareholders annually any net
capital gains which have been recognized for federal income tax
purposes (including unrealized gains at the end of the Fund's
fiscal year) on Futures transactions. Such distributions will be
combined with distributions of capital gains realized on the
Fund's other investments and shareholders will be advised of the
nature of the payments.
Warrants
The Fund may invest in warrants if after giving effect
thereto, not more than 5% of its net assets will be invested in
warrants other than warrants acquired in units or attached to
other securities. Of such 5% not more than 2% of the Fund's net
assets at the time of purchase may be invested in warrants that
are not listed on the New York Stock Exchange or the American
Stock Exchange. Investments in warrants is pure speculation in
that they have no voting rights, pay no dividends, and have no
rights with respect to the assets of the corporation issuing them.
Warrants basically are options to purchase equity securities at a
specific price for a specific period of time. They do not
represent ownership of the securities but only the right to buy
them. Warrants differ from call options in that warrants are
issued by the issuer of the security which may be purchased on
their exercise, whereas call options may be written or issued by
anyone. (See "Purchasing Put and Call Options" above.) The
prices of warrants do not necessarily move parallel to the prices
of the underlying securities.
When-Issued Securities
The Fund may from time to time invest up to 5% of its net
assets in securities purchased on a "when-issued" basis. The
price of securities purchased on a when-issued basis is fixed at
the time the commitment to purchase is made, but delivery and
payment for the securities take place at a later date. Normally,
the settlement date occurs within 45 days of the purchase. During
the period between the purchase and settlement, no payment is made
by the Fund to the issuer, no interest is accrued on debt
securities, and no dividend income is earned on equity securities.
Forward commitments involve a risk of loss if the value of the
security to be purchased declines prior to the settlement date,
which risk is in addition to the risk of decline in value of the
Fund's other assets. While when-issued securities may be sold
prior to the settlement date, the Fund intends to purchase such
securities with the purpose of actually acquiring them. At the
time the Fund makes the commitment to purchase a security on a
when-issued basis, it will record the transaction and reflect the
value of the security in determining its net asset value. The
Fund does not believe that its net asset value will be adversely
affected by its purchases of securities on a when-issued basis.
The Fund will maintain cash and marketable securities equal
in value to commitments for when-issued securities. Such
segregated securities either will mature or, if necessary, be sold
on or before the settlement date. When the time comes to pay for
when-issued securities, the Fund will meet its obligations from
then available cash flow, sale of the securities held in the
separate account, described above, sale of other securities or,
although it would not normally expect to do so, from the sale of
the when-issued securities themselves (which may have a market
value greater or less than the Fund's payment obligation).
<PAGE>
Repurchase Obligations
The Fund may enter into repurchase agreements with respect
to no more than 25% of its net assets with member banks of the
Federal Reserve System and certain non-bank dealers. In a
repurchase agreement, the Fund buys a security at one price and,
at the time of the sale, the seller agrees to repurchase the
obligation at a mutually agreed upon time and price (usually
within seven days). The repurchase agreement thereby determines
the yield during the purchaser's holding period, while the
seller's obligation to repurchase is secured by the value of the
underlying security. GCM will monitor, on an ongoing basis, the
value of the underlying securities to ensure that the value always
equals or exceeds the repurchase price plus accrued interest.
Repurchase agreements could involve certain risks in the event of
a default or insolvency of the other party to the agreement,
including possible delays or restrictions upon the Fund's ability
to dispose of the underlying securities.
Unseasoned Companies
The Fund may invest not more than 5% of its net assets in
unseasoned companies. While smaller companies generally have
potential for rapid growth, they often involve higher risks
because they lack the management experience, financial resources,
product diversification, and competitive strengths of larger
corporations. In addition, in many instances, the securities of
smaller companies are traded only over-the-counter or on regional
securities exchanges, and the frequency and volume of their
trading is substantially less than is typical of larger companies.
Therefore, the securities of smaller companies may be subject to
wider price fluctuations. When making large sales, the Fund may
have to sell portfolio holdings of small companies at discounts
from quoted prices or may have to make a series of smaller sales
over an extended period of time due to the trading volume in
smaller company securities.
TRUSTEES AND OFFICERS OF THE TRUST
Trustees and officers of the Trust, together with
information as to their principal business occupations during the
last five years, and other information, are shown below. Each
Trustee who is deemed an "interested person," as defined in the
Investment Company Act of 1940 ("Investment Company Act"), is
indicated by an asterisk.
*Charles S. Cruice, President and a Trustee of the Trust.
Mr. Cruice has been the President of GCM since its founding
in 1989. From 1978 until 1989, Mr. Cruice was associated
with Friess Associates Inc., a Wilmington, Delaware
investment management company. From until
Mr. Cruice was a director of The Brandywine Fund, an open-
end mutual fund. Mr. Cruice holds a B.A. from the
University of Denver.
*Richard H. Gould, and a Trustee of the Trust.
Mr. Gould has been a Vice President of GCM since 1994.
From 1987 until 1994, Mr. Gould was associated with PNC
Investment Management, first as an equity analyst and later
as the co-manager of the PNC Small Cap Growth Fund. Mr.
Gould received his Charter Financial Analyst designation in
1989; became a Chartered Market Technician in 1995; and
received his B.S. in 1983 and his M.B.A. in Finance in 1985,
both from The Pennsylvania State University.
Robert McLean, a Trustee of the Trust.
Mr. McLean has been a Senior Vice President of PaineWebber,
Inc. since . From until Mr. McLean was
a Senior Vice President of Kidder, Peabody & Co. Mr. McLean
received his B.A. from Brown University in 1976.
Dr. Peter Utsinger, a Trustee of the Trust.
Dr. Utsinger has been a practicing physician for arthritis
and rheumatic disease since 1970 when he received his M.D.
from Georgetown University. Dr. Utsinger has written
several publications in his area of specialty.
, a Trustee of the Trust. [Add biographical
information for final Trustee.]
<PAGE>
The address for Messrs. Cruice and Gould is Greenville
Capital Management, Inc., 100 South Rockland Road, Rockland,
Delaware, 19732. Mr. McLean's address is _______________________.
Dr. Utsinger's address is 8909 Crefield Street, Philadelphia, PA
19118. ______________'s address is _____________________________.
As of September 15, 1996, officers and trustees of the Trust
beneficially owned ______ shares of beneficial interest in the
Fund, which was ___% of the Fund's then outstanding shares.
Trustees and officers of the Trust who are officers, directors,
employees, or shareholders of GCM do not receive any remuneration
from the Trust or the Fund for serving as Trustees or officers.
Each Trustee who is not deemed an "interested person," as
defined in the Investment Company Act, receives $___ for each
board of Trustees meeting attended by such person.
PRINCIPAL SHAREHOLDERS
As of September 15, 1996 ____________ owned _________ shares
of beneficial interest or ______% of the Fund's outstanding
shares.
INVESTMENT ADVISOR
Greenville Capital Management, Inc. ("GCM") is the
investment advisor to the Fund. Mr. Charles S. Cruice controls
GCM and is the President and a director of GCM. Ms. Kathryn S.
Cruice is the Secretary and a director of GCM. Mr. Charles S.
Cruice owns a voting majority interest in GCM. Mr. M. Locke
Wallace and Mr. Richard H. Gould are both Vice Presidents of GCM.
A brief description of the Fund's investment advisory agreement is
set forth in the Prospectus under "MANAGEMENT."
The Fund's Advisory Agreement is dated ______________, 1996
(the "Advisory Agreement"). The Advisory Agreement has an initial
term of two years and thereafter is required to be approved
annually by the Board of Trustees of the Trust or by vote of a
majority of the Fund's outstanding voting securities (as defined
in the Investment Company Act). Each annual renewal must also be
approved by the vote of a majority of the Trustees who are not
parties to the Advisory Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of
voting on such approval. The Advisory Agreement was approved by
the vote of a majority of the Trust's Trustees who are not parties
to the Advisory Agreement or interested persons of any such party
on ______________,1996 and by the initial shareholders of the Fund
on __________, 1996. The Advisory Agreement is terminable without
penalty, on 60 days' written notice by the Board of Trustees of
the Trust by vote of a majority of the Trust's outstanding voting
securities, or by GCM, and will terminate automatically in the
event of its assignment.
Under the terms of the Advisory Agreement, GCM manages the
Fund's investments subject to the supervision of the Trust's Board
of Trustees. GCM is responsible for investment decisions and
supplies investment research and portfolio management. At its
expense, GCM provides office space and all necessary office
facilities, equipment and personnel for servicing the investments
of the Fund.
As compensation for its services, the Trust, on behalf of
the Fund, pays to GCM a monthly advisory fee at the annual rate of
1.00% of the average daily net asset value of the Fund. See
"Determination of Net Asset Value" in the Prospectuses. From time
to time, GCM may voluntarily waive all or a portion of its
management fee for the Fund. The organizational expenses of the
Fund were advanced by GCM and will be reimbursed by the Fund over
a period of not more than 60 months. The organizational expenses
for the Fund were approximately $___________.
The Advisory Agreement requires GCM to reimburse the Fund in
the event that the expenses and charges payable by the Fund in any
fiscal year, including the advisory fee but excluding taxes,
interest, brokerage commissions, and similar fees, exceed two
percent (2%) of the average net asset value of the Fund for such
year. Such excess is determined by valuations made as of the
Fund's fiscal year. In addition, various states impose expense
limitations. The most restrictive percentage limitation currently
applicable to the Fund will be 2 1/2% of its average net asset
value up to $30,000,000, 2% on the next $70,000,000 of its average
net asset value and 1 1/2%
<PAGE>
of its average net asset value in
excess of $100,000,000. Reimbursement of expenses in excess of
the applicable limitation will be made on a monthly basis and will
be paid to the Fund by reduction of GCM's fee, subject to later
adjustment, month by month, for the remainder of the Fund's fiscal
year. GCM may from time to time voluntarily absorb expenses for
the Fund in addition to the reimbursement of expenses in excess of
the limitations described above.
UNDERWRITER
Under a Distribution Agreement dated __________ (the
"Distribution Agreement"), ______________ acts as underwriter of
the Fund's shares. The Distribution Agreement provides that
________________ will use its best efforts to distribute the
Fund's shares, The Retail shares are offered for sale by the Fund
continuously at net asset value per share plus a maximum initial
sales charge of 3.00% of the offering price. No sales charge is
imposed on the reinvestment of dividends or capital gains.
Certain other exceptions to the imposition of this sales charge
apply, as discussed more fully in the Prospectuses under the
caption "HOW TO PURCHASE FUND SHARES -- Purchases at Net Asset
Value." These exceptions are made available because minimal or no
sales effort is required with respect to the categories of
investors so excepted. Pursuant to the terms of the Distribution
Agreement, _______________ bears the costs of printing
prospectuses and shareholder reports which are used for selling
purposes, as well as advertising and any other costs attributable
to the distributor of Fund shares. The Distribution Agreement is
subject to the same termination and renewal provisions as are
described above with respect to the Advisory Agreement, except
that the Distribution Agreement need not be approved by the Fund's
shareholders.
DISTRIBUTION PLAN
Description of Plan
The Fund has adopted a plan pursuant to Rule 12b-1 under the
Investment Company Act (the "Plan"), which requires the Retail
class to pay _____________, in its capacity as the principal
underwriter of Fund shares, a distribution fee of up to 0.25% per
annum of the Retail class' average daily net assets. Under the
terms of the Plan, ________________ is authorized to, in turn, pay
all or a portion of this fee to any securities dealer, financial
institution or any other person (the "Recipient") who renders
assistance in distributing or promoting the sale of Retail class
shares pursuant to a written agreement (the "Rule 12b-1 Related
Agreement"). To the extent such fee is not paid to such persons,
____________ may use the fee for its own distribution expenses
incurred in connection with the sale of the Retail class' shares,
although it is _____________'s current intention to pay out all or
most of the fee. A form of the 12b-1 Related Agreement referred
to above has been approved by a majority of the Board of Trustees,
and of the Disinterested Trustees voting separately. Accordingly,
GCM may enter into 12b-1 Related Agreements with securities
dealers, financial institutions or other persons without further
Board approval.
Pursuant to the terms of the Plan, payment of the
distribution fee is to be made quarterly, within 30 days after the
close of the quarter for which the fee is payable, upon
_____________ forwarding to the Board of Trustees a written report
of all amounts expensed pursuant to the Plan; provided, however,
that the aggregate payments by the Retail class under the Plan in
any month to _____________ and all Recipients may not exceed 0.25%
of the Retail class' average net assets for that quarter; and
provided further that no fee may be paid in excess of the
distribution expenses as set forth in the quarterly written
report. Thus, the Plan does not provide for the payment of
distribution fees in subsequent periods that relate to expenses
incurred in prior periods.
The Plan, and any Rule 12b-1 Related Agreement which is
entered into, will continue in effect for a period of more than
one year only so long as its continuance is specifically approved
at least annually by a vote of a majority of the Fund's Board of
Trustees, and of the Disinterested Trustees, cast in person at a
meeting called for the purpose of voting on the Plan, or the Rule
12b-1 Related Agreement, as applicable. In addition, the Plan,
and any Rule 12b-1 Related Agreement, may be terminated at any
time, without penalty, by vote of a majority of the outstanding
voting securities of the Retail class, or by vote of a majority of
Disinterested Trustees, on not more than sixty (60) days' written
notice.
Anticipated Benefits to the Retail Class
Prior to approving the Plan, the Board of Trustees was
furnished with drafts of the Plan and related materials, including
information relating to the advantages and disadvantages of 12b-1
plans currently being used
<PAGE>
in the mutual fund industry. Legal
counsel for the Fund provided additional information, summarized
the provisions of the proposed Plan and discussed the legal and
regulatory considerations in adopting such Plan.
The Board considered various factors in connection with its
decision to approve the Plan, including: (a) the nature and
causes of the circumstances which made implementation of the Plan
necessary and appropriate; (b) the way in which the Plan would
address those circumstances, including the nature and potential
amount of expenditures; (c) the nature of the anticipated
benefits; (d) the merits of possible alternative plans or pricing
structures; (e) the relationship of the Plan to other distribution
efforts of the Retail class, including the imposition of the 3.00%
front-end sales load, subject to certain exceptions; and (f) the
possible benefits of the Plan to any other person relative to
those of the Retail class.
Based upon its review of the foregoing factors and the
material presented to it, and in light of its fiduciary duties
under relevant state law and the Investment Company Act, the Board
determined, in the exercise of its business judgment, that the
Plan was reasonably likely to benefit the Retail class and its
shareholders in at least one or several potential ways.
Specifically, the Board concluded that _____________ and any
Recipients operating under Rule 12b-1 Related Agreements would
have little or no incentive to incur promotional expenses on
behalf of the Retail class if a Rule 12b-1 Plan were not in place
to reimburse them, thus making the adoption of such Plan important
to the Retail class. In addition, the Board determined that the
payment of distribution fees to these persons should motivate them
to maintain and enhance the level of service provided to the
Retail class shareholders, which would, of course, benefit such
shareholders. Finally, the adoption of the Plan would likely lead
to an increase in net assets under management, given the enhanced
marketing efforts on the part of ___________ and Recipients to
sell Fund shares.
While there is no assurance that the expenditure of Retail
class assets to finance distribution of Retail class shares will
have the anticipated results, the Board of Trustees believes there
is a reasonable likelihood that one or more of such benefits will
result, and since the Board will be in a position to monitor the
distribution expenses of the Retail class, it will be able to
evaluate the benefit of such expenditures in deciding whether to
continue the Plan.
PORTFOLIO TRANSACTIONS AND BROKERAGE
As investment advisor to the Fund, GCM is responsible for
decisions to buy and sell securities for the Fund and for the
placement of the Fund's portfolio business, the negotiation of the
commissions to be paid on such transactions and the allocation of
portfolio brokerage and principal business. It is the policy of
GCM to seek the best execution at the best security price
available with respect to each transaction, in light of the
overall quality of brokerage and research services provided to GCM
or the Fund. The best price to the Fund means the best net price
without regard to the mix between purchase or sale price and
commission, if any. Purchases may be made from underwriters,
dealers, and, on occasion, the issuers. Commissions will be paid
on the Fund's futures and options transactions, if any. The
purchase price of portfolio securities purchased from an
underwriter or dealer may include underwriting commissions and
dealer spreads. The Fund may pay mark-ups on principal
transactions. In selecting broker-dealers and in negotiating
commissions, GCM considers the firm's reliability, the quality of
its execution services on a continuing basis and its financial
condition. Brokerage will not be allocated based on the sale of
the Fund's shares.
Section 28(e) of the Securities Exchange Act of 1934
("Section 28(e)") permits an investment advisor, under certain
circumstances, to cause an account to pay a broker or dealer who
supplies brokerage and research services a commission for
effecting a transaction in excess of the amount of commission
another broker or dealer would have charged for effecting the
transaction. Brokerage and research services include (a)
furnishing advice as to the value of securities, the advisability
of investing, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities;
(b) furnishing analyses and reports concerning issuers,
industries, securities, economic factors and trends, portfolio
strategy, and the performance of accounts; and (c) effecting
securities transactions and performing functions incidental
thereto (such as clearance, settlement, and custody).
GCM is responsible for selecting brokers in connection with
securities transactions. In selecting such brokers, GCM considers
investment and market information and other research, such as
economic, securities and performance measurement research,
provided by such brokers, and the quality and reliability of
brokerage services, including execution capability, performance,
and financial responsibility. Accordingly, the commissions
charged by any such broker may be greater than the amount another
firm might charge if GCM determines in good faith that the amount
of such commissions is reasonable in relation to the value of the
research information and brokerage
<PAGE>
services provided by such
broker to the Fund. GCM believes that the research information
received in this manner provides the Fund with benefits by
supplementing the research otherwise available to the Fund. The
Advisory Agreement provides that such higher commissions will not
be paid by the Fund unless (a) GCM determines in good faith that
the amount is reasonable in relation to the services in terms of
the particular transaction or in terms of GCM's overall
responsibilities; and (b) such payment is made in compliance with
the provisions of Section 28(e) and other applicable state and
federal laws. The investment advisory fees paid by the Fund under
the Advisory Agreement are not reduced as a result of GCM's
receipt of research services.
GCM places portfolio transactions for other advisory
accounts managed by GCM. Research services furnished by firms
through which the Fund effects its securities transactions may be
used by GCM in servicing all of its accounts; not all of such
services may be used by GCM in connection with the Fund. GCM
believes it is not possible to measure separately the benefits
from research services to each of the accounts (including the
Fund) managed by it. Because the volume and nature of the trading
activities of the accounts are not uniform, the amount of
commissions in excess of those charged by another broker paid by
each account for brokerage and research services will vary.
However, GCM believes such costs to the Fund will not be
disproportionate to the benefits received by the Fund on a
continuing basis. GCM seeks to allocate portfolio transactions
equitably whenever concurrent decisions are made to purchase or
sell securities by the Fund and another advisory account. In some
cases, this procedure could have an adverse effect on the price or
the amount of securities available to the Fund. In making such
allocations between the Fund and other advisory accounts, the main
factors considered by GCM are the respective investment
objectives, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment and
the size of investment commitments generally held.
The Fund anticipates that its portfolio turnover rate may
exceed 70%, although such rate is not expected to exceed 110%.
The annual portfolio turnover rate indicates changes in the Fund's
portfolio; for instance, a rate of 100% would result if all the
securities in the portfolio (excluding securities whose maturities
at acquisition were one year or less) at the beginning of an
annual period had been replaced by the end of the period. The
turnover rate may vary from year to year, as well as within a
year, and may be affected by portfolio sales necessary to meet
cash requirements for redemptions of the Fund's shares.
CUSTODIAN
As custodian of the Fund's assets, Firstar Trust Company
("Firstar") has custody of all securities and cash of the Fund,
delivers and receives payment for securities sold, receives and
pays for securities purchased, collects income from investments
and performs other duties, all as directed by the officers of the
Trust. The custodian is in no way responsible for any of the
investment policies or decisions of the Fund.
TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
Firstar also acts as transfer agent and dividend-disbursing
agent for the Fund. Firstar is compensated based on an annual fee
per open account of $___, plus out-of-pocket expenses such as
postage and printing expenses in connection with shareholder
communications. Firstar also receives an annual fee per closed
account of $___.
TAXES
As indicated under "INCOME DIVIDENDS, CAPITAL GAINS
DISTRIBUTIONS, AND TAX STATUS" in the Prospectuses, it is the
Trust's intent, on behalf of the Fund, to continue to qualify
annually as a "regulated investment company" under the Code. This
qualification does not involve government supervision of the
Fund's management practices or policies.
A dividend or capital gains distribution received shortly
after the purchase of shares reduces the net asset value of shares
by the amount of the dividend or distribution and, although in
effect a return of capital, will be subject to income taxes. Net
gain on sale of securities when realized and distributed, any or
constructively, is taxable as capital gain. If the net asset
value of shares were reduced below a shareholder's cost by
distribution of gains realized on sales of securities, such
distribution would be a return of investment although taxable as
stated above.
<PAGE>
DETERMINATION OF NET ASSET VALUE
As set forth in the Prospectuses under the same caption, the
net asset value of each class will be determined as of the close
of trading on each day the New York Stock Exchange is open for
trading. The Fund does not determine net asset value on days the
New York Stock Exchange is closed and at other times described in
the Prospectus. The New York Stock Exchange is closed on New
Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
Additionally, if any of the aforementioned holidays falls on a
Saturday, the New York Stock Exchange will not be open for trading
on the preceding Friday and when such holiday falls on a Sunday,
the New York Stock Exchange will not be open for trading on the
succeeding Monday, unless unusual business conditions exist, such
as the ending of a monthly or the yearly accounting period.
SHAREHOLDER MEETINGS
Delaware law permits registered investment companies, such
as the Trust, to operate without an annual meeting of shareholders
under specified circumstances if an annual meeting is not required
by the Investment Company Act. The Trust has adopted the
appropriate provisions in its Bylaws and may, at its discretion,
not hold an annual meeting in any year in which the election of
trustees is not required to be acted on by shareholders under the
Investment Company Act.
The Trust's Bylaws also contain procedures for the removal
of trustees by shareholders. At any meeting of shareholders, duly
called and at which a quorum is present, the shareholders may, by
the affirmative vote of the holders of a majority of the votes
entitled to be cast thereon, remove any trustees from office and
may elect a successor or successors to fill any resulting
vacancies for the unexpired terms of removed trustees.
Upon the written request of the holders of shares entitled
to not less than ten percent (10%) of all the votes entitled to be
cast at such meeting, the Secretary of the Trust shall promptly
call a special meeting of shareholders for the purpose of voting
upon the question of removal of any director. Whenever ten or
more shareholders of record who have been such for at least six
months preceding the date of application, and who hold in the
aggregate either shares having a net asset value of at least
$25,000 or at least one percent (1%) of the total outstanding
shares, whichever is less, shall apply to the Trust's Secretary in
writing, stating that they wish to communicate with other
shareholders with a view to obtaining signatures to a request for
a meeting as described above and accompanied by a form of
communication and request which they wish to transmit, the
Secretary shall within five business days after such application
either: (1) afford to such applicants access to a list of the
names and addresses of all shareholders as recorded on the books
of the Trust; or (2) inform such applicants as to the approximate
number of shareholders of record and the approximate cost of
mailing to them the proposed communication and form of request.
If the Secretary elects to follow the course specified in
clause (2) of the last sentence of the preceding paragraph, the
Secretary, upon the written request of such applicants,
accompanied by a tender of the material to be mailed and of the
reasonable expenses of mailing, shall, with reasonable promptness,
mail such material to all shareholders of record at their
addresses as recorded on the books unless within five business
days after such tender the Secretary shall mail to such applicants
and file with the SEC, together with a copy of the material to be
mailed, a written statement signed by at least a majority of the
Board of Trustees to the effect that in their opinion either such
material contains untrue statements of fact or omits to state
facts necessary to make the statements contained therein not
misleading, or would be in violation of applicable law, and
specifying the basis of such opinion.
After opportunity for hearing upon the objections specified
in the written statement so filed, the SEC may, and if demanded by
the Board of Trustees or by such applicants shall, enter an order
either sustaining one or more of such objections or refusing to
sustain any of them. If the SEC shall enter an order refusing to
sustain any of such objections, or if, after the entry of an order
sustaining one or more of such objections, the SEC shall find,
after notice and opportunity for hearing, that all objections so
sustained have been met, and shall enter an order so declaring,
the Secretary shall mail copies of such material to all
shareholders with reasonable promptness after the entry of such
order and the renewal of such tender.
<PAGE>
PERFORMANCE INFORMATION
As described in the "Performance" section of each class'
respective Prospectus, each class' historical performance or
return may be shown in the form of various performance figures.
It may occasionally cite statistics to reflect its volatility or
risk. Each class' performance figures are based upon historical
results and are not necessarily representative of future
performance. Factors affecting each class' performance include
general market conditions, operating expenses, the imposition of
sales charges and investment management. Any additional fees
charged by a dealer or other financial services firm would reduce
the returns described in this section.
Total Return
The average annual total return of each class is computed by
finding the average annual compounded rates of return over the
periods that would equate the initial amount invested to the
ending redeemable value, according to the following formula:
n
P(1+T) = ERV
P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of a hypothetical
$1,000 payment made at the beginning of
the stated periods at the end of the
stated periods.
Calculation of each class' total return is not subject to a
standardized formula. Total return performance for a specific
period is calculated by first taking an investment (assumed to be
$1,000) ("initial investment") in each class' respective shares on
the first day of the period and computing the "ending value" of
that investment at the end of the period. The total return
percentage is then determined by subtracting the initial
investment from the ending value and dividing the remainder by the
initial investment and expressing the result as a percentage.
With respect to the Retail class, the calculation reflects the
deduction of the maximum initial sales charge and assumes that all
income and capital gains dividends paid by the Retail class have
been reinvested at the net asset value of the Retail class on the
reinvestment dates during the period. Total return may also be
shown as the increased dollar value of the hypothetical investment
over the period.
Cumulative total return represents the simple change in
value of an investment over a stated period and may be quoted as a
percentage or as a dollar amount. Total returns may be broken
down into their components of income and capital (including
capital gains and changes in share price) in order to illustrate
the relationship between these factors and their contributions to
total return.
Volatility
Occasionally statistics may be used to specify Fund
volatility or risk. Measures of volatility or risk are generally
used to compare net asset value or performance relative to a
market index. One measure of volatility is beta. Beta is the
volatility of a fund relative to the total market as represented
by the Standard & Poor's 500 Stock Index. A beta of more than
1.00 indicates volatility greater than the market, and a beta of
less than 1.00 indicates volatility less than the market. Another
measure of volatility or risk is standard deviation. Standard
deviation is used to measure variability of net asset value or
total return around an average, over a specified period of time.
The premise is that greater volatility connotes greater risk
undertaken in achieving performance.
Comparisons
The Fund may compare its performance to that of United
States Treasury Bills, Notes or Bonds. Treasury obligations are
issued in selected denominations. Rates of Treasury obligations
are fixed at the time of issuance and payment of principal and
interest is backed by the full faith and credit of the United
States Treasury. The market value of such instruments will
generally fluctuate inversely with interest rates prior to
maturity and will equal par value at maturity. Generally, the
values of obligations with shorter maturities will fluctuate less
than those with longer maturities.
From time to time, in marketing and other fund literature,
each class' performance may be compared to the performance of
other mutual funds in general or to the performance of particular
types of mutual funds with
<PAGE>
similar investment goals, as tracked by
independent organizations. Among these organizations, Lipper
Analytical Services, Inc. ("Lipper"), a widely used independent
research firm which ranks mutual funds by overall performance,
investment objectives, and assets, may be cited. Lipper
performance figures are based on changes in net asset value, with
all income and capital gains dividends reinvested. Such
calculations do not include the effect of any sales charges. The
Fund will be compared to Lipper's appropriate fund category, that
is, by fund objective and portfolio holdings.
Each class' performance may also be compared to the
performance of other mutual funds by Morningstar, Inc.
("Morningstar"), which rates funds on the basis of historical risk
and total return. Morningstar's ratings range from five stars
(highest) to one star (lowest) and represent Morningstar's
assessment of the historical risk level and total return of a fund
as a weighted average for 3, 5, and 10 year periods. Ratings are
not absolute or necessarily predictive of future performance.
Evaluations of each class' performance made by independent
sources may also be used in advertisements concerning a class,
including reprints of or selections from, editorials or articles
about a class. Sources for performance and articles about the
Fund may include publications such as Money, Forbes, Kiplinger's,
Financial World, Business Week, U.S. News and World Report, the
Wall Street Journal, Barron's and a variety of investment
newsletters.
The Fund may compare its performance to a wide variety of
indices and measures of inflation including the Standard & Poor's
Index of 500 Stocks and the NASDAQ Over-the-Counter Composite
Index. There are differences and similarities between the
investments that the Fund may purchase for its portfolio and the
investments measured by these indices.
Investors may want to compare a class' performance to that
of certificates of deposit offered by banks and other depository
institutions. Certificates of deposit may offer fixed or variable
interest rates and principal is guaranteed and may be insured.
Withdrawal of the deposits prior to maturity normally will be
subject to a penalty. Rates offered by banks and other depository
institutions are subject to change at any time specified by the
issuing institution.
Investors may also want to compare performance of a class to
that of money market funds. Money market fund yields will
fluctuate and shares are not insured, but share values usually
remain stable.
INDEPENDENT ACCOUNTANTS
_______________________ have been selected as the
independent accountants for the Fund.
FINANCIAL STATEMENTS
The following Financial Statements of the Fund are contained
herein:
(a) Statement of Assets and Liabilities.
(b) Notes to Financial Statements.
(c) Report of Independent Accountants.
<PAGE>
APPENDIX
SHORT-TERM RATINGS
Standard & Poor's Commercial Paper Ratings
A Standard & Poor's commercial paper rating is a current
assessment of the likelihood of timely payment of debt having an
original maturity of no more than 365 days. The categories are as
follows:
A issues assigned this highest rating are regarded as
having the greatest capacity for timely payment. Issues
within this category are delineated with the numbers 1, 2
and 3 to indicate the relative degree of safety.
A-1 designation indicates that the degree of
safety regarding timely payment is either overwhelming
or very strong. Those issues determined to possess
overwhelming safety characteristics are designated
A-1+.
A-2 designation indicates that the capacity for
timely payment is strong. However, the relative
degree of safety is not as high as for issues
designated A-1.
A-3 designation indicates a satisfactory
capacity for timely payment. Issues with this
designation however, are somewhat more vulnerable to
the adverse effects of changes in circumstances than
obligations carrying the higher designations.
B issues are regarded as having only an adequate
capacity for timely payment. They are, however, somewhat
more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher
designations.
C issues have a doubtful capacity for payment.
D issues are in payment default. The D rating
category is used when interest payments or principal
payments are not made on the due date even if the applicable
grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace
period.
Standard & Poor's Note Ratings
A Standard & Poor's note rating reflects the liquidity
concerns and market access risks unique to notes. Notes due in
three years or less normally receive a note rating. Notes
maturing beyond three years normally receive a bond rating,
although the following criteria are used in making such an
assessment: (i) the amortization schedule (the larger the final
maturity relative to the other maturities, the more likely the
issue will be rated as a note), and (ii) the source of payment
(the more dependent the issue is on the market for its
refinancing, the more likely it will be rated as a note).
SP-1 notes have very strong or strong capacity to pay
principal and interest. Those issues determined to possess
overwhelming safety characteristics are designated as SP-1+.
SP-2 notes have satisfactory capacity to pay principal
and interest.
SP-3 notes have speculative capacity to pay principal
and interest.
Moody's Commercial Paper Ratings
Moody's rates commercial paper as either Prime, which
contains three categories, or Not Prime. The commercial paper
ratings are as follows:
P-1 issuers (or related supporting institutions) have
a superior capacity for repayment of short-term promissory
obligations, normally evidenced by the following
characteristics: (i) leading market positions in well
established industries, (ii) high rates of return on funds
employed, (iii) conservative capitalization structures with
moderate reliance on debt and ample asset protection, (iv)
broad margins in earnings
<PAGE>
coverage of fixed financial
charges and high internal cash generation and (v) well
established access to a range of financial markets and
assured sources of alternate liquidity.
P-2 issuers (or related supporting institutions) have
a strong capacity for repayment of short-term promissory
obligations, normally evidenced by many of the
characteristics of a P-1 rating, 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.
P-3 issuers (or related supporting institutions) have
an acceptable capacity for repayment of short-term
promissory obligations. The effect of industry
characteristics and market composition may be more
pronounced. Variability in earnings and profitability may
result in changes in the level of debt protection
measurements and the requirement for relatively high
financial leverage. Adequate alternate liquidity is
maintained.
Not Prime issuers (or related supporting institutions)
do not fall within any of the Prime rating categories.
Moody's Note Ratings
MIG-1 notes are the best quality. There is present strong
protection by established cash flows, superior liquidity support
or demonstrated broad-based access to the market for refinancing.
MIG-2 notes are high quality. Margins of protection are
ample although not so large as in the preceding group.
MIG-3 notes are favorable quality. All security elements
are accounted for but there is lacking the undeniable strength of
the preceding grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to be less well
established.
MIG-4 notes are adequate quality. Protection commonly
regarded as required of an investment security is present and
although not distinctly or predominantly speculative, there is
specific risk.
S.G. notes are speculative quality. Debt instruments in
this category lack margins of protection.
Fitch Investors Service, Inc. Commercial Paper and Note Ratings
Fitch's short-term ratings apply to debt obligations that
are payable on demand or have original maturities of up to three
years, including commercial paper, certificates of deposit,
medium-term notes, and municipal and investment notes. Although
the credit analysis is similar to Fitch's bond rating analysis,
the short-term rating places greater emphasis on the existence of
liquidity necessary to meet the issuer's obligations in a timely
manner. Fitch's short-term ratings are as follows:
Fitch-1+ (Exceptionally Strong Credit Quality)
Issues assigned this rating are regarded
as having the strongest degree of
assurance for timely payment.
Fitch-2 (Very Strong Credit Quality) Issues
assigned this rating reflect an assurance
of timely payment only slightly less in
degree than issues rated Fitch-1+.
Fitch-2 (Good Credit Quality) Issues carrying
this rating have a satisfactory degree of
assurance for timely payment but the
margin of safety is not as great as the
two higher categories.
Fitch-3 (Fair Credit Quality) Issues carrying
this rating have characteristics
suggesting that the degree of assurance
for timely payment is adequate, however,
near-term adverse change is likely to
cause these securities to be rated below
investment grade.
<PAGE>
Fitch-S (Weak Credit Quality) Issues carrying
this rating have characteristics
suggesting a minimal degree of assurance
for timely payment and are vulnerable to
near term adverse changes in financial
and economic conditions.
D (Default) Issues carrying this rating are
in actual or imminent payment default.
Duff & Phelps, Inc. Short-Term Ratings
Duff & Phelps' short-term ratings are consistent with the
rating criteria utilized by money market participants. The
ratings apply to all obligations with maturities of under one
year, including commercial paper, the uninsured portion of
certificates of deposit, unsecured bank loans, master notes,
bankers acceptances, irrevocable letters of credit, and current
maturities of long-term debt. Asset-backed commercial paper is
also rated according to this scale.
Emphasis is placed on liquidity which is defined as not only
cash from operations, but also access to alternative sources of
funds, including trade credit, bank lines, and the capital
markets. An important consideration is the level of an obligor's
reliance on short-term funds on an ongoing basis.
A. Category 1: High Grade
Duff 1+ Highest certainty of timely payment.
Short-term liquidity, including internal
operating factors and/or access to
alternative sources of funds, is
outstanding, and safety is just below
risk-free U.S. Treasury short-term
obligations.
Duff 1 Very high certainty of timely payment.
Liquidity factors are excellent and
supported by good fundamental protection
factors. Risk factors are minor.
Duff 1- High certainty of timely payment.
Liquidity factors are strong and
supported by good fundamental protection
factors. Risk factors are very small.
B. Category 2: Good Grade
Duff 2 Good certainty of timely payment.
Liquidity factors and company
fundamentals are sound. Although ongoing
funding needs may enlarge total financing
requirements, access to capital markets
is good. Risk factors are small.
C. Category 3: Satisfactory Grade
Duff 3 Satisfactory liquidity and other
protection factors quality issue as to
investment grade. Risk factors are
larger and subject to more variation.
Nevertheless, timely payment is expected.
D. Category 4: Non-investment Grade
Duff 4 Speculative investment characteristics.
Liquidity is not sufficient to insure
against disruption in debt service.
Operating factors and market access may
be subject to a high degree of variation.
E. Category 5: Default
Duff 5 Issuer failed to meet scheduled principal
and/or interest payments.
<PAGE>
BOND RATINGS
Standard & Poor's Bond Ratings
A Standard & Poor's corporate rating is a current assessment
of the creditworthiness of an obligor with respect to a specific
obligation. This assessment may take into consideration obligors
such as guarantors, insurers, or lessees.
The debt rating is not a recommendation to purchase, sell,
or hold a security, inasmuch as it does not comment as to market
price or suitability for a particular investor.
The ratings are based on current information furnished by
the issuer or obtained by Standard & Poor's from other sources it
considers reliable. Standard & Poor's does not perform an audit
in connection with any rating and may, on occasion, rely on
unaudited financial information. The ratings may be changed,
suspended, or withdrawn as a result of changes in, or
unavailability of, such information, or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
1. Likelihood of default -- capacity and willingness
of the obligor as to the timely payment of interest and
repayment of principal in accordance with the terms of the
obligation.
2. Nature of and provisions of the obligation.
3. Protection afforded by, and relative position of,
the obligation in the event of bankruptcy, reorganization,
or other arrangement under the laws of bankruptcy and other
laws affecting creditors' rights.
AAA Bonds have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA Bonds have a very strong capacity to pay interest and
repay principal and differs from the highest rated issues only in
small degree.
A Bonds have a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
debt in higher rated categories.
BBB Bonds are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit
adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for bonds in this
category than in higher rated categories.
BB, B, CCC, CC and C Bonds are regarded, on balance, as
predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the
obligation. BB indicates the least degree of speculation and C
the highest degree of speculation. While such debt will likely
have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to
adverse conditions. A C rating is typically applied to debt
subordinated to senior debt which is assigned an actual or implied
CCC rating. It may also be used to cover a situation where a
bankruptcy petition has been filed, but debt service payments are
continued.
Moody's Bond Ratings
Aaa Bonds are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred
to as "gilt edged". 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.
<PAGE>
Aa Bonds 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 Bonds possess many favorable investment attributes and are
to be considered as upper-medium grade obligations. Factors
giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to
impairment some time in the future.
Baa Bonds are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
Bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba Bonds are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection
of interest and principal payments may be very moderate, and
thereby not well safeguarded during both good and bad times over
the future. Uncertainty of position characterizes Bonds in this
class.
B Bonds generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of
time may be small.
Caa Bonds are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca Bonds represent obligations which are speculative in a
high degree. Such issues are often in default or have other
marked shortcomings.
C Bonds 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.
Fitch Investors Service, Inc. Bond Ratings
The Fitch Bond Rating provides a guide to investors in
determining the investment risk associated with a particular
security. The rating represents its assessment of the issuer's
ability to meet the obligations of a specific debt issue. Fitch
bond ratings are not recommendations to buy, sell or hold
securities since they incorporate no information on market price
or yield relative to other debt instruments.
The rating takes into consideration special features of the
issue, its relationship to other obligations of the issuer, the
record of the issuer and of any guarantor, as well as the
political and economic environment that might affect the future
financial strength and credit quality of the issuer.
Bonds which have the same rating are of similar but not
necessarily identical investment quality since the limited number
of rating categories cannot fully reflect small differences in the
degree of risk. Moreover, the character of the risk factor varies
from industry to industry and between corporate, health care and
municipal obligations.
In assessing credit risk, Fitch Investors Service relies on
current information furnished by the issuer and/or guarantor and
other sources which it considers reliable. Fitch does not perform
an audit of the financial statements used in assigning a rating.
Ratings may be changed, withdrawn or suspended at any time
to reflect changes in the financial condition of the issuer, the
status of the issue relative to other debt of the issuer, or any
other circumstances that Fitch considers to have a material effect
on the credit of the obligor.
<PAGE>
AAA rated bonds are considered to be investment grade and
of the highest credit quality. The obligor has an
extraordinary ability to pay interest and repay
principal, which is unlikely to be affected by
reasonably foreseeable events.
AA rated bonds are considered to be investment grade and
of very high credit quality. The obligor's ability to
pay interest and repay principal, while very strong,
is somewhat less than for AAA rated securities or more
subject to possible change over the term of the issue.
A rated bonds are considered to be investment grade and
of high credit quality. The obligor's ability to pay
interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes
in economic conditions and circumstances than bonds
with higher ratings.
BBB rated bonds are considered to be investment grade and
of satisfactory credit quality. The obligor's ability
to pay interest and repay principal is considered to
be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to weaken
this ability than bonds with higher ratings.
BB rated bonds are considered speculative and of low
investment grade. The obligor's ability to pay
interest and repay principal is not strong and is
considered likely to be affected over time by adverse
economic changes.
B rated bonds are considered highly speculative. Bonds
in this class are lightly protected as to the
obligor's ability to pay interest over the life of the
issue and repay principal when due.
CCC rated bonds may have certain identifiable
characteristics which, if not remedied, could lead to
the possibility of default in either principal or
interest payments.
CC rated bonds are minimally protected. Default in
payment of interest and/or principal seems probable.
C rated bonds are in actual or imminent default in
payment of interest or principal.
Duff & Phelps, Inc. Long-Term Ratings
These ratings represent a summary opinion of the issuer's
long-term fundamental quality. Rating determination is based on
qualitative and quantitative factors which may vary according to
the basic economic and financial characteristics of each industry
and each issuer. Important considerations are vulnerability to
economic cycles as well as risks related to such factors as
competition, government action, regulation, technological
obsolescence, demand shifts, cost structure, and management depth
and expertise. The projected viability of the obligor at the
trough of the cycle is a critical determination.
Each rating also takes into account the legal form of the
security, (e.g., first mortgage bonds, subordinated debt,
preferred stock, etc.). The extent of rating dispersion among the
various classes of securities is determined by several factors
including relative weightings of the different security classes in
the capital structure, the overall credit strength of the issuer,
and the nature of covenant protection. Review of indenture
restrictions is important to the analysis of a company's operating
and financial constraints.
The Credit Rating Committee formally reviews all ratings
once per quarter (more frequently, if necessary).
<PAGE>
Rating
Scale Definition
AAA Highest credit quality. The risk
factors are negligible, being only
slightly more than for risk-free
U.S. Treasury debt.
AA+ High credit quality. Protection
AA factors are strong. Risk is modest, but
may vary slightly from time to time
because of economic conditions.
A+ Protection factors are average but
A adequate. However, risk factors are more
A- variable and greater in periods of
economic stress.
BBB+ Below average protection factors but
BBB still considered sufficient for prudent
BBB- investment. Considerable variability in
risk during economic cycles.
BB+ Below investment grade but deemed
BB likely to meet obligations when due.
BB- Present or prospective financial
protection factors fluctuate according
to industry conditions or company
fortunes. Overall quality may move
up or down frequently within this
category.
B+ Below investment grade and possessing
B risk that obligations will not be met
B- when due. Financial protection factors
will fluctuate widely according to
economic cycles, industry conditions
and/or company fortunes. Potential
exists for frequent changes in the
rating within this category or into
a higher or lower rating grade.
CCC Well below investment grade
securities. Considerable uncertainty
exists as to timely payment of
principal, interest or preferred
dividends. Protection factors are
narrow and risk can be substantial
with unfavorable economic/industry
conditions, and/or with unfavorable
company developments.
DD Defaulted debt obligations. Issuer
failed to meet scheduled principal
and/or interest payments.
DP Preferred stock with dividend
arrearages.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements (All included in Parts A and B)
Financial Statements
Report of Independent Accountants
Notes to Financial Statements
(b) Exhibits
(1.1) Certificate of Trust dated July 31, 1996
(1.2) Trust Instrument
(2) Registrant's By-Laws
(3) None
(4) Instruments Defining Rights of Shareholders
(5.1) Investment Advisory Agreement
(6.1) Distribution Agreement
(6.2) Form of Dealer Agreement
(7) None
(8) Custodian Agreement with Firstar Trust Company
(9.1) Transfer Agency Agreement with Firstar Trust
Company
(9.2) Administration Agreement with Firstar Trust
Company
(9.3) Accounting Agreement with Firstar Trust Company
(10) Opinion and Consent of Godfrey & Kahn, S.C.
(11) Consent of _____________________
(12) None
(13) Subscription Agreements
(14) Individual Retirement Trust Account
(15) Rule 12b-1 Distribution Plan with respect to the
Retail Class
(16) None
<PAGE>
(17) None
(18) Rule 18f-3 Plan
(19) Powers of Attorney for Directors and Officers
(see signature page)
Item 25. Persons Controlled by or under Common Control with
Registrant
Registrant neither controls any person nor is under common
control with any other person.
Item 26. Number of Holders of Securities
Number of Record Holders
Title of Securities as of _____, 1996
Shares of beneficial interest
Retail Class Shares ___
Institutional Class Shares ___
Item 27. Indemnification
Section 9.2 of The Rockland Funds Trust governing instrument
provides:
9.2 Indemnification.
(a) Subject to the exceptions and limitations
contained in subsections (b) and (c) below:
(i) every person who is, or has been, a Trustee
or an officer, employee or agent of the Trust
( Covered Person ) shall be indemnified by the
Trust or the appropriate Series to the fullest
extent permitted by law against liability and
against all expenses reasonably incurred or paid by
him or her in connection with any claim, action,
suit or proceeding in which he or she becomes
involved as a party or otherwise by virtue of his
or her being or having been a Covered Person and
against amounts paid or incurred by him or her in
the settlement thereof;
(ii) as used herein, the words claim, action,
suit, or proceeding shall apply to all claims,
actions, suits or proceedings (civil, criminal or
other, including appeals), actual or threatened,
and the words liability and expenses shall
include, without limitation, attorneys fees, costs,
judgments, amounts paid in settlement, fines,
penalties and other liabilities.
(b) No indemnification shall be provided hereunder
to a Covered Person:
(i) who shall have been adjudicated by a court
or body before which the proceeding was brought (A)
to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties
involved in the conduct of his or her office, or
(B) not to have acted in good faith in the
reasonable belief that his or her action was in the
best interest of the Trust; or
(ii) in the event of a settlement, unless there
has been a determination that such Covered Person
did not engage in willful misfeasance, bad faith,
gross negligence or reckless disregard of the
duties involved in the conduct of his or her
office; (A) by the court or other body approving
the settlement; (B) by the vote of at least a
majority of those Trustees who are neither
Interested Persons of the Trust nor are parties to
the proceeding based upon a review
<PAGE>
of readily
available facts (as opposed to a full trial-type
inquiry); or (C) by written opinion of independent
legal counsel based upon a review of readily
available facts (as opposed to a full trial-type
inquiry).
(c) The rights of indemnification herein provided
may be insured against by policies maintained by the
Trust, shall be severable, shall not be exclusive of
or affect any other rights to which any Covered Person
may now or hereafter be entitled, and shall inure to
the benefit of the heirs, executors and administrators
of a Covered Person.
(d) To the maximum extent permitted by applicable
law, expenses in connection with the preparation and
presentation of a defense to any claim, action, suit
or proceeding of the character described in subsection
(a) of this Section may be paid by the Trust or
applicable Series from time to time prior to final
disposition thereof upon receipt of an undertaking by
or on behalf of such Covered Person that such amount
will be paid over by him or her to the Trust or
applicable Series if it is ultimately determined that
he or she is not entitled to indemnification under
this Section; provided, however, that either (i) such
Covered Person shall have provided appropriate
security for such undertaking, (ii) the Trust is
insured against losses arising out of any such advance
payments or (iii) either a majority of the Trustees
who are neither Interested Persons of the Trust nor
parties to the proceeding, or independent legal
counsel in a written opinion, shall have determined,
based upon a review of readily available facts (as
opposed to a full trial-type inquiry) that there is
reason to believe that such Covered Person will not be
disqualified from indemnification under this Section.
(e) Any repeal or modification of this Article IX by
the Shareholders of the Trust, or adoption or
modification of any other provision of the Trust
Instrument or By-Laws inconsistent with this Article,
shall be prospective only, to the extent that such
repeal or modification would, if applied
retrospectively, adversely affect any limitation on
the liability of any Covered Person or indemnification
available to any Covered Person with respect to any
act or omission which occurred prior to such repeal,
modification or adoption.
Item 28. Business and Other Connections of Investment Adviser
None.
<PAGE>
Item 29. Principal Underwriters
(a) None
(b) Incorporated by reference to the information contained
under "DISTRIBUTOR" in the Prospectuses and
"UNDERWRITER" in the Statement of Additional
Information, all pursuant to Rule 411 under the
Securities Act of 1933.
(c) None
Item 30. Location of Accounts and Records
All accounts, books or other documents required to be
maintained by section 31(a) of the Investment Company Act of 1940
and the rules promulgated thereunder are in the possession of GCM,
Registrant's investment adviser, at Registrant's corporate
offices, except records held and maintained by Firstar Trust
Company, Mutual Fund Services, Third Floor, 615 East Michigan
Street, Milwaukee, Wisconsin 53202, relating to its function as
custodian, transfer agent, and administrator.
Item 31. Management Services
All management-related service contracts entered into by
Registrant are discussed in Parts A and B of this Registration
Statement.
Item 32. Undertakings.
(a) Registrant undertakes to call a meeting of
shareholders, if requested to do so by the holders of
at least 10% of the Registrant's outstanding shares,
for the purpose of voting upon the question of removal
of a director or directors. The Registrant also
undertakes to assist in communications with other
shareholders as required by Section 16(c) of the
Investment Company Act of 1940; and
(b) Registrant undertakes to file a post-effective
amendment to this Registration Statement within four
to six months of the effective date of this
Registration Statement which will contain financial
statements (which need not be certified) as of and for
the time period reasonably close or as soon as
practicable to the date of such post-effective
amendment.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant has duly
caused this Registration Statement on Form N-1A to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of Greenville and State of Delaware on the 31st day of July,
1996.
THE ROCKLAND FUNDS TRUST (Registrant)
By: /s/ Charles S. Cruice
----------------------
Charles S. Cruice
President
Each person whose signature appears below constitutes and
appoints Charles S. Cruice and Richard Gould and each of them, his
true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all pre-
effective amendments to this Registration Statement and to file
the same, with all exhibits thereto, and any other documents in
connection therewith, with the Securities and Exchange Commission
and any other regulatory body, granting unto said attorney-in-fact
and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully
to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement on Form N-1A has been signed below by
the following persons in the capacities and on the date(s)
indicated.
Name Title Date
/s/ Charles S. Cruice President and a Trustee July 31, 1996
----------------------
Charles S. Cruice
/s/ Richard H. Gould __________ and a Trustee July 31,1996
----------------------
Richard H. Gould
/s/ Robert McLean Trustee July 31, 1996
------------------------
Robert McLean
/s/ Dr. Peter Utsinger Trustee July 31, 1996
-------------------------
Dr. Peter Utsinger
Trustee July 31, 1996
-------------------------
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
(1.1) Certificate of Trust dated July 31, 1996
(1.2) Trust Instrument
(2) Registrant's By-Laws
(3) None
(4) Instruments Defining Rights of
Shareholders
(5.1) Investment Advisory Agreement*
(6.1) Distribution Agreement*
(6.2) Form of Dealer Agreement*
(7) None
(8) Custodian Agreement with Firstar
Trust Company*
(9.1) Transfer Agency Agreement with
Firstar Trust Company*
(9.2) Administration Agreement with
Firstar Trust Company*
(9.3) Accounting Agreement with Firstar Trust Company*
(10) Opinion and Consent of Godfrey &
Kahn, S.C.*
(11) Consent of ______________________*
(12) None
(13) Subscription Agreement*
(14) Individual Retirement Trust Account*
(15) Rule 12b-1 Distribution Plan with
respect to the Retail Class*
(16) None
(17) None
(18) Rule 18f-3 Plan*
(19) Powers of Attorney for Directors and Officers (see
signature page)
* To be filed by amendment.
CERTIFICATE OF TRUST
OF
THE ROCKLAND FUNDS TRUST
This Certificate of Trust, a business trust to be registered under the
Investment Company Act of 1940, as amended, is filed in accordance with the
provisions of the Delaware Business Trust Act (Del. Code Ann. tit. 12, Section
3801, et seq.) and sets forth the following:
1. The name of the trust is The Rockland Funds Trust (the
"Trust").
2. The business address of the registered office and the name and
business address of the registered agent of the Trust is:
Greenville Capital Management, Inc.
4001 Centerville Road
Greenville, DE 19807
Attn: Charles S. Cruice
3. This Certificate is effective upon filing.
4. The Trust will consist of one or more series. The debts,
liabilities, obligations and expenses incurred, contracted for or
otherwise existing with respect to a particular series of the Trust
shall be enforceable against the assets of such series only and
not against the assets of the Trust generally or any other series.
This Certificate is executed this 31st day of July, 1996, in Greenville,
Delaware, upon the penalties of perjury and constitutes the oath or affirmation
that the facts stated above are true to the undersigned initial trustee's belief
or knowledge.
/s/ Charles S. Cruice
_________________________________
Charles S. Cruice, as Trustee
and not individually
<PAGE>
THE ROCKLAND FUNDS TRUST
TRUST INSTRUMENT
This Trust Instrument is made on July 31, 1996 by the Trustees to
establish a business trust for the investment and reinvestment of funds
contributed to the Trust by investors. The Trustees declare that all money and
property contributed to the Trust shall be held and managed in trust pursuant to
this Trust Instrument. The name of the Trust created by this Trust Instrument
is The Rockland Funds Trust.
ARTICLE I
DEFINITIONS
1.1 Definitions. Unless otherwise provided or required by the
context:
(a) "By-Laws" means the By-Laws of the Trust adopted by
the Trustees, as amended from time to time;
(b) "Class" means the class of Shares of a Series established
pursuant to Article IV;
(c) "Commission," "Interested Person," and "Principal
Underwriter" have the meanings provided in the Investment Company Act of
1940, as amended ("1940 Act");
(d) "Covered Person" means a person so defined in Section
9.2;
(e) "Delaware Act" means Chapter 38 of Title 12 of the
Delaware Code entitled "Delaware Business Trust Act," as amended from time
to time;
(f) "Majority Shareholder Vote" means "the vote of a
majority of the outstanding voting securities" as defined in the 1940 Act;
(g) "Net Asset Value" means the net asset value of each
Series of the Trust, as determined in Section 5.3;
(h) "Outstanding Shares" means Shares shown on the books
of the Trust or its transfer agent as then issued and outstanding, but does not
include Shares which have been repurchased or redeemed by the Trust;
(i) "Series" means a series of Shares established pursuant to
Article IV;
(j) "Shareholder" means a record owner of Outstanding
Shares;
(k) "Shares" means the equal proportionate transferable
units of interest into which the beneficial interest of each Series or Class is
divided from time to time (including whole and fractional Shares);
<PAGE>
(l) "Trust" means The Rockland Funds Trust established by
this Trust Instrument and reference to the Trust, when applicable to one or
more Series, refers to that Series;
(m) "Trustees" means the persons who have signed this
Trust Instrument, so long as they continue in office in accordance with the
terms of this Trust Instrument, and all other persons who may from time to
time serve as Trustees in accordance with Article II; and
(n) "Trust Property" means any and all property, real or
personal, tangible or intangible, owned or held by or for the Trust or any
Series or the Trustees on behalf of the Trust or any Series.
ARTICLE II
TRUSTEES
2.1 Management of the Trust. The business and affairs of the
Trust shall be managed by or under the direction of the Trustees, and they shall
have all powers necessary or desirable to carry out that responsibility. The
Trustees may execute all instruments and take all action they deem necessary
or desirable to promote the interests of the Trust. Any determination made by
the Trustees in good faith as to what is in the interests of the Trust shall be
conclusive.
2.2 Initial Trustee; Number and Election of Trustees. The initial
Trustee shall be the person signing this Trust Instrument. The number of
Trustees shall be fixed from time to time by the Trustees; provided, that there
shall be at least three (3) Trustees at all times the Trust is registered under
the 1940 Act. Unless otherwise required by the 1940 Act or any court or
regulatory body of competent jurisdiction, or unless the Trustees determine
otherwise, a Trustee shall be elected by the Trustees, and Shareholders shall
have no right to elect Trustees.
2.3 Term of Office. Each Trustee shall hold office for life or until
his or her successor is elected or the Trust terminates; except that (a) any
Trustee may resign by delivering to the other Trustees or to any Trust officer a
written resignation effective upon delivery or a later date specified therein;
(b) any Trustee may be removed with or without cause at any time by a written
instrument signed by at least two-thirds of the other Trustees, specifying the
effective date of removal; (c) any Trustee who requests to be retired, or who
has become physically or mentally incapacitated or is otherwise unable to
serve, may be retired by a written instrument signed by a majority of the other
Trustees, specifying the effective date of retirement; and (d) any Trustee may
be removed at any meeting of the Shareholders by a vote of at least two-thirds
of the Outstanding Shares.
2.4 Vacancies; Appointment of Trustees. Whenever a vacancy
exists in the Board of Trustees, the remaining Trustees shall appoint any
person as they determine in their sole discretion to fill that vacancy,
consistent with the limitations under the 1940 Act. The appointment shall be
made by a written instrument signed by a majority of the Trustees or by a
<PAGE>
resolution of the Trustees specifying the effective date of the appointment.
The Trustees may appoint a new Trustee as provided above in anticipation of a
vacancy expected to occur because of the retirement, resignation or removal of a
Trustee, or an increase in the number of Trustees, provided that the appointment
will become effective only after the expected vacancy occurs. As soon as any
such Trustee has accepted his or her appointment in writing, the trust estate
shall vest in the new Trustee, together with the continuing Trustees, without
any further act or conveyance and he or she will be deemed a Trustee hereunder
The power of appointment is subject to Section 16(a) of the 1940 Act.
2.5 Temporary Vacancy or Absence. Whenever a vacancy in the
Board of Trustees occurs and until such vacancy is filled, or while any Trustee
is absent from his or her domicile (unless that Trustee has made arrangements
to participate in, the affairs of the Trust during the absence) or is physically
or mentally incapacitated, the remaining Trustees shall have all the powers
under this Trust Instrument. Any determination by the Trustees with respect to
certifying a Trustee's vacancy, absence or incapacitation shall be conclusive.
Any Trustee may delegate his or her powers as Trustee by power of attorney
for a period not exceeding six (6) months at any one time to any other Trustee
or Trustees.
2.6 Chairman. The Trustees may appoint one Trustee as Chairman
of the Board of Trustees. The Chairman shall perform the duties the Trustees
designate from time to time.
2.7 Action by the Trustees. The Trustees shall act by majority
vote at a meeting duly called (including at a telephonic meeting, unless the
1940 Act requires that a particular action be taken only at an in person meeting
of Trustees) at which a quorum is present or by written consent of a majority of
Trustees (or such greater number as is required by applicable law) without a
meeting. A majority of the Trustees shall constitute a quorum at any meeting.
Meetings of the Trustees may be called orally or in writing by the President of
the Trust or by any two Trustees. Notice of the time, date and place of all
Trustees meetings shall be given to each Trustee by telephone, facsimile or
other electronic mechanism sent to his or her home or business address at least
twenty-four (24) hours in advance of the meeting or by written notice mailed to
his or her home or business address at least seventy-two (72) hours in advance
of the meeting. Notice need not be given to any Trustee who attends the
meeting without objecting to the lack of notice or who signs a waiver of notice
either before or after the meeting. Subject to the requirements of the 1940
Act, the Trustees by majority vote may delegate to any Trustee or Trustees
authority to approve particular matters or take particular actions on behalf of
the Trust. Any written consent or waiver may be provided and delivered to the
Trust by facsimile or other electronic mechanism.
2.8 Ownership of Trust Property. The Trust Property of the Trust
and of each Series shall be held separate and apart from any assets held in any
capacity other than as Trustee hereunder by the Trustees or any successor
Trustees. All of the Trust Property shall at all times be vested in the
Trustees on behalf of the Trust, except that the Trustees may cause legal title
to any Trust Property to be held by or in the name of the Trust or in the name
of any person as nominee. No Shareholder shall be deemed to have a severable
ownership in any individual asset of the Trust or of any Series or any right of
partition or
<PAGE>
possession thereof, but each Shareholder shall have, as provided in
Article IV, a proportionate undivided beneficial interest in the Trust or Series
represented by Shares.
2.9 Effect of Trustees Not Serving. The death, resignation,
retirement, removal, incapacity or inability or refusal to serve 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 Trust
Instrument.
2.10 Trustees and Others as Shareholders. Subject to any
restrictions in the By-Laws, any Trustee, officer, agent or independent
contractor of the Trust may acquire, own and dispose of Shares to the same
extent as any other Shareholder. The Trustees may issue and sell Shares to and
buy Shares from any such person or any firm or company in which such person
is interested.
ARTICLE III
POWERS OF THE TRUSTEES
3.1 Powers. The Trustees shall act as principals, free of the control
of the Shareholders. The Trustees shall have full power and authority to take
or refrain from taking any action and to execute any contracts and instruments
that they may consider necessary or desirable in the management of the Trust.
The Trustees shall not be bound or limited by current or future laws or customs
applicable to trust investments, but shall have full power and authority to make
any investments which they, in their sole discretion, deem proper to
accomplish the purposes of the Trust. The Trustees may exercise all of their
powers without recourse to any court or other authority. Subject to any
applicable limitation herein or in the By-Laws, operating documents or
resolutions of the Trust, the Trustees shall have power and authority, without
limitation:
(a) to invest and reinvest cash and other property and to
hold cash or other property uninvested, without being bound or limited by any
current or future law or custom concerning investments by trustees, and to sell,
exchange, lend, pledge, mortgage, hypothecate, write options on and lease any
or all of the Trust Property; to invest in obligations and securities of any
kind and without regard to whether they may mature before the possible
termination of the Trust; and to invest all or any part of its cash and other
property in securities issued by a registered investment company or series
thereof, subject to the provisions of the 1940 Act;
(b) to operate as and carry on the business of a registered
investment company and exercise all the powers necessary and proper to
conduct such a business;
(c) to adopt By-Laws not inconsistent with this Trust
Instrument providing for the conduct of the business of the Trust and to amend
and repeal them to the extent such right is not reserved to the Shareholders;
<PAGE>
(d) to elect and remove such officers and appoint and
terminate such agents as they deem appropriate;
(e) to employ as custodian of any assets of the Trust, subject
to any provisions herein or in the By-Laws, one or more banks, trust
companies or companies that are members of a national securities exchange or
other entities permitted by the Commission to serve as such;
(f) to retain one or more transfer agents and Shareholder
servicing agents;
(g) to provide for the distribution of Shares either through a
Principal Underwriter as provided herein or by the Trust itself, or both, or
pursuant to a distribution plan;
(h) to set record dates in the manner provided for herein or
in the By-Laws;
(i) to delegate such authority as they consider desirable to
any officers of the Trust and to any agent, independent contractor, manager,
investment adviser, custodian or underwriter;
(j) to sell or exchange any or all of the assets of the Trust,
subject to Section 10.4;
(k) to vote, give assent or exercise any rights of ownership
with respect to other securities or property and to execute powers of attorney
delegating such power to other persons;
(l) to exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of securities;
(m) to hold any security or other property (i) in a form not
indicating any trust, whether in bearer, book entry, unregistered or other
negotiable form or (ii) either in the Trust's or Trustees' own name or in the
name of a custodian or a nominee or nominees, subject to safeguards according
to the usual practice of business trusts or investment companies;
(n) to establish separate and distinct Series with separately
defined investment objectives and policies and with separate Shares
representing beneficial interests in such Series, and to establish separate
Classes, all in accordance with the provisions of Article IV;
(o) to the full extent permitted by Section 3804 of the
Delaware Act, to allocate assets, liabilities and expenses of the Trust to a
particular Series and liabilities and expenses to a particular Class or to
apportion the same between or among two or more Series or Classes, provided
that any liabilities or expenses incurred by a particular Series or Class
<PAGE>
shall be payable solely out of the assets belonging to that Series or Class as
provided for in Section 4.4;
(p) to consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or concern whose
securities are held by the Trust; to consent to any contract, lease, mortgage,
purchase or sale of property by such corporation or concern and to pay calls or
subscriptions with respect to any security held in the Trust;
(q) to compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any matter in controversy including, but not
limited to, claims for taxes;
(r) to make distributions of income and of capital gains to
Shareholders in the manner hereinafter provided for;
(s) to borrow money;
(t) to establish a minimum total investment for
Shareholders and to require the redemption of the Shares of any Shareholders
whose investment is less than such minimum upon giving notice to such
Shareholder;
(u) to establish committees for such purposes, with such
membership and with such responsibilities as the Trustees may consider
proper, including a committee consisting of fewer than all of the Trustees then
in office which may act for and bind the Trustees and the Trust with respect to
the institution, prosecution, dismissal, settlement, review or investigation of
any pending or threatened legal action, suit or proceeding;
(v) to issue, sell, repurchase, redeem, cancel, retire, acquire,
hold, resell, reissue, dispose of and otherwise deal in Shares, to establish
terms and conditions regarding the issuance, sale, repurchase, redemption,
cancellation, retirement, acquisition, holding, resale, reissuance, disposition
of or dealing in Shares and, subject to Articles IV and V, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any
funds or property of the Trust or of the particular Series with respect to which
such Shares are issued; and
(w) to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary or
desirable to accomplish any purpose or to further any of the foregoing powers
and to take every other action incidental to the foregoing business or purposes,
objects or powers.
The clauses above shall be construed as objects and powers, and the
enumeration of specific powers shall not limit in any way the general powers
of the Trustees. Any action by one or more of the Trustees in their capacity as
such hereunder shall be deemed an action on behalf of the Trust or the
applicable Series and not an action in an individual capacity. No one dealing
with the Trustees shall be under any obligation to make any inquiry concerning
the authority of the Trustees or to see to the application of any payments made
or property
<PAGE>
transferred to the Trustees or upon their order. In construing this
Trust Instrument, the presumption shall be in favor of a grant of power to the
Trustees.
3.2 Certain Transactions. Except as prohibited by applicable law,
the Trustees may, on behalf of the Trust, buy any securities from or sell any
securities to, or lend any assets of the Trust to, any Trustee or officer of the
Trust or any firm of which any such Trustee or officer is a member acting as
principal, or have any such dealings with any investment adviser,
administrator, distributor or transfer agent for the Trust or with any
Interested Person of such person. The Trust may employ any such person or
entity in which such person is an Interested Person, as broker, legal counsel,
registrar, investment adviser, administrator, distributor, transfer agent,
dividend disbursing agent, custodian or in any other capacity upon customary
terms.
ARTICLE IV
SERIES; CLASSES; SHARES
4.1 Establishment of Series or Class. The Trust shall consist of
one or more Series. The Trustees hereby establish The Rockland Growth Fund
Series, comprised of Class A (Institutional) and Class B (Retail) Shares. Each
additional Series shall be established by the adoption of a resolution by the
Trustees. The Trustees may designate the relative rights and preferences of the
Shares of each Series. The Trustees may divide the Shares of any Series into
Classes. In such case each Class of a Series shall represent interests in the
assets of that Series and have identical voting, dividend, liquidation and other
rights and the same terms and conditions, except that expenses allocated to a
Class may be borne solely by such Class as determined by the Trustees and a
Series or Class may have exclusive voting rights with respect to matters
affecting only that Series or Class. The Trust shall maintain separate and
distinct records for each Series and hold and account for the assets thereof
separately from the other assets of the Trust or of any other Series. A Series
may issue any number of Shares but need not issue Shares. Each Share of a
Series shall represent an equal beneficial interest in the net assets of such
Series. Each holder of Shares of a Series shall be entitled to receive his or
her pro rata share of all distributions made with respect to such Series,
provided that, if Classes of a Series are outstanding, each holder of Shares of
a Class shall be entitled to receive his or her pro rata share of all
distributions made with respect to such Class of the Series. Upon redemption of
his or her Shares, such Shareholder shall be paid solely out of the assets and
property of such Series. The Trustees may change the name of the Trust, or any
Series or Class without shareholder approval.
4.2 Shares. The beneficial interest in the Trust shall be divided
into Shares of one or more separate and distinct Series or Classes established
by the Trustees. The number of Shares of the Trust and of each Series and
Class is unlimited and each Share shall have a par value of $0.001 per Share.
All Shares issued hereunder shall be fully paid and nonassessable.
Shareholders shall have no preemptive or other right to subscribe to any
additional Shares or other securities issued by the Trust. The Trustees shall
have full power and authority, in their sole discretion and without obtaining
Shareholder approval: (i) to issue original or additional Shares and fractional
Shares at such times and on such terms and conditions as they deem
<PAGE>
appropriate; (ii) to establish and to change in any manner Shares of any Series
or Classes with such preferences, terms of conversion, voting powers, rights
and privileges as the Trustees may determine (but the Trustees may not change
Outstanding Shares in a manner materially adverse to the Shareholders of such
Shares); (iii) to divide or combine the Shares of any Series or Classes into a
greater or lesser number; (iv) to classify or reclassify any unissued Shares of
any Series or Classes into one or more Series or Classes of Shares; (v) to
abolish any one or more Series or Classes of Shares; (vi) to issue Shares to
acquire other assets (including assets subject to, and in connection with, the
assumption of liabilities) and businesses; and (vii) to take such other action
with respect to the Shares as the Trustees may deem desirable.
4.3 Investment in the Trust. The Trustees shall accept
investments in any Series from such persons and on such terms as they may
from time to time authorize. At the Trustees' discretion and subject to
applicable law, such investments may be in the form of cash or securities in
which that Series is authorized to invest, valued as provided in Section 5.3.
Investments in a Series shall be credited to each Shareholder's account in the
form of full and fractional Shares at the Net Asset Value per Share next
determined after the investment is received or accepted in good form as may be
determined by the Trustees; provided, however, that the Trustees may, in their
sole discretion impose a sales charge upon investments in any Series or Class
or determine the Net Asset Value per Share of the initial capital contribution.
The Trustees shall have the right to refuse to accept investments in any Series
at any time without any cause or reason.
4.4 Assets and Liabilities of Series. All consideration received by
the Trust for the issue or sale of Shares of a particular Series, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof (including any proceeds derived
from the sale, exchange or liquidation of such assets and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same
may be), shall be held and accounted for separately from the other assets of the
Trust and every other Series and are referred to as "assets belonging to" that
Series. The assets belonging to a Series shall belong only to that Series for
all purposes and to no other Series, subject only to the rights of creditors of
that Series. Any assets, income, earnings, profits and proceeds thereof, funds
or payments which are not readily identifiable as belonging to any particular
Series shall be allocated by the Trustees between and among one or more
Series as the Trustees deem fair and equitable. Each such allocation shall be
conclusive and binding upon the Shareholders of all Series for all purposes,
and such assets, earnings, income, profits or funds shall be referred to as
assets belonging to that Series. The assets belonging to a Series shall be so
recorded upon the books of the Trust and shall be held by the Trustees in trust
for the benefit of the Shareholders of that Series. The assets belonging to a
Series shall be charged with the liabilities of that Series and all expenses,
costs, charges and reserves attributable to that Series, except that liabilities
and expenses allocated solely to a particular Class shall be borne by that
Class. Any general liabilities, expenses, costs, charges or reserves of the
Trust which are not readily identifiable as belonging to any particular Series
or Class shall be allocated and charged by the Trustees between or among any one
or more of the Series or Classes in such manner as the Trustees deem fair and
equitable. Each such
<PAGE>
allocation shall be conclusive and binding upon the Shareholders of all
Series or Classes for all purposes.
Without limiting the foregoing, but subject to the right of the Trustees
to allocate general liabilities, expenses, costs, charges or reserves as herein
provided, the debts, liabilities, obligations and expenses incurred, contracted
for or otherwise existing with respect to a particular Series shall be
enforceable against the assets of such Series only, and not against the assets
of the Trust generally or of any other Series. Notice of this contractual
limitation on liabilities among Series may, in the Trustees' discretion, be set
forth in the certificate of trust of the Trust (whether originally or by
amendment) as filed or to be filed in the Office of the Secretary of State of
the State of Delaware pursuant to the Delaware Act, and upon the giving of such
notice in the certificate of trust, the statutory provisions of Section 3804 of
the Delaware Act relating to limitations on liabilities among Series (and the
statutory effect under Section 3804 of setting forth such notice in the
certificate of trust) shall become applicable to the Trust and each Series.
Any person extending credit to, contracting with or having any claim against any
Series may look only to the assets of that Series to satisfy or enforce any
debt, with respect to that Series. No Shareholder or former Shareholder of any
Series shall have a claim on or any right to any assets allocated or belonging
to any other Series.
4.5 Ownership and Transfer of Shares. The Trust shall maintain
a register containing the names and addresses of the Shareholders of each
Series and Class thereof, the number of Shares of each Series and Class held by
such Shareholders, and a record of all Share transfers. The register shall be
conclusive as to the identity of Shareholders of record and the number of
Shares held by them from time to time. The Trustees shall not be required to,
but may authorize the issuance of certificates representing Shares and adopt
rules governing their use. The Trustees may make rules governing the transfer
of Shares, whether or not represented by certificates.
4.6 Status of Shares; Limitation of Shareholder Liability.
Shares shall be deemed to be personal property giving Shareholders only the
rights provided in this Trust Instrument. Every Shareholder, by virtue of
having acquired a Share, shall be held expressly to have assented to and agreed
to be bound by the terms of this Trust Instrument and to have become a party
hereto. No Shareholder shall be personally liable for the debts, liabilities,
obligations and expenses incurred by, contracted for, or otherwise existing with
respect to, the Trust or any Series. Neither the Trust nor the Trustees shall
have any power to bind any Shareholder personally or to demand payment
from any Shareholder for anything, other than as agreed by the Shareholder.
Shareholders shall have the same limitation of personal liability as is extended
to shareholders of a private corporation for profit incorporated in the State of
Delaware. Every written obligation of the Trust or any Series shall contain a
statement to the effect that such obligation may only be enforced against the
assets of the Trust or such Series; however, the omission of such statement
shall not operate to bind or create personal liability for any Shareholder or
Trustee.
<PAGE>
ARTICLE V
DISTRIBUTIONS AND REDEMPTIONS
5.1 Distributions. The Trustees may declare and pay dividends
and other distributions, including dividends on Shares of a particular Series
and other distributions from the assets belonging to that Series. The amount
and payment of dividends or distributions and their form, whether they are in
cash, Shares or other Trust Property, shall be determined by the Trustees.
Dividends and other distributions may be paid pursuant to a standing resolution
adopted once or more often as the Trustees determine. All dividends and other
distributions on Shares of a particular Series shall be distributed pro rata to
the Shareholders of that Series in proportion to the number of Shares of that
Series they held on the record date established for such payment, except that
such dividends and distributions shall appropriately reflect expenses allocated
to a particular Class of such Series. The Trustees may adopt and offer to
Shareholders such dividend reinvestment plans, cash dividend payout plans or
similar plans as the Trustees deem appropriate.
5.2 Redemptions. Each Shareholder of a Series shall have the right
at such times as may be permitted by the Trustees to require the Series to
redeem all or any part of his or her Shares at a redemption price per Share
equal to the Net Asset Value per Share at such time as the Trustees shall have
prescribed by resolution. In the absence of such resolution, the redemption
price per Share shall be the Net Asset Value next determined after receipt by
the Series of a request for redemption in proper form less such charges as are
determined by the Trustees and described in the Trust's Registration Statement
for that Series under the Securities Act of 1933. The Trustees may specify
conditions, prices, and places of redemption, and may specify binding
requirements for the proper form or forms of requests for redemption.
Payment of the redemption price may be wholly or partly in securities or other
assets at the value of such securities or assets used in such determination of
Net Asset Value, or may be in cash. Upon redemption, Shares may be reissued
from time to time. The Trustees may require Shareholders to redeem Shares
for any reason under terms set by the Trustees, including the failure of a
Shareholder to supply a personal identification number if required to do so, or
to have the minimum investment required, or to pay when due for the purchase
of Shares issued to him or her. To the extent permitted by law, the Trustees
may retain the proceeds of any redemption of Shares required by them for
payment of amounts due and owing by a Shareholder to the Trust or any Series
or Class. Notwithstanding the foregoing, the Trustees may postpone payment
of the redemption price and may suspend the right of the Shareholders to
require any Series or Class to redeem Shares during any period of time when
and to the extent permissible under the 1940 Act.
5.3 Determination of Net Asset Value. The Trustees shall cause
the Net Asset Value of Shares of each Series or Class to be determined from
time to time in a manner consistent with applicable laws and regulations. The
Trustees may delegate the power and duty to determine Net Asset Value per
Share to one or more Trustees or officers of the Trust or to an investment
manager, administrator or investment adviser, custodian, depository or other
agent appointed for such purpose. The Net Asset Value of Shares shall be
determined separately for each Series or Class at such times as may be
prescribed by the Trustees or, in
<PAGE>
the absence of action by the Trustees, as of the
close of trading on the New York Stock Exchange on each day for all or part of
which such Exchange is open for unrestricted trading.
5.4 Suspension of Right of Redemption. If, as referred to in
Section 5.2, the Trustees postpone payment of the redemption price and
suspend the right of Shareholders to redeem their Shares, such suspension shall
take effect at the time the Trustees shall specify, but not later than the close
of business on the business day next following the declaration of suspension.
Thereafter Shareholders shall have no right of redemption or payment until the
Trustees declare the end of the suspension. If the right of redemption is
suspended, a Shareholder may either withdraw his request for redemption or
receive payment based on the Net Asset Value per Share next determined after
the suspension terminates.
5.5 Redemptions Necessary for Qualification as a Regulated
Investment Company. If the Trustees shall determine that direct or indirect
ownership of Shares of any Series has or may become concentrated in any
person to an extent which would disqualify any Series as a regulated
investment company under the Internal Revenue Code, then the Trustees shall
have the power (but not the obligation) by lot or other means they deem
equitable to (a) call for redemption by any such person of a number, or
principal amount, of Shares sufficient to maintain or bring the direct or
indirect ownership of Shares into conformity with the requirements for such
qualification and (b) refuse to transfer or issue Shares to any person whose
acquisition of Shares in question would, in the Trustees' judgment, result in
such disqualification. Any such redemption shall be effected at the redemption
price and in the manner provided in this Article. Shareholders shall upon
demand disclose to the Trustees in writing such information concerning direct
and indirect ownership of Shares as the Trustees deem necessary to comply
with the requirements of any taxing authority.
ARTICLE VI
SHAREHOLDERS' VOTING POWERS AND MEETINGS
6.1 Voting Powers. The Shareholders shall have power to vote
only with respect to (a) the election of Trustees as provided in Section 6.2;
(b) the removal of Trustees as provided in Section 2.3(d); (c) any investment
advisory or management contract as provided in Section 7.1; (d) any
termination of the Trust as provided in Section 10.4; (e) the amendment of this
Trust Instrument to the extent and as provided in Article 10.8; and (f) such
additional matters relating to the Trust as may be required or authorized by
law, this Trust Instrument, or the By-Laws or any registration of the Trust with
the Commission or any State, or as the Trustees may consider desirable.
On any matter submitted to a vote of the Shareholders, all Shares shall
be voted by individual Series or Class, except (a) when required by the 1940
Act, Shares shall be voted in the aggregate and not by individual Series or
Class, and (b) when the Trustees have determined that the matter affects the
interests of more than one Series or Class, then the Shareholders of all such
Series or Classes affected shall be entitled to vote thereon. 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
<PAGE>
cumulative voting in the election of Trustees. Shares may be voted
in person or by proxy or in any manner provided for in the By-Laws. The
By-Laws may provide that proxies may be given by any electronic or
telecommunications device or in any other manner, but if a proposal by anyone
other than the officers or Trustees is submitted to a vote of the Shareholders
of any Series or Class, or if there is a proxy contest or proxy solicitation or
proposal in opposition to any proposal by the officers or Trustees, Shares may
be voted only in person or by written proxy. Until Shares of a Series are
issued, as to that Series the Trustees may exercise all rights of Shareholders
and may take any action required or permitted to be taken by Shareholders by
law, this Trust Instrument or the By-Laws.
6.2 Meetings of Shareholders. The first Shareholders' meeting
shall be held to elect Trustees at such time and place as the Trustees
designate. Annual meetings shall not be required. Special meetings of the
Shareholders of any Series or Class may be called by the Trustees and shall be
called by the Trustees upon the written request of Shareholders owning at least
ten percent of the Outstanding Shares of such Series or Class entitled to vote.
Special meetings of Shareholders shall be held, notice of such meetings shall be
delivered and waiver of notice shall occur according to the provisions of the
Trust's By-Laws. Any action that may be taken at a meeting of Shareholders
may be taken without a meeting according to the procedures set forth in the
By-Laws.
6.3 Quorum; Required Vote. One-third of the Outstanding Shares
of each Series or Class, or one-third of the Outstanding Shares of the Trust,
entitled to vote in person or by proxy shall be a quorum for the transaction of
business at a Shareholders' meeting with respect to such Series or Class, or
with respect to the entire Trust, respectively. Any lesser number shall be
sufficient for adjournments. Any adjourned session of a Shareholders' meeting
may be held within a reasonable time without further notice. Except when a
larger vote is required by law, this Trust Instrument or the By-Laws, a majority
of the Outstanding Shares voted in person or by proxy shall decide any matters
to be voted upon with respect to the entire Trust and a plurality of such
Outstanding Shares shall elect a Trustee; provided, that if this Trust
Instrument or applicable law permits or requires that Shares be voted on any
matter by individual Series or Classes, then a majority of the Outstanding
Shares of that Series or Class (or, if required or permitted by law, regulation,
Commission order, or no-action letter, a Majority Shareholder Vote of that
Series or Class) voted in person or by proxy voted on the matter shall decide
that matter insofar as that Series or Class is concerned. Shareholders may act
as to the Trust or any Series or Class by the written consent of a majority (or
such greater amount as may be required by applicable law) of the Outstanding
Shares of the Trust or of such Series or Class, as the case may be.
ARTICLE VII
CONTRACTS WITH SERVICE PROVIDERS
7.1 Investment Adviser. Subject to a Majority Shareholder Vote,
the Trustees may enter into one or more investment advisory contracts on
behalf of the Trust or any Series, providing for investment advisory services,
statistical and research facilities and services, and other facilities and
services to be furnished to the Trust or Series on terms and
<PAGE>
conditions acceptable to the
Trustees. Any such contract may provide for the investment adviser to effect
purchases, sales or exchanges of portfolio securities or other Trust Property on
behalf of the Trustees or may authorize any officer or agent of the Trust to
effect such purchases, sales or exchanges pursuant to recommendations of the
investment adviser. The Trustees may authorize the investment adviser to
employ one or more sub-advisers or servicing agents.
7.2 Principal Underwriter. The Trustees may enter into contracts
on behalf of the Trust or any Series or Class, providing for the distribution
and sale of Shares by the other party, either directly or as sales agent, on
terms and conditions acceptable to the Trustees. The Trustees may adopt a plan
or plans of distribution with respect to Shares of any Series or Class and enter
into any related agreements, whereby the Series or Class finances directly or
indirectly any activity that is primarily intended to result in sales of its
Shares, subject to the requirements of Section 12 of the 1940 Act, Rule 12b-1
thereunder, and other applicable rules and regulations.
7.3 Transfer Agency, Shareholder Services, and Administration
Agreements. The Trustees, on behalf of the Trust or any Series or Class, may
enter into transfer agency agreements, Shareholder service agreements, and
administration and management agreements with any party or parties on terms
and conditions acceptable to the Trustees.
7.4 Custodian. The Trustees shall at all times place and maintain
the securities and similar investments of the Trust and of each Series with a
custodian meeting the requirements of Section 17(f) of the 1940 Act and the
rules thereunder. The Trustees, on behalf of the Trust or any Series, may enter
into an agreement with a custodian on terms and conditions acceptable to the
Trustees, providing for the custodian, among other things, to (a) hold the
securities owned by the Trust or any Series and deliver the same upon written
order or oral order confirmed in writing, (b) to receive and receipt for any
moneys due to the Trust or any Series and deposit the same in its own banking
department or elsewhere, (c) to disburse such funds upon orders or vouchers,
and (d) to employ one or more sub-custodians.
7.5 Parties to Contracts with Service Providers. The Trustees
may enter into any contract referred to in this Article with any entity,
although one or more of the Trustees or officers of the Trust may be an officer,
director, trustee, partner, shareholder, or member of such entity, and no such
contract shall be invalidated or rendered void or voidable because of such
relationship. No person having such a relationship shall be disqualified from
voting on or executing a contract in his or her capacity as Trustee and/or
Shareholder, or be liable merely by reason of such relationship for any loss or
expense to the Trust with respect to such a contract or accountable for any
profit realized directly or indirectly therefrom; provided, that the contract
was reasonable and fair and not inconsistent with this Trust Instrument or the
By-Laws.
Any contract referred to in Sections 7.1 and 7.2 shall be consistent with
and subject to the applicable requirements of Section 15 of the 1940 Act and
the rules and regulations thereunder with respect to its continuance in effect,
its termination, and the method of
<PAGE>
authorization and approval of such contract
or renewal. No amendment to a contract referred to in Section 7.1 shall be
effective unless assented to in a manner consistent with the requirements of
Section 15 of the 1940 Act, and the rules and regulations thereunder.
ARTICLE VIII
EXPENSES OF THE TRUST AND SERIES
8.1 Expenses. Subject to Section 4.4, the Trust or a particular
Series shall pay, or shall reimburse the Trustees from the Trust estate or the
assets belonging to the particular Series, for their expenses and disbursements,
including, but not limited to, interest charges, taxes, brokerage fees and
commissions; expenses of issue, repurchase and redemption of Shares;
insurance premiums; applicable fees, interest charges and expenses of third
parties, including the Trust's investment advisers, managers, administrators,
distributors, custodians, transfer agents and fund accountants; fees of pricing,
interest, dividend, credit and other reporting services; costs of membership in
trade associations; telecommunications expenses; funds transmission expenses;
auditing, legal and compliance expenses; costs of forming the Trust and its
Series and maintaining its existence; costs of preparing and printing the
prospectuses of the Trust and each Series, statements of additional information
and reports for Shareholders and delivering them to Shareholders; expenses of
meetings of Shareholders and proxy solicitations therefor (unless otherwise
agreed to by another party); costs of maintaining books and accounts; costs of
reproduction, stationery and supplies; fees and expenses of the Trustees;
compensation of the Trust's officers and employees and costs of other
personnel performing services for the Trust or any Series; costs of Trustee
meetings; Commission registration fees and related expenses; state or foreign
securities laws registration fees and related expenses; and for such non-
recurring items as may arise, including litigation to which the Trust or a
Series (or a Trustee or officer of the Trust acting as such) is a party, and for
all losses and liabilities by them incurred in administering the Trust. The
Trustees shall have a lien on the assets belonging to the appropriate Series, or
in the case of an expense allocable to more than one Series, on the assets of
each such Series, prior to any rights or interests of the Shareholders thereto,
for the reimbursement to them of such expenses, disbursements, losses and
liabilities.
ARTICLE IX
LIMITATION OF LIABILITY AND INDEMNIFICATION
9.1 Limitation of Liability. All persons contracting with or having
any claim against the Trust or a particular Series shall look only to the assets
of the Trust or such Series for payment under such contract or claim; and
neither the Trustees nor any of the Trust's officers, employees or agents,
whether past, present or future, shall be personally liable therefor. Every
written instrument or obligation on behalf of the Trust or any Series shall
contain a statement to the foregoing effect, but the absence of such statement
shall not operate to make any Trustee or officer of the Trust liable thereunder.
Provided they have exercised reasonable care and have acted under the reasonable
belief that their actions are in the best interest of the Trust, the Trustees
and officers of the Trust shall not be responsible or liable for any act or
omission or for neglect or wrongdoing of them or any officer, agent, employee,
<PAGE>
investment adviser or independent contractor of the Trust, but nothing contained
in this Trust Instrument or in the Delaware Act shall protect any Trustee or
officer of the Trust against liability to the Trust or to Shareholders to which
he or she would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office.
9.2 Indemnification.
(a) Subject to the exceptions and limitations contained in
subsections (b) and (c) below:
(i) every person who is, or has been, a Trustee or an
officer, employee or agent of the Trust ("Covered Person") shall be
indemnified by the Trust or the appropriate Series to the fullest extent
permitted by law against liability and against all expenses reasonably incurred
or paid by him or her in connection with any claim, action, suit or proceeding
in which he or she becomes involved as a party or otherwise by virtue of his or
her being or having been a Covered Person and against amounts paid or
incurred by him or her in the settlement thereof;
(ii) as used herein, the words "claim," "action,"
"suit," or "proceeding" shall apply to all claims, actions, suits or proceedings
(civil, criminal or other, including appeals), actual or threatened, and the
words "liability" and "expenses" shall include, without limitation, attorneys
fees, costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided hereunder to a
Covered Person:
(i) who shall have been adjudicated by a court or
body before which the proceeding was brought (A) to be liable to the Trust or
its Shareholders by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his or her
office, or (B) not to have acted in good faith in the reasonable belief that
his or her action was in the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been
a determination that such Covered Person did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office; (A) by the court or other body
approving the settlement; (B) by the vote of at least a majority of those
Trustees who are neither Interested Persons of the Trust nor are parties to the
proceeding based upon a review of readily available facts (as opposed to a full
trial-type inquiry); or (C) by written opinion of independent legal counsel
based upon a review of readily available facts (as opposed to a full trial-type
inquiry).
(c) The rights of indemnification herein provided may be
insured against by policies maintained by the Trust, shall be severable, shall
not be exclusive of or affect any
<PAGE>
other rights to which any Covered Person may
now or hereafter be entitled, and shall inure to the benefit of the heirs,
executors and administrators of a Covered Person.
(d) To the maximum extent permitted by applicable law,
expenses in connection with the preparation and presentation of a defense to
any claim, action, suit or proceeding of the character described in subsection
(a) of this Section may be paid by the Trust or applicable Series from time to
time prior to final disposition thereof upon receipt of an undertaking by or on
behalf of such Covered Person that such amount will be paid over by him or
her to the Trust or applicable Series if it is ultimately determined that he or
she is not entitled to indemnification under this Section; provided, however,
that either (i) such Covered Person shall have provided appropriate security
for such undertaking, (ii) the Trust is insured against losses arising out of
any such advance payments or (iii) either a majority of the Trustees who are
neither Interested Persons of the Trust nor parties to the proceeding, or
independent legal counsel in a written opinion, shall have determined, based
upon a review of readily available facts (as opposed to a full trial-type
inquiry) that there is reason to believe that such Covered Person will not be
disqualified from indemnification under this Section.
(e) Any repeal or modification of this Article IX by the
Shareholders of the Trust, or adoption or modification of any other provision
of the Trust Instrument or By-Laws inconsistent with this Article, shall be
prospective only, to the extent that such repeal or modification would, if
applied retrospectively, adversely affect any limitation on the liability of any
Covered Person or indemnification available to any Covered Person with
respect to any act or omission which occurred prior to such repeal,
modification or adoption.
9.3 Indemnification of Shareholders. If any Shareholder or
former Shareholder of any Series shall be held personally liable solely by
reason of his or her being or having been a Shareholder and not because of his
or her acts or omissions or for some other reason, the Shareholder or former
Shareholder (or his or her heirs, executors, administrators or other legal
representatives or in the case of any entity, its general successor) shall be
entitled out of the assets belonging to the applicable Series to be held
harmless from and indemnified against all loss and expense arising from such
liability. The Trust, on behalf of the affected Series, shall, upon request by
such Shareholder, assume the defense of any claim made against such Shareholder
for any act or obligation of the Series and satisfy any judgment thereon from
the assets of the Series.
ARTICLE X
MISCELLANEOUS
10.1 Trust Not a Partnership. This Trust Instrument creates a trust
and not a partnership. No Trustee shall have any power to bind personally
either the Trust's officers or any Shareholder.
10.2 Trustee Action; Expert Advice; No Bond or Surety. The
exercise by the Trustees of their powers and discretion hereunder in good faith
and with reasonable care under the circumstances then prevailing shall be
binding upon everyone interested. Subject to
<PAGE>
the provisions of Article IX, the
Trustees shall not be liable for errors of judgment or mistakes of fact or law.
The Trustees may take advice of counsel or other experts with respect to the
meaning and operation of this Trust Instrument, and subject to the provisions
of Article IX, shall not be liable for any act or omission in accordance with
such advice or for failing to follow such advice. The Trustees shall not be
required to give any bond as such, nor any surety if a bond is obtained.
10.3 Record Dates. The Trustees may fix in advance a date up to
ninety (90) days before the date of any Shareholders' meeting, or the date for
the payment of any dividends or other distributions, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
Shares shall go into effect as a record date for the determination of the
Shareholders entitled to notice of, and to vote at, any such meeting, or
entitled to receive payment of such dividend or other distribution, or to
receive any such allotment of rights, or to exercise such rights in respect of
any such change, conversion or exchange of Shares. Record dates for adjourned
meetings of Shareholders shall be set according to the Trust's By-Laws.
10.4 Termination of the Trust.
(a) This Trust shall have perpetual existence. Subject to a
Majority Shareholder Vote of the Trust or of each Series to be affected, the
Trustees may:
(i) sell and convey all or substantially all of the
assets of the Trust or any affected Series to another Series or to another
entity which is an open-end investment company as defined in the 1940 Act, or
is a series thereof, for adequate consideration, which may include the
assumption of all outstanding obligations, taxes and other liabilities, accrued
or contingent, of the Trust or any affected Series, and which may include shares
of or interests in such Series, entity, or series thereof; or
(ii) at any time sell and convert into money all or
substantially all of the assets of the Trust or any affected Series.
Upon making reasonable provision for the payment of all known liabilities of
the Trust or any affected Series in either (i) or (ii), by such assumption or
otherwise, the Trustees shall distribute the remaining proceeds or assets (as
the case may be) ratably among the Shareholders of the Trust or any affected
Series; however, the payment to any particular Class of such Series may be
reduced by any fees, expenses or charges allocated to that Class.
(b) The Trustees may take any of the actions specified in
subsection (a) (i) and (ii) above without obtaining a Majority Shareholder Vote
of the Trust or any Series if a majority of the Trustees determines that the
continuation of the Trust or Series is not in the best interests of the Trust,
such Series, or their respective Shareholders as a result of factors or events
adversely affecting the ability of the Trust or such Series to conduct its
business and operations in an economically viable manner. Such factors and
events may include the inability of the Trust or a Series to maintain its assets
at an appropriate size, changes in laws
<PAGE>
or regulations governing the Trust or
the Series or affecting assets of the type in which the Trust or Series invests,
or economic developments or trends having a significant adverse impact on the
business or operations of the Trust or such Series.
(c) Upon completion of the distribution of the remaining
proceeds or assets pursuant to subsection (a), the Trust or affected Series
shall terminate and the Trustees and the Trust shall be discharged of any and
all further liabilities and duties hereunder with respect thereto and the right,
title and interest of all parties therein shall be canceled and discharged.
Upon termination of the Trust, following completion of winding up of its
business, the Trustees shall cause a certificate of cancellation of the Trust's
certificate of trust to be filed in accordance with the Delaware Act, which
certificate of cancellation may be signed by any one Trustee.
10.5 Reorganization. Notwithstanding anything else herein, to
change the Trust's form of organization the Trustees may, without Shareholder
approval, (a) cause the Trust to merge or consolidate with or into one or more
entities, if the surviving or resulting entity is the Trust or another open-end
management investment company under the 1940 Act, or a series thereof, that
will succeed to or assume the Trust's registration under the 1940 Act, or (b)
cause the Trust to incorporate under the laws of Delaware. Any agreement of
merger or consolidation or certificate of merger may be signed by a majority of
Trustees and facsimile signatures conveyed by electronic or telecommunication
means shall be valid. Pursuant to and in accordance with the provisions of
Section 3815(f) of the Delaware Act, an agreement of merger or consolidation
approved by the Trustees in accordance with this Section 10.5 may effect any
amendment to the Trust Instrument or effect the adoption of a new trust
instrument of the Trust if it is the surviving or resulting trust in the merger
or consolidation.
10.6 Trust Instrument. The original or a copy of this Trust
Instrument and of each amendment hereto or Trust Instrument supplemental
shall be kept at the office of the Trust where it may be inspected by any
Shareholder. Anyone dealing with the Trust may rely on a certificate by a
Trustee or an officer of the Trust as to the authenticity of the Trust
Instrument or any such amendments or supplements and as to any matters in
connection with the Trust. The masculine gender herein shall include the
feminine and neuter genders. Headings herein are for convenience only and shall
not affect the construction of this Trust Instrument. This Trust Instrument may
be executed in any number of counterparts, each of which shall be deemed an
original.
10.7 Applicable Law. This Trust Instrument and the Trust created
hereunder are governed by and construed and administered according to the
Delaware Act and the applicable laws of the State of Delaware; provided,
however, that there shall not be applicable to the Trust, the Trustees or this
Trust Instrument (a) the provisions of Section 3540 of Title 12 of the Delaware
Code, or (b) any provisions of the laws (statutory or common) of the State of
Delaware (other than the Delaware Act) pertaining to trusts which relate to or
regulate (i) the filing with any court or governmental body or agency of trustee
accounts or schedules of trustee fees and charges, (ii) affirmative requirements
to post bonds for trustees, officers, agents or employees of a trust, (iii) the
necessity for obtaining court or other governmental
<PAGE>
approval concerning the
acquisition, holding or disposition of real or personal property, (iv) fees or
other sums payable to trustees, officers, agents or employees of a trust, (v)
the allocation of receipts and expenditures to income or principal, (vi)
restrictions or limitations on the permissible nature, amount or concentration
of trust investments or requirements relating to the titling, storage or other
manner of holding of trust assets, or (vii) the establishment of fiduciary or
other standards of responsibilities or limitations on the acts or powers of
trustees, which are inconsistent with the limitations or liabilities or
authorities and powers of the Trustees set forth or referenced in this Trust
Instrument. The Trust shall be of the type commonly called a Delaware business
trust, and, without limiting the provisions hereof, the Trust may exercise all
powers which are ordinarily exercised by such a trust under Delaware law. The
Trust specifically reserves the right to exercise any of the powers or
privileges afforded to trusts or actions that may be engaged in by trusts under
the Delaware Act, and the absence of a specific reference herein to any such
power, privilege or action shall not imply that the Trust may not exercise such
power or privilege or take such actions.
10.8 Amendments. The Trustees may, without any Shareholder
vote, amend or otherwise supplement this Trust Instrument by making an
amendment, a Trust Instrument supplemental hereto or an amended and
restated trust instrument; provided, that Shareholders shall have the right to
vote on any amendment (a) which would affect the voting rights of
Shareholders granted in Section 6.1, (b) to this Section 10.8, (c) required to
be approved by Shareholders by law or by the Trust's registration statement(s)
filed with the Commission, and (d) submitted to them by the Trustees in their
discretion. Any amendment submitted to Shareholders which the Trustees
determine would affect the Shareholders of any Series shall be authorized by
vote of the Shareholders of such Series and no vote shall be required of
Shareholders of a Series not affected. Notwithstanding anything else herein,
any amendment to Article IX which would have the effect of reducing the
indemnification and other rights provided thereby to Trustees, officers,
employees, and agents of the Trust or to Shareholders or former Shareholders,
and any repeal or amendment of this sentence shall each require the affirmative
vote of the holders of two-thirds of the Outstanding Shares of the Trust
entitled to vote thereon.
10.9 Fiscal Year. The fiscal year of the Trust shall end on a
specified date as set forth in the By-Laws. The Trustees may change the fiscal
year of the Trust without Shareholder approval.
10.10 Severability. The provisions of this Trust Instrument are
severable. If the Trustees determine, with the advice of counsel, that any
provision hereof conflicts with the 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 Trust Instrument; provided, however, that such
determination shall not affect any of the remaining provisions of this Trust
Instrument or render invalid or improper any action taken or omitted prior to
such determination. If any provision hereof shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision only in such jurisdiction and shall not affect any
other provision of this Trust Instrument.
IN WITNESS WHEREOF, the undersigned, being the sole initial
Trustee, has executed this Trust Instrument as of the date first above written.
/s/ Charles S. Cruice
__________________________________________
Charles S. Cruice, as Trustee and not individually
Address: 4001 Centerville Road
Greenville, DE 19807
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-8A
NOTIFICATION OF REGISTRATION
FILED PURSUANT TO SECTION 8(a) OF THE
INVESTMENT COMPANY ACT OF 1940
The undersigned investment company hereby notifies the
Securities and Exchange Commission that it registers under and
pursuant to the provisions of Section 8(a) of the Investment
Company Act of 1940 and in connection with such notification of
registration submits the following information:
Name: The Rockland Funds Trust
Address of Principal Business Office: 4001 Centerville Road
Greenville, Delaware 19807
Telephone number (including area code): (302) 429-9799
Name and Address of Agent for Service
of Process: Charles S. Cruice
The Rockland Funds Trust
4001 Centerville Road
Greenville, Delaware 19807
Check Appropriate Box:
Registrant is filing a Registration Statement pursuant to
Section 8(b) of the Investment Company Act of 1940 concurrently
with the filing of Form N-8A:
YES X NO
Pursuant to the requirements of the Investment Company Act
of 1940, the Trustee of the Registrant has caused this
notification of registration to be duly signed on its behalf in
the City of Greenville and State of Delaware on the 31st day of
July, 1996.
THE ROCKLAND FUNDS TRUST
By: /s/ Charles S. Cruice
---------------------
Charles S. Cruice
President and initial Trustee
Attest: /s/ Richard H. Gould
-----------------------
Richard H. Gould
___________ and Trustee