AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 29, 2000
Securities Act Registration No. File No. 333-9355
Investment Company Act Registration No. File No. 811-7743
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
[X] POST-EFFECTIVE AMENDMENT NO. 6
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
[X] AMENDMENT NO. 7
THE ROCKLAND FUNDS TRUST
(Exact name of registrant as specified in charter)
100 South Rockland Falls Road
Rockland, Delaware 19732
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (302) 429-9799
Charles S. Cruice
100 South Rockland Falls Road
Rockland, Delaware 19732
(Name and Address of Agent for Service)
Copies to:
John H. Grady, Jr., Esq.
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
It is proposed that this filing become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/ / on [---------------] pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / 75 days after filing pursuant to paragraph (a)
/X/ on January 28, 2001 pursuant to paragraph (a) of Rule 485.
PROSPECTUS
JANUARY 28, 2001
THE ROCKLAND SMALL CAP
GROWTH FUND
PROSPECTUS
January 28, 2001
THE ROCKLAND SMALL CAP GROWTH FUND
a Series of
The Rockland Funds Trust
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
Telephone: 1-800-497-3933
GREENVILLE CAPITAL MANAGEMENT, INC.
Investment Advisor
Website: www.rocklandfund.com
The investment objective of The Rockland Small Cap Growth Fund (the "Fund") is
to seek capital appreciation. The Fund will, under normal market conditions,
invest its assets primarily in equity securities of domestic small
capitalization companies, with an emphasis on those companies whose growth
potential, in the opinion of the Fund's investment advisor, GREENVILLE CAPITAL
MANAGEMENT, INC., has been overlooked by Wall Street analysts.
Please read this Prospectus carefully and keep it for future reference.
-------------------
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
PAGE NO.
RISK/RETURN SUMMARY 3
FUND FEES AND EXPENSES 5
INVESTMENT STRATEGY AND APPROACH 6
IMPLEMENTATION OF INVESTMENT OBJECTIVE 6
FUND MANAGEMENT 7
CUSTODIAN, TRANSFER AGENT, ADMINISTRATOR AND FUND ACCOUNTANT 8
DISTRIBUTOR 8
HOW TO PURCHASE FUND SHARES 8
HOW TO REDEEM SHARES 9
VALUATION OF FUND SHARES 10
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX TREATMENT 11
FINANCIAL HIGHLIGHTS OF THE FUND 12
ADDITIONAL INFORMATION 13
RISK/RETURN SUMMARY
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek capital appreciation.
INVESTMENT ADVISOR
Greenville Capital Management, Inc. ("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
$440 million.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily in high quality, small capitalization growth
companies with an emphasis on those domestic companies whose growth potential,
in GCM's opinion, has been overlooked by Wall Street analysts.
PRINCIPAL RISKS
Risks associated with investing in the Fund include the risks that:
(1) the market value of the Fund's portfolio may fluctuate unpredictably
due to overall market trends and developments affecting small capitalization
companies; and
(2) the investment strategy used by GCM, including using short positions,
may fail to produce the intended result.
MARKET CONDITIONS. Because the stock market and individual stock prices
fluctuate, you may receive more or less money than you originally invested.
Individual stock prices do not necessarily correlate to overall market moves.
The stock market has for a number of years experienced strong growth, however,
the market is also subject to periods of poor performance.
SMALL CAP STOCKS. Small capitalization companies may not have the size,
resources or other assets of large capitalization companies. Small
capitalization companies may be subject to greater market risks and fluctuations
in value than large capitalization companies and may not correspond to changes
in value of the stock market in general.
SHORT POSITIONS. The Fund intends to use short positions to reduce the
Fund's overall risk. However, short positions are risky and there is no
guarantee that the stocks which are sold short by the Fund will decline in
value. If GCM is incorrect in determining which stocks to sell short, the Fund
will experience a loss on the position.
SUITABILITY. The Fund is not a short-term investment vehicle. Rather, it is
suitable for long-term investors only who seek to invest a portion of their
overall portfolio in an aggressive equity mutual fund that invests principally
in small capitalization growth companies. You must be willing to accept a high
degree of volatility and have no immediate financial requirements for this
investment. The Fund is designed for those investors who are willing to accept
a higher degree of risk with the potential for higher returns in the future.
You should be aware that you could lose money by investing in the Fund. An
investment in the Fund is not a bank deposit and is not insured or guaranteed by
the FDIC or any other government agency.
PAST PERFORMANCE
The performance information that follows gives some indication of how the Fund's
performance can vary. The bar chart indicates the risks of investing in the
Fund by showing the changes in the Fund's performance from year to year (on a
calendar year basis). The table shows the Fund's average annual return for one
year and since the Fund's inception, compared with a broad measure of market
performance. Please remember that the Fund's past performance does not reflect
how the Fund may perform in the future.
CALENDAR YEAR TOTAL RETURNS
1997 19.59%
1998 25.13%
1999 109.26%
2000 ------%
The Fund's fiscal year-to-date return as of December 31, 2000 was -----%
BEST AND WORST QUARTERLY RETURNS
[61.11% (4th quarter, 1999)
-17.02% (3rd quarter, 1998)]
AVERAGE ANNUAL TOTAL RETURNS
AS OF 12/31/00
ANNUALIZED
1 YEAR SINCE INCEPTION
------ ---------------
Fund -----% -----%
Russell 2000 Index (with dividends
reinvested)*<F2> -----% -----%
S&P 500 Index (with dividends
reinvested)*<F2> -----% -----%
NASDAQ Composite Index*<F2> -----% -----%
---------------------
*<F2> The Russell 2000 Index is an unmanaged index generally
representative of the U.S. market for small cap stocks. The S&P 500
Index is an unmanaged index generally representative of the U.S. stock
market for large cap stocks. The NASDAQ Composite Index is an
unmanaged index generally representative of the market for over-the-
counter stocks. The Fund returns presented above include operating
expenses that reduce returns, while the returns of the Russell 2000,
S&P 500 and NASDAQ Composite Indexes do not include operating
expenses.
FUND FEES AND EXPENSES
The table and footnotes which follow describe the fees and expenses that you
may pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) NONE
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price) NONE
Redemption Fee (as a percentage of amount redeemed) NONE*<F4>
Exchange Fee NONE
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
Management Fees ----%
Distribution (12b-1) Fees NONE
Other Expenses ----%
-----
TOTAL ANNUAL FUND OPERATING EXPENSES ----%
----------------------
* <F4> There is a service fee of $12.00 for redemptions effected via
wire transfer.
EXAMPLE
The following Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The Example
assumes that you invest $10,000 in the Fund for the time periods indicated and
then redeem all of your shares at the end of those periods. The Example also
assumes that you have a 5% return each year and that the Fund's total annual
operating expenses remain the same each year. Although your actual costs may be
higher or lower, based on these assumptions your costs would be as follows:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$--- $--- $--- $---
ADDITIONAL INFORMATION ABOUT THE FUND
INVESTMENT STRATEGY AND APPROACH
In managing the Fund's portfolio, GCM seeks to make investments in growth
stocks with an emphasis on those domestic companies whose growth potential, in
GCM's opinion, has been overlooked by Wall Street analysts. The Fund will
generally invest in companies with market capitalizations ranging from $100
million to $2 billion. GCM's general approach is to take advantage of
investment and trading opportunities that investors might not otherwise have the
time, expertise or inclination to exploit themselves.
When making investment decisions, GCM evaluates the fundamental and technical
prospects for a company using information and analyses from numerous sources.
GCM evaluates 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 buys securities GCM believes possess earnings prospects
that have been underestimated by Wall Street analysts. The Fund typically sells
a security when it shows deteriorating fundamentals or its earnings fall short
of GCM's expectations. The Fund may also employ rapid trading strategies to
capture incremental changes in the prices of securities, and to enhance the
Fund's after-tax return.
IMPLEMENTATION OF INVESTMENT OBJECTIVE
IN GENERAL
In implementing its investment objective, the Fund may invest in the
following securities and use the following investment techniques, all with the
following associated risks.
TEMPORARY STRATEGIES
When GCM believes that adverse economic or market conditions justify such
action, the Fund may invest up to 100% of its assets temporarily in short-term
fixed-income securities. Short-term fixed-income securities include U.S.
government securities, certificates of deposit, bank time deposits, bankers'
acceptances, repurchase agreements and commercial paper and commercial paper
master notes rated A-1 or better by S&P, Prime-1 or better by Moody's, or Fitch
2 or higher by Fitch. It is impossible to predict when or for how long GCM may
employ these strategies for the Fund. To the extent the Fund engages in any of
these temporary strategies, the Fund may not achieve its investment objective.
ILLIQUID SECURITIES
The Fund may invest up to 10% of the value of its net assets in illiquid
securities.
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. Investments in ADRs may involve risks
which are in addition to the usual risks inherent in domestic investments. 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, many foreign companies are not subject to uniform accounting,
auditing and financial reporting standards. From time to time, foreign
securities may be difficult to liquidate rapidly without adverse price effects.
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 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.
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.
SHORT-TERM TRADING
The Fund trades actively and frequently. The Fund's portfolio turnover rates
for the fiscal years ending September 30, 2000, 1999 and 1998 were ----%, 815%
and 353%, respectively. The portfolio turnover rate indicates changes in the
Fund's securities holdings; generally if all the securities in the Fund at the
beginning of the period are replaced by the end of the period, the turnover rate
would be 100%. You may realize taxable gains as a result of such frequent
trading of the Fund's assets and the Fund will incur transaction costs in
connection with buying and selling securities. Tax and transaction costs lower
the Fund's effective return for investors. Long-term capital gains are
desirable from a taxation standpoint and GCM strives for these gains where
possible. Trading focuses on low transaction costs and efficient trading
systems.
FUND MANAGEMENT
The Fund has entered into an Investment Advisory Agreement with GCM under
which GCM manages the Fund's investments and business affairs, subject to the
supervision of the Fund's Board of Trustees.
GCM was founded in 1989 and serves as investment advisor to individual and
institutional clients. As of November 30, 2000, GCM managed approximately $---
million in assets. GCM is located at 100 South Rockland Falls Road, Rockland,
Delaware 19732. Under the Investment Advisory Agreement 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 Fund is currently managed by Richard H. Gould. Mr. Gould has been with
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, currently
called the Blackrock Small Cap Growth Fund. Mr. Gould is a Chartered Financial
Analyst and a Chartered Market Technician. Mr. Gould received his BS in 1982 and
his MBA in Finance in 1985 from The Pennsylvania State University.
Charles S. 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.
CUSTODIAN, TRANSFER AGENT, ADMINISTRATOR
AND FUND ACCOUNTANT
Firstar Bank, N.A. ("Firstar Bank"), acts as custodian of the Fund's assets.
Firstar Mutual Fund Services, LLC ("Firstar") acts as transfer agent (the
"Transfer Agent") for the Fund and as the Fund's Administrator and Fund
Accountant.
DISTRIBUTOR
Unified Financial Securities, Inc. (formerly, AmeriPrime Financial Securities,
Inc.) (the "Distributor"), serves as the principal underwriter to distribute the
Fund's shares. The Distributor receives no compensation from the Fund for
selling Fund shares.
HOW TO PURCHASE FUND SHARES
INITIAL INVESTMENT -- MINIMUM $2,000
You may purchase shares by completing the enclosed application and mailing it
along with a check or money order payable to "The Rockland Small Cap Growth
Fund," to your securities dealer, the Distributor or the Transfer Agent. The
minimum initial investment in the Fund is $2,000. 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.
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 or waived 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.
If your check does not clear, you will be charged a $25.00 service fee. You
will also be responsible for any losses suffered by the Fund as a result.
Neither cash nor third-party checks will be accepted. All applications to
purchase Fund 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 purchase Fund shares by wire. Please instruct your bank to use the
following instructions when wiring funds:
Wire to: Firstar Bank, N.A.
ABA Number 042000013
Credit: Firstar Mutual Fund Services, LLC
Account 112-952-137
Further Credit: The Rockland Small Cap Growth Fund
(shareholder account number)
(shareholder name/account registration)
Please call 1-800-497-3933 prior to wiring any funds to notify the Transfer
Agent that the wire is coming and to confirm the wire instructions. The Fund is
not responsible for the consequences of delays resulting from the banking or
Federal Reserve wire system.
TELEPHONE PURCHASES
You may purchase Fund shares by moving money from your bank account to your
Fund account. Only bank accounts held at domestic financial institutions can be
used for telephone transactions. To have your Fund 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 before the close of regular trading on such date. Most transfers
are completed within three business days. Telephone transactions may not be
used for initial purchases of Fund shares.
AUTOMATIC INVESTMENT PLAN -- MINIMUM $250
The Automatic Investment Plan ("AIP") allows you to make regular, systematic
investments in the Fund from your bank checking account. To establish the AIP,
complete the Fund's AIP application. Under the AIP, you may choose to make
investments on any business day from your financial institution in amounts of
$250 or more.
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. Please refer to the SAI for additional
information regarding the AIP, or call 1-800-497-3933.
SUBSEQUENT INVESTMENTS -- MINIMUM $250
Additions to your account may be made by mail, wire or telephone. When
making an additional purchase by mail, enclose a check payable to "The Rockland
Small Cap Growth Fund" along with the Additional Investment Form provided on the
lower portion of your account statement. To make an additional purchase by
wire, please use the wiring instructions listed above.
HOW TO REDEEM SHARES
IN GENERAL
You may request redemption of part or all of your Fund shares at any time.
No redemption request will become effective until all documents have been
received in proper form (as described below) by the Transfer Agent. You should
contact the Transfer Agent for further information concerning documentation
required for a redemption of Fund shares. 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, if
you make a purchase by check, the Fund may hold payment on redemption proceeds
until it is reasonably satisfied that the check has cleared; this may take up to
twelve days from the purchase date.
Redemptions may also be made through brokers or dealers. Such redemptions
will be effected at the net asset value next determined after the Fund receives
the broker or dealer's instruction to redeem shares. Some brokers or dealers
may charge a fee in connection with such redemptions.
Investors who have an Individual Retirement Account ("IRA") must indicate on
their redemption requests whether or not federal income tax should be withheld.
Redemption requests failing to indicate an election will be subject to
withholding.
WRITTEN REDEMPTION
For most redemption requests, you need only furnish a written, unconditional
request to the Fund's Transfer Agent. Requests for redemption must be signed
exactly as the 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 charges a $12.00 service fee for wire transactions.
Additional documentation may be requested from corporations, executors,
administrators, trustees, guardians, agents, or attorneys-in-fact. The Fund
does not consider the U.S. Postal Service or other independent delivery services
to be its agents. Therefore, deposit in the mail or with such services, or
receipt at the Transfer Agent's post office box, of redemption requests does not
constitute receipt by the Transfer Agent or the Fund. Do not mail letters by
overnight courier to the post office box. Any written redemption requests
received within 15 days after an address change must be accompanied by a
signature guarantee.
TELEPHONE REDEMPTION
You may also redeem your shares by calling the Transfer Agent at 1-800-497-
3933. In order to utilize this procedure, you must have previously elected this
option on your account application, and the redemption proceeds must be mailed
directly to you or a predesignated account. To change the designated account,
send a written request with signature(s) guaranteed to the Transfer Agent. To
change the address, call the Transfer Agent or send a written request with
signature(s) guaranteed to the Transfer Agent. No telephone redemptions may be
made within 15 days of any address change. The Fund reserves the right to limit
the number of telephone redemptions you may make. You may not modify or cancel
a telephone redemption request.
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, neither the Fund nor the Transfer Agent will be liable
for any loss, cost or expense for acting upon an investor's telephone
instructions or for any unauthorized telephone redemption. The Fund reserves
the right to refuse a telephone redemption request.
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;
(ii) redemption requests to be mailed or wired to other than the address of
record; and
(iii) any redemption request if a change of address request has been
received by the Fund or Transfer Agent within the last 15 days.
A signature guarantee may be obtained from any eligible guarantor including
banks, savings associations, credit unions, brokerage firms and others.
TERMINATION OF ACCOUNTS
Your account may be terminated by the Fund on not less than 30 days' written
notice if, at the time of any redemption of shares in your account, the value of
the remaining shares in the account falls below $2,000. Upon any such
termination, a check for the redemption proceeds will be sent to the account of
record within seven days of the redemption.
VALUATION OF FUND SHARES
The Fund's share price is determined as of the close of trading (generally
4:00 p.m. Eastern Time) on each day the New York Stock Exchange ("NYSE") is open
for business and is calculated by taking the fair value of the Fund's total
assets, including interest or dividends accrued, but not yet collected, less all
liabilities, and dividing by the total number of shares outstanding. The Fund
does not determine its net asset value on days the NYSE is closed. Currently,
the NYSE is closed on New Year's Day, Martin Luther King, Jr. Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day. If any of these holidays falls on a Saturday, the NYSE is
not open on the preceding Friday and if a holiday falls on a Sunday, the NYSE is
not open on the following Monday, unless unusual business conditions exist, such
as the ending of a monthly or yearly accounting period.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX TREATMENT
Please consult your tax advisor regarding your specific questions about
federal, state, local and foreign taxes. For federal income tax purposes, all
dividends and distributions of net realized short-term capital gains you receive
from the Fund are taxable to you as ordinary income whether reinvested in
additional shares or received in cash. Distributions of net realized long-term
capital gains you receive from the Fund, whether received in cash or reinvested
in additional shares, are taxable as a capital gain. The capital gain holding
period and the applicable tax rate 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
Fund. You will be informed annually as to the amount and nature of all
dividends and capital gains paid during the prior year. Such capital gains and
dividends may also be subject to state or local taxes.
When you sell your shares of the Fund, you may have a capital gain or loss.
The individual tax rate on any gain from the sale of your shares depends on your
marginal tax rate and on how long you have held your shares. A sale of your
shares may also be subject to state and local taxes.
Dividends and capital gains, if any, are usually distributed annually in
December. When a dividend or capital gain is distributed, the Fund's net asset
value will decrease by the amount of the payment. A dividend paid shortly after
the purchase of Fund shares will reduce the net asset value of the shares
purchased by the amount of the dividend and any such dividend will also be
taxable to such shareholder. All dividends or capital gains distributions will
automatically be reinvested in additional shares of the Fund at the then
prevailing net asset value unless you specifically request that either dividends
or capital gains or both be paid in cash. The election to receive dividends in
cash or reinvest them in shares 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.
FINANCIAL HIGHLIGHTS OF THE FUND
The financial highlights table is intended to help you understand the Fund's
financial performance for the Fund's shares for the period from December 2, 1996
(commencement of operations) through September 30, 1997 and for the fiscal years
ending September 30, 1998, 1999 and 2000. Certain information reflects
financial results for a single Fund share. The total returns presented in the
table represent the rate that an investor would have earned on an investment in
the Fund for the stated periods (assuming reinvestment of all dividends and
distributions). This information has been audited by -------------------------,
whose report, along with the Fund's financial statements, is included in the
Fund's annual report, which is available upon request.
<TABLE>
DECEMBER 2, 1996 (1)<F5>
YEAR ENDED YEAR ENDED YEAR ENDED THROUGH
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999 SEPTEMBER 30, 1998 SEPTEMBER 30,1997
------------------ ------------------ ------------------- ------------------
<S> <C> <C> <C> <C>
Per Share Data:
Net asset value,
beginning of period $---- $11.21 $14.43 $10.00
Income from investment operations:
Net investment loss ---- (0.20)(3)<F7> (0.17)(2)<F6> (0.11)(3)<F7>
Net realized and unrealized
gains (losses) on
investments ----- 8.33 (2.73) 4.56
------ ------ ------ ------
Total from investment
operations ----- 8.13 (2.90) 4.45
------ ------ ------ ------
Less distributions:
Dividends in excess of net
investment income -- -- -- (0.02)
Distributions from net
realized gains -- -- -- --
Distributions in excess of
net realized gains -- -- (0.18) --
Return of capital -- -- (0.14) --
------ ------ ------ ------
Total distributions ---- -- (0.32) (0.02)
------ ------ ------ ------
Net asset value, end of period $----- $19.34 $11.21 $14.43
------ ------ ------ ------
------ ------ ------ ------
Total return (4)<F8> ------% 72.52% (20.21%) 44.53%
Supplemental data and ratios:
Net assets, end
of period $---------- $21,561,339 $10,681,337 $10,858,957
Ratio of operating
expenses to
average net
assets
(5)<F9>(6)<F10> ----% 1.75% 1.75% 1.75%
Ratio of net
investment loss
to average net
assets
(5)<F9>(6)<F10> -----% 1.34% 1.47% 1.11%
Portfolio turnover
rate ------% 814.67% 353.27% 204.05%
</TABLE>
------------------
(1) <F5> Commencement of operations.
(2) <F6> Net investment loss per share is calculated using ending balances
prior to consideration of adjustments for permanent book and tax differences.
(3) <F7> Net investment loss per share represents net investment loss
divided by the monthly average shares of beneficial interest outstanding
throughout the period.
(4) <F8> Not annualized for the period December 2, 1996 through September
30, 1997.
(5) <F9> Annualized for the period December 2, 1996 through September 30,
1997.
(6) <F10> Without expense reimbursements of $96,798, $107,092 and $120,419
for the years ended September 30, 1999, 1998 and the period December 2, 1996
through September 30, 1997, respectively, the ratio of operating expenses to
average net assets would have been 2.31%, 2.60% and 3.98%, respectively, and
the ratio of net investment loss to average net assets would have been (1.90%),
(2.32%) and (3.35%), respectively.
ADDITIONAL INFORMATION
TRUSTEES
Mr. Charles Cruice
Mr. Richard Gould
Mr. George Keeley
Mr. Edwin Moats, Jr.
Dr. Peter Utsinger
OFFICERS
Mr. Charles Cruice, President
Mr. Richard Gould, Treasurer
Mr. Jeffrey Rugen, Secretary
INVESTMENT ADVISOR
Greenville Capital Management, Inc.
100 South Rockland Falls Road
Rockland, DE 19732
CUSTODIAN
Firstar Bank, N.A.
777 East Wisconsin Avenue
Milwaukee, WI 53202
TRANSFER AGENT, ADMINISTRATOR AND FUND ACCOUNTANT
Firstar Mutual Fund Services, LLC
1-800-497-3933
For overnight deliveries, use: For regular mail deliveries, use:
Third Floor P.O. Box 701
615 East Michigan Street Milwaukee, WI 53201-0701
Milwaukee, WI 53202
INDEPENDENT ACCOUNTANTS
DISTRIBUTOR
Unified Financial Securities Inc.
P.O. Box 6110
Indianapolis, IN 46206
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
The SAI contains additional information about the Fund. Additional
information about the Fund's investments is contained in the Fund's annual and
semi-annual reports to shareholders. The Fund's annual report provides a
discussion of the market conditions and investment strategies that significantly
affected the Fund's performance during its last fiscal year. The Fund's SAI,
which is incorporated by reference into this Prospectus, annual reports and
semi-annual reports are available without charge upon request to the address,
toll-free telephone number, or Website noted on the cover page of this
Prospectus. These documents may also be obtained from certain financial
intermediaries who purchase or sell Fund shares. General inquiries regarding
the Fund can be directed to the Fund at the address and toll-free telephone
number on the cover page of this Prospectus.
Information about the Fund (including the SAI) can be reviewed and copied at
the SEC's Public Reference Room in Washington, D.C. Please call the SEC at 1-
800-SEC-0330 for information relating to the operation of the Public Reference
Room. Reports and other information about the Fund are also available on the
SEC's Internet Website located at http://www.sec.gov. Alternatively, copies of
this information may be obtained, upon payment of a duplicating fee, by writing
the Public Reference Section of the SEC, Washington, D.C. 20549-6009 or by
electronic request at the following e-mail address: [email protected].
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and the Fund's
Statement of Additional Information ("SAI"), 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.
The Fund's 1940 Act File Number is 811-7743.
Registration Nos. 333-9355; 811-7743
STATEMENT OF ADDITIONAL INFORMATION
THE ROCKLAND SMALL CAP GROWTH FUND
A SERIES OF
THE ROCKLAND FUNDS TRUST
P. O. Box 701
Milwaukee, Wisconsin 53201-0701
Telephone: 1-800-497-3933
Website: www. greenvillecap.com
GREENVILLE CAPITAL MANAGEMENT, INC.
Investment Advisor
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Prospectus of The Rockland Small Cap Growth Fund
(the "Fund"), dated January 28, 2001. The Fund is a series of The Rockland
Funds Trust (the "Trust").
The Fund's audited financial statements for the year ended September 30,
2000, are incorporated herein by reference to the Fund's 2000 Annual Report.
A copy of the Prospectus is available without charge upon request to the
above-noted address, toll-free telephone number or website.
This Statement of Additional Information is dated January 28, 2001.
THE ROCKLAND SMALL CAP GROWTH FUND
TABLE OF CONTENTS
Page No.
FUND ORGANIZATION...............................................3
INVESTMENT RESTRICTIONS........................................ 4
IMPLEMENTATION OF INVESTMENT OBJECTIVE..........................5
TRUSTEES AND OFFICERS OF THE TRUST.............................17
PRINCIPAL SHAREHOLDERS.........................................19
INVESTMENT ADVISOR.............................................19
PORTFOLIO TRANSACTIONS AND BROKERAGE...........................20
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT........21
ADMINISTRATOR AND FUND ACCOUNTANT..............................21
DISTRIBUTOR....................................................21
PURCHASE AND PRICING OF SHARES.................................22
TAXES..........................................................24
TAXATION OF THE FUND AND ITS SHAREHOLDERS......................24
PERFORMANCE INFORMATION........................................26
INDEPENDENT ACCOUNTANTS........................................27
FINANCIAL STATEMENTS...........................................28
---------------------
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 RELATED PROSPECTUS, 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 IN ANY STATE OR JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
FUND ORGANIZATION
------------------
The Trust is an open-end, diversified, management investment company
commonly referred to as a mutual fund. The Fund is a series of common stock of
the Trust, a Delaware business trust organized on July 31, 1996. The Trust is
authorized to issue an unlimited number of shares of beneficial interest in
separate series and to create classes of shares within each series. Currently,
the Fund is the only series of the Trust. As of October 1, 2000, the
Institutional and Retail classes combined so that the Fund now has only one
class. If the Trust issues additional series, the assets belonging to each
series of shares will be held separately by the Trust's 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
of shares affected, and matters affecting only one series 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' meeting except when required
by the Investment Company Act of 1940, as amended (the "1940 Act"). There will
normally be no meeting 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'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 Trustee. 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 Securities and Exchange
Commission (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.
INVESTMENT RESTRICTIONS
-----------------------
The investment objective of The Rockland Small Cap Growth Fund (the "Fund")
is to seek capital appreciation. The Fund seeks to achieve this objective
through investment of its assets primarily in small capitalization
companies. The following is a complete list of the Fund's fundamental
investment limitations which cannot be changed without the approval of a
majority of the Fund's outstanding voting securities. As used herein, a
"majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the shares of common stock of the Fund represented at a meeting at which
more than 50% of the outstanding shares are present; or (ii) more than 50% of
the outstanding shares of common stock of the Fund.
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 1940 Act 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 1940 Act.
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.
Except for the fundamental investment limitations listed above and the
Fund's investment objective, the Fund's other investment policies are not
fundamental and may be changed with approval of the Trust's Board of Trustees.
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 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. 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.
5. Purchase securities of open-end or closed-end investment companies
except in compliance with the 1940 Act and applicable state law.
6. 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.
7. 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.
8. Purchase securities when borrowings exceed 5% of its total assets.
IMPLEMENTATION OF INVESTMENT OBJECTIVE
---------------------------------------
The following information supplements the discussion of the Fund's
investment objective and strategy described in the Prospectus under the captions
"INVESTMENT STRATEGY AND APPROACH" and "IMPLEMENTATION OF INVESTMENT OBJECTIVE."
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
Greenville Capital Management, Inc. ("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 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.
TEMPORARY STRATEGIES
When GCM believes that adverse economic or market conditions justify such
action, 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) Fannie Mae, 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 Inter-
American 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 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 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 Commodities 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 enter into futures contracts and futures
options transactions if more than 50% of its net assets would be committed to
such instruments. 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.
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 marked-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.
The Fund may also purchase call options 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.
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 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.
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.
WRITING COVERED CALL AND PUT OPTIONS
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.
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.
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.
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.
FEDERAL TAX TREATMENT OF OPTIONS
Certain option transactions have special tax results for the Fund. 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.
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 or the IRS 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 are "nonequity options" within the meaning of Code Section 1256. 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.
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.
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. 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.
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 does 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.
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.
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.
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.
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.
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.
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.
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. 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. 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).
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. 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.
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. For the
fiscal years ending September 30, 1998, 1999 and 2000, the turnover rates were
353.27%, 814.67% and ------%, respectively. The turnover rates reflect GCM's
rapid trading approach.
TRUSTEES AND OFFICERS OF THE TRUST
----------------------------------
Under the laws of the State of Delaware, the Board of Trustees of the Trust
is responsible for managing its business and affairs. 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 and officer who is deemed an "interested person," as defined in the 1940
Act, is indicated by an asterisk.
*Charles S. Cruice, President and a Trustee of the Trust, age 50.
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. Mr. Cruice also 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, Treasurer and a Trustee of the Trust, age 40.
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 Chartered 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.
Dr. Peter Utsinger, a Trustee of the Trust, age 55.
Dr. Utsinger has been a practicing physician in arthritis and rheumatic
diseases since 1970 when he received his M.D. from Georgetown University.
Dr. Utsinger was Director of the Arthritis Clinical and Research unit at
the University of North Carolina and has written over 100 publications in
his area of specialty.
George Keeley, a Trustee of the Trust, age 70
Mr. Keeley was a general partner of Meridian Venture Partners from 1985-
1997. He retired in 1998.
Edwin W. Moats, Jr., a Trustee of the Trust, age 53
Mr. Moats has been the President of Logan's Roadhouse, Inc. since 1992 and
CEO from 1995 to 1999. Mr. Moats has been a partner in the Haury and Moats
Company since 1987. Mr. Moats was Chairman and CEO of Metropolitan Federal
Savings Bank from 1989 to 1991 and President and COO from 1984 to 1989.
*Jeffrey Rugen, Secretary of the Trust, age 41.
Mr. Rugen has been a trader with GCM since 1994. From 1992-1994 Mr. Rugen
was a trader with PNC Bank and from 1986-1992 was a trader with Penn Group.
The address for Messrs. Cruice, Gould and Rugen is Greenville Capital
Management, Inc., 100 South Rockland Falls Road, Rockland, Delaware, 19732. The
address for Dr. Utsinger is 8909 Crefield Street, Philadelphia, Pennsylvania,
19118. The address for Mr. Keeley is 298 Island Creek Drive, Vero Beach,
Florida, 32963. The address for Mr. Moats is 801 Foster Hill Drive, Nashville,
Tennessee, 37215.
As of January 1, 2001, 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. Accordingly, Messrs. Cruice, Gould
and Rugen do not receive compensation from the Trust for their services as
Trustees and/or officers. However, Messrs. Utsinger, Keeley and Moats receive
the following fees for their services as Trustees of the Trust:
Name Cash Compensation(1)<F11> Other Compensation Total
---- -------------------- ------------------ -----
Dr. Peter Utsinger $--- $0 $---
Richard W. Vague(2)<F12> $--- $0 $---
Edwin Moats, Jr. $--- $0 $---
George Keeley(3)<F13> $--- $0 $---
-----------------
(1)<F11> Each Trustee who is not deemed an "interested person" of the Trust, as
defined in the 1940 Act, receives $250 per meeting payable in Fund shares on
September 30th. The Board of Trustees held four meetings during 2000.
(2)<F12> Richard W. Vague retired as a Trustee on May 18, 2000.
(3)<F13> George Keeley was appointed as a Trustee on February 18, 2000.
PRINCIPAL SHAREHOLDERS
----------------------
As of January --, 2001, the following persons owned of record or are known
by the Trust to own beneficially 5% or more of the outstanding shares of the
Fund:
Percentage
Name and Address No. Shares of Fund
---------------- ----------- ----------
As of January --, 2001, Mr. Cruice owned a controlling interest in the
Fund. Shareholders with a controlling interest could affect the outcome of
proxy voting or the direction of management of the Fund.
INVESTMENT ADVISOR
------------------
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. Richard H. Gould is a Vice President and officer of GCM.
The Fund's Investment Advisory Agreement is dated November 18, 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 1940 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 October 22,1996
and by the initial shareholders of the Fund on October 22, 1996. Most recently,
the Advisory Agreement, was approved by the Trustees, including the
disinterested Trustees on November 17, 2000. 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. From time to time, GCM may voluntarily waive all or a
portion of its management fee for the Fund. During the fiscal years ended
September 30, 1998, 1999 and 2000, GCM received $15,980, $77,316 and $------,
respectively, from the Fund for its services under the Advisory Agreement. The
amount received by GCM for such services would have been $123,072, $174,114 in
1998 and 1999, respectively, had GCM not waived all or a portion of its fees
during such periods.
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.
The aggregate amount of brokerage commissions paid by the Fund for the
years ended September 30, 1998, 1999 and 2000 was $63,443, $154,107 and $------,
respectively. For the fiscal years ended September 30, 1998, 1999 and 2000,
the Fund paid brokerage commissions with respect to transactions for which
research services were provided; however, neither the Fund nor the Advisor had
any agreement or understanding with any broker or dealer to direct brokerage to
such broker or dealer because of research services provided. During the fiscal
year ended September 30, 2000, the Fund [did not] acquire any stock of its
regular brokers or dealers.
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 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.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
--------------------------------------------------------
As custodian of the Fund's assets, Firstar Bank, N.A. ("Firstar Bank",
formerly Firstar Bank Milwaukee, N.A.), 777 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202, 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. Firstar Bank is in no way responsible
for any of the investment policies or decisions of the Fund. Firstar Mutual
Fund Services, LLC, Third Floor, 615 East Michigan Street, Milwaukee, Wisconsin
53202 ("Firstar") acts as transfer agent and dividend-disbursing agent for the
Fund. Firstar is compensated based on an annual fee per open account of $14,
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 $14.
ADMINISTRATOR AND FUND ACCOUNTANT
----------------------------------
Firstar also provides administrative and fund accounting services to the
Fund pursuant to the Fund Administration Servicing Agreement and the Fund
Accounting Servicing Agreement. Under these Agreements, Firstar 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 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
expense accruals and performs securities valuations, monitors the Trust's
status as a registered investment company under Subchapter M of the 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.
Firstar, 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 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 : (i) pursuant
to the Fund Administration Servicing Agreement, Firstar receives a fee at the
annual rate of .06 of 1% on the Fund's average net assets, subject to an annual
minimum of $50,000, plus out-of-pocket expenses and (ii) pursuant to the Fund
Accounting Servicing Agreement, Firstar receives a fee of $22,000 on the first
$40 million, 0.01 of 1% on the next $200 million and 0.005 of 1% on the balance,
plus out-of-pocket expenses. For the fiscal years ended September 30, 1998,
1999 and 2000, Firstar received $47,271, $50,005 and $------ respectively, for
its services under the Fund Administration Servicing Agreement and $28,500,
$30,230 and $------, respectively, for its services under the Fund Accounting
Servicing Agreement.
DISTRIBUTOR
-----------
Under a Distribution Agreement dated November 17, 2000 (the "Distribution
Agreement"), Unified Financial Securities, Inc. (formerly, AmeriPrime Financial
Securities, Inc.) (the "Distributor") acts as underwriter of the Fund's shares.
The Distributor's principal business address is P.O. Box 6011, Indianapolis,
Indiana 46206.
The Distribution Agreement provides that the Distributor will use its best
efforts to distribute the Fund's shares, which shares are offered for sale
continuously at net asset value per share without the imposition of a sales
charge.
Pursuant to the terms of the Distribution Agreement, either the Distributor
or GCM 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 distribution of Fund shares.
The Distributor receives no compensation from the Fund for the distribution
of Fund shares.
PURCHASE AND PRICING OF SHARES
------------------------------
PURCHASE OF SHARES
The Fund offers shares without a sales charge. Please see "HOW TO PURCHASE
FUND SHARES" in the Prospectus for more information.
AUTOMATIC INVESTMENT PLAN
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 minimum initial investment is reached, or, after reaching the minimum
initial investment, the account balance is reduced to less than $2,000), 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 day of your
choosing (or the next business day thereafter) 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 $25 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, you close
your bank account or in any manner prevent withdrawal of funds from the
designated checking 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.
INDIVIDUAL RETIREMENT ACCOUNTS
In addition to purchasing Fund shares as described in the Prospectus under
"HOW TO PURCHASE FUND SHARES," individuals may establish their own tax-sheltered
individual retirement accounts ("IRAs").
TRADITIONAL IRA. In a Traditional IRA, amounts contributed to the IRA may
be tax deductible at the time of contribution depending on whether the investor
is an "active participant" in an employer-sponsored retirement plan and the
investor's income. Distributions from a Traditional IRA will be taxed at
distribution except to the extent that the distribution represents a return of
the investor's own contributions for which the investor did not claim (or was
not eligible to claim) a deduction. Distributions prior to age 59-1/2 may be
subject to an additional 10% tax applicable to certain premature distributions.
Distributions must commence by April 1 following the calendar year in which the
investor attains age 70-1/2. Failure to begin distributions by this date (or
distributions that do not equal certain minimum thresholds) may result in
adverse tax consequences.
ROTH IRA. In a Roth IRA, amounts contributed to the IRA are taxed at the
time of contribution, but distributions from the IRA are not subject to tax if
the investor has held the IRA for certain minimum periods of time (generally,
until age 59-1/2). Investors whose income exceeds certain limits are ineligible
to contribute to a Roth IRA. Distributions that do not satisfy the requirements
for tax-free withdrawal are subject to income taxes (and possibly penalty taxes)
to the extent that the distribution exceeds the investor's contributions to the
IRA. The minimum distribution rules applicable to Traditional IRAs do not apply
during the lifetime of the investor. Following the death of the investor,
certain minimum distribution rules apply.
For Traditional and Roth IRAs, the maximum annual contribution generally is
equal to the lesser of $2,000 or 100% of the investor's compensation (earned
income). An individual may also contribute to a Traditional IRA or Roth IRA on
behalf of his or her spouse provided that the individual has sufficient
compensation (earned income). Contributions to a Traditional IRA reduce the
allowable contributions under a Roth IRA, and contributions to a Roth IRA reduce
the allowable contribution to a Traditional IRA.
EDUCATION IRA. In an Education IRA, contributions are made to an IRA
maintained on behalf of a beneficiary under age 18. The maximum annual
contribution is $500 per beneficiary. The contributions are not tax deductible
when made. However, if amounts are used for certain educational purposes,
neither the contributor nor the beneficiary of the IRA are taxed upon
distribution. The beneficiary is subject to income (and possibly penalty taxes)
on amounts withdrawn from an Education IRA that are not used for qualified
educational purposes. Investors whose income exceeds certain limits are
ineligible to contribute to an Education IRA.
SIMPLIFIED EMPLOYEE PENSION PLAN. A Traditional IRA may also be used in
conjunction with a Simplified Employee Pension Plan ("SEP-IRA"). A SEP-IRA is
established through execution of Form 5305-SEP together with a Traditional IRA
established for each eligible employee. Generally, a SEP-IRA allows an employer
(including a self-employed individual) to purchase shares with tax deductible
contributions not exceeding annually for any one participant 15% of
compensation. A number of special rules apply to SEP Plans, including a
requirement that contributions generally be made on behalf of all employees of
the employer (including for this purpose a sole proprietorship or partnership)
who satisfy certain minimum participation requirements.
SIMPLE IRA. An IRA may also be used in connection with a SIMPLE Plan
established by the investor's employer (or by a self-employed individual). When
this is done, the IRA is known as a SIMPLE IRA, although it is similar to a
Traditional IRA with the exceptions described below. In addition, the employer
will contribute certain amounts to the investor's SIMPLE IRA, either as a
matching contribution to those participants who make salary reduction
contributions or as a non-elective contribution to all eligible participants
whether or not making salary reduction contributions. A number of special rules
apply to SIMPLE Plans, including (1) a SIMPLE Plan generally is available only
to employers with fewer than 100 employees; (2) contributions must be made on
behalf of all employees of the employer (other than bargaining unit employees)
who satisfy certain minimum participation requirements; (3) contributions are
made to a special SIMPLE IRA that is separate and apart from the other IRAs of
employees; (4) the distribution excise tax (if otherwise applicable) is
increased to 25% on withdrawals during the first two years of participation in a
SIMPLE IRA; and (5) amounts withdrawn during the first two years of
participation may be rolled over tax-free only into another SIMPLE IRA (and not
to a Traditional IRA or to a Roth IRA). A SIMPLE IRA is established by
executing Form 5304-SIMPLE together with an IRA established for each eligible
employee.
Under current IRS regulations, IRA applicants must be furnished a
disclosure statement containing information specified by the IRS. Applicants
generally have the right to revoke their account within seven days after
receiving the disclosure statement and obtain a full refund of their
contributions. The custodian may, in its discretion, hold the initial
contribution uninvested until the expiration of the seven-day revocation period.
The custodian does not anticipate that it will exercise its discretion but
reserves the right to do so.
PRICING OF SHARES
The Fund's shares are offered to the public at their net asset value (next
computed after receipt of an order in proper form by a dealer, the Distributor
or Firstar).
The net asset value per share of the Fund is determined as of the close of
trading (currently 4:00 p.m. Eastern 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 shares and requests for redemption of 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 per share of the
Fund is calculated by taking the fair value of the 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 or may be unreliable 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.
TAXES
-----
The following is only a summary of certain additional federal income tax
considerations generally affecting the Fund and its shareholders that are not
described in the Fund's prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Fund or its shareholders, and the
discussion here and in the Fund's prospectus is not intended as a substitute
for careful tax planning. Shareholders are urged to consult their tax
advisors with specific reference to their own tax situations, including their
federal, state and local, or foreign tax liabilities.
The following general discussion of certain federal income tax consequences
is based on the Internal Revenue Code of 1986, as amended (the "Code") and the
regulations issued thereunder as in effect on the date of this Statement of
Additional Information. New legislation, as well as administrative changes or
court decisions, may significantly change the conclusions expressed herein, and
may have a retroactive effect with respect to the transactions contemplated
herein.
TAXATION OF THE FUND AND ITS SHAREHOLDERS
-----------------------------------------
TAXATION OF THE FUND
The Fund intends to qualify annually as a "regulated investment company"
under Subchapter M of the Code, and, if so qualified, will not be liable for
federal income taxes to the extent earnings are distributed to shareholders on a
timely basis. In the event the Fund fails to qualify as a "regulated investment
company," it will be treated as a regular corporation for federal income tax
purposes. Accordingly, the Fund would be subject to federal income taxes and
any distributions that it makes would be taxable and non-deductible by the Fund.
This would increase the cost of investing in the Fund for shareholders and would
make it more economical for shareholders to invest directly in securities held
by the Fund instead of investing indirectly in such securities through the Fund.
The board reserves the right not to maintain the qualification of the Fund as a
regulated investment company if it determines such course of action to be
beneficial to shareholders.
To avoid federal excise taxes, the Code requires the Fund to distribute to
you by December 31 of each year, at a minimum, the following amounts: 98% of its
taxable ordinary income earned during the calendar year; 98% of its capital gain
net income earned during the twelve month period ending October 31; and to
declare and pay these amounts in December (or at the latest in January so that
are treated by you as received in December.) The Fund, however, can give no
assurances that its distributions will be sufficient to eliminate all taxes.
The Fund's transactions in futures contracts, options, and certain other
investment activities may be subject to special tax rules. In a given case,
these rules may accelerate income to the Fund, defer its losses, cause
adjustments in the holding period's of the Fund's assets, convert short-term
capital losses into long term capital losses, or otherwise affect the
character of the Fund's net income. These rules could therefore affect the
amount, timing, and character of distributions to shareholders. The Fund will
endeavor to make any available elections pertaining to these transactions in a
manner believed to be in the best interest of the Fund and its shareholders.
TAXATION OF SHAREHOLDERS
The Fund receives income generally in the form of dividends and interest on
its investments. This income, less expenses incurred in the operation of the
Fund, constitutes the Fund's net investment income from which dividends may be
paid to you. Any distributions by the Fund from such income may be taxable to
you regardless of whether they are received in cash or in additional shares.
The Fund may derive capital gains and losses in connection with sales or other
dispositions of its portfolio securities. Distributions of net short-term
capital gains will be taxable to shareholders as ordinary income. Distributions
from net long-term capital gains will be taxable to you as long-term capital
gain, regardless of how long you have held your shares in the Fund. Any net
capital gains realized by the Fund generally will be distributed once each year,
and may be distributed more frequently, if necessary, in order to eliminate
excise or income taxes on the Fund.
Ordinarily, investors should include all dividends as income in the year of
payment. Every January, you will receive a statement that shows the tax status
of distributions you received for the previous year. Distributions declared in
December but paid in January are taxable as if they were paid in December.
Shareholders who have not held Fund shares for a full year should be aware that
the Fund may designate and distribute, as ordinary income or capital gain, a
percentage of income that is not equal to the actual amount of such income
earned during the period of investment in the Fund.
If the Fund's distributions exceed its taxable income and capital gains
realized during a taxable year, all or a portion of the distributions made in
the same taxable year may be recharacterized as a return of capital to
shareholders. A return of capital distribution will generally not be taxable,
but will reduce each shareholder's cost basis in the Fund and result in a higher
reported capital gain or lower reported capital loss when those shares on which
the distribution was received are sold.
By law, the Fund must withhold 31% of your taxable distributions and
proceeds if you do not provide your correct social security or taxpayer
identification number, or if the IRS instructs the Fund to do so.
Sales, redemptions and exchanges of Fund shares are taxable transactions
for federal and state income tax purposes and may result in a gain or loss to
you. In general, for a shareholder who is not a dealer in securities, the
gain or loss will be capital in nature and will be classified as long-term or
short-term, depending on the length of the time shares have been held. Any
loss incurred on the redemption or exchange of shares held for six months or
less will be treated as long-term capital loss to the extent of any long-term
capital gains distributed to you by the Fund on those shares. In addition, all
or a portion of any loss realized upon the redemption of Fund shares will be
disallowed to the extent that others shares in the Fund are purchased (through
reinvestment of dividends or otherwise) within 30 days before or after a share
redemption. Any loss disallowed under these rules will be added to the tax
basis in the newly purchased shares.
State and local tax treatment of fund distributions varies depending upon
state law and shareholders are urged to consult their tax advisors as to the
consequences of these and other state and local tax rules affecting investments
in the Fund.
PERFORMANCE INFORMATION
------------------------
The Fund's historical performance or return may be shown in the form of
various performance figures. The Fund may occasionally cite statistics to
reflect its volatility or risk. The Fund's performance figures are based upon
historical results and are not necessarily representative of future performance.
Factors affecting the Fund's 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 the Fund 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 the Fund's 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 the Fund's
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. All income and capital gains dividends paid by the Fund have
been reinvested at the net asset value of the Fund 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.
The total returns for the Fund for the year ended and annualized since
inception through September 30, 2000 were -----% and -----%, respectively.
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, the Fund's
performance may be compared to the performance of other mutual funds in general
or to the performance of particular types of mutual funds with similar
investment goals, as tracked by independent organizations. Among these
organizations, Lipper, 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.
The Fund's 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 the Fund's 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,
Russell 2000 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 the Fund's 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 the Fund 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
-----------------------
---------------------------------------------------------, the Fund's
independent accountants, audit and report on the Fund's annual financial
statements.
FINANCIAL STATEMENTS
--------------------
The following audited financial statements of the Fund are incorporated
herein by reference to the Fund's Annual Report for the year ended September 30,
2000 as filed with the Securities and Exchange Commission on December --, 2000:
A. Schedule of Investments as of September 30, 2000.
B. Statement of Assets and Liabilities as of September 30, 2000.
C. Statement of Operations for the year ended September 30, 2000.
D. Statement of Changes in Net Assets for the periods ended September 30,
1999 and 2000.
E. Financial Highlights for the periods ended September 30, 1999 and
2000.
F. Notes to Financial Statements.
G. Report of Independent Auditors dated October --, 2000.
PART C
OTHER INFORMATION
Item 23. Exhibits
--------
(a.1) Certificate of Trust dated July 31, 1996(1)<F15>
(a.2) Trust Instrument(1)<F15>
(b) Registrant's By-Laws(2)<F16>
(c) None
(d) Investment Advisory Agreement(2)<F16>
(e.1) Distribution Agreement, filed herewith.
(e.2) Dealer Agreement(2)<F16>
(f) None
(g.1) Custodian Agreement with Firstar Trust Company(2)<F16>
(g.2) Addendum to Custodian Agreement (changing name to Firstar Bank
Milwaukee, N.A.)
(g.3) Addendum to Custodian Agreement (changing name to Firstar Bank, N.A.)
(h.1) Transfer Agent Agreement with Firstar Trust Company(2)<F16>
(h.2) Fund Administration Servicing Agreement with Firstar Trust
Company(2)<F16>
(h.3) Fund Accounting Servicing Agreement with Firstar Trust Company(2)<F16>
(h.4) Addendum to Firstar Servicing Agreements (changing name to Firstar
Mutual Fund Services, LLC)
(i) Not applicable.
(j) Not applicable.
(k) None
(l.1) Subscription Agreement with Charles S. Cruice(2)<F16>
(l.2) Subscription Agreement with Richard H. Gould(2)<F16>
(l.3) Subscription Agreement with Jeffrey Rugen(2)<F16>
(l.4) Subscription Agreement with Molly Lewis(2)<F16>
(m) Not applicable
(n) Not applicable
(o) Not applicable.
(p) Code of Ethics, filed herewith.
(q) Powers of Attorney for Trustees and Officers (see signature page)
(1)<F15> Incorporated by reference to Registrant's Form N-1A as filed with the
Commission on August 1, 1996.
(2)<F16> Incorporated by reference to Registrant's Form N-1A as filed with the
Commission on October 25, 1996.
(3)<F17> Incorporated by reference to Registrant's Form N-SAR as filed with the
Commission on November 29, 1999.
Item 24. Persons Controlled by or under Common Control with Registrant
-------------------------------------------------------------
Registrant neither controls any person nor is under common control
with any other person.
Item 25. 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 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 26. Business and Other Connections of Investment Adviser
----------------------------------------------------
Besides serving as investment advisor to private accounts, GCM is not
currently and has not during the past two fiscal years engaged in any other
business, profession, vocation or employment of a substantial nature.
Information regarding the business, profession, vocation or employment of a
substantial nature of each of GCM's directors and officers is hereby
incorporated by referenced from the information contained under "TRUSTEES AND
OFFICERS OF THE TRUST" in the SAI.
Item 27. Principal Underwriters
----------------------
(a) The Distributor also acts as distributor for the Grand Prix
Funds, Inc., AmeriPrime Funds, The Kenwood Funds and Tanaka Funds, Inc.
(b) The principal business address of Unified Financial Securities,
Inc. ("Unified"), the Registrant's principal underwriter, is P.O. Box 6011,
Indianapolis, Indiana 46206. The following information relates to
each director and officer of Unified:
Positions and Offices Positions and Offices
Name with Underwriter With Registrant
---- ---------------- ---------------
Kenneth D. Trumpfheller President None
(c) None
Item 28. 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
Bank, N.A., 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202, relating to
its function as custodian, and Firstar Mutual Fund Services, LLC, Third Floor,
615 East Michigan Street, Milwaukee, Wisconsin 53202, relating to its function
as transfer agent, fund accountant and administrator.
Item 29. Management Services
-------------------
All management-related service contracts entered into by Registrant
are discussed in Parts A and B of this Registration Statement.
Item 30. 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
trustee or trustees. The Registrant also undertakes to assist in communications
with other shareholders as required by Section 16(c) of the Investment Company
Act of 1940.
(b) Registrant undertakes to furnish each person to whom a prospectus
or statement of additional information is delivered with a copy of the
Registrant's latest annual report to shareholders, without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Post-
Effective Amendment No. 6 to Registrant's Registration Statement on Form N-1A to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Rockland and State of Delaware on the 29th day of November, 2000.
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
post-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 Post-
Effective Amendment No. 6 to Registrant's 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 November 29, 2000
----------------------------
Charles S. Cruice
/s/ Richard H. Gould Treasurer and a Trustee November 29, 2000
----------------------------
Richard H. Gould
/s/ Dr. Peter Utsinger Trustee November 29, 2000
----------------------------
Dr. Peter Utsinger
/s/ Edwin Moats, Jr. Trustee November 29, 2000
----------------------------
Edwin Moats, Jr.
/s/ George Keeley Trustee November 29, 2000
----------------------------
George Keeley
EXHIBIT INDEX
Exhibit No. Exhibit
----------- -------
(a.1) Certificate of Trust dated July 31, 1996 (previously filed as
Exhibit 1.1 to the Registration Statement on Form N-1A, Reg. Nos.
811-7743 and 333-9355)
(a.2) Trust Instrument (previously filed as Exhibit 1.2 to the
Registration Statement on Form N-1A, Reg. Nos. 811-7743 and 333-
9355)
(b) Registrant's By-Laws (previously filed as Exhibit 2 to the
Registration Statement on Form N-1A, Reg. Nos. 811-7743 and 333-
9355)
(c) None
(d) Investment Advisory Agreement (previously filed as Exhibit 5 to
the Registration Statement on Form N-1A, Reg. Nos. 811-7743 and
333-9355)
EX-99. (e.1) Distribution Agreement, filed herewith.
(e.2) Dealer Agreement (previously filed as Exhibit 6.2 to the
Registration Statement on Form N-1A, Reg. Nos. 811-7743 and 333-
9355)
(f) None
(g.1) Custodian Agreement with Firstar Trust Company (previously filed
as Exhibit 8 to the Registration Statement on Form N-1A, Reg.
Nos. 811-7743 and 333-9355)
(g.2) Addendum to Custodian Agreement (changing name to Firstar Bank
Milwaukee, N.A.)
(g.3) Addendum to Custodian Agreement (changing name to Firstar Bank,
N.A.)
(h.1) Transfer Agent Agreement with Firstar Trust Company (previously
filed as Exhibit 9.1 to the Registration Statement on Form N-1A,
Reg. Nos. 811-7743 and 333-9355)
(h.2) Fund Administration Servicing Agreement with Firstar Trust
Company (previously filed as Exhibit 9.2 to the Registration
Statement on Form N-1A, Reg. Nos. 811-7743 and 333-9355)
(h.3) Fund Accounting Servicing Agreement with Firstar Trust Company
(previously filed as Exhibit 9.3 to the Registration Statement on
Form N-1A, Reg. Nos. 811-7743 and 333-9355)
(h.4) Addendum to Firstar Servicing Agreements (changing name to
Firstar Mutual Fund Services, LLC)
(i) Not applicable.
(j) Not applicable.
(k) None
(l.1) Subscription Agreement with Charles S. Cruice (previously filed
as Exhibit 13.1 to the Registration Statement on Form N-1A, Reg.
Nos. 811-7743 and 333-9355)
(l.2) Subscription Agreement with Richard H. Gould (previously filed as
Exhibit 13.2 to the Registration Statement on Form N-1A, Reg.
Nos. 811-7743 and 333-9355)
(l.3) Subscription Agreement with Jeffrey Rugen (previously filed as
Exhibit 13.3 to the Registration Statement on Form N-1A, Reg.
Nos. 811-7743 and 333-9355)
(l.4) Subscription Agreement with Molly Lewis (previously filed as
Exhibit 13.4 to the Registration Statement on Form N-1A, Reg.
Nos. 811-7743 and 333-9355)
(m) Not applicable.
(n) Not applicable
(o) Not applicable.
EX-99. (p) Code of Ethics, filed herewith.
(q) Powers of Attorney for Trustees and Officers (see signature page)
