As filed with the Securities and Exchange Commission on October 20, 1997
1933 Act Reg. No. 333-11633
1940 Act File No. 811-7801
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 3 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 4 [X]
Burridge Funds
(Registrant)
115 South LaSalle Street
Chicago, Illinois 60603
Telephone Number: (312) 368-0066
Kenneth M. Arenberg Janet D. Olsen
Burridge Funds Bell, Boyd & Lloyd
115 South LaSalle Street Three First National Plaza, Suite 3300
Chicago, Illinois 60603 Chicago, Illinois 60602
(Agents for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to rule 485(b)
on , 1997 pursuant to rule 485(b)
------------ ---
60 days after filing pursuant to rule 485(a)(1)
X on December 19, 1997 pursuant to rule 485(a)(1)
75 days after filing pursuant to rule 485(a)(2)
on pursuant to rule 485(a)(2)
-----------------
Registrant has previously elected to register pursuant to rule 24f-2 under the
Investment Company Act of 1940 an indefinite number of shares of Burridge
Capital Development Fund, a series of Burridge Funds. Registrant filed its Rule
24f-2 Notice for the fiscal year ended June 30, 1997 on August 29, 1997.
Amending Parts A, B, and C and filing Exhibits.
<PAGE>
Burridge Funds
Cross-reference sheet pursuant to rule 495(a) of Regulation C
Item Location or caption*
- ---- --------------------
Part A
1 (a)-(b) Front cover
2 (a) Expense Information
(b)-(c) Highlights
3 (a) Expense Information - Financial Highlights
(b) Not applicable
(c)-(d) Management of the Fund - Performance
4 (a) (i) The Fund and its Shares
(ii) Investment Objective and Policies; Investment Restrictions
(b) Investment Objective and Policies; Investment Restrictions
(c) Risks
5 (a) Management of the Fund
(b) Management of the Fund; Back cover; Expense Information
(c) Management of the Fund
(d) Not applicable
(e) Back cover
(f) Management of the Fund; Expense Information
(g) Management of the Fund
5A The required information is included in Registrant's annual
report to shareholders
6 (a) The Fund and its Shares
(b)-(d) Not applicable
(e) The Fund and its Shares
(f)-(g) Dividends and Distributions
<PAGE>
7 Purchasing Shares
(a) Back cover
(b) Purchasing Shares; Net Asset Value
(c) Not applicable
(d) Purchasing Shares
(e)-(f) Not applicable
8 (a)-(d) Redeeming Shares
9 Not applicable
<PAGE>
Item Location or caption*
- ---- --------------------
Part B (Statement of Additional Information)
-------------------------------------------
10 Front cover
11 Table of contents
12 Not applicable
13(a)-(c) Investment Objectives and Policies; Investment
Restrictions
(d) Investment Objective and Policies
14(a)-(c) Management of the Fund
15(a)-(b) Not applicable
(c) Management of the Fund
16(a)(i) Investment Advisory Services
(ii) Management of the Fund
(iii) Investment Advisory Services
(b) Investment Advisory Services
(c)-(d) Not applicable
(e) Investment Sub-Advisory Services
(f)-(g) Not applicable
(h) General Information
(i) Not applicable
17(a) Portfolio Transactions
(b)-(e) Not applicable
18(a)-(b) Not applicable
19(a)-(c) Purchase and Redemption of Shares
20 Taxes
21(a)-(b) General Information - Distributor
(c) Not applicable
22(a) Not applicable
(b) Performance Information
23 Financial Statements
<PAGE>
Item Location or caption*
- ---- -------------------
Part C - Other Information
--------------------------
24 Financial Statements and Exhibits
25 Persons Controlled by or Under Common Control With Registrant
26 Number of Holders of Securities
27 Indemnification
28 Business and Other Connections of Investment Adviser
29 Principal Underwriters
30 Location of Accounts and Records
31 Management Services
32 Undertakings
- --------------------
* References are to captions within the part of the registration statement to
which the particular items relates except as otherwise indicated.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED [ ,] 1997
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME
THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BY ANY SALES OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION, OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
BURRIDGE CAPITAL DEVELOPMENT FUND
PROSPECTUS
DECEMBER 19, 1997
BURRIDGE CAPITAL DEVELOPMENT FUND
115 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60603
(888) BURRIDGE
(1-888-287-7434)
December 19, 1997
BURRIDGE CAPITAL DEVELOPMENT FUND (THE "FUND"), a series of Burridge
Funds (the "Trust"), invests for long-term capital appreciation. The Fund is
managed in a tax-sensitive manner. The Fund employs a growth-oriented
investment approach with a valuation discipline to create a diversified
portfolio of small and medium capitalization common stocks.
THE FUND is a "no-load" fund. There are no sales or redemption charges,
and there are no "12b-1" fees.
This Prospectus is a concise statement of information you should know
before investing. Please retain it for future reference.
A Statement of Additional Information regarding the Fund dated the date of
this Prospectus has been filed with the Securities and Exchange Commission and
(together with any supplement to it) is incorporated in this Prospectus by
reference. The Statement of Additional Information may be obtained without
charge by calling or writing the Trust at the telephone numbers or address shown
above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
Page
----
HIGHLIGHTS......................................................1
EXPENSE INFORMATION.............................................3
FINANCIAL HIGHLIGHTS............................................3
INVESTMENT OBJECTIVE AND POLICIES...............................4
INVESTMENT PROCESS..............................................5
RISKS...........................................................6
INVESTMENT RESTRICTIONS.........................................7
PURCHASING SHARES...............................................7
REDEEMING SHARES................................................9
NET ASSET VALUE................................................10
SHAREHOLDER SERVICES...........................................10
SHAREHOLDER ACCOUNTS......................................10
IRA PLAN FOR ROLLOVER ACCOUNTS............................10
DIVIDENDS AND DISTRIBUTIONS....................................11
TAXES..........................................................11
MANAGEMENT OF THE FUND.........................................12
THE TRUSTEES..............................................12
BURRIDGE..................................................12
GEOCAPITAL................................................13
ADMINISTRATOR, CUSTODIAN AND TRANSFER AGENT...............13
DISTRIBUTOR...............................................13
PORTFOLIO TRANSACTIONS....................................13
PERFORMANCE...............................................14
THE FUND AND ITS SHARES........................................14
SHARES....................................................15
VOTING RIGHTS.............................................15
SHAREHOLDER INQUIRIES.....................................15
<PAGE>
HIGHLIGHTS
Burridge Capital Development Fund (the "Fund") is a series of Burridge
Funds (the "Trust"). The Fund is a "no-load" fund. There are no sales or
redemption charges, and no 12b-1 fees.
INVESTMENT OBJECTIVE AND POLICIES The Fund's investment objective is long-term
capital appreciation. The Fund focuses on
after-tax investment returns for its
shareholders. The Fund employs a growth-
oriented investment approach with a
valuation discipline to create a diversified
portfolio of small and medium capitalization
common stocks. The Fund's Adviser and Sub-
Adviser each manage approximately one-half
the portfolio. Both attempt to maximize
long-term capital gains and unrealized
capital gains, minimize short-term capital
gains and ordinary income, and use losses to
offset any gains. See "Investment Objective
and Policies."
INVESTMENT RISKS The Fund's performance and price per share
change daily based on many factors,
including general economic and market
conditions and the performance of
individual stocks selected for the Fund's
portfolio. The Fund is intended as a
long-term investment for investors
willing to bear the volatility inherent
in any investment in common stocks.
There can be no assurance that the Fund will
achieve its investment objective.
MINIMUM PURCHASE $500,000 for initial investments and $5,000
for subsequent investments. Some exceptions
apply. See "Purchasing Shares."
DIVIDENDS AND CAPITAL GAINS Income dividends and capital gains, if any,
are distributed at least annually.
Distributions are automatically reinvested
in additional shares at net asset value
unless payment in cash is requested. See
"Dividends and Distributions."
REDEMPTION PRICE Current net asset value, without charge.
See "Redeeming Shares."
ADVISER AND SUB-ADVISER The Burridge Group LLC ("Burridge") is
investment adviser to the Fund and manages
approximately one-half the Fund's portfolio.
GeoCapital LLC ("GeoCapital") is sub-
adviser and manages the rest of the
portfolio. See "Management of the Fund."
EXPENSES The Fund pays its own operating expenses,
including a management fee to Burridge of
1.25% of the Fund's average daily net
assets. Burridge has undertaken to
reimburse the Fund for any ordinary costs
and expenses of the Fund in excess of 1.75%
of the average net assets annually. See
"Management of the Fund."
DISTRIBUTOR Funds Distributor, Inc.
<PAGE>
EXPENSE INFORMATION
The following table illustrates all expenses and fees that a shareholder in
the Fund will bear:
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of
offering price) none
Maximum Sales Load Imposed on Reinvested Dividends (as a
percentage of offering price).......... none
Deferred Sales Load ...................... none
Redemption Fees <F1> ...................... none
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees .......................... 1.25%
12b-1 Fees ............................... none
Other Expenses (after expense reimbursement) <F2> .50%
Total Operating Expenses
(after expense reimbursement) 1.75%
<F1> The Fund does not charge a redemption fee. A wire transfer fee (currently
$12) is required to have the proceeds of a redemption paid to you by wire
transfer.
<F2> Burridge has undertaken to reimburse the Fund to the extent its ordinary
operating expenses exceed 1.75% of the Fund's average net assets annually.
Without that expense limitation, Other Expenses would be estimated to be
1.44% and Total Operating Expenses would then be 2.69%. See "Management
of the Fund-The Adviser and Sub-Adviser" in this Prospectus for more
information.
The purpose of the table is to assist you in understanding the various
costs and expenses that an investor in the Fund will bear, directly or
indirectly. The estimate of "Other Expenses" is based on the estimated
expenses the Fund expects to incur during its current fiscal year, taking into
account Burridge's voluntary expense limitation.
EXAMPLE
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and expenses as shown in the "Annual Operating Expenses" table
above and (2) redemption at the end of each time period:
1 year........................ $18
3 years....................... $55
<PAGE>
This example illustrates the effect of expenses, but is not meant to
suggest actual PAST OR FUTURE EXPENSES or returns, all of which may be more or
less than those shown in the example.
FINANCIAL HIGHLIGHTS
The information below shows the results of an investment in the Fund
throughout the period December 27, 1996 (commencement of operations) through
June 30, 1997. This information was audited by Arthur Anderson LLP, independent
accountants. Their unqualified report is included in the Fund's annual report
to shareholders.
Dec. 27. 1996<F1>
through
June 30, 1997
-------------
Net asset value at beginning of period $ 10.00
Income from investment operations:
Net investment income
0.17
Net realized and unrealized (loss) on securities 0.52
----
Total from investment operations 0.69
Less distributions:
Dividends from net investment income 0.00
Distributions from realized gains on securities 0.00
----
Total distributions
0.00
----
Net asset value at end of period $ 10.69
=======
Total return 6.90%<F2>
Ratios and supplemental data:
Net assets at end of period $ 360,786
Ratio of net expenses to average net assets 1.50% <F3>
Net investment income to average net assets (0.04)% <F3>
Portfolio turnover rate 0.27% <F2>
Average commission rate per share $ 0.0400
<F1> Commencement of operations.
<F2> Not annualized.
<F3> Annualized. Without expense reimbursements of $77,648 for the period
December 27, 1996 through June 30, 1997,the annualized ratio of expenses to
average net assets would have been 59.90%, and the annualized ratio of net
investment income to average net assets would have been (58.44%).
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is long-term capital appreciation. The
Fund focuses on after tax investment returns for its shareholders. The Fund
employs a growth oriented investment approach with a valuation discipline to
create a diversified portfolio of small and medium capitalization common stocks.
Burridge and GeoCapital are each responsible for managing approximately one-half
of the Fund's assets. In implementation of the investment disciplines, both
Burridge and GeoCapital analyze the tax consequences of position changes to the
Fund and its shareholders subject to Federal income tax. Both managers attempt
to maximize
<PAGE>
long term capital gains and unrealized capital gains, minimize short term gains
and ordinary income, and use losses to offset any gains.
Burridge believes that long term capital appreciation can be achieved by
purchasing stocks of companies with superior operating fundamentals relative to
their industry group and the broad market. A valuation discipline is used to
purchase and hold companies trading at attractive valuation levels. GeoCapital
believes purchasing stocks of companies that create, commercialize and market
new technology or services and those with undervalued or unrecognized assets
or earnings can result in superior investment returns.
Burridge is responsible for allocating assets between Burridge and
GeoCapital for management. Assets are generally allocated about equally between
them, although variations in cash flows in and out of the Fund may cause
deviations from that allocation. The Fund's portfolio generally consists of
investments in approximately 30 to 70 companies.
Under normal market conditions, the Fund expects to be substantially fully
invested in common stocks of small and medium growth companies.
INVESTMENT PROCESS
In managing the Fund, investment professionals from Burridge and GeoCapital
discuss different investment ideas, as well as economic and market conditions.
However, the main research functions and ultimate security selection decisions
are made separately by Burridge and GeoCapital.
The Burridge Group LLC
- ----------------------
Burridge uses a disciplined investment process in managing its portion of
the Fund's portfolio. The first step is the identification of those companies
exhibiting superior operating characteristics and fundamentals which Burridge
believes are important to potential above average and sustainable earnings
growth. Among other things, Burridge looks for:
- - historic long-term earnings growth of 15% or more and projected
long-term earnings growth of 15% or more;
- - a focus in one business segment;
- - an increasing market share versus industry competition;
- - stable or increasing margins versus industry competition;
- - a strong balance sheet relative to its industry group as measured by
the ratio of debt to capital; and
- - a proven and effective management team.
In conducting disciplined fundamental research, the investment team focuses on
industry fundamentals, a company's products or services, its revenue growth
prospects, its costs and
<PAGE>
margins and the strategic business plan of management. As a long-term investor,
Burridge believes personal visits with senior management are an important
element of its fundamental research and security valuation. Through this
research process, Burridge projects quarterly and annual earnings growth for
those companies being considered for purchase and those held by the Fund.
Although investing in companies with superior earnings growth is important,
Burridge applies a valuation discipline in order to eliminate those securities
that may be overvalued. The key valuation discipline used by Burridge is based
on projected long-term earnings growth and price/earnings ratios.
Investments made by Burridge are based on a "bottom-up" approach where
individual companies meet the operating characteristics outlined above and the
Fund's valuation discipline. Investments are made in sectors and industry groups
in which the greatest earnings growth is found at the most attractive prices.
Investments by Burridge are concentrated in companies with medium-sized
aggregate market capitalizations.
GeoCapital
----------
The investment discipline of GeoCapital is based on strict fundamental
research with a focus on small capitalization companies. The sub-adviser
identifies industry and sector trends, looking for evidence of new technologies
and services, or those where pressure exists to increase efficiency through
consolidation and buyouts. From there, GeoCapital uses its own independent
research, employing a bottom-up approach to analyze a company's strategic,
financial and managerial strengths.
Important elements in companies GeoCapital considers for investment
include: appropriate growth potential for earnings and cash flow; modest
valuation levels relative to future prospects; management incentives, such as
inside ownership, to improving shareholder value; and high returns on various
operating categories such assets, equity and sales.
GeoCapital invests with a 3 to 5 year time horizon, believing this is an
optimal time period for companies to create substantial value. GeoCapital is a
long-term, supportive shareholder, which invests in public companies as though
committing private capital to the venture.
General
-------
The Fund is managed with a focus on after-tax returns and attempts to
maximize long-term capital gains and unrealized capital gains as components of
investment return. The Fund invests in stocks which pay below average dividends
and under normal market conditions expects its portfolio turnover rate to be
below 50%, to minimize the amount of ordinary income and short-term capital
gains created for shareholders. A decision to sell a portfolio security is
based on, among other things, a company's long-term prospects for continued
earnings and cash flow growth relative to its stock's price/earnings ratio and
the tax effect of the sale. Both Burridge and GeoCapital expect to offset
realized capital gains by selling stocks in which the
<PAGE>
Fund has a loss, to the extent losses are available and the sale of the security
would be consistent with prudent portfolio management.
The Fund may sell short securities the Fund owns or has the right to
acquire without further consideration, a technique called selling short
"against the box." Short sales against the box may be used to lock in a
profit on a security when the Adviser does not want to sell the security. The
Fund may also invest in convertible securities, options and futures to a limited
extent. For a more complete explanation, please refer to the Statement of
Additional Information. The Fund may invest up to 10% of its total assets in
American Depository Receipts (ADRs), which are securities traded in the United
States but representing interests in foreign securities. A portion of the
Fund's assets (not ordinarily expected to exceed about 5% of the Fund's total
assets) may be held from time to time in cash or cash equivalents pending
investment or to meet cash requirements. Up to 100% of the Fund's assets may be
held in cash or cash equivalents under abnormal market or economic conditions if
the portfolio managers determine that a temporary defensive position is
advisable. Because the Fund tries to minimize ordinary income subject to income
tax, cash equivalents held by the Fund may include high-quality, short-term
municipal securities producing income exempt from federal income tax.
RISKS
The Fund's performance and price per share will change daily based on many
factors, including general economic and market conditions and the performance of
individual stocks selected for the Fund's portfolio. The Fund is intended as a
long-term investment for investors willing to bear the volatility inherent in
any investment in common stocks. The Fund's intention is to maximize after-tax
returns for investors subject to income tax. An investor not subject to federal
income tax may invest in the Fund, but should consider whether an investment as
sensitive to tax consequences as the Fund is appropriate. There can be no
assurance that the Fund will achieve its investment objective.
Stocks of smaller and medium-sized companies tend to be more volatile and
less liquid than stocks of larger companies. Medium-sized companies, as
compared to larger companies, may have a shorter history of operations, may have
a less diversified product line making them susceptible to market pressure, and
may have a smaller public market for their securities.
Investment in ADRs representing foreign securities may represent a greater
degree of risk (including risk related to exchange rate fluctuations, tax
provisions, exchange and currency controls, and expropriation of assets) than
investment in securities of domestic issuers. Other risks of investing in ADRs
include less complete financial information on issuers of the underlying
securities, less developed and regulated markets, and greater political
instability.
The Fund's investment objective and policies may be changed by the Trust's
board of trustees without shareholder approval. However, shareholder approval
is required for changes in the Fund's fundamental investment restrictions. Any
change in the investment objective of the Fund might result in the Fund having
an investment objective that differs from the investment objective a shareholder
considered appropriate when investing.
<PAGE>
INVESTMENT RESTRICTIONS
The Fund has adopted the following investment restrictions, among others,
that may be changed only with the approval of a majority of the outstanding
shares of the Fund as defined in the Investment Company Act of 1940. The Fund
may not: (1) with respect to 75% of its total assets, invest more than 5% of
its total assets (taken at market value at the time of a particular purchase) in
the securities of any single issuer, except for securities issued or guaranteed
by the Government of the U.S. or any of its agencies or instrumentalities or
repurchase agreements for such securities; (2) acquire more than 10% (taken at
the time of a particular purchase) of the outstanding voting securities of any
one issuer; or (3) invest in a security if 25% or more of its total assets
(taken at market value at the time of a particular purchase) would be invested
in the securities of issuers in a single industry, except that this restriction
does not apply to securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities. All of the investment restrictions of the Fund
are stated in the Statement of Additional Information.
PURCHASING SHARES
Shares of the Fund may be purchased by completing a share purchase
application and forwarding it, together with a check for the investment,
directly to the Fund c/o Firstar Trust Company, P.O. Box 701, Milwaukee,
Wisconsin 53201. The transfer agent is unable to accept third party
checks both on initial and subsequent share purchases.
DO NOT mail letters by overnight courier to the Post Office Box address.
Correspondence mailed by overnight courier should be sent to Firstar Trust
Company, Third Floor, 615 East Michigan Street, Milwaukee, Wisconsin 53202.
To establish a new account by wire please first call Firstar at 1-888-287-
7434 to advise it of the investment and dollar amount. This will ensure proper
and accurate handling of your investment. A completed share purchase
application form must also be sent to Firstar at the address above immediately
after your investment is made so that the necessary remaining information can be
recorded to your account. Your purchase request should be wired through the
Federal Reserve Bank as follows:
Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
ABA Number 075000022
For credit to Firstar Trust M.F.S.
Account Number 112-952-137
For further credit to Burridge Capital Development Fund
(Your account name and account number)
If you have authorized telephone transaction privileges in your
application, you may also make purchases by calling toll free 1-888-287-7434.
By using a telephone purchase option you may move money from your bank account
to your Fund account at your request. Only bank accounts held at domestic
financial institutions that are Automated Clearing House (ACH) members may be
used for telephone transactions. To have shares of the Fund purchased at the
<PAGE>
net asset value determined as of the close of regular trading on a given date,
Firstar must receive both the purchase order and payment by Electronic Funds
Transfer through the ACH system before the close of regular trading on such
date. Most transfers are completed within three business days. You may not use
telephonic transactions for initial purchases. The minimum amount that can be
transferred by telephone is $10,000.
The purchase price of shares in the Fund is the net asset value per share
next computed after receipt by Firstar, as agent for the Fund, or another
authorized agent, of an order completed in accordance with the instructions on
the account application. Your order must be received by Firstar or another
authorized agent, before the close of regular session trading on the New York
Stock Exchange ("NYSE") (currently 3:00 p.m., Central time) to receive the net
asset value calculated on that day. See "Net Asset Value." All purchases
must be made in U.S. dollars and checks must be drawn on U.S. banks. The
minimum initial investment to open an account is $500,000, and subsequent
investments must be at least $5,000. Exceptions to the minimum investment
requirements may be made at the discretion of Burridge including, without
limitation, for employees of Burridge or GeoCapital, or investors who are, or
are related to, clients of Burridge or GeoCapital. In addition, lower minimums,
may apply to purchases made through financial intermediaries which have made
arrangements to offer shares of the Fund to clients of the intermediary.
You may also purchase (or redeem) shares through certain investment dealers
or other institutions. Certain institutions that have entered into agreements
with the Fund or its Distributor may act as agents of the Fund for purposes of
receipt of purchase orders and redemption requests, or may enter confirmed
purchase orders or redemption requests on behalf of customers on an expedited
basis, including orders by phone, with payment to follow no later than the time
when the fund is priced on the following business day. If payment is not
received by that time, the financial institution could be held liable for
resulting fees or losses. These institutions may impose charges for their
services, and those charges could constitute a significant portion of a smaller
account. There are no charges or limitations imposed by the Fund (other than
nominal charges for returned checks, and similar items, as described in this
Prospectus) if shares are purchased (or redeemed) by mailing your purchase
application and payment for shares directly to Firstar as described in this
prospectus.
The Fund reserves the right to reject purchase orders under circumstances
or in amounts considered disadvantageous to existing shareholders. The Fund
believes that frequent purchases and redemptions of Fund shares by investors
utilizing market-timing strategies would adversely affect the Fund. The Fund
therefore intends to reject purchase orders from investors identified by the
Fund as market-timers. Should an order to purchase shares of the Fund be
canceled because a shareholder's check does not clear, the shareholder will be
responsible for any resulting loss incurred by the Fund. A charge (currently
$20) will be assessed for any returned check.
The Fund does not issue share certificates.
<PAGE>
REDEEMING SHARES
You may redeem your Fund's shares at the net asset value next determined
after the request is received by Firstar, as agent for the Fund, or another
authorized agent, in writing or by telephone. Telephone redemptions are limited
to $50,000. Your redemption request in proper form must be received by Firstar,
or another authorized agent, before the close of regular session trading on the
New York Stock Exchange ("NYSE") (currently 3:00 p.m., Central time) to
receive the net asset value calculated on that day. See "Net Asset Value."
To redeem shares in writing, a written request must be received by Firstar.
A written request for redemption must be signed by all persons in whose names
the shares are registered. Redemption requests received by facsimile
transmission or other electronic means will not be accepted. Signatures must
conform exactly to the account registration.
DO NOT mail letters by overnight courier to the Post Office Box address.
Correspondence mailed by overnight courier should be sent to Firstar Trust
Company, Third Floor, 615 East Michigan Street, Milwaukee, Wisconsin 53202.
A signature guarantee is required on the written redemption request if (i)
the redemption proceeds are to be sent to a bank or brokerage account not
previously authorized by the shareholder in accordance with the instructions on
the account application, (ii) the proceeds of the requested redemption would be
more than $50,000, or (iii) THE ADDRESS OF RECORD HAS CHANGED WITHIN THE LAST 60
DAYS. The guarantor must be a bank, member firm of a national securities
exchange, savings and loan association, credit union or other entity authorized
by state law to guarantee signatures. A NOTARY PUBLIC IS NOT AN ACCEPTABLE
GUARANTOR. Additional documentary evidence of authority is required in the
event redemption is requested by a corporation, partnership, trust, fiduciary,
executor, or administrator. CHECKS TO THIRD PARTIES OTHER THAN A BANK OR
BROKERAGE ACCOUNT AS AUTHORIZED ABOVE ARE NOT PERMITTED. Redemption checks will
not be forwarded if the redeeming shareholder moves. The redemption request
should also indicate the change of address and include a signature guarantee.
Telephone redemptions of not more than $50,000 can be authorized on the
account application. If telephone redemptions are authorized, the Fund will
honor requests by telephone at (888) BURRIDGE (1-888-287-7434). Reasonable
procedures are used to confirm that instructions received by telephone are
genuine, such as requesting personal identification information that appears on
the purchase application and recording the conversation. You bear the risk of
any loss that might result from a fraudulent instruction, although the Fund may
bear such risk if reasonable procedures were not used. To reduce the risk of a
fraudulent instruction, proceeds of telephone redemptions may be sent only to
your address of record or to a bank or brokerage account you designated, in
writing, on the purchase application or in a letter with the signature(s)
guaranteed. The Fund reserves the right to record all telephone redemption
requests.
The redemption price per share is the net asset value next determined after
receipt of the redemption request by Firstar, or another authorized agent of the
Fund, which may be more or
<PAGE>
less than your cost depending upon the value of the Fund's investment securities
at the time of redemption. See "Net Asset Value."
Payment for shares redeemed is made by check or wire. Payment by check
normally is mailed within seven days after receipt of the redemption request in
proper form. If specified in the account application, the check will be payable
and sent to a designated financial institution. A wire will be sent only to
your bank or brokerage account as shown on the account application. Wire
requests generally are paid the next business day, after deduction of the cost
of the wire transfer (currently $12). That charge and any similar service fee
may be changed without prior notice to shareholders. Wires to third parties are
not permitted.
The Fund may suspend or postpone the right of redemption at times when
trading on the NYSE is restricted or as otherwise permitted by the Securities
and Exchange Commission. If you attempt to redeem shares within 15 days after
they have been purchased by check, the Fund may delay payment of the redemption
proceeds until it can verify that payment for the purchase of the shares has
been (or will be) received which may take up to 15 days from purchase.
The Fund reserves the right to redeem shares in any account with a balance
of less than 80% of the applicable minimum initial investment ($400,000) in
share value. Prior to any such redemption, the Fund will give the shareholder
30 days' written notice during which time you may increase your investment to
avoid having your shares redeemed. The minimum balance will be waived if the
account balance drops below the applicable minimum due to market activity.
NET ASSET VALUE
The price per share for a purchase order or redemption request is the net
asset value next determined after receipt of the order or request by Firstar or
another authorized agent of the Fund.
The net asset value of a share of the Fund is determined as of the close of
regular session trading on the NYSE (currently 3:00 p.m., Central time) each day
the NYSE is open for trading. The net asset value per share is determined by
dividing the difference between the values of the Fund's assets and liabilities
by the number of shares outstanding. Each security traded on a national stock
exchange or on the Nasdaq National Market is valued at the last sale price or,
if there have been no sales on the valuation day, at the mean between the most
recent bid and asked prices. Other securities traded over the counter are
valued at the mean between the last reported bid and asked prices. Other assets
and securities are valued by methods the Fund's board of trustees believes will
determine a fair value.
SHAREHOLDER SERVICES
SHAREHOLDER ACCOUNTS. You will receive an annual account statement showing
transactions in Fund shares with a balance denominated in Fund shares. In
addition, confirmations are sent to you upon purchase, redemption, dividend
reinvestment, and change of shareholder address. For a fee, you may obtain a
historical transcript of your account by requesting one in writing from Firstar
Trust Company.
<PAGE>
IRA PLAN FOR ROLLOVER ACCOUNTS. The Fund has a prototype Individual
Retirement Account ("IRA") plan for your rollover IRA. The minimum investment
in an IRA account is $500,000. Call (888) BURRIDGE (1-888-287-7434) for an IRA
booklet and application. Because the Fund's intention is to maximize after-tax
returns for investors subject to federal income tax, an IRA investor should
consider whether an investment in the Fund is appropriate.
DIVIDENDS AND DISTRIBUTIONS
You may receive two kinds of distributions from the Fund: dividends and
capital gains distributions. All dividends and capital gains distributions are
paid in the form of additional shares credited to your account at net asset
value per share unless you have requested on the account application or in
writing that distributions be paid in cash. The Fund expects to declare and pay
net investment income dividends and distributions of net realized short- and
long-term capital gains, if any, at least annually.
TAXES
Your distributions will be taxable to you, under income tax law, whether
received in cash or reinvested in additional shares. For federal income tax
purposes, any distribution that is paid in January but was declared in the prior
calendar year is deemed paid in the prior calendar year.
You will be subject to federal income tax at ordinary rates on income
dividends and distributions of net short-term capital gain. Distributions of
net long-term capital gain will be taxable to you as long-term capital gain
regardless of the length of time you have held your shares.
You will be advised annually as to the source of distributions for tax
purposes. If you are not subject to tax on your income, you will not be
required to pay tax on these amounts.
If you realize a loss on the sale of Fund shares held for six months or
less, your short-term loss is recharacterized as long-term to the extent of any
long-term capital gain distributions you have received with respect to those
shares.
The Taxpayer Relief Act of 1997 reduced from 28% to 20% the maximum tax
rate on long-term capital gains. This reduced rate generally applies to
securities held more than 18 months and sold after July 28, 1997, and securities
held for more than one year and sold after May 6, 1997 and before July 29, 1997.
This discussion of taxation is not intended to be a full discussion of
income tax laws and their effect on shareholders. You may wish to consult your
own tax advisor. The foregoing information applies to U.S. shareholders.
Foreign shareholders should consult their tax advisors as to the tax
consequences of ownership of Fund shares.
The Fund may be required to withhold federal income tax ("backup
withholding") from certain payments to you, generally redemption proceeds.
Backup withholding may be required if:
<PAGE>
- You fail to furnish your properly certified social security or other
tax identification number;
- You fail to certify that your tax identification number is correct or
that you are not subject to backup withholding due to the
underreporting of certain income;
- The Internal Revenue Service informs the Trust that your tax
identification number is incorrect.
These certifications are contained in the Application that you should
complete and return when you open an account. The Fund must promptly pay to the
IRS all amounts withheld. Therefore, it is usually not possible for the Fund to
reimburse you for amounts withheld. You may, however, claim the amount withheld
as a credit on your federal income tax return.
MANAGEMENT OF THE FUND
THE TRUSTEES. The board of trustees has overall responsibility for the
conduct of the Trust's affairs. The trustees serve indefinite terms of
unlimited duration provided that a majority of trustees always has been elected
by the shareholders. The trustees appoint their own successors, provided that
at least two-thirds of the trustees, after such appointment, have been elected
by the shareholders. Shareholders may remove a trustee, with or without cause,
upon the declaration in writing or vote, at a meeting called for that purpose,
of two-thirds of the Fund's outstanding shares. A trustee may be removed with
or without cause upon the written declaration of a majority of the trustees.
BURRIDGE. The Fund's investment adviser is The Burridge Group LLC, or
Burridge. Burridge employs a growth oriented investment approach in creating a
diversified portfolio of equities for corporate, public, and Taft-Hartley
pension plans, endowments, foundations and private investors. As of October 1,
1997, it managed over $1.5 billion in assets for clients, including over $400
million for taxable accounts.
Burridge allocates the Fund's assets between itself and GeoCapital for
management, and manages the investment and reinvestment of its allocated portion
of the assets of the Fund. In addition Burridge manages and oversees the
services provided by GeoCapital and all of the Fund's service providers,
including Firstar (which serves as administrator, custodian, transfer agent and
accounting agent), and the Fund's lawyer and accountants, and is responsible for
all the Fund's communications with its shareholders. Burridge provides office
space, facilities, equipment, and personnel for managing those assets and
providing those services.
For its services, the Fund pays Burridge a fee, accrued daily and paid
monthly, based on its average daily net asset value at the annual rates of 1.25%
of the first $500 million, 1.10% of average daily net assets in excess of $500
million, and 1.00% of average daily net assets in excess of $1 billion. The
anticipated overall expense ratio is shown in the "Expense Information" table
in this Prospectus.
<PAGE>
In addition, Burridge has voluntarily undertaken to limit the Fund's
expenses (including the advisory fee but excluding extraordinary costs or
expenses not incurred in the ordinary course of the Fund's operations) to 1.75%
of the Fund's average daily net assets.
Burridge employs a team of investment professionals who participate in
investment strategy formulation and security selection. The individual
responsible for overseeing the implementation of Burridge's strategy for the
Fund is Richard M. Burridge. Mr. Burridge is chairman and chief investment
officer of Burridge. He has been engaged in the investment management business
since 1974 and, with Kenneth M. Arenberg, founded the Adviser's predecessor in
1986. Mr. Burridge holds a B.S. from the University of Colorado and is a
Chartered Financial Analyst.
Burridge is a Delaware limited liability company, the Member Manager of
which is The Burridge Group Inc., an Illinois corporation ("Burridge Inc.").
Presently, seven principals, including Richard M. Burridge and Kenneth M.
Arenberg, hold member interests in Burridge representing an interest in the
aggregate of 45% of Burridge's profits, subject to reduction under certain
conditions. The remaining interest in the profits of Burridge is owned by
Affiliated Managers Group, Inc. ("AMG"). Burridge Inc. is a wholly owned
subsidiary of AMG.
AMG is a Delaware corporation which has its offices at Two International
Place, Boston, Massachusetts 02110. AMG may be deemed to have as its ultimate
parent TA Associates, Inc., a Delaware corporation. The address of TA
Associates, Inc. is High Street Tower, Suite 2500, 125 High Street, Boston,
Massachusetts 02110.
The offices of Burridge are located at 115 South LaSalle Street, Chicago,
Illinois 60603.
GEOCAPITAL. GeoCapital LLC is the Fund's sub-adviser. GeoCapital
invests in small-capitalization equities, based on its own fundamental analysis.
As of October 1, 1997, it managed $2.2 billion in assets for clients.
GeoCapital manages the investment and reinvestment of the portion of the
Fund's assets allocated to it for management by Burridge and provides the office
space, facilities, equipment and personnel for providing those services. For
its services GeoCapital receives a fee from Burridge (paid by Burridge out of
its management fee from the Fund) at the annual rates of 0.75% of the first $500
million of the average daily net assets allocated to it, 0.65% of the next $500
million of the average daily net assets allocated to it, and 0.60% of the
average daily net assets allocated to it in excess of $1 billion.
If the Fund's ordinary operating expenses would exceed the expense
limitation described above, the fee paid by Burridge to GeoCapital will be
reduced by an amount equal to one-half of any waiver or reimbursement of
expenses by Burridge.
Irwin Lieber and Barry K. Fingerhut are responsible for overseeing
implementation of GeoCapital's strategy for managing its portion of the Fund's
portfolio. Mr. Lieber is chairman and chief investment officer of GeoCapital,
and formed GeoCapital's predecessor in 1979. Mr. Fingerhut is GeoCapital's
president and joined the firm in 1981.
<PAGE>
GeoCapital is a Delaware limited liability company, the member manager of
which is GeoCapital Corporation, a subsidiary of AMG. Currently, seven
principals, including Mr. Lieber and Mr. Fingerhut, hold member interests in
GeoCapital representing an interest in the aggregate of 40% of GeoCapital's
profits, subject to reduction under certain conditions. The remaining interest
in the profits of GeoCapital is owned by GeoCapital Corporation.
The offices of GeoCapital are at 767 Fifth Avenue, New York, New York 10153
ADMINISTRATOR, CUSTODIAN AND TRANSFER AGENT. Firstar Trust Company, P.O.
Box 701, Milwaukee, Wisconsin 53201, is the Fund's Administrator and generally
assists the Fund in all aspects of its administration and operation. Firstar is
also the Fund's custodian and transfer agent. Firstar is responsible for
maintaining many of the Fund's books and records, handling compliance and
regulatory issues, processing purchase and redemption requests, shareholder
services and safekeeping of the Fund's securities.
DISTRIBUTOR. Funds Distributor, Inc. (the "Distributor"), 60 State
Street, Suite 1300, Boston, Massachusetts 02109, is the distributor of shares of
the Fund. Fees for the Distributor's services are paid by Burridge and
GeoCapital from their own resources. See the Statement of Additional
Information for more information.
PORTFOLIO TRANSACTIONS. Decisions as to the purchase and sale of securities
for the Fund and the execution of these transactions, including the negotiation
of brokerage commissions on such transactions, are the responsibility of
Burridge and GeoCapital. In general, the managers seek to obtain prompt and
reliable execution of purchase and sale orders at the most favorable net prices
or yields. In determining the best net price and execution, the managers may
take into account a broker's or dealer's operational and financial capabilities
and the type of transaction involved.
The managers may consider research services provided by the broker or
dealer, some of which may be useful to the managers in their other business
functions. To the extent such research services are taken into account, the
execution price paid may be higher, but only in reasonable relation to the
benefit of such research services as determined in good faith by the manager.
The managers are authorized to place portfolio transactions with brokers or
dealers participating in the distribution of shares of the Fund, but only if the
manager reasonably believes that the execution and commission are comparable to
those available from other qualified firms.
The Fund's portfolio turnover rate will vary from year to year, but is
expected to be below 50% under normal market conditions.
PERFORMANCE. From time to time, in advertisements and sales literature,
the Fund may present information regarding the total return on a hypothetical
investment in the Fund for various periods of performance and may make
comparisons of such total return to various stock indexes (groups of unmanaged
common stocks), to the Consumer Price Index, or to groups of comparable mutual
funds.
<PAGE>
Total return for a period is the percentage change in value during the
period of an investment in the Fund shares, including the value of shares
acquired through reinvestment of all dividends and capital gains distributions.
The average annual total return for a given period may be calculated by finding
the average annual compounded rate of return that would equate a hypothetical
$1,000 investment to the value of that investment that could be redeemed at the
end of the period, assuming reinvestment of all distributions. All of the
calculations described above will assume the reinvestment of dividends and
distributions in additional shares of the Fund. Income taxes will not be taken
into account.
In addition to the figures described above, the Fund might use rankings or
ratings determined by Lipper Analytical Services, Inc., Morningstar, Inc., or
another service to compare the performance of the Fund with the performance of
(i) other funds of similar size and investment objective or (ii) broader groups
of funds. The Fund may also provide information about, or compare its
performance to, the historical returns on various types of financial assets.
Performance of the Fund will vary from time to time, and past results are
not indicative of likely future performance. Performance information supplied
by the Fund may not provide a basis of comparison with other investments using
different reinvestment assumptions or time periods.
Information about the Fund's performance is included in its annual report
to shareholders, a copy of which may be obtained without charge by calling the
Fund at (888) BURRIDGE (1-888-287-7434).
THE FUND AND ITS SHARES
The Fund was organized as a Massachusetts business trust on August 30, 1996
and is an open-end, diversified management investment company.
SHARES. Under the terms of the Agreement and Declaration of Trust, the
Fund may issue an unlimited number of shares of beneficial interest without par
value for each series of shares authorized by the trustees. Burridge Capital
Development Fund is currently the only series authorized and outstanding. All
shares issued will be fully paid and non-assessable and will have no preemptive
or conversion rights. Each share of a series is entitled to participate pro
rata in any dividends and other distributions declared by the Fund's board of
trustees on shares of that series. All shares of a series have equal rights in
the event of liquidation of that series.
Under Massachusetts law, the shareholders of the Fund may, under certain
circumstances believed to be remote, be held personally liable for the Fund's
obligations. However, the Trust's Agreement and Declaration of Trust disclaims
liability of shareholders, the Trust's trustees, or the Fund's officers for acts
or obligations of the Trust or the Fund and requires that notice of such
disclaimer be given in each agreement, obligation, or contract entered into or
executed by the Trust or the board of trustees. The Trust's Agreement and
Declaration of Trust provides for indemnification out of the assets of the Fund
of all losses and expenses of any shareholder held personally liable for the
obligations of the Fund. Thus, the risk of a shareholder incurring
<PAGE>
financial loss on account of shareholder liability is remote, since it is
limited to circumstances in which the disclaimer is inoperative and the Fund
itself is unable to meet its obligations.
At October 1, 1997, the following persons owned more than 25% of the Fund's
outstanding shares: Kenneth M. Arenberg - 5,000.00 shares (14.81%); Richard M.
Burridge - 5,000.00 shares (14.81%); and J. Thomas Hurvis - 23,764.26 shares
(70.38%). Messrs. Arenberg and Hurvis are members of the board of trustees; Mr.
Burridge is the Fund's portfolio manager.
VOTING RIGHTS. Each share has one vote and fractional shares have
fractional votes. The Fund does not intend to hold annual meetings of
shareholders. A special meeting of Shareholders may be called by the board of
trustees, chairman or president, or, under certain conditions, by the holders of
at least 10% of the Trust's outstanding shares.
SHAREHOLDER INQUIRIES. Inquiries should be addressed to Burridge Funds, c/o
Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin 53201. Telephone
inquiries may be made at (888) BURRIDGE (1-888-287-7434).
<PAGE>
Shareholder Services:
Burridge Funds
c/o Firstar Trust Company
P.O. Box 701
Milwaukee, WI 53201
(888) BURRIDGE
(1-888-287-7434)
Investment Adviser:
The Burridge Group LLC
Chicago, IL
Managers
The Burridge Group LLC
Chicago, IL
GeoCapital LLC
New York, NY
Distributor:
Funds Distributor, Inc.
Boston, MA
Custodian and Transfer Agent:
Firstar Trust Company
Milwaukee, WI
Independent Auditors:
Arthur Andersen LLP
Chicago, IL
Legal Counsel:
Bell, Boyd & Lloyd
Chicago, IL
<PAGE>
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME
THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS STATEMENT OF ADDITIONAL
INFORMATION SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY NOR SHALL THERE BY ANY SALES OF THESE SECURITIES IN ANY STATE IN
WHICH SUCH OFFER, SOLICITATION, OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION
OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
BURRIDGE FUNDS
115 South LaSalle Street
Chicago, Illinois 60603
(888) BURRIDGE
(1-888-287-7434)
STATEMENT OF ADDITIONAL INFORMATION
December 19, 1997
Burridge Capital Development Fund (the "Fund") is a series of Burridge
Funds (the "Trust"). The Fund represents shares of beneficial interest in a
separate portfolio of securities and other assets, with its own investment
objective and policies. This Statement of Additional Information is not a
prospectus. It should be read in conjunction with the Fund's Prospectus dated
December ___, 1997, and any supplement to that Prospectus. That Prospectus can
be obtained without charge by calling or writing to the Trust.
Investment Objective and Policies....................................1
Investment Techniques and Risk.......................................2
Investment Restrictions.............................................10
Performance Information.............................................11
Management of the Fund..............................................14
Investment Advisory Services........................................16
Portfolio Transactions and Brokerage................................18
Purchase and Redemption of Shares...................................19
<PAGE>
Taxes...............................................................20
General Information.................................................20
Financial Statements................................................21
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
---------------------------------
The Fund's investment objective is long-term capital appreciation.
The Fund focuses on after-tax investment returns for its shareholders. The Fund
employs a growth-oriented investment approach with a valuation discipline to
create a diversified portfolio of small and medium capitalization common
stocks. The Burridge Group LLC ("Burridge") is the investment adviser to
the Fund, and manager of approximately one-half of the Fund's assets.
GeoCapital LLC ("GeoCapital," and together with Burridge, the "Managers")
is a sub-adviser to the Fund and is responsible for managing the remainder
of the Fund's portfolio. In implementation of the investment disciplines,
both Burridge and GeoCapital analyze the tax consequences of position
changes to the Fund and its shareholders subject to Federal income tax.
Both Managers attempt to maximize long term capital gains and unrealized
capital gains, minimize short term gains and ordinary income, and use
losses to offset any gains.
Burridge believes that long-term capital appreciation can be achieved by
purchasing stocks of companies with superior operating fundamentals relative to
their industry group and the broad market. A valuation discipline is used to
purchase and hold companies trading at attractive valuation levels. GeoCapital
believes purchasing stocks of companies that create, commercialize, and market
new technology or services and those with undervalued or unrecognized assets
or earnings can result in superior investment returns.
Burridge is responsible for allocating assets between Burridge and
GeoCapital for management. Assets are generally allocated about equally between
them, although variations in cash flows in and out of the Fund may cause
deviations from that allocation.
Under normal market conditions, the Fund expects to be substantially fully
invested in common stocks of small and medium growth companies.
INVESTMENT TECHNIQUES AND RISK
FOREIGN SECURITIES
The Fund may invest up to 10% of its total assets in foreign securities
(including American Depository Receipts ("ADRs")), which may entail a greater
degree of risk (including risks relating to exchange rate fluctuations, tax
provisions, or expropriation of assets) than does investment in securities of
domestic issuers. ADRs are receipts typically issued by an American bank or
trust company evidencing ownership of the underlying securities. The Fund may
invest in sponsored or unsponsored ADRs. In the case of an unsponsored ADR, the
Fund is likely to bear its proportionate share of the expenses of the depository
and it may have greater difficulty in receiving shareholder communications than
it would have with a sponsored ADR. The Fund does not intend to invest more than
5% of its net assets in unsponsored ADRs.
SHORT-TERM INVESTMENTS
The Fund intends to be substantially fully invested in common stocks in
ordinary circumstances, although the Fund may invest without limitation in high-
quality fixed-income
<PAGE>
securities or hold assets in cash or cash equivalents pending investment,
to meet anticipated cash requirements, or if Burridge or GeoCapital determines
that a temporary defensive position is advisable. Because the Fund tries to
minimize its ordinary income subject to income tax, the Fund's short-term
investments may include short-term, high quality securities producing income
exempt from federal income tax.
CONVERTIBLE SECURITIES
Convertible securities include any corporate debt security or preferred
stock that may be converted into underlying shares of common stock. The common
stock underlying convertible securities may be issued by a different entity than
the issuer of the convertible securities. Convertible securities entitle the
holder to receive interest payments paid on corporate debt securities or the
dividend preference on a preferred stock until such time as the convertible
security matures or is redeemed or until the holder elects to exercise the
conversion privilege.
The value of convertible securities is influenced by both the yield of non-
convertible securities of comparable issuers and by the value of a convertible
security viewed without regard to its conversion feature (i.e., strictly on the
basis of its yield) is sometimes referred to as its "investment value." The
investment value of the convertible security will typically fluctuate inversely
with changes in prevailing interest rates. However, at the same time, the
convertible security will be influenced by its "conversion value," which is the
market value of the underlying common stock that would be obtained if the
convertible security were converted. Conversion value fluctuates directly with
the price of the underlying common stock.
By investing in convertible securities, the Fund obtains the right to
benefit from the capital appreciation potential in the underlying stock upon
exercise of the conversion right, while earning higher current income than would
be available if the stock were purchased directly. In determining whether to
purchase a convertible security, Burridge and GeoCapital will consider the same
criteria that would be considered in purchasing the underlying stock. Although
convertible securities purchased by the Fund are frequently rated investment
grade, the Fund also may purchase unrated securities or securities rated below
investment grade if the securities meet the Managers' other investment criteria.
Convertible securities rated below investment grade (a) tend to be more
sensitive to interest rate and economic changes, (b) may be obligations of
issuers who are less creditworthy than issuers of higher quality convertible
securities, and (c) may be more thinly traded due to such securities being less
well known to investors than either common stock or conventional debt
securities. As a result, the Managers' own investment research and analysis
tends to be more important in the purchase of such securities than other
factors. The Fund will not invest more than 5% of its net assets in convertible
securities rated below investment grade, or considered by the Managers to be of
comparable credit quality.
OPTIONS ON SECURITIES AND INDEXES. The Fund may purchase and sell put
options and call options on securities, indexes or foreign currencies in
standardized contracts traded on recognized securities exchanges, boards of
trade, or similar entities, or quoted on NASDAQ. The Fund may purchase
agreements, sometimes called cash puts, that may accompany the purchase
<PAGE>
of a new issue of bonds from a dealer. The Fund will limit its use of options
and futures so that not more than 5% of the Fund's total assets will be at risk.
An option on a security (or index) is a contract that gives the purchaser
(holder) of the option, in return for a premium, the right to buy from (call) or
sell to (put) the seller (writer) of the option the security underlying the
option (or the cash value of the index) at a specified exercise price at any
time during the term of the option (normally not exceeding nine months). The
writer of an option on an individual security or on a foreign currency has the
obligation upon exercise of the option to deliver the underlying security or
foreign currency upon payment of the exercise price or to pay the exercise price
upon delivery of the underlying security or foreign currency. Upon exercise, the
writer of an option on an index is obligated to pay the difference between the
cash value of the index and the exercise price multiplied by the specified
multiplier for the index option. (An index is designed to reflect specified
facets of a particular financial or securities market, a specific group of
financial instruments or securities, or certain economic indicators.)
The Fund will write call options and put options only if they are
"covered." For example, in the case of a call option on a security, the option
is "covered" if the Fund owns the security underlying the call or has an
absolute and immediate right to acquire that security without additional cash
consideration (or, if additional cash consideration is required, assets of
equivalent value are held in a segregated account by its custodian) upon
conversion or exchange of other securities held in its portfolio.
If an option written by the Fund expires, the Fund realizes a capital gain
equal to the premium received at the time the option was written. If an option
purchased by the Fund expires, the Fund realizes a capital loss equal to the
premium paid.
Prior to the earlier of exercise or expiration, an option may be closed out
by an offsetting purchase or sale of an option of the same series (type,
exchange, underlying security or index, exercise price, and expiration). There
can be no assurance, however, that a closing purchase or sale transaction can be
effected when the Fund desires.
The Fund will realize a capital gain from a closing purchase transaction if
the cost of the closing option is less than the premium received from writing
the option, or, if it is more, the Fund will realize a capital loss. If the
premium received from a closing sale transaction is more than the premium paid
to purchase the option, the Fund will realize a capital gain or, if it is less,
the Fund will realize a capital loss. The principal factors affecting the market
value of a put or a call option include supply and demand, interest rates, the
current market price of the underlying security or index in relation to the
exercise price of the option, the volatility of the underlying security or
index, and the time remaining until the expiration date.
A put or call option purchased by the Fund is an asset of the Fund, valued
initially at the premium paid for the option. The premium received for an option
written by the Fund is recorded as a deferred credit. The value of an option
purchased or written is marked-to-market daily and is valued at the closing
price on the exchange on which it is traded or, if not traded on an exchange or
no closing price is available, at the mean between the last bid and asked
prices.
<PAGE>
RISKS ASSOCIATED WITH OPTIONS ON SECURITIES AND INDEXES. There are several
risks associated with transactions in options. For example, there are
significant differences between the securities markets, the currency markets,
and the options markets that could result in an imperfect correlation between
these markets, causing a given transaction not to achieve its objectives. A
decision as to whether, when and how to use options involves the exercise of
skill and judgment, and even a well-conceived transaction may be unsuccessful to
some degree because of market behavior or expected events.
There can be no assurance that a liquid market will exist when the Fund
seeks to close out an option position. If the Fund were unable to close out an
option that it had purchased on a security, it would have to exercise the option
in order to realize any profit or the option would expire and become worthless.
If the Fund were unable to close out a covered call option that it had written
on a security, it would not be able to sell the underlying security until the
option expired. As the writer of a covered call option on a security, the Fund
foregoes, during the option's life, the opportunity to profit from increases in
the market value of the security covering the call option above the sum of the
premium and the exercise price of the call.
If trading were suspended in an option purchased or written by the Fund,
the Fund would not be able to close out the option. If restrictions on exercise
were imposed, the Fund might be unable to exercise an option it has purchased.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. The Fund may use
interest rate futures contracts, index futures contracts, and foreign currency
futures contracts. An interest rate, index or foreign currency futures contract
provides for the future sale by one party and purchase by another party of a
specified quantity of a financial instrument or the cash value of an index<F1>
at a specified price and time. A public market exists in futures contracts
covering a number of indexes (including, but not limited to: the Standard &
Poor's 500 Index, the Value Line Composite Index, and the New York Stock
Exchange Composite Index) as well as financial instruments (including, but not
limited to: U.S. Treasury bonds, U.S. Treasury notes, Eurodollar certificates of
deposit, and foreign currencies). Other index and financial instrument futures
contracts are available and it is expected that additional futures contracts
will be developed and traded.
The Fund may purchase and write call and put futures options. Futures
options possess many of the same characteristics as options on securities,
indexes and foreign currencies (discussed above). 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 at any time during the period 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. The Fund might, for example, use futures contracts to hedge
against or gain exposure to fluctuations in the general level of stock prices,
anticipated changes in interest rates or currency fluctuations that might
adversely affect either the value of the Fund's securities or the price of the
securities that the Fund intends to purchase. Although other techniques could be
used to reduce or increase the Fund's exposure to stock price, interest rate and
currency fluctuations, the Fund may be able to achieve its desired degree of
exposure more effectively and perhaps at a lower cost by using futures contracts
and futures options.
<F1> A futures contract on an index is an agreement pursuant to which two
parties agree to 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 contract was originally written.
Although the value of a securities index is a function if the value of certain
specified securities, no physical delivery of those securities is made.
<PAGE>
The Fund will only enter into futures contracts and futures options that
are standardized and traded on an exchange, board of trade, or similar entity,
or quoted on an automated quotation system.
The success of any futures transaction depends on Burridge and GeoCapital
correctly predicting changes in the level and direction of stock prices,
interest rates, currency exchange rates and other factors. Should those
predictions be incorrect, the Fund's return might have been better had the
transaction not been attempted; however, in the absence of the ability to use
futures contracts, the Managers might have taken portfolio actions in
anticipation of the same market movements with similar investment results but,
presumably, at greater transaction costs.
When a purchase or sale of a futures contract is made by the Fund, the Fund
is required to deposit with its custodian (or broker, if legally permitted) a
specified amount of cash or U.S. Government securities or other securities
acceptable to the broker ("initial margin"). The margin required for a futures
contract is set by the exchange on which the contract is traded and may be
modified during the term of the contract. The initial margin is in the nature of
a performance bond or good faith deposit on the futures contract, which is
returned to the Fund upon termination of the contract, assuming all contractual
obligations have been satisfied. The Fund expects to earn interest income on its
initial margin deposits. A futures contract held by the Fund is valued daily at
the official settlement price of the exchange on which it is traded. Each day
the Fund pays or receives cash, called "variation margin," equal to the daily
change in value of the futures contract. This process is known as "marking-to-
market." Variation margin paid or received by the Fund does not represent a
borrowing or loan by the Fund but is instead settlement between the Fund and the
broker of the amount one would owe the other if the futures contract had expired
at the close of the previous day. In computing daily net asset value, the Fund
will mark-to-market its open futures positions.
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.
Although some futures contracts call for making or taking delivery of the
underlying securities, usually these obligations are closed out prior to
delivery by offsetting purchases or sales of matching futures contracts (same
exchange, underlying security or index, and delivery
<PAGE>
month). If an offsetting purchase price is less than the original sale
price, the Fund engaging in the transaction realizes a capital gain, or if it is
more, the Fund realizes a capital loss. Conversely, if an offsetting sale price
is more than the original purchase price, the Fund engaging in the transaction
realizes a capital gain, or if it is less, the Fund realizes a capital loss. The
transaction costs must also be included in these calculations.
RISKS ASSOCIATED WITH FUTURES. There are several risks associated with the
use of futures contracts and futures options. A purchase or sale of a futures
contract may result in losses in excess of the amount invested in the futures
contract. In trying to increase or reduce market exposure, there can be no
guarantee that there will be a correlation between price movements in the
futures contract and in the portfolio exposure sought. In addition, there are
significant differences between the securities and futures markets that could
result in an imperfect correlation between the markets, causing a given
transaction not to achieve its objectives. The degree of imperfection of
correlation depends on circumstances such as: variations in speculative market
demand for futures, futures options and the related securities, including
technical influences in futures and futures options trading and differences
between the securities market and the securities underlying the standard
contracts available for trading. For example, 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, and, in
the case of interest rate futures contracts, the interest rate levels,
maturities, and creditworthiness of the issues underlying the futures contract
may differ from the financial instruments held in the Fund's portfolio. A
decision as to whether, when and how to use futures contracts involves the
exercise of skill and judgment, and even a well-conceived transaction may be
unsuccessful to some degree because of market behavior or unexpected stock price
or interest rate trends.
Futures exchanges may limit the amount of fluctuation permitted in certain
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 the current trading
session. Once the daily limit has been reached in a futures contract subject to
the limit, no more trades may be made on that day at a price beyond that limit.
The daily limit governs only price movements during a particular trading day and
therefore does not limit potential losses because the limit may work to prevent
the liquidation of unfavorable positions. For example, futures prices have
occasionally moved to the daily limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of positions and
subjecting some holders of futures contracts to substantial losses. Stock index
futures contracts are not normally subject to such daily price change
limitations.
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
be exposed to possible loss on the position during the interval of inability to
close, and would continue to be required to meet margin requirements until the
position is closed. In addition, many of the contracts discussed above are
relatively new instruments without a significant trading history. As a result,
there can be no assurance that an active secondary market will develop or
continue to exist.
<PAGE>
LIMITATIONS ON OPTIONS AND FUTURES. If other options, futures contracts, or
futures options of types other than those described herein are traded in the
future, the Fund also may use those investment vehicles, provided the board of
directors determines that their use is consistent with the Fund's investment
objective. The Fund will limit its use of options and futures so that not more
than 5% of the Fund's net assets will be at risk.
The Fund will not enter into a futures contract or purchase an option
thereon if, immediately thereafter, the initial margin deposits for futures
contracts held by the Fund plus premiums paid by it for open futures option
positions, less the amount by which any such positions are "in-the-money,"
<F2> would exceed 5% of the Fund's net assets. When purchasing a futures
contract or writing a put option on a futures contract, the Fund must maintain
with its custodian (or broker, if legally permitted) cash or cash equivalents
(including any margin) equal to the market value of such contract. When writing
a call option on a futures contract, the Fund similarly will maintain with its
custodian cash or cash equivalents (including any margin) equal to the amount by
which such option is in-the-money until the option expires or is closed out by
the Fund.
<F2> A call option is "in-the-money" if the value of the futures contract that
is the subject of the option exceeds the excise price. A put option is "in-the-
money" if the exercise price exceeds the value of the futures contract that is
the subject of the option.
The Fund may not maintain open short positions in futures contracts, call
options written on futures contracts or call options written on indexes if, in
the aggregate, the market value of all such open positions exceeds the current
value of the securities in its portfolio, plus or minus unrealized gains and
losses on the open positions, adjusted for the historical relative volatility of
the relationship between the portfolio and the positions. For this purpose, to
the extent the Fund has written call options on specific securities in its
portfolio, the value of those securities will be deducted from the current
market value of the securities portfolio.
In order to comply with Commodity Futures Trading Commission Regulation 4.5
and thereby avoid being deemed a "commodity pool operator," the Fund will use
commodity futures or commodity options contracts solely for bona fide hedging
purposes within the meaning and intent of Regulation 1.3(z), or, with respect to
positions in commodity futures and commodity options contracts that do not come
within the meaning and intent of Regulation 1.3(z), the aggregate initial margin
and premiums required to establish such positions will not exceed 5% of the fair
market value of the assets of the Fund, after taking into account unrealized
profits and unrealized losses on any such contracts it has entered into (in the
case of an option that is in-the-money at the time of purchase, the in the-money
amount (as defined in Section 190.01(x) of the Commission Regulations) may be
excluded in computing such 5%).
TAXATION OF OPTIONS AND FUTURES. If the Fund exercises a call or put option
that it holds, the premium paid for the option is added to the cost basis of the
security purchased (call) or deducted from the proceeds of the security sold
(put). For cash settlement options and futures
<PAGE>
options exercised by the Fund, the difference between the cash received at
exercise and the premium paid is a capital gain or loss.
If a call or put option written by the Fund is exercised, the premium is
included in the proceeds of the sale of the underlying security (call) or
reduces the cost basis of the security purchased (put). For cash settlement
options and futures options written by the Fund, the difference between the cash
paid at exercise and the premium received is a capital gain or loss.
Entry into a closing purchase transaction will result in capital gain or
loss. If an option written by the Fund is in-the-money at the time it was
written and the security covering the option was held for more than the long-
term holding period prior to the writing of the option, any loss realized as a
result of a closing purchase transaction will be long-term. The holding period
of the securities covering an in-the-money option will not include the period of
time the option is outstanding.
If the Fund writes an equity call option <F3> other than a "qualified
covered call option," as defined in the Internal Revenue Code, any loss on such
option transaction, to the extent it does not exceed the unrealized gains on the
securities covering the option, may be subject to deferral until the securities
covering the option have been sold.
<F3> An equity option is defined to mean any option to buy or sell stock, and
any other option the value of which is determined by reference to an index of
stocks of the type that is ineligible to be traded on a commodity futures
exchange (e.g., an option contract on a sub-index based on the price of nine
hotel-casino stocks). The definition of equity option excludes options on broad-
based stock indexes (such as the Standard & Poor's 500 index).
A futures contract held until delivery results in capital gain or loss
equal to the difference between the price at which the futures contract was
entered into and the settlement price on the earlier of delivery notice date or
expiration date. If the Fund delivers securities under a futures contract, the
Fund also realizes a capital gain or loss on those securities.
For Federal income tax purposes, the Fund generally is required to
recognize for each taxable year its net unrealized gains and losses as of the
end of the year on futures, futures options and non-equity options positions
("year-end mark-to-market"). Generally, any gain or loss recognized with
respect to such positions (either by year-end mark-to-market or by actual
closing of the positions) is considered to be 60% long-term and 40% short-term,
without regard to the holding periods of the contracts. However, in the case of
positions classified as part of a "mixed straddle," the recognition of losses
on certain positions (including options, futures and futures options positions,
the related securities and certain successor positions thereto) may be deferred
to a later taxable year. Sale of futures contracts or writing of call options
(or futures call options) or buying put options (or futures put options) that
are intended to hedge against a change in the value of securities held by the
Fund may affect the holding period of the hedged securities.
<PAGE>
If the Fund were to enter into a short index future, short index futures
option or short index option position and the Fund's portfolio were deemed to
"mimic" the performance of the index underlying such contract, the option or
futures contract position and the Fund's stock positions may be deemed to be
positions in a mixed straddle, subject to the above-mentioned loss deferral
rules.
In order for the Fund to continue to qualify for Federal income tax
treatment as a regulated investment company, at least 90% of its gross income
for a taxable year must be derived from qualifying income; i.e., dividends,
interest, income derived from loans of securities, and gains from the sale of
securities or foreign currencies, or other income (including but not limited to
gains from options, futures, or forward contracts). In addition, gains realized
on the sale or other disposition of securities held for less than three months
must be limited to less than 30% of the Fund's annual gross income. Any net gain
realized from futures (or futures options) contracts will be considered gain
from the sale of securities and therefore be qualifying income for purposes of
the 90% requirement. In order to avoid realizing excessive gains on securities
held less than three months, the Fund may be required to defer the closing out
of certain positions beyond the time when it would otherwise be advantageous to
do so.
The Fund intends to distribute to shareholders annually any capital gains
that have been recognized for Federal income tax purposes (including year-end
mark-to-market gains) on options and futures transactions, together with gains
on other Fund investments, to the extent such gains exceed recognized capital
losses and any net capital loss carryovers of the Fund. Shareholders will be
advised of the nature of such capital gain distributions.
PORTFOLIO TURNOVER
Under normal market conditions, the Fund's portfolio turnover rate will
vary from year to year, but is expected to be below 50%. Portfolio turnover can
occur for a number of reasons such as general conditions in the securities
markets, more favorable investment opportunities in other securities, or other
factors relating to the desirability of holding or changing a portfolio
investment. Because of the Fund's emphasis on minimizing the recognition of
ordinary income, the Fund intends to keep portfolio turnover low. A high rate of
portfolio turnover in the Fund, if it should occur, would result in increased
transaction expense, which must be borne by the Fund. High portfolio turnover
also may result in the realization of capital gains or losses and, to the extent
net short-term capital gains are realized, any distributions resulting from such
gains will be considered ordinary income for Federal income tax purposes. See
"Taxes" in the prospectus, and "Additional Tax Information" in this statement
of additional information.
INVESTMENT RESTRICTIONS
The Fund has adopted the following investment restrictions (which may not
be changed without the approval of a majority of the Fund's outstanding shares),
under which the Fund may not:
1. with respect to 75% of its total assets, invest more than 5% of its
total assets, taken at market value at the time of a particular purchase, in the
securities of a single issuer,
<PAGE>
except for securities issued or guaranteed by the Government of the U.S. or
any of its agencies or instrumentalities or repurchase agreements for such
securities;
2. acquire more than 10%, taken at the time of a particular purchase, of
the outstanding voting securities of any one issuer;
3. act as an underwriter of securities, except insofar as it may be
deemed an underwriter for purposes of the Securities Act of 1933 on disposition
of securities acquired subject to legal or contractual restrictions on resale;
4. purchase or sell real estate (although it may purchase securities
secured by real estate or interests therein, or securities issued by companies
which invest in real estate or interests therein), commodities, or commodity
contracts, except that it may enter into (a) futures and options on futures and
(b) forward contracts;
5. make loans, but this restriction shall not prevent the Fund from (a)
investing in debt securities, (b) investing in repurchase agreements, or (c)
lending portfolio securities, provided that it may not lend securities if, as a
result, the aggregate value of all securities loaned would exceed 33 1/3% of its
total assets (taken at market value at the time of such loan);<F4>
<F4> The Fund has no present intention of investing in repurchase agreements or
lending portfolio securities.
6. borrow (including entering into reverse repurchase agreements), except
that it may (a) borrow up to 33 1/3% of its total assets, taken at market value
at the time of such borrowing, as a temporary measure for extraordinary or
emergency purposes, but not to increase portfolio income and (b) enter into
transactions in options, futures, and options on futures;<F5>
<F5> The Fund will not purchase securities when total borrowings by the Fund are
greater than 5% of its net asset value.
7. invest in a security if more than 25% of its total assets (taken at
market value at the time of a particular purchase) would be invested in the
securities of issuers in any particular industry, except that this restriction
does not apply to securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities; or
8. issue any senior security except to the extent permitted under the
Investment Company Act of 1940.
The Fund's investment objective is not a fundamental restriction and,
therefore, a change in the objective is not subject to shareholder approval.
However, investors in the Fund will receive written notification at least 30
days' prior to any change in the Fund's investment objective.
Non-Fundamental Restrictions
- ----------------------------
<PAGE>
The Fund also is subject to the following non-fundamental restrictions and
policies, which may be changed by the board of trustees, without shareholder
approval.
The Fund may not:
a. invest in companies for the purpose of exercising control or
management;
b. invest more than 10% of its total assets (valued at time of purchase)
in securities of foreign issuers;
c. purchase securities on margin (except for use of short-term credits as
are necessary for the clearance of transactions), or sell securities short
unless (i) the Fund owns or has the right to obtain securities equivalent in
kind and amount to those sold short at no added cost or (ii) the securities sold
are "when issued" or "when distributed" securities which the Fund expects to
receive in recapitalization, reorganization, or other exchange for securities
the Fund contemporaneously owns or has the right to obtain and provided that
transactions in options, futures, and options on futures are not treated as
short sales; or
d. invest more than 15% of its net assets (taken at market value at the
time of each purchase) in illiquid securities, including repurchase agreements
maturing in more than seven days.
In addition, the Investment Company Act of 1940 requires that the Fund not
(i) purchase more than 3% of the stock of another investment company or (ii)
purchase stock of other investment companies equal to more than 5% of the Fund's
total assets (valued at time of purchase) in the case of any one other
investment company or (iii) purchase stock of other investment companies equal
to more than 10% of the Fund's total assets (valued at time of purchase) in the
case of all other investment companies in the aggregate.
PERFORMANCE INFORMATION
From time to time the Fund may quote total return figures. Total return for
a period is the percentage change in value during the period of an investment in
shares of a fund, including the value of shares acquired through reinvestment of
all dividends and capital gains distributions. An average annual total return
for a given period may be computed by finding the average annual compounded rate
that would equate a hypothetical initial amount invested of $1,000 to the value
of that investment that could be redeemed at the end of the period, assuming
reinvestment of all distributions. Average annual total return is computed as
follows:
ERV = P(l+T)n
Where: P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
<PAGE>
ERV = ending redeemable value of a hypothetical $1,000
investment made at the beginning of the period, at
the end of the period (or fractional portion thereof)
The Fund's Total Return for the period December 27, 1996 (commencement of
operations) through June 30, 1997 was 6.9%. The Fund will not quote Average
Annual Return until it has been in operation more than 12 months.
The Fund imposes no sales charges and pays no distribution expenses. Income
taxes are not taken into account. Performance figures quoted by the Fund are not
necessarily indicative of future results. The Fund's performance is a function
of conditions in the securities markets, portfolio management and operating
expenses. Although information about past performance is useful in reviewing the
Fund's performance and in providing some basis for comparison with other
investment alternatives, it should not be used for comparison with other
investments using different reimbursement assumptions or time periods.
In advertising and sales literature, the performance of the Fund may be
compared with that of other mutual funds, indexes or averages of other mutual
funds, indexes of related financial assets or data, other accounts, limited
liability investment companies or partnerships managed or advised by the
Adviser, and other competing investment and deposit products available from or
through other financial institutions. The composition of these indexes, averages
or accounts differs from that of the Fund. The comparison of the Fund to an
alternative investment should consider differences in features and expected
performance.
All of the indexes and averages noted below will be obtained from the
indicated sources or reporting services, which the Fund generally believes to be
accurate. The Fund also may note (or provide reprints of articles or charts
containing) its mention (including performance or other comparative rankings) in
newspapers, magazines, or other media from time to time. However, the Fund
assumes no responsibility for the accuracy of such data. Newspapers and
magazines which might mention the Fund include, but are not limited to, the
following:
Business Week Money
Changing Times The Mutual Fund Letter
Chicago Mutual Fund Values (Morningstar)
Chicago Tribune Newsweek
Chicago Sun-Times The New York Times
Crain's Chicago Business Pensions and Investments
Consumer Reports Personal Investor
Consumer Digest Smart Money
Financial World Stanger Reports
FA Advisor Time
Forbes USA Today
Fortune U.S. News and World Report
Institutional Investor The Wall Street Journal
Investor's Daily Worth
<PAGE>
Los Angeles Times
When a newspaper, magazine, or other publication mentions the Fund, such
mention may include: (i) listings of some or all of the Fund's holdings; (ii)
descriptions of characteristics of some or all of the securities held by the
Fund, including price-earnings ratios, earnings, growth rates and other
statistical information, and comparisons of that information to similar
statistics for the securities comprising any of the indexes or averages listed
below; and (iii) descriptions of the Fund's or a portfolio manager's economic
and market outlook, generally and for the Fund.
The Fund may compare its performance to the Consumer Price Index (All
Urban), a widely recognized measure of inflation.
The performance of the Fund may be compared to stock market indexes or
averages, including the following widely recognized indicators of general U.S.
stock market results:
Russell Mid-Cap Stock Index
Russell Mid-Cap Growth Index
Russell 1,000 Index
Russell 1,000 Growth Index
Russell 2,500 Index
Standard & Poor's 500 Stock Index
Standard & Poor's Mid-Cap 400 Index
S&P/Barra Mid-Cap Growth Index
The Fund's performance may also be compared to mutual fund industry indexes
or averages, including the following: Value Line Index; Lipper Capital
Appreciation Fund Average; Lipper Growth Funds Average; Lipper General Equity
Funds Average; Lipper Equity Funds Average; Lipper Mid-Cap Average; Morningstar
Growth Average; Morningstar Aggressive Growth Average; Morningstar U.S.
Diversified Average; Morningstar Equity Fund Average; Morningstar Hybrid Fund
Average; Morningstar All Equity Funds Average; and Morningstar General Equity
Average; Morningstar MidCap/Value Average.
The Lipper and Morningstar averages are unweighted averages of total return
performance of mutual funds as classified, calculated, and published by Lipper
and by Morningstar, Inc. ("Morningstar"), respectively. The Fund may also use
comparative performance as computed in a ranking by Lipper or category averages
and rankings provided by another independent service. Should Lipper or another
service reclassify the Fund to a different category or develop (and place the
Fund into) a new category, the Fund may compare its performance or ranking
against other funds in the newly assigned category, as published by the service.
Moreover, the Fund may compare its performance or ranking against all funds
tracked by Lipper or another independent service, and may cite its rating,
recognition or other mention by Morningstar or any other entity. Morningstar's
rating system is based on risk-adjusted total return performance and is
expressed in a star-rating format. The risk-adjusted number is computed by
subtracting the Fund's risk score (which is a function of the Fund's monthly
returns less the 3-month Treasury bill return) from the Fund's load-adjusted
total return score. This
<PAGE>
numerical score is then translated into rating categories, with the top 10%
labeled five star, the next 22.5% labeled four star, the next 35% labeled three
star, the next 22.5% labeled two star and the bottom 10% one star. A high rating
reflects either above-average returns or below-average risk, or both.
To illustrate the historical returns on various types of financial assets,
the Fund may use historical data provided by Ibbotson Associates, Inc.
("Ibbotson"), a Chicago-based investment firm. Ibbotson constructs (or
obtains) very long-term (since 1926) total return data (including, for example,
total return indexes, total return percentages, average annual total returns and
standard deviations of such returns) for the following asset types: common
stocks, small company stocks, long-term corporate bonds, long-term government
bonds, intermediate-term government bonds and U.S. Treasury bills. Similarly,
the Fund may use Ibbotson's historical data regarding the Consumer Price Index.
The Fund may also use historical data compiled by sources believed by the Fund
to be accurate, illustrating the past performance of small-capitalization
stocks, large-capitalization stocks, common stocks, equity securities, growth
stocks (small-capitalization, large-capitalization, or both) and value stocks
(small-capitalization, large-capitalization, or both).
MANAGEMENT OF THE FUND
Trustees and officers of the Trust, and their principal business
occupations during at least the last five (5) years, are shown below. Trustees
deemed to be "interested persons" of the Trust for purposes of the Investment
Company Act of 1940 are indicated with an asterisk.
Positions Held Principal Occupations
Name and Age with Registrant During Past 5 Years
- ------------ --------------- -------------------
Richard M. Burridge Chairman Chairman, The Burridge
[(68)] Group LLC, since September
1996, and president prior thereto.
Kenneth M. Arenberg* Trustee, President Vice Chairman, The Burridge
[(67)] and Treasurer Group LLC, since September 1996,
and executive vice president prior
thereto.
J. Thomas Hurvis Trustee Chairman, Old World Industries, Inc.
[(59)]
Angelo L. Spoto Trustee Private investor, 1990 to present;
[(68)] Senior Vice President - Investments,
Blunt, Ellis & Loewi, Inc., prior
thereto.
<PAGE>
Positions Held Principal Occupations
Name and Age with Registrant During Past 5 Years
- ------------ --------------- ------------------------------
Robert L. Underwood Trustee Executive Vice President, North
[(52)] American Business Development
Companies, LLC.
John H. Streur, Jr. Senior Vice President, The Burridge Group LLC
[(37)] President since September 1996, and vice
and Secretary president and director of marketing
prior thereto.
Robert L. Worthington Vice President Senior Vice President, The Burridge
[(37)] Group LLC since September 1996,
and vice president, September 1993
to September 1996; Vice
President-Corporate Finance,
Westpac Banking Corporation,
September 1990 to August 1993.
Bradley P. Schluter Vice President Vice President, The Burridge
[(39)] Group LLC, November 1995 to
present; Vice President-Marketing,
Nicholas Applegate Capital
Management, February 1991 to
November 1995
References in the preceding table to The Burridge Group LLC include its
predecessor, The Burridge Group Inc., for periods prior to January 1, 1997.
The only compensation paid to trustees and officers of the Trust for their
services as such consists of a fee of $500 per meeting of the board or any
committee thereof attended, paid to trustees who are not interested persons of
the Trust or the Adviser. The Trust has no retirement or pension plans.
The following table sets forth compensation by the Trust during the fiscal
year ending June 30, 1997 to each of the trustees of the Trust. The Trust is not
part of a complex of mutual funds.
<PAGE>
AGGREGATE
COMPENSATION
NAME OF TRUSTEE FROM TRUST
------------------- ----------
Kenneth M. Arenberg $0
J. Thomas Hurvis $500
Angelo L. Spoto $1,000
Robert L. Underwood $1,000
At October , 1997, the following persons owned 5% or more of the Fund's
---
outstanding shares:
Name and Address Shares % Outstanding
- ----------------- ------ -------------
Kenneth M. Arenberg 5,000 14.81%
The Burridge Group LLC
115 S. LaSalle Street
Chicago, IL 60603
Richard M. Burridge 5,000 14.81%
The Burridge Group LLC
115 S. LaSalle Street
Chicago, IL 60603
J. Thomas Hurvis 70.38%
Old World Industries, Inc. 23,764.26
4065 Commercial Avenue
Northbrook, IL 60062
INVESTMENT ADVISORY SERVICES
Burridge is investment adviser to the Fund pursuant to an Amended and
Restated Investment Advisory Agreement dated December ___, 1997 (the "Advisory
Agreement"), and manages approximately one-half of the Fund's portfolio.
GeoCapital is sub-adviser to the Fund pursuant to an Investment Sub-Advisory
Agreement (the "Sub-Advisory Agreement") dated December ___, 1997, and manages
the remainder of the portfolio. In managing the Fund, investment professionals
from Burridge and GeoCapital discuss different investment ideas, as well as
economic and market conditions, but the main research functions and ultimate
security selection decisions are made separately by Burridge and GeoCapital.
The Burridge Group LLC
----------------------
<PAGE>
Burridge employs a growth oriented investment approach in creating a
diversified portfolio of equities for corporate, public and Taft-Hartley pension
plans, endowments, foundations and private investors. As of October 1, 1997
Burridge managed over $1.5 billion in assets for clients, including over $400
million for taxable accounts.
In return for its services Burridge is paid a monthly fee from the Fund
based on the Fund's average daily net assets. Under the Advisory Agreement, the
Fund pays Burridge a fee, accrued daily and paid monthly, at the annual rates of
1.25% of the first $500 million of its average daily net assets, 1.10% of the
next $500 million up to $1 billion, and 1.00% of average daily net assets in
excess of $1 billion.
The advisory fees accrued by the Fund to Burridge during the period
December 27, 1996 (commencement of operations) through June 30, 1997 aggregated
$1,330. During the same period, Burridge reimbursed the Fund for operating
expenses in excess of Burridge's expense limitation in the aggregate amount of
$77,648.
The Advisory Agreement provides that Burridge shall not be liable for any
loss suffered by the Trust or its shareholders as a consequence of any act or
omission in connection with investment advisory or portfolio services under the
Advisory Agreement, except by reason of willful misfeasance, bad faith, or gross
negligence on the part of Burridge in the performance of its duties or from
reckless disregard by Burridge of its obligations and duties under the Advisory
Agreement.
The Advisory Agreement expires on December ___, 1999, but may be continued
from year to year only so long as the continuance of each is approved annually
(a) by the vote of a majority of the trustees of the Trust who are not
"interested persons" of the Trust or Burridge cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the board of
trustees of the Trust or by the vote of a majority (as defined in the 1940 Act)
of the outstanding shares of the Fund. The Advisory Agreement is terminable
without penalty, on 60 days' notice, by the trustees of the Trust or by vote of
a majority of the outstanding shares of the Fund, or, on not less than 90 days'
notice, by Burridge. The Advisory Agreement automatically terminates in the
event of its assignment (as defined in the 1940 Act).
Buridge employs a team of investment professionals who participate in
investment strategy formulation and issue selection. The individual responsible
for overseeing the implementation of Burridge's strategy for the Fund is Richard
M. Burridge.
Mr. Burridge is chairman and chief investment officer of Burridge. He has
been engaged in the investment management business since 1974 and, with Kenneth
M. Arenberg, founded the Burridge's predecessor in 1986. Mr. Burridge holds a
B.S. from the University of Colorado and is a Chartered Financial Analyst.
Burridge is a Delaware limited liability company the Member Manager of
which is The Burridge Group Inc., an Illinois corporation ("Burridge Inc.").
Presently, seven principals, including Richard M. Burridge and Kenneth M.
Arenberg, hold member interests in Burridge representing an interest in the
aggregate of 45% of the Adviser's profits, subject to reduction
<PAGE>
under certain conditions. The remaining interest in the profits of Burridge is
owned by Affiliated Managers Group, Inc. ("AMG"). AMG is a Boston-based
private holding company that makes equity investments in investment management
firms in which management personnel retain a significant interest in the future
of the business. Burridge Inc. is a wholly owned subsidiary of AMG.
AMG is a Delaware corporation which has its offices at Two International
Place, Boston, Massachusetts 02110. AMG may be deemed to have as its parent,
Advent VII, L.P., a Delaware limited partnership, because Advent VII, L.P. owns
greater than fifty percent of the voting stock of AMG. Advent VII, L.P. may be
deemed to have, as its parent, its sole general partner - TA Associates VII,
L.P., which is a Delaware limited partnership, and which in turn may be deemed
to have, as its parent, its sole general partner - TA Associates, Inc., a
Delaware corporation. The address of each of Advent VII, L.P., TA Associated
VII, L.P. and TA Associates, Inc., is c/o TA Associates, Inc., High Street
Tower, Suite 2500, 125 High Street, Boston, Massachusetts 02110. AMG has advised
the Trust that TA Associates, Inc., which was founded in 1968, has invested
directly or indirectly in over 200 enterprises prior to its investment in AMG.
The offices of Burridge are located at 115 South LaSalle Street, Chicago,
Illinois 60603.
GeoCapital LLC
--------------
GeoCapital invests in small-capitalization equities in emerging technology
and service industries, based on its own fundamental analysis of the companies
and industries. As of October 1, 1997, GeoCapital managed $2.2 billion in
assets for clients.
In return for its services, GeoCapital is paid a monthly fee from Burridge
based on the average daily net assets allocated to it by Burridge for
management. Under the Sub-Advisory Agreement, Burridge pays GeoCapital a fee,
accrued daily and paid monthly, at the annual rates of 0.75% of the first $500
million of the average daily net assets allocated to it, 0.65% of the next $500
million of the average daily net assets allocated to it, and 0.60% of the
average daily net assets allocated to it in excess of $1 billion.
No Sub-Advisory fees have yet accrued by Burridge to GeoCapital.
The Sub-Advisory Agreement provides that GeoCapital shall not be liable for
any loss suffered by the Trust, its shareholders, or Burridge as a consequence
of any act or omission in connection with investment advisory or portfolio
services under the Sub-Advisory Agreement, except by reason of willful
misfeasance, bad faith, or gross negligence on the part of GeoCapital in the
performance of its duties, or from reckless disregard by GeoCapital of its
obligations and duties under the Sub-Advisory Agreement. The Sub-Advisory
Agreement also provides that Burridge's obligations and liabilities under the
Sub-Advisory Agreement are not binding upon the Trust or the Fund, or the
officers, shareholders, employees, or other agents of either.
The Sub-Advisory Agreement expires on December ___, 1999, but may be
continued from year to year only so long as the continuance of each is approved
annually (a) by the vote of a majority of the trustees of the Trust who are not
"interested persons" of the Trust, Burridge,
<PAGE>
or GeoCapital cast in person at a meeting called for the purpose of voting on
such approval, and (b) by the board of trustees of the Trust or by the vote of a
majority (as defined in the 1940 Act) of the outstanding shares of the Fund. The
Sub-Advisory Agreement is terminable without penalty, on 60 days' notice, by the
trustees of the Trust or by vote of a majority of the outstanding shares of the
Fund, or, on not less than 90 days' notice, by GeoCapital. The Sub-Advisory
Agreement automatically terminates in the event of its assignment (as defined in
the 1940 Act).
Irwin Lieber and Barry K. Fingerhut are responsible for overseeing the
implementation of GeoCapital's strategy for managing its portion of the Fund's
portfolio. Mr. Lieber is chairman and chief investment officer of GeoCapital,
and formed GeoCapital's predecessor in 1979. Mr. Fingerhut is GeoCapital's
president and joined the firm in 1981.
GeoCapital is a Delaware limited liability company, the member manager of
which is GeoCapital Corporation, a subsidiary of AMG. Currently seven
principals, including Mr. Lieber and Mr. Fingerhut, hold member interests
in GeoCapital, representing an interest, in the aggregate, of 40% of
GeoCapital's profits, subject to reduction under certain conditions. The
remaining interests in the profits of GeoCapital are owned by GeoCapital
Corporation.
The offices of GeoCapital are located at 767 Fifth Avenue, New York, New
York 10153.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Portfolio transactions are placed with those securities brokers and dealers
that Burridge and GeoCapital believe will provide the best value in transaction
and research services either in a particular transaction or over a period of
time. Although some transactions involve only brokerage services, many involve
research services as well.
In valuing brokerage services, Burridge and GeoCapital make judgments as to
which brokers are capable of providing the most favorable net price (not
necessarily the lowest commission considered alone) and the best execution in a
particular transaction. Best execution connotes not only general competence and
reliability of a broker, but specific expertise and effort of a broker in
overcoming the anticipated difficulties in fulfilling the requirements of
particular transactions, because the problems of execution and the required
skills and effort vary greatly among transactions.
In valuing research services, Burridge and GeoCapital make judgments as to
the usefulness of the research information provided by a broker to the Managers
in managing the Fund. Although the information, e.g., data or recommendations
concerning particular securities, sometimes relates to the specific transaction
placed with the broker, the research predominately consists of a wide variety of
information concerning companies, industries, investment strategy, and economic,
financial and political conditions and prospects useful to the Managers in
advising the Fund and other accounts.
The reasonableness of brokerage commissions paid in relation to transaction
and research services received is evaluated by the staffs of Burridge and
GeoCapital on an ongoing basis. The
<PAGE>
general level of brokerage charges and other aspects of the portfolio
transactions for the Fund are reviewed periodically by Trust's board of
trustees.
Burridge and GeoCapital are the principal sources of information and advice
to the Fund and are responsible for making and initiating the execution of
investment decisions. However, the board of trustees recognizes that it is
important for the Managers, in performing their responsibilities to the Fund, to
continue to receive and evaluate the broad spectrum of economic and financial
information which many securities brokers have customarily furnished in
connection with brokerage transactions, and that in compensating brokers for
their services, it is in the interest of the Fund to take into account the value
of the information received for use in advising the Fund. Consequently, Burridge
and GeoCapital are authorized to allocate the orders placed by them on behalf of
the Trust to brokers and dealers who provide research services to the Trust or
the Managers and the commission paid to a broker providing research services may
be greater than the amount of commission another broker would charge for the
same transaction. The extent, if any, to which receipt of such information may
reduce the expenses of the Managers in providing management services to the Fund
is not determinable. In addition, the board of trustees understands that other
clients of Burridge and GeoCapital also may benefit from the information
obtained for the Fund, in the same manner that the Fund also may benefit from
information obtained by Burridge and GeoCapital in performing services for
others.
Transactions of the Fund in the over-the-counter market and the third
market are executed with primary market makers acting as principals except where
it is believed that better prices and execution may be obtained from others.
Consistent with the National Association of Securities Dealers, Inc.
Conduct Rules and subject to the policy of seeking the best price and execution
as stated above, sales of shares of the Fund by a broker-dealer may be
considered by Burridge and GeoCapital in the selection of broker-dealers to
execute portfolio transactions for the Fund.
Although investment decisions for the Fund are made independently from
those for other investment advisory clients of Burridge and GeoCapital, the same
investment decision may be made for both the Fund and one or more other advisory
clients. If both the Fund and other clients purchase or sell the same class of
securities on the same day, the transactions will be allocated as to amount and
price in a manner considered equitable to each.
Burridge and GeoCapital may place brokerage transactions with brokers
affiliated with the distributor, Funds Distributor, Inc. Commissions paid to
such brokers on any transaction will not exceed those paid by the Fund in
similar transactions to other brokers.
PURCHASE AND REDEMPTION OF SHARES
Purchases and redemptions are discussed in the prospectus under the
headings "Purchasing Shares," "Redeeming Shares," "Shareholder Services,"
and "Net Asset Value." All of that information is incorporated herein by
reference.
<PAGE>
You may purchase (or redeem) shares of the Fund through investment dealers,
banks, or other institutions. However, these institutions may charge for their
services or place limitations on the extent to which you may use the services
offered by the Fund. The Fund imposes no charges other than those described in
the Prospectus and this Statement of Additional Information if shares are
purchased (or redeemed) directly from the Fund.
NET ASSET VALUE. The net asset value of the shares of the Fund is
determined as of the close of regular session trading on the New York Stock
Exchange ("NYSE") (currently 3:00 p.m., Chicago time) each day the NYSE is
open for trading. The net asset value per share of the Fund is determined by
dividing the value of all its securities and other assets, less its liabilities,
by the number of shares of the Fund outstanding.
Investments are stated at current value. Securities listed or admitted to
trading on a national securities exchange or the Nasdaq National Market are
valued at the last sales price or, if there has been no sale that day, at the
mean between the most recent bid and asked prices. Other securities traded over-
the-counter are valued at the mean between the last reported bid and asked
prices. Money market instruments with sixty days or less remaining from the
valuation date until maturity are valued on an amortized cost basis. Securities
or other assets for which market quotations are not readily available will be
valued at a fair value as determined in good faith by or under the direction of
Trust's board of trustees.
The NYSE is currently closed on weekends and on the following holidays: New
Year's Day, Washington's Birthday, Martin Luther King's Birthday, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
REDEMPTION IN KIND. The Fund intends to pay all redemptions in cash and is
obligated to redeem shares solely in cash up to the lesser of $250,000 or one
percent of the net assets of the Fund during any 90-day period for any one
shareholder. However, redemptions in excess of such limit may be paid wholly or
partly by a distribution in kind of readily marketable securities. If
redemptions are made in kind, the redeeming shareholders might incur brokerage
fees in selling the securities received in the redemptions.
TAXES
The Fund intends to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code, and thus not be subject to federal
income taxes on amounts which it distributes to shareholders.
GENERAL INFORMATION
Administrator. Firstar Trust Company, 615 East Michigan Street, Milwaukee,
Wisconsin 53202 (the "Administrator") is the Fund's Administrator. The Fund
Administration Servicing Agreement entered into between the Fund and the
Administrator relating to the Fund (the "Administration Agreement") will
remain in effect until terminated by either party. The Administration Agreement
may be terminated at any time, without the payment of any penalty, by the Board
of Trustees of the Fund upon the giving of ninety (90) days' written notice to
<PAGE>
the Administrator, or by the Administrator upon the giving of ninety (90) days'
written notice to the Fund.
Under the Administration Agreement, the Administrator shall exercise
reasonable care and is not liable for any error or judgment or mistake of law or
for any loss suffered by the Corporation in connection with the performance of
the Administration Agreement, except a loss resulting from willful misfeasance,
bad faith or negligence on the part of the Administrator in the performance of
its duties under the Administration Agreement.
CUSTODIAN AND FUND ACCOUNTING AGENT. Firstar Trust Company ("Firstar"),
P.O. Box 701, Milwaukee, Wisconsin 53201, acts as Custodian of the securities
and other assets of the Fund. As Custodian, Firstar is responsible for, among
other things, safeguarding and controlling the Fund's cash and securities,
handling the receipt and delivery of securities, and collecting interest and
dividends on the Fund's investments. Firstar also performs portfolio accounting
services for the Fund. Firstar is not an affiliate of Burridge, GeoCapital, or
any affiliates of either.
In addition the Fund has entered into a Fund Accounting Services Agreement
with Firstar Trust Company pursuant to which Firstar Trust Company has agreed to
maintain the financial accounts and records of the Fund and provide other
accounting services to the Fund.
TRANSFER AGENT. Firstar Trust Company also serves as transfer agent and
dividend disbursing agent for the Fund under a Transfer Agency Agreement. As
transfer and dividend disbursing agent, Firstar Trust Company has agreed to (i)
issue and redeem shares of the Fund, (ii) make dividend and other distributions
to shareholders of the Fund, (iii) respond to correspondence by Fund
shareholders and others relating to its duties, (iv) maintain shareholder
accounts, and (v) make periodic reports to the Fund.
AUDITORS. Arthur Andersen LLP, 33 West Monroe Street, Chicago, Illinois
60603 serves as the Trust's independent public accountants, providing services
including (i) audit of the annual financial statements, (ii) assistance and
consultation in connection with Securities and Exchange Commission filings, and
(iii) review of the annual income tax returns filed on behalf of the Fund.
DISTRIBUTOR. The shares of the Fund are offered for sale on a continuous
basis through Funds Distributor, Inc. ("Distributor"), 60 State Street,
Boston, Massachusetts 02109, without any sales commissions or charges to the
Fund or its shareholders. The Distributor acts pursuant to a written
Distribution Agreement with the Trust which expires in December, 1998, but may
continue from year to year thereafter, provided such continuance is approved
annually (i) by a majority of the trustees or by a majority of the outstanding
voting securities of the affected Fund and (ii) by a majority of the trustees
who are not parties to the Agreement or interested persons of any such party.
Burridge pays the fees and expenses of the Distributor and all sales and
promotional expenses from its own resources.
As agent, the Distributor offers the Fund's shares only on a best-efforts
basis. The Distributor offers shares of the Fund to investors at net asset
value, without sales commissions, sales loads or other sales charges.
<PAGE>
FINANCIAL STATEMENTS
The 1997 annual report to shareholders of the Fund, a copy of which
accompanies this Statement of Additional Information, contains financial
statements, notes thereto, supplementary information entitled "Financial
Highlights," and a report of independent accountants, all of which (but no
other part of the annual report) are incorporated herein by reference.
Additional copies of the annual report may be obtained at no charge by writing
or telephoning Burridge Funds at the address and telephone number on the cover
page of this Statement of Additional Information.
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) Financial Statements included in Part A of this registration
statement:
Financial Highlights.
(2) Financial Statements included in Part B of this amendment:
The following financial statements, but no other part of the
report, are incorporated by reference to the following portions of
Registrant's annual report to shareholders for the fiscal year ended
June 30, 1997:
- Schedule of Investments at June 30, 1997
- Statement of Assets and Liabilities at June 30, 1997
- Statement of Operations for December 27, 1996 through June
30, 1997
- Statement of Changes in Net Assets for December 27, 1996
through June 30, 1997
- Financial Highlights for December 27, 1996 through June
30, 1997
- Notes to Financial Statements
- Report of Independent Public Accountants
(b) Exhibits:
1 Agreement and Declaration of Trust of the registrant*
2 Bylaws, as amended, of the registrant**
3 None
* Incorporated by reference to the exhibit of the same number filed with
Registrant's registration statement on Form N-1A filed on September 9, 1996
with the Securities and Exchange Commission pursuant to the Securities Act of
1933 (File No. 333-11633) (the "Registration Statement").
** Incorporated by reference to the exhibit of the same number filed with pre-
effective amendment no. 1 to the Registration Statement, filed on November
22, 1996.
4 None (registrant does not issue share certificates.)
<PAGE>
5.1 Amended and Restated Investment Advisory Agreement between the
registrant and The Burridge Group LLC
5.2 Investment Sub-Advisory Agreement between The Burridge Group LLC
and GeoCapital LLC
6 Distribution Agreement between the registrant and Funds
Distributor, Inc.***
7 None
8 Custodian Agreement between the registrant and Firstar Trust
Company***
9.1 Transfer Agency Agreement between the registrant and Firstar
Trust Company***
9.2 Fund Accounting Services Agreement between the registrant and
Firstar Trust Company***
9.3 Fund Administration Servicing Agreement between the registrant
and Firstar Trust Company***
9.4 Fulfillment Servicing Agreement between the registrant and
Firstar Trust Company***
10 Opinion and Consent of Counsel**
11 Consent of Independent Auditors
12 None
13 Subscription Agreement**
14 Burridge Funds Individual Retirement Account Custodial Agreement
and Disclosure Statement and related applications**
15 None
16 Schedule of Computation of Performance Quotations
17 Financial Data Schedule
18 Form of account application**
** Incorporated by reference to the exhibit of the same number filed with pre-
effective amendment no. 1 to the Registration Statement, filed November 22,
1996.
*** Incorporated by reference to the exhibit of the same number filed with
post-effective amendment no. 1 to the Registration Statement, filed January
2, 1997.
<PAGE>
ITEM 25. Persons Controlled by or Under Common Control With Registrant.
The registrant does not consider that there are any persons directly or
indirectly controlling, controlled by, or under common control with, the
registrant within the meaning of this item. The information in the prospectus
under the caption "Management of the Fund" and in the Statement of Additional
Information under the caption "Management of the Fund" and the first paragraph
under the caption "Investment Advisory Services" is incorporated herein by
reference.
ITEM 26. Number of Holders of Securities.
Number of Record Holders
Title of Series as of October 1, 1997
--------------- ----------------------
Burridge Capital Development Fund 3
ITEM 27. Indemnification.
See Article VIII of registrant's Agreement and Declaration of Trust.
The general effect of the indemnification provisions of the Agreement and
Declaration of Trust is to protect, out of assets of the Registrant,
Registrant's officers and trustees from liabilities to which they would
otherwise be subject.
The registrant, its trustees and officers, the investment adviser to
registrant and certain affiliated persons of the adviser are insured under a
policy of insurance maintained by registrant and the adviser, within the limits
and subject to the limitations of the policy, against certain expenses in
connection with the defense of actions, suits or proceedings, and certain
liabilities that might be imposed as a result of such actions, suits or
proceedings, to which they are parties by reason of being or having been such
trustees, directors or officers. The policy expressly excludes coverage for any
trustee or officer whose personal dishonesty, fraudulent breach of trust, lack
of good faith, or intention to deceive or defraud has been finally adjudicated
or may be established or who willfully fails to act prudently.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be permitted to trustees,
officers, and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a trustee, officer
or controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such trustee, officer, or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is the final adjudication of such issue.
ITEM 28. Business and Other Connections of Investment Adviser.
The information in the prospectus in the first paragraph under the caption
"Management of the Fund" is incorporated herein by reference. For a description
of other business, profession, vocation or employment of a substantial nature in
which any general partner, managing general partner, director or officer of The
Burridge Group LLC has engaged during the last two years for his account or in
the capacity of director, officer, employee, partner or trustee, see the
information under the caption "Management of the Fund" in the statement of
additional information.
<PAGE>
For a description of other business, profession, vocation or employment of a
substantial nature in which any general partner, managing general partner,
director or officer of GeoCapital LLC has engaged during the last two years for
his account or in the capacity of director, officer, employee, partner or
trustee, see the information under the caption "Management of the Fund" in
the statement of additional information.
ITEM 29. Principal Underwriters.
(a) Funds Distributor, Inc. (the "Distributor") acts as principal
underwriter for the following investment companies:
BJB Investment Funds
Burridge Funds
The Brinson Funds
Fremont Mutual Funds, Inc.
Harris Insight Funds Trust
HT Insight Funds, Inc. d/b/a Harris Insight Funds
The JPM Advisor Funds
The JPM Institutional Funds
The JPM Pierpont Funds
The JPM Series Trust
The JPM Series Trust II
LKCM Fund
Monetta Fund, Inc.
Monetta Trust
The Montgomery Funds
The Montgomery Funds II
The Munder Framlington Funds Trust
The Munder Funds Trust
The Munder Funds, Inc.
Orbitex Group of Funds
The PanAgora Institutional Funds
RCM Capital Funds, Inc.
RCM Equity Funds, Inc.
St. Clair Funds, Inc.
Skyline Funds
Waterhouse Investors Cash Management Fund, Inc.
WEBS Index Funds, Inc.
Funds Distributor is registered with the Securities and Exchange
Commission as a broker-dealer and is a member of the National Association of
Securities Dealers. Funds Distributor is an indirect wholly-owned subsidiary of
Boston International Group, Inc., a holding company all of whose outstanding
shares are owned by key employees.
(b) The following is a list of the executive officers, directors and
partners of Funds Distributor, Inc.:
<PAGE>
Director, President and Chief Marie E. Connolly
Executive Officer
Executive Vice President Richard W. Ingram
Executive Vice President Donald R. Roberson
Senior Vice President, General John E. Pelletier
Counsel, Secretary and Clerk
Senior Vice President Michael S. Petrucelli
Director, Senior Vice President, Joseph F. Tower III
Treasurer and Chief Financial Officer
Senior Vice President Paula R. David
Senior Vice President Bernard A. Whalen
Director William J. Nutt
(c) Not applicable.
ITEM 30. Location of Accounts and Records.
(1) Firstar Trust Company
P.O. Box 701
Milwaukee, Wisconsin 53201
(2) Kenneth M. Arenberg
Burridge Funds
115 South LaSalle Street
Chicago, Illinois 60603
ITEM 31. Management Services.
Not applicable.
ITEM 32. Undertakings.
(a) Not applicable.
(b) Not applicable.
(c) Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant has duly caused this amendment to
the registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Chicago, Illinois on October , 1997.
---
BURRIDGE FUNDS
By /s/ Kenneth M. Arenberg
--------------------
Kenneth M. Arenberg, President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
Name Title Date
---- ----- ----
/s/ Richard M. Burridge Chairman )
- -----------------------
Richard M. Burridge )
)
/s/ Kenneth M. Arenberg Trustee, President and )
- ----------------------- Treasurer (Chief executive, )
Kenneth M. Arenberg financial and accounting )
officer) )
) October , 1997
/s/ J. Thomas Hurvis Trustee )
- -------------------- )
J. Thomas Hurvis )
)
/s/ Angelo L. Spoto Trustee )
- ------------------- )
Angelo L. Spoto )
)
/s/ Robert L. Underwood Trustee )
- ----------------------- )
Robert L. Underwood )
<PAGE>
Index of Exhibits Filed with this Post-Effective
Amendment to the Registration Statement
---------------------------------------
Exhibit
number Exhibit Filed
- ----- ------- -----
1 Agreement and Declaration of Trust of the registrant *
2 Bylaws, as amended, of the registrant *
3 None n/a
4 None (registrant does not issue share certificates.) n/a
5.1 Amended and Restated Investment Advisory Agreement filed
between the registrant and The Burridge Group LLC
5.2 Investment Sub-Advisory Agreement between filed
The Burridge Group LLC and GeoCapital LLC
6 Distribution Agreement between the registrant *
and Funds Distributor, Inc.
7 None n/a
8 Custodian Agreement between the registrant *
and Firstar Trust Company
9.1 Transfer Agency Agreement between the *
registrant and Firstar Trust Company
9.2 Fund Accounting Services Agreement between *
the registrant and Firstar Trust Company
9.3 Fund Administration Servicing Agreement between *
the registrant and Firstar Trust Company
9.4 Fulfillment Servicing Agreement between the registrant *
and Firstar Trust Company
10 Opinion and Consent of Counsel *
11 Consent of Independent Auditors filed
12 None n/a
13 Subscription Agreement *
14 The Burridge Funds Individual Retirement Account Custodial
Agreement and Disclosure Statement and Related applications *
15 None n/a
<PAGE>
16 Schedule of Computation of Performance Quotations filed
17 Financial Data Schedule filed
18 Form of account application *
BURRIDGE FUNDS
BURRIDGE CAPITAL DEVELOPMENT FUND
AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, dated the ___day of December 1997, is made and entered
into by and between BURRIDGE FUNDS, a Massachusetts business trust (the
"Trust") on behalf of its series Burridge Capital Development Fund (the
"Fund"), and THE BURRIDGE GROUP LLC, a Delaware limited liability company (the
"Adviser").
WITNESSETH:
WHEREAS, the Fund is a series of the Trust, an open-end management
investment company, registered as such under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, and is engaged in the business of supplying
investment advisory services as an independent contractor; and
WHEREAS, the Trust and the Fund desire to retain the Adviser as an
investment manager to render portfolio advice and services to the Fund pursuant
to the terms and provisions of this Agreement, and the Adviser desires to
furnish said advice and services; and
WHEREAS, this Agreement amends, restates, and supersedes the Investment
Advisory Agreement dated December 31, 1996, between the Trust and the Adviser.
NOW, THEREFORE, in consideration of the covenants and mutual promises
hereinafter set forth, the parties to this Agreement, intending to be legally
bound hereby, mutually agree as follows:
1. APPOINTMENT OF ADVISER. The Trust appoints the Adviser to act as
manager and investment adviser to the Fund, for the period and on the terms
herein set forth. The Adviser accepts that appointment and agrees to provide the
services set forth in this Agreement, for the compensation herein provided.
2. SERVICES OF ADVISER.
(a) The Adviser shall manage the business and affairs of the Fund and
the investment and reinvestment of the assets of the Fund, subject to the
supervision of the board of trustees of the Trust, for the period and on the
terms set forth in this Agreement. The Adviser shall give due consideration to
the investment policies and restrictions and the other statements concerning the
Fund in the Trust's Agreement and Declaration of Trust, bylaws and registration
statements under Actthe 1940 Act and the Securities Act of 1933 (the "1933
Act"), and to the provisions of the Internal Revenue Code applicable to the
Trust as a regulated investment company. The Adviser shall be deemed for all
purposes to be an independent contractor and not an agent of the Trust or the
Fund, and unless otherwise expressly provided or authorized, shall have no
authority to act or represent the Trust or the Fund in any way.
(b) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the account of the Fund with brokers or dealers
selected by the Adviser, although the Fund will pay the actual brokerage
commissions on portfolio transactions in accordance with Section 6 hereof. In
executing portfolio transactions and selecting brokers or dealers, the Adviser
will use its best efforts to seek on behalf of the Fund the best overall terms
available for any transaction. The Adviser shall consider all factors it deems
relevant, including the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer, and the reasonableness of the commission, if any (for the specific
transaction and on a continuing basis).
(c) To the extent contemplated by the Trust's registration statement
under the 1933 Act, in evaluating the best overall terms available, and in
selecting the broker or dealer to execute a particular transaction, the Adviser
may also consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the
Fund and/or other accounts over which the Adviser (or an affiliate of the
Adviser) exercises investment discretion. Consistent with the Rules of Fair
Practice of the National Association of Securities Dealers, Inc. and subject to
seeking the most favorable combination of net price and execution available, the
Adviser may consider sales of shares of the Fund as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund. The Adviser is
authorized to pay to a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the Fund which
is in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if, but only if, the Adviser determines
in good faith that such commission was reasonable in relation to the value of
the brokerage and research services provided by such broker or dealer, viewed in
terms of that particular transaction or in terms of all of the accounts over
which investment discretion is so exercised.
3. ENGAGEMENT OF SUB-ADVISER. The Adviser may, at the Adviser's expense,
engage one or more sub-advisers (the "Sub-Adviser") to assist the Adviser in
the performance of its duties under this Agreement. The Sub-Adviser shall be a
registered investment adviser, and such engagement shall be pursuant to a
written agreement (the "Sub-Advisory Agreement"). To the extent provided in
the Sub-Advisory Agreement, the Sub-Adviser shall provide the same services to
the Fund as those provided by the Adviser pursuant to Section 2 hereof. The Sub-
Adviser shall be responsible for managing an allocated portion of the assets of
the Fund, the size of such allocated portion to be determined in the Adviser's
sole discretion; provided, however, that the Adviser may not allocate all of the
assets of the Fund to the Sub-Adviser.
4. SERVICES OTHER THAN AS ADVISER. The Adviser (or an affiliate of the
Adviser) may act as broker for the Trust in connection with the purchase or sale
of securities by or to the Trust if and to the extent permitted by procedures
adopted from time to time by the board of trustees of the Trust. Such brokerage
services are not within the scope of the duties of the Adviser under this
Agreement, and, within the limits permitted by law and the trustees, the Adviser
(or an affiliate of the Adviser) may receive brokerage commissions, fees or
other remuneration from the Trust for such services in addition to its fee for
services as Adviser. Within the limits permitted by law, the Adviser may receive
compensation from the Trust for other services performed by or for the Trust
which are not within the scope of the duties of the Adviser under this
Agreement.
5. EXPENSES TO BE PAID BY THE ADVISER. The Adviser shall furnish, at its
own expense, office space to the Trust and all necessary office facilities,
equipment, and personnel for managing the assets of the Fund, providing
shareholder servicing and providing general administrative services to the Fund
and to the Trust. The Adviser shall also assume and pay all other expenses
incurred by it in connection with managing the assets of the Fund, all Sub-
Adviser fees, all expenses of marketing shares of the Fund, all compensation of
trustees who are "interested persons" of the Trust as defined in the 1940 Act
and all expenses incurred in connection with their services to the Trust.
6. EXPENSES TO BE PAID BY THE TRUST. The Trust shall assume and pay all
other costs and expenses not specifically assumed by the Adviser, including, but
not limited to: (i) all accounting, auditing and legal services, clerical and
statistical services, administrative costs; (ii) all costs attributable to
shareholder and investor services relating to the Fund (including, without
limitation, telephone and personnel expenses and the charges, if any, of third
parties performing such services); (iii) all expenses of maintaining the
registration of shares of the Fund under the 1933 Act and of qualifying and
maintaining qualification of shares of the Fund under the securities laws of
such United States jurisdictions as the Trust may from time to time reasonably
designate; (iv) all expenses of determining daily price computations and
performing related bookkeeping services; (v) all charges of depositories,
custodians, and other agencies for the safekeeping and servicing of the Fund's
cash, securities, and other property and of the Trust's transfer, dividend
disbursing, and redemption agents and registrars, if any; (vi) insurance
expenses; (vii) all expenses of publication of notices and reports to the
Trust's shareholders; (viii) all expenses of proxy solicitations of the Trust or
its board of trustees; (ix) all expenses of maintaining the Trust's existence
and maintaining the registration of the Trust under the 1940 Act; (x) all fees
and expenses incurred in connection with the services to the Trust of trustees
who are not "interested persons" of the Trust as defined in the 1940 Act; (xi)
the compensation to the Adviser provided in Section 7 hereof; (xii) all taxes
and fees payable to federal, state, or other governmental agencies, domestic or
foreign; (xiii) all stamp or other transfer taxes; (xiv) all interest charges;
and (xv) any extraordinary costs or expenses such as legal, accounting, or other
costs or expenses not incurred in the course of the Trust's ongoing operation.
In addition to the payment of the foregoing expenses the Trust shall also pay
all brokers' commissions and other portfolio transaction costs. Any expenses
borne by the Trust that are attributable solely to the organization, operation
or business of the Fund are charged against the Fund. Other expenses of the
Trust are allocated among its portfolios on a reasonable basis as determined by
the Trust's board of trustees.
7. COMPENSATION OF ADVISER. For the services to be rendered and the
charges and expenses to be assumed and to be paid by the Adviser hereunder, the
Trust shall pay out of Fund assets to the Adviser a fee, accrued daily and paid
monthly, at the annual rate of (i) 1.25% of the first $500 million of the Fund's
average daily net assets; (ii) 1.10% of the Fund's average daily net assets in
excess of $500 million and less than $1 billion; and (iii) 1.00% of the average
daily net assets of $1 billion or more. The fee payable hereunder shall be
reduced proportionately during any month in which this Agreement is not in
effect for the entire month. The fee for each calendar month or portion thereof
shall be payable on the first business day of the next month.
8. SERVICES OF ADVISER NOT EXCLUSIVE. The services of the Adviser to the
Trust hereunder are not exclusive, and the Adviser shall be free to render
similar services to others so long as its services under this Agreement are not
impaired by such other activities.
9. LIABILITY OF ADVISER. The Adviser shall not be liable to the Trust or
its shareholders for any loss suffered by the Trust or its shareholders from or
as a consequence of any act or omission of the Adviser, or of any of the
directors, officers, employees, or agents of the Adviser, in connection with,
pursuant to or arising out of this Agreement, except by reason of willful
misfeasance, bad faith, or gross negligence on the part of the Adviser in the
performance of its duties or by reason of reckless disregard by the Adviser of
such obligations and duties under this Agreement.
10. LIABILITY OF TRUST. The obligations of the Trust hereunder shall not
be binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust, personally, but shall bind only the assets and property
of the Trust as provided in the Agreement and Declaration of Trust of the Trust.
11. USE OF ADVISER'S NAME. The Trust may use the name "Burridge Funds"
or any other name derived from the name "Burridge," only for so long as this
Agreement or any extension, renewal or amendment hereof remains in effect,
including any similar agreement with any organization which shall have succeeded
to the business of the Adviser as investment adviser. At such time as this
Agreement or any extension, renewal or amendment hereof, or such other similar
agreement shall no longer be in effect, the Trust will (by amendment of its
Agreement and Declaration of Trust, if necessary) cease to use any name derived
from the name "Burridge," any name similar thereto or any other name
indicating that it is advised by or otherwise connected with the Adviser, or
with any organization which shall have succeeded to the Adviser's business as
investment adviser. The consent of the Adviser to the use of such name by the
Trust shall not prevent the Adviser's permitting any other enterprise, including
another investment company, to use such name or names.
12. DURATION AND RENEWAL.
(a) Unless sooner terminated in accordance with Section 13 hereof,
this Agreement shall continue in effect until December ___, 1999, and thereafter
from year to year only so long as such continuance is specifically approved at
least annually by (a) a majority of those trustees who are not interested
persons of the Trust or of the Adviser, voting in person at a meeting called for
the purpose of voting on such approval, and (b) either the board of trustees of
the Trust or a vote of the holders of a majority of the outstanding shares of
the Fund (which term as used throughout this Agreement shall be construed in
accordance with the definition of "vote of a majority of the outstanding voting
securities of a company" in Section 2(a)(42) of the 1940 Act).
(b) Any approval of this Agreement by the holders of a majority of
the outstanding shares of the Fund shall be effective to continue this Agreement
notwithstanding that it has not been approved by the vote of a majority of the
outstanding shares of the Trust, unless such approval shall be required by any
other applicable law or otherwise.
13. TERMINATION. This Agreement may be terminated at any time, without
payment of any penalty, by the board of trustees of the Trust, or by a vote of
the holders of a majority of the outstanding shares of the Fund, upon 60 days'
written notice to the Adviser. This Agreement may be terminated by the Adviser
at any time upon 60 days' written notice to the Trust. This Agreement shall
terminate automatically in the event of its assignment (as defined in Section
2(a)(4) of the 1940 Act).
14. AMENDMENT. This Agreement may not be amended without the affirmative
vote of (a) a majority of those trustees who are not "interested persons" (as
defined in Section 2(a)(19) of the 1940 Act) of the Trust and (b) the holders of
a majority of the outstanding shares of the Fund.
15. GOVERNING LAW. The terms and provisions of this Agreement shall be
interpreted under and governed by the law of the State of Illinois.
16. RESTATEMENT OF PRIOR AGREEMENT. This Agreement amends, restates, and
supersedes in its entirety the Investment Advisory Agreement dated December ___,
1996 between the Trust and the Adviser.
175. NOTICES. Any notices and communications required hereunder shall be in
writing and shall be deemed given when delivered in person or when sent by
first-class, registered or certified mail to the Adviser at 115 South LaSalle
Street, Chicago, Illinois 60603 and to the Fund at 115 South LaSalle Street,
Chicago, Illinois 60603, or at such address as either party may from time to
time specify by notice to the other.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first above written.
BURRIDGE FUNDS, on behalf of THE BURRIDGE GROUP LLC
BURRIDGE CAPITAL DEVELOPMENT FUND
By: By:
----------------------- -----------------------
Kenneth M. Arenberg Richard M. Burridge
President Chairman
BURRIDGE FUNDS
BURRIDGE CAPITAL DEVELOPMENT FUND
INVESTMENT SUB-ADVISORY AGREEMENT
THIS AGREEMENT, dated the ______ day of December, 1997, is made and entered
into by and between THE BURRIDGE GROUP LLC, a Delaware limited liability company
(the "Adviser") and GEOCAPITAL LLC, a Delaware limited liability company (the
"Sub-Adviser").
WITNESSETH:
WHEREAS, the Adviser has been retained as the investment adviser to the
Burridge Capital Development Fund (the "Fund"), a series of Burridge Funds, a
Massachusetts business trust (the "Trust"), an open-end management investment
company, registered as such under the Investment Company Act of 1940, as amended
(the "1940 Act"); and
WHEREAS, pursuant to the Amended and Restated Investment Advisory Agreement
(the "Advisory Agreement") dated December ____, 1997 between the Trust and the
Adviser, the Adviser is authorized to retain one or more sub-advisers to serve
as portfolio managers for a specified portion of the Fund's assets (the
"Allocated Portion"); and
WHEREAS, the Sub-Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and is engaged in the business of
supplying investment advisory services as an independent contractor; and
WHEREAS, the Fund and the Adviser desire to retain the Sub-Adviser as an
investment manager to render portfolio advice and services to the Fund pursuant
to the terms and provisions of this Agreement, and Sub-Adviser desires to
furnish said advice and services; and
WHEREAS, the Trust and the Fund are third party beneficiaries of this
Agreement.
NOW, THEREFORE, in consideration of the covenants and mutual promises
hereinafter set forth, the parties to this Agreement, which shall include the
Trust on behalf of the Fund as a third party beneficiary hereof, intending to be
legally bound hereby, mutually agree as follows:
1. APPOINTMENT OF SUB-ADVISER.
(a) Adviser hereby employs the Sub-Adviser, and the Sub-Adviser
hereby accepts such employment, to render investment advice and related services
with respect to the Allocated Portion of the assets of the Fund for the
compensation herein provided.
(b) The Sub-Adviser's employment shall be solely with respect to an
Allocated Portion of the Fund's assets, such Allocated Portion to be specified
by the Adviser and subject to periodic increases or decreases at the Adviser's
sole discretion; provided, however, that in no event shall the Allocated Portion
exceed 67% of the assets of the Fund.
2. DUTIES OF SUB-ADVISER.
(a) The Sub-Adviser shall act as an investment manager to the Fund
and shall invest the Sub-Adviser's Allocated Portion of the assets of the Fund,
subject to the supervision of Adviser and the board of trustees of the Trust for
the period and on the terms set forth herein. The Sub-Adviser shall give due
consideration to the investment policies and restrictions and the other
statements concerning the Fund in the Trust's Agreement and Declaration of
Trust, bylaws and registration statements under the 1940 Act and the Securities
Act of 1933 (the "1933 Act"), and to the provisions of the Internal Revenue
Code applicable to the Trust as a regulated investment company. Adviser shall
provide to the Sub-Adviser such information with respect to the Fund such that
the Sub-Adviser will be able to maintain compliance with all applicable laws,
regulations, policies, and restrictions with respect to the Sub-Adviser's
Allocated Portion. The Sub-Adviser shall for all purposes be an independent
contractor and not an agent of Adviser, the Trust, or the Fund, and unless
otherwise expressly provided or authorized, shall have no authority to act for
or represent the Trust or the Fund in any way.
(b) The Sub-Adviser shall place all orders for the purchase and sale
of portfolio securities for the account of the Fund with brokers or dealers
selected by the Sub-Adviser, although the Fund will pay the actual brokerage
commissions on portfolio transactions in accordance with Section 5 of this
Agreement. In executing portfolio transactions and selecting brokers or dealers,
the Sub-Adviser will use its best efforts to seek on behalf of the Fund the best
overall terms available for any transaction. The Sub-Adviser shall consider all
factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the commission, if any (for the
specific transaction and on a continuing basis).
(c) To the extent contemplated by the Trust's registration statement
under the 1933 Act, in evaluating the best overall terms available, and in
selecting the broker or dealer to execute a particular transaction, the Sub-
Adviser may also consider the brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934) provided to
the Fund and/or other accounts over which the Sub-Adviser (or an affiliate of
the Sub-Adviser) exercises investment discretion. Consistent with the Rules of
Fair Practice of the National Association of Securities Dealers, Inc., and
subject to seeking the most favorable combination of net price and execution
available, the Sub-Adviser may consider sales of shares of the Fund as a factor
in the selection of broker-dealers to execute portfolio transactions for the
Fund. The Sub-Adviser is authorized to pay to a broker or dealer who provides
such brokerage and research services a commission for executing a portfolio
transaction for the Fund which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if, but only
if, the Sub-Adviser determines in good faith that such commission was reasonable
in relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of that particular transaction or in terms of
all of the accounts over which investment discretion is so exercised.
(d) The Sub-Adviser shall provide such information to the Adviser or
the Fund and permit compliance inspections by the Adviser or the Fund as shall
be reasonably necessary to permit the Adviser or the Fund to satisfy their
obligations to the reasonable requests of the Board of Trustees of the Trust.
3. SERVICES OTHER THAN AS SUB-ADVISER. The Sub-Adviser (or an affiliate
of the Sub-Adviser) may act as broker for the Trust in connection with the
purchase or sale of securities by or to the Trust if and to the extent permitted
by procedures adopted from time to time by the board of trustees of the Trust.
Such brokerage services are not within the scope of the duties of the the Sub-
Adviser under this agreement, and, within the limits permitted by law and the
trustees, the Sub-Adviser (or an affiliate of the Sub-Adviser) may receive
brokerage commissions, fees or other remuneration from the Trust for such
services in addition to its fee for services as the Sub-Adviser. Within the
limits permitted by law, the Sub-Adviser may receive compensation from the
Adviser or the Trust for other services performed for the Adviser or the Trust
which are not within the scope of the duties of the Sub-Adviser under this
agreement.
4. EXPENSES TO BE PAID BY SUB-ADVISER. The Sub-Adviser shall furnish, at
its own expense, all necessary office facilities, equipment, and personnel for
managing its Allocated Portion, providing shareholder servicing and providing
general administrative services to the Fund and to the Trust with respect to its
Allocated Portion. The Sub-Adviser shall also assume and pay all other expenses
incurred by it in connection with managing its Allocated Portion. To the extent
the Sub-Adviser incurs any costs or expenses by assuming costs or expenses which
are an obligation of the Adviser or the Fund, the Adviser shall promptly
reimburse the Sub-Adviser for such costs and expenses. To the extent the Sub-
Adviser performs services for which the Adviser or the Fund is obligated to pay,
the Sub-Adviser shall be entitled to prompt reimbursement from the Adviser, but,
under no circumstances, shall such reimbursement exceed the Sub-Adviser's actual
costs for providing such services.
5. EXPENSES TO BE PAID BY THE TRUST. The Trust shall assume and pay all
other costs and expenses not specifically assumed by the Sub-Adviser in Section
4 of this Agreement, or by the Adviser in the Advisory Agreement, including, but
not limited to: (i) all accounting, auditing and legal services, clerical and
statistical services, administrative costs; (ii) all costs attributable to
shareholder and investor services relating to the Fund (including, without
limitation, telephone and personnel expenses and the charges, if any, of third
parties performing such services); (iii) all expenses of maintaining the
registration of shares of the Fund under the 1933 Act and of qualifying and
maintaining qualification of shares of the Fund under the securities laws of
such United States jurisdictions as the Trust may from time to time reasonably
designate; (iv) all expenses of determining daily price computations and
performing related bookkeeping services; (v) all charges of depositories,
custodians, and other agencies for the safekeeping and servicing of the Fund's
cash, securities, and other property and of the Trust's transfer, dividend
disbursing, and redemption agents and registrars, if any; (vi) insurance
expenses; (vii) all expenses of publication of notices and reports to the
Trust's shareholders; (viii) all expenses of proxy solicitations of the Trust or
its board of trustees; (ix) all expenses of maintaining the Trust's existence
and maintaining the registration of the Trust under the 1940 Act; (x) all fees
and expenses incurred in connection with the services to the Trust of trustees
who are not "interested persons" of the Trust as defined in the 1940 Act; (xi)
the compensation to the Adviser provided in Section 6 of this Agreement; (xii)
all taxes and fees payable to federal, state, or other governmental agencies,
domestic or foreign; (xiii) all stamp or other transfer taxes; (xiv) all
interest charges; and (xv) any extraordinary costs or expenses such as legal,
accounting, or other costs or expenses not incurred in the course of the Trust's
ongoing operation. In addition to the payment of the foregoing expenses the
Trust shall also pay all brokers' commissions and other portfolio transaction
costs. Any expenses borne by the Trust that are attributable solely to the
organization, operation or business of the Fund are charged against the Fund.
Other expenses of the Trust are allocated among its portfolios on a reasonable
basis as determined by the Trust's board of trustees.
6. SUB-ADVISORY FEE. For the services to be rendered and the charges and
expenses to be assumed and to be paid by the Sub-Adviser hereunder, the Adviser
shall pay to the Sub-Adviser a fee, accrued daily and paid monthly, at the
annual rate of (i) 0.75% of the first $500 million of the average daily net
assets of the Fund attributable to the Sub-Adviser's Allocated Portion; (ii)
0.65% of the average daily net assets of the Fund attributable to the Sub-
Adviser's Allocated Portion in excess of $500 million and less than $1 billion;
and (iii) 0.60% of the average daily net assets of the Fund attributable to the
Sub-Adviser's Allocated Portion of $1 billion or more. The fee payable hereunder
shall be reduced proportionately during any month in which this Agreement is not
in effect for the entire month. The fee for each calendar month or portion
thereof shall be payable on the first business day of the next month.
7. NON-EXCLUSIVITY. The Adviser's employment of the Sub-Adviser hereunder
is not exclusive. The Sub-Adviser shall be free to render similar services to
others so long as its services under this agreement are not impaired by such
other activities. Likewise, the Adviser may employ other individuals or entities
in addition to the Sub-Adviser to furnish it with the services provided for
herein.
8. LIABILITY OF SUB-ADVISER.
(a) The Sub-Adviser shall be responsible for the accuracy and
completeness (and shall be liable for the lack thereof) of the statements and
information furnished by the Sub-Adviser for use by the Adviser in the Fund's
offering materials (including the prospectus, the statement of additional
information, advertising, and sales materials) that pertain to the Sub-Adviser
and the investment of the Sub-Adviser's Allocated Portion of the Fund. The Sub-
Adviser shall not be responsible or liable for any other disclosures
(b) Except as provided in subsection (a), the Sub-Adviser shall not
be liable to the Adviser, the Trust or its shareholders for any loss suffered by
the Adviser, the Trust or its shareholders from or as a consequence of any act
or omission of the Sub-Adviser, or of any of the directors, officers, employees,
or agents of the Sub-Adviser, in connection with, pursuant to or arising out of
this Agreement, except by reason of willful misfeasance, bad faith, or gross
negligence on the part of the Sub-Adviser in the performance of its duties or by
reason of reckless disregard by the Sub-Adviser of such obligations and duties
under this Agreement.
9. LIABILITY OF ADVISER. The obligations of the Adviser hereunder shall
not be binding upon the Fund or upon any of the trustees, shareholders,
nominees, officers, agents or employees of the Trust.
10. DURATION AND RENEWAL.
(a) Unless sooner terminated in accordance with Section 11 hereof,
this Agreement shall continue in effect until December ____, 1999, and
thereafter from year to year only so long as such continuance is specifically
approved at least annually by (a) a majority of those trustees who are not
interested persons of the Trust or of the Adviser, voting in person at a meeting
called for the purpose of voting on such approval, and (b) either the board of
trustees of the Trust or a vote of the holders of a majority of the outstanding
shares of the Fund (which term as used throughout this agreement shall be
construed in accordance with the definition of "vote of a majority of the
outstanding voting securities of a company" in section 2(a)(42) of the 1940
Act).
(b) Any approval of this agreement by the holders of a majority of
the outstanding shares of the Fund shall be effective to continue this agreement
notwithstanding that it has not been approved by the vote of a majority of the
outstanding shares of the Trust, unless such approval shall be required by any
other applicable law or otherwise.
11. TERMINATION. This agreement may be terminated at any time, without
payment of any penalty, by the Adviser, by the board of trustees of the Trust,
or by a vote of the holders of a majority of the outstanding shares of the Fund,
upon 60 days' written notice to the Sub-Adviser. This agreement may be
terminated by the Sub-Adviser at any time upon 60 days' written notice to the
Adviser. This agreement shall terminate automatically in the event of its
assignment (as defined in section 2(a)(4) of the 1940 Act).
12. AMENDMENT. This agreement may not be amended without (i) the consent
of Adviser, and (ii) the affirmative vote of (a) a majority of those trustees
who are not "interested persons" (as defined in Section 2(a)(19) of the 1940
Act) of the Trust, and (b) the holders of a majority of the outstanding shares
of the Fund.
13. GOVERNING LAW. The terms and provisions of this Agreement shall be
interpreted under and governed by the law of the State of Illinois.
14. NOTICES. Any notices and communications required hereunder shall be in
writing and shall be deemed given when delivered in person or when sent by
first-class, registered or certified mail to the Sub-Adviser at 767 Fifth
Avenue, New York, New York 10153, and to the Adviser, the Trust or the Fund at
115 South LaSalle Street, Chicago, Illinois 60603, or at such other addresses as
either party may from time to time specify by notice to the other.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first above written.
THE BURRIDGE GROUP LLC GEOCAPITAL
By: By: -----------------------------
-----------------------
Richard M. Burridge -----------------------------
Chairman
-----------------------------
As a Third Party Beneficiary,
BURRIDGE FUNDS,
on behalf of
BURRIDGE CAPITAL DEVELOPMENT FUND
By: /s/ Kenneth M. Arenberg
-----------------------
Kenneth M. Arenberg
President
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated August 1, 1997, and to all references to our firm included in or made a
part of this registration statement on Form N-1A of Burridge Funds, comprising
the Burridge Capital Development Fund.
/s/ ARTHUR ANDERSON LLP
Chicago, Illinois
October 15,1997
BURRIDGE CAPITAL DEVELOPMENT FUND
SCHEDULE OF COMPUTATION OF PERFORMANCE QUOTATIONS
TOTAL RETURN
For the Period from December 27, 1996
(commencement of operations)
to June 30, 1997
Total Return=(Ending Redeemable Value/Initial Value)-1
Total Return=(1069.00/1,000.00)-1
Total Return=6.90%
<TABLE> <S> <C>
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<NAME> BURRIDGE FUNDS
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 7-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> DEC-27-1996
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 369,171
<INVESTMENTS-AT-VALUE> 383,429
<RECEIVABLES> 501
<ASSETS-OTHER> 79,880
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 463,810
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 103,024
<TOTAL-LIABILITIES> 103,024
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 344,130
<SHARES-COMMON-STOCK> 33,764
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<ACCUMULATED-NET-GAINS> (3,420)
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<ACCUM-APPREC-OR-DEPREC> 14,258
<NET-ASSETS> 360,786
<DIVIDEND-INCOME> 807
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<NET-INVESTMENT-INCOME> (52)
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<APPREC-INCREASE-CURRENT> 14,258
<NET-CHANGE-FROM-OPS> 10,786
<EQUALIZATION> 0
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<NUMBER-OF-SHARES-REDEEMED> 0
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<NET-CHANGE-IN-ASSETS> 360,786
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 1,330
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<GROSS-EXPENSE> 79,642
<AVERAGE-NET-ASSETS> 260,932
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .17
<PER-SHARE-GAIN-APPREC> .52
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
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<PER-SHARE-NAV-END> 10.69
<EXPENSE-RATIO> 1.5
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
