As filed with the Securities and Exchange Commission on December 23, 1997
Securities Act Registration No. 333-39133
Investment Company Act Registration No. 811-8461
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No. ____ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 [X]
Amendment No. 1 [ ]
GRAND PRIX FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
Wilton Executive Campus
15 River Road, Suite 220 06897
Wilton, Connecticut (Zip Code)
(Address of Principal Executive
Offices)
Registrant's Telephone Number, including Area Code:
(203) 761-9600
Robert Zuccaro
Target Investors, Inc.
Wilton Executive Campus
15 River Road, Suite 220
Wilton, Connecticut 06897
(Name and Address of Agent for Service)
Copies to:
Carol A. Gehl
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202
Approximate date of proposed public offering: As soon
as practicable after the Registration Statement becomes
effective.
In accordance with Rule 24f-2 under the Investment
Company Act of 1940, Registrant declares that an
indefinite number of shares of its common stock, $.01
par value, is being registered by this Registration
Statement.
The Registrant hereby amends this Registration
Statement on such date or dates as may be necessary to
delay its effective date until the Registrant shall
file a further amendment which specifically states that
this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may
determine.
<PAGE>
CROSS REFERENCE SHEET
(Pursuant to Rule 481 showing the location in
the Prospectus and the Statement of Additional
Information of the responses to the Items of Parts A
and B of Form N-1A).
Caption or Subheading in
Prospectus or Statement
Item No. on Form N-1A of Additional Information
PART A - INFORMATION REQUIRED IN PROSPECTUS
1. Cover Page Cover Page
2. Synopsis Investor Expenses;
Highlights
3. Condensed Financial *
Information
4. General Description of Investment Strategy;
Registrant Implementation of
Policies and Risks; Investment
Objective and Restrictions;
Fund Organization and
Management
5. Management of the Fund Fund Organization and
Management
5A. Management's Discussion
of Fund Performance *
6. Capital Stock and Other Highlights; Fund
Securities Organization and
Management; Dividends, Capital
Gain Distributions and
Tax Treatment
7. Purchase of Securities Fund Organization and
Being Offered Management; Your Account;
Determination of Net Asset
Value; Distribution and
Shareholder Servicing Plan
8. Redemption or Repurchase Your Account;
Determination of Net Asset
Value
9. Pending Legal Proceedings *
PART B - INFORMATION REQUIRED IN STATEMENT OF
ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information *
and History
<PAGE>
13. Investment Investment Objective and
Objectives and Policies Restrictions; Investment
Policies and Techniques; Fund
Transactions and Brokerage
14. Management of the Directors and Officers;
Fund Investment Advisor
15. Control Persons and Principal Shareholders;
Principal Holders of Directors and Officers
Securities
16. Investment Advisory Investment Advisor; Fund
and Other Services Organization and Management
(in Prospectus); Plan of
Distribution; Custodian,
Transfer Agent and Dividend-
Disbursing Agent; Independent
Auditors
17. Brokerage Allocation Fund Transactions and
and Other Practices Brokerage
18. Capital Stock and Included in Prospectus
Other Securities under the heading Fund
Organization and Management
19. Purchase, Redemption and Included in Prospectus
Pricing of Securities Being under the headings Your
Offered Account; Determination of Net
Asset Value; and in the
Statement of Additional
Information under the heading
Plan of Distribution
20. Tax Status Included in Prospectus
under the heading
Dividends, Capital Gain
Distributions and Tax
Treatment; and in the
Statement of Additional
Information under the heading
Taxes
21. Underwriters *
22. Calculations of Performance
Performance Data Information
23. Financial Financial Statements
Statements
________________________
* Answer negative or inapplicable.
<PAGE>
PROSPECTUS
December 31, 1997
[Logo]
GRAND PRIX FUNDS, INC.
Grand Prix Fund
Wilton Executive Campus
15 River Road, Suite 220
Wilton, Connecticut 06897
Telephone: 1-800-432-4741
Grand Prix Funds, Inc. ("Corporation") is an open-
end, management investment company, commonly referred
to as a mutual fund. The Corporation currently
comprises one non-diversified portfolio: the Grand Prix
Fund ("Fund"). The Fund's investment objective is
capital appreciation. The Fund seeks to achieve its
investment objective by investing primarily in common
stocks of companies that exhibit fast earnings growth
and are rising in price. Target Holdings Corporation,
doing business as Target Investors (the "Advisor"),
believes that the use of this momentum strategy has the
potential for higher returns than other investment
strategies. Under federal securities laws, the Fund is
"not diversified." As a result, it may be more
vulnerable than a "diversified" fund to fluctuations in
the value of the companies in the Fund's portfolio.
This Prospectus contains information you should
consider before you invest in the Fund. Please read it
carefully and keep it for future reference. A
Statement of Additional Information ("SAI") for the
Fund, dated December 31, 1997, contains further
information, is incorporated by reference into this
Prospectus, and has been filed with the Securities and
Exchange Commission ("SEC"). The SAI, which may be
revised from time to time, is available without charge
upon request to the Fund at the above-noted address or
telephone number.
____________________
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>
CONTENTS
INVESTOR EXPENSES 3
HIGHLIGHTS 4
INVESTMENT STRATEGY 5
IMPLEMENTATION OF POLICIES AND RISKS 6
INVESTMENT OBJECTIVE AND RESTRICTIONS 8
PRIOR PERFORMANCE OF THE ADVISOR 9
FUND ORGANIZATION AND MANAGEMENT 9
YOUR ACCOUNT 10
DETERMINATION OF NET ASSET VALUE 17
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN 17
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX TREATMENT 18
FUND PERFORMANCE 18
ADDITIONAL INFORMATION 20
No person has been authorized to give any
information or to make any representations other than
those contained in this Prospectus and the SAI, and if
given or made, such information or representations may
not be relied upon as having been authorized by the
Fund. This Prospectus does not constitute an offer to
sell securities in any state or jurisdiction in which
such offering may not lawfully be made.
<PAGE>
INVESTOR EXPENSES
The following information is provided to help you
understand the various costs and expenses that you, as
an investor in the Fund, will bear directly or
indirectly.
Shareholder Transaction Expenses(1)
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fees None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 1.00%
Rule 12b-1 Fees(2) 0.25%
Other Expenses (after
waivers or reimbursements)(3) 0.40%
Total Operating Expenses
(after waivers or reimbursements)(3) 1.65%
____________
(1) There are certain charges associated with
certain special shareholder services offered by the
Fund, including a $23 fee for returned checks or
electronic funds transfers and a $10 fee for wire
redemptions. For additional information, see "Your
Account." Purchases and redemptions may also be
made through broker-dealers or other financial
intermediaries who may charge a commission or other
transaction fee for their services.
(2) See "Distribution and Shareholder Servicing
Plan" for detailed information relating to the Rule
12b-1 distribution and shareholder servicing plan
("Plan"). Consistent with the National Association
of Securities Dealers, Inc.'s ("NASD") rules, Rule
12b-1 fees could cause long-term investors in the
Fund to pay more than the economic equivalent of the
maximum front-end sales charges permitted under
those rules.
(3) The Advisor has agreed to limit the total
operating expenses of the Fund (excluding interest,
taxes, brokerage and extraordinary expenses) to an
annual rate of 1.65% of the Fund's average net
assets until December 31, 1998. After such date,
the expense limitation may be terminated or revised
at any time. Absent this limitation, other expenses
and total operating expenses of the Fund are
estimated to be 0.87% and 2.12%, respectively. For
additional information, see "Fund Organization and
Management."
Example
You would pay the following expenses on a $1,000
investment, assuming a 5% annual return and redemption
at the end of each time period.
1 year $17
3 years $52
The Example is based on the above-described "Total
Operating Expenses." REMEMBER THAT THE EXAMPLE SHOULD
NOT BE CONSIDERED AS REPRESENTATIVE OF PAST OR FUTURE
EXPENSES AND THAT ACTUAL EXPENSES MAY BE HIGHER OR
LOWER THAN THOSE SHOWN. The assumption in the Example
of a 5% annual return is required by SEC regulations.
The assumed 5% annual return is not a prediction of,
and does not represent, the projected or actual
performance of the Fund's shares.
<PAGE>
HIGHLIGHTS
What is the objective of the Fund?
The Fund's investment objective is capital
appreciation. The Fund seeks to achieve its investment
objective by investing primarily in common stocks of
companies that the Advisor believes have the potential
for revenue and earnings growth superior to that of
companies with similar market or business
characteristics. The Advisor will not consider
dividend or interest income in the selection of
investments. See "Investment Strategy" and "Investment
Objective and Restrictions."
In what types of companies/securities will the Fund
invest?
The Advisor intends to invest primarily in common
stocks of companies which the Advisor characterizes as
"growth" companies. The Fund's securities selections
will be made without regard to an issuer's market
capitalization; however, the Advisor anticipates that
most investments will be made in companies that have a
small-to-medium market capitalization. In the
Advisor's opinion, a growth company is a company that
is likely to experience positive sales and earnings
growth at above average rates.
Under normal circumstances, the Fund will be fully
invested in common stocks, except that a small portion
of the Fund's assets may be held in short-term money
market securities and cash to pay redemption requests
and Fund expenses and pending investment. Under
unusual circumstances, as a defensive technique, the
Fund may invest up to 25% of its total assets in cash
and/or money market instruments deemed by the Advisor
to be consistent with a temporary defensive posture.
The Fund may but does not intend to leverage its assets
or invest in options, futures, derivative contracts,
initial public offerings or other exotic securities or
arrangements. See "Implementation of Policies and
Risks."
In an effort to increase returns, the Fund expects
to trade actively. The annual portfolio turnover rate
could range from 400 to 800% or higher but generally
will not exceed 1,500%. Higher portfolio turnover
rates usually generate additional brokerage commissions
and expenses and the short-term gains realized from
these transactions are taxable to shareholders as
ordinary income. See "Implementation of Policies and
Risks."
What are the potential risks of investing in the Fund?
Equity securities fluctuate in value, often based
on factors unrelated to the value of the issuer of the
securities, and such fluctuations can be pronounced.
Changes in the value of the Fund's investments will
result in changes in the value of its shares and thus
the Fund's total return to investors. In addition,
because the Fund has elected not to be subject to the
diversification rules of the Investment Company Act of
1940, as amended ("1940 Act"), a relatively larger
percentage of the Fund's assets may be invested in
relatively fewer companies than is typical of other
mutual funds. This non-diversification may increase
volatility. See "Implementation of Policies and
Risks."
Is an investment in the Fund appropriate for me?
The Fund is suitable for long-term investors only.
It is not a short-term investment vehicle. An
investment in the Fund may be appropriate if you seek
capital appreciation; seek a mutual fund for the
aggressive equity portion of your portfolio; have no
immediate financial requirements for this investment;
and are willing to accept a high degree of volatility.
The Fund is designed for investors who have the
financial ability to undertake greater risk in exchange
for the opportunity to realize greater financial gains
in the future. See "Investment Objective and
Restrictions."
<PAGE>
Who will manage my investment?
Target Investors ("Advisor") serves as investment
advisor to the Fund. As of September 30, 1997, the
Advisor managed approximately $1 billion for individual
and institutional clients. See "Prior Performance of
the Advisor" and "Fund Organization and Management."
How can I purchase or redeem Fund shares?
You may purchase Fund shares at the Fund's net
asset value. Fund shares are sold without a sales
charge. You may be charged a nominal fee if you effect
transactions in Fund shares through a securities
dealer, bank or other financial institution. No
certificates are issued for shares. The Fund reserves
the right to reject any purchase order.
You may request redemption of Fund shares at any
time. There are no redemption charges. For
redemptions by wire, however, there is a $10 fee. When
a redemption request is received in good order, the
Fund will redeem the shares at the Fund's next net
asset value determined after receipt of the request.
See "Your Account."
The Fund has adopted a distribution and
shareholder servicing plan under Rule 12b-1 of the 1940
Act, which authorizes the Fund to pay a yearly
distribution and/or shareholder servicing fee of up to
0.25% of the average daily net assets of the Fund. See
"Your Account" and "Distribution and Shareholder
Servicing Plan."
The minimum initial investment is $5,000.
Subsequent investments must be at least $1,000. These
minimums may be changed or waived at any time by the
Fund. See "Your Account."
What is the Fund's policy regarding dividends and other
distributions?
You should not expect income from the Fund.
However, as required by law, to avoid double taxation,
the Fund will distribute substantially all of its net
realized capital gains and net investment income, if
any, to shareholders annually in the form of a
distribution and/or dividend, taxable to you as capital
gain or ordinary income. In the absence of specific
instructions to the contrary, distributions and
dividends will be reinvested in additional Fund shares
and will not be available for the payment of taxes.
See "Implementation of Policies and Risks" and
"Dividends, Capital Gain Distributions and Tax
Treatment."
Who should I contact if I have questions?
General inquiries regarding the Fund can be
addressed to either your investment professional or the
Fund at the address or telephone number listed on the
cover page of this Prospectus.
INVESTMENT STRATEGY
The Fund seeks to invest in the equity securities
of companies, regardless of size, which, in the opinion
of the Advisor, will experience positive earnings
growth at an above average rate. Although the Advisor
may invest in companies of all sizes, the Advisor
expects that most investments will be made in companies
with small to medium market capitalizations. The
Advisor focuses on companies which exhibit fast
earnings growth and are rising in price. The Advisor's
general strategy is to be fully invested with at least
95% of assets invested in equity securities. Although
the Advisor's investment strategy is based on company
fundamentals, companies considered by the Advisor to be
"growth" companies are often in the same or related
market sectors. Thus, the Fund may be heavily invested
in a single sector. One sector, however, like
technology, may include various industries, like
networking, telecommunications, software,
semiconductors or voice-processing. The Fund may be
concentrated in one sector, while being diversified
among several industries. The Fund may take relatively
large positions in a single issuer. To the extent the
Fund is concentrated, it will be susceptible to adverse
economic, political, regulatory or market developments
affecting a single sector, industry or issuer.
Additionally, the Fund will invest in a limited number
of companies. This may increase the volatility of
investment performance. Furthermore, as a means to
increase returns, the Fund expects to trade actively.
The annual portfolio turnover rate could range from 400
to 800% or higher but generally will not exceed 1,500%.
<PAGE>
When making purchase decisions for the Fund, the
Advisor uses a "buy discipline" that involves three key
components: research, fundamentals, and valuation.
The Advisor develops its own research. Using a
computer-driven model, the Advisor screens for certain
fundamental attributes that it believes a "buy"
candidate should possess, including (i) projected sales
growth of 20% or more; (ii) projected earnings growth
of 20% or more; and (iii) unexpected good earnings.
The Advisor then assigns scores to the securities based
on such factors and ranks the securities accordingly.
Pursuant to that ranking, the Advisor constructs a list
of securities for the Fund and purchases the highest
ranking securities for its portfolio. Companies are
rescored and the portfolio is rebalanced weekly for
variations from expectations.
The Advisor makes sell decisions for the Fund
based on two primary factors: significant deterioration
in the price of the securities or better relative value
in other securities.
IMPLEMENTATION OF POLICIES AND RISKS
In implementing its investment strategy, the Fund
may use the following securities and investment
techniques. Some of these securities and investment
techniques involve special risks, which are described
below, elsewhere in this Prospectus or in the Fund's
SAI.
Common Stocks and Other Equity Securities
The Fund will invest in common stocks and other
equity securities. Other equity securities may include
depository receipts and warrants and other securities
convertible or exchangeable into common stock. Common
stocks and other equity securities generally increase
or decrease in value based on the earnings of a company
and on general industry and market conditions. A fund
that invests a significant amount of its assets in
common stocks and other equity securities is likely to
have greater fluctuations in share price than a fund
that invests a significant portion of its assets in
fixed-income securities.
Small and Medium Market Capitalization Companies
The Fund may invest a substantial portion of its
assets in small and medium-sized companies. While
small and medium-sized companies generally have
potential for rapid growth, investments in such
companies often involve greater risks than investments
in larger, more established companies because small and
medium-sized companies may lack the management
experience, financial resources, product
diversification, and competitive strengths of larger
companies. In addition, in many instances the
securities of small and medium-sized companies are
traded only over-the-counter or on a regional
securities exchange, and the frequency and volume of
their trading is substantially less than is typical of
larger companies. Therefore, the securities of small
and medium-sized companies may be subject to greater
and more abrupt price fluctuations. When making large
sales, the Fund may have to sell portfolio holdings at
discounts from quoted prices or may have to make a
series of small sales over an extended period of time
due to the trading volume of small and medium-sized
company securities. Investors should be aware that,
based on the foregoing factors, an investment in the
Fund may be subject to greater price fluctuations than
an investment in a fund that invests primarily in
larger, more established companies. The Advisor's
research efforts may also play a greater role in
selecting securities for the Fund than in a fund that
invests in larger, more established companies.
Unseasoned Companies
The Fund may invest in securities of unseasoned
companies. These are companies that have been in
operation less than three years, including the
operations of any of their predecessors. The
securities of such companies may have limited liquidity
and the prices of such securities may be volatile. The
Fund currently intends to invest no more than 10% of
its total assets in securities of unseasoned companies.
The Fund may only invest up to 5% of its net assets in
illiquid securities.
<PAGE>
Non-Diversification and Sector Concentration
As a "non-diversified" fund, the Fund is permitted
to invest its assets in a more limited number of
issuers than other investment companies. Under the
Internal Revenue Code of 1986 (the "Code"), however,
for income tax purposes, the Fund (i) may not invest
more than 25% of its assets in the securities of any
one company or in the securities of any two or more
companies controlled by the Fund which, pursuant to
regulations under the Code, may be deemed to be engaged
in the same, similar, or related trades or businesses
and (ii) with respect to 50% of its assets, may not
invest more than 5% of its assets in the securities of
any one company and may not own more than 10% of the
outstanding voting securities of a single company.
Thus, as a "non-diversified" fund under the 1940 Act,
the Fund may invest (i) up to 50% of its assets in the
securities of as few as two companies, up to 25% each,
so long as the Fund does not control the two companies
or so long as the two companies are engaged in
different businesses and (ii) up to 50% of its assets
in the securities of as few as ten companies, up to 5%
each, provided that, in any event, the Fund does not
own in excess of 10% of any company's outstanding
voting stock. This practice involves an increased risk
of loss to the Fund if the market value of a security
should decline or its issuer were otherwise unable to
meet its obligations.
The Fund may invest more than 25% of its assets in
securities of companies in one or more market sectors,
such as the technology or health care sector. A market
sector may be made up of companies in a number of
different industries. The Fund will only concentrate
its investments in a particular market sector if the
Advisor believes that the potential investment return
justifies the additional risk associated with
concentration in that sector.
The Fund may invest its assets in fewer than 25
companies. This strategy may increase the volatility
of investment performance and the Fund could incur
greater losses than funds that invest in a greater
number of issuers.
Portfolio Turnover
A change in the investments held by the Fund is
known as "portfolio turnover." The annual portfolio
turnover rate for the Fund is expected to be between
400 and 800% or higher but generally will not exceed
1,500%. High portfolio turnover generally involves
above-average expenses to the Fund, including brokerage
commissions or dealer mark-ups and other transaction
costs on the sale of securities and reinvestment in
other securities. In addition, the short-term gains
realized from these transactions are taxable to
shareholders as ordinary income. In fact, it is
possible that 100% of all capital gains and losses in
any fiscal year may qualify as short-term.
Temporary Strategies
Prior to investing the proceeds from sales of Fund
shares, to meet ordinary daily cash needs, and to
retain the flexibility to respond promptly to changes
in market and economic conditions, the Advisor may hold
cash and/or invest up to 35% of the Fund's total assets
in short-term fixed-income securities issued by private
and governmental institutions. It is impossible to
predict when or for how long the Advisor may employ
such strategies. Short-term fixed income securities
must be rated at least A or higher by Standard & Poor's
("S&P"), Moody's Investors Service, Inc. ("Moody's") or
Fitch Investors Service, Inc. ("Fitch") or A- or higher
by Duff & Phelps, Inc. ("D&P"), and include without
limitation the following securities, each of which has
a stated maturity of one year or less from the date of
purchase unless otherwise indicated, or securities
which the Advisor deems to be of comparable quality to
rated securities: U.S. government securities,
including bills, notes and bonds, differing as to
maturity and rate of interest, which are either issued
or guaranteed by the U.S. Treasury or by U.S.
governmental agencies or instrumentalities;
certificates of deposit issued against funds deposited
in a U.S. bank or savings and loan association; bank
time deposits, which are monies kept on deposit with
U.S. banks or savings and loan associations for a
stated period of time at a fixed rate of interest;
bankers' acceptances which are short-term credit
instruments used to finance commercial transactions;
commercial paper and commercial paper master notes
(which are demand instruments without a fixed maturity
bearing interest at rates which are fixed to known
lending rates and automatically adjusted when such
lending rates change) rated A-1 or better by S&P, Prime-
1 or better by Moody's, Duff 2 or higher by D&P, or
Fitch 2 or higher by Fitch; and repurchase agreements
entered into only with respect to obligations of the
U.S. government, its agencies or instrumentalities.
Repurchase agreements could involve certain risks in
the event of default or insolvency of the other party
to the agreement, including possible delays or
restrictions upon the Fund's ability to dispose of the
underlying securities. Additionally, the Fund may
invest in short-term investment vehicles of a custodian
bank.
<PAGE>
ADRs
The Fund may invest up to 20% of its net assets in
American Depositary Receipts ("ADRs") or other foreign
instruments denominated in U.S. dollars. ADRs are
receipts typically issued by a U.S. bank or trust
company evidencing ownership of the underlying foreign
security and denominated in U.S. dollars. Some
institutions issuing ADRs may not be sponsored by the
issuer. A non-sponsored depository may not provide the
same shareholder information that a sponsored
depository is required to provide under the contractual
arrangements with the issuer, including reliable
financial statements.
Investments in securities of foreign issuers
involve risks which are in addition to the usual risks
inherent in domestic investments. In many countries
there is less publicly available information about
issuers than is available in the reports and ratings
published about companies in the United States.
Additionally, foreign countries are not subject to
uniform accounting, auditing and financial reporting
standards. Other risks inherent in foreign investments
include expropriation; confiscatory taxation;
withholding taxes on dividends and interest; less
extensive regulation of foreign brokers, securities
markets and issuers; costs incurred in conversions
between currencies; the possibility of delays in
settlement in foreign securities markets; limitations
on the use or transfer of assets (including suspension
of the ability to transfer currency from a given
country); the difficulty of enforcing obligations in
other countries; diplomatic developments; and political
or social instability. Foreign economies may differ
favorably or unfavorably from the U.S. economy in
various respects, and many foreign securities are less
liquid and their prices are more volatile than
comparable U.S. securities. From time to time, foreign
securities may be difficult to liquidate rapidly
without adverse price effects. Certain costs
attributable to foreign investing, such as custody
charges and brokerage costs, are higher than those
attributable to domestic investing.
INVESTMENT OBJECTIVE AND RESTRICTIONS
The Fund's investment objective is capital
appreciation. This investment objective is fundamental
and cannot be changed without shareholder approval.
Under normal market conditions, the Fund will attempt
to achieve this objective by investing at least 65% of
its assets in common stocks of companies which the
Advisor characterizes as "growth" companies. There can
be no assurance that the Fund will achieve its
investment objective or that shares in the Fund will be
worth more at redemption than at acquisition. The Fund
may also hold cash and money market instruments to
provide the Fund with liquidity and flexibility.
In addition, the Fund has adopted certain
fundamental investment restrictions that, like the
Fund's investment objective, may not be changed without
shareholder approval.
Limitation on Borrowing: The Fund may (i) borrow
money from banks for temporary or emergency purposes
(but not for leverage or the purchase of investments)
and (ii) make other investments or engage in other
transactions permissible under the 1940 Act, provided
that the combination of (i) and (ii) shall not exceed
33-1/3% of the value of the Fund's total assets
(including the amount borrowed), less the Fund's
liabilities (other than borrowings). The Fund may also
borrow money from other persons to the extent permitted
by applicable law.
Limitation on Lending: The Fund may not make
loans if, as a result, more than 33-1/3% of the Fund's
assets would be lent to other persons, except through
purchases of debt securities or other debt instruments
or engaging in repurchase agreements.
Limitation on "Senior Securities": The Fund may
not issue senior securities, except as permitted under
the 1940 Act.
All of the Fund's fundamental investment
restrictions are described in the Fund's SAI.
<PAGE>
PRIOR PERFORMANCE OF THE ADVISOR
The following table shows the Advisor's historical
performance data for a bank commingled fund (the
"Account") managed by the Advisor, for the periods
indicated, that has investment objectives, policies,
strategies, and risks substantially similar to those of
the Fund. The Account is not subject to the same
types of expenses to which the Fund is subject nor to
the specific tax restrictions and investment
limitations imposed on the Fund by the Code and the
1940 Act. Consequently, the performance results for
the Account could have been adversely affected if it
had been regulated as an investment company under the
federal tax and securities laws.
The Account's performance has been calculated in
accordance with recommended standards of the
Association for Investment Management and Research
("AIMR"). All returns presented were calculated on a
total return basis and include all dividends and
interest, if any, accrued income, if any, and realized
and unrealized gains and losses. All returns are net
of all fees imposed upon the Account, including
investment advisory fees, brokerage commissions, and
execution costs paid by the Account without provision
for federal or state income taxes. Cash and
equivalents are included in performance returns. Total
return is calculated monthly in accordance with the
"time-weighted" rate of return method provided for by
the AIMR standards, accounted for on a trade-date and
accrual basis. No leveraged positions were utilized.
Principal additions and withdrawals are weighted in
computing the monthly returns based on the timing of
these transactions.
The following data is provided to illustrate the
past performance of the Advisor in managing an account
which is substantially similar to the Fund as measured
against specified market indices and does not represent
the performance of the Fund. Investors should not
consider this performance data as an indication of the
future performance of the Fund or the Advisor.
Account Annualized Performance Through September 30,
1997
Total Return
Time Period Account S&P 500 Mid-Cap
2nd Quarter 22.51% 17.46%
3rd Quarter 32.27% 7.49%
FUND ORGANIZATION AND MANAGEMENT
Organization
The Fund is a series of common stock of a
corporation, Grand Prix Funds, Inc. ("Corporation"), a
Maryland company incorporated on October 30, 1997. The
Corporation is authorized to issue shares of common
stock in series and classes. Each share of common
stock is entitled to one vote, and each share is
entitled to participate equally in dividends and
capital gains distributions. No certificates will be
issued for shares held in your account. You will,
however, have full shareholder rights. Generally, the
Fund will not hold annual shareholders' meetings unless
required by the 1940 Act or Maryland Law. As of
December _____, 1997, _______________ owned a
controlling interest in the Fund.
Management
Under the laws of the State of Maryland, the Board
of Directors of the Corporation is responsible for
managing its business and affairs. The Corporation has
entered into an Investment Advisory Agreement with the
Advisor under which the Advisor manages the Fund's
investments and business affairs, subject to the
supervision of the Corporation's Board of Directors.
<PAGE>
Advisor
The Advisor is a Florida corporation organized in
February 1992. Under the Investment Advisory
Agreement, the Corporation pays the Advisor an annual
management fee of 1.00% of the Fund's average daily net
assets. The advisory fee is accrued daily and paid
monthly. For the fiscal year ending December 31, 1998,
the Advisor has agreed to waive its management fee
and/or reimburse the Fund's operating expenses to the
extent necessary to ensure that the Fund's total
operating expenses do not exceed 1.65% of the Fund's
average daily net assets. After such date, the Advisor
may voluntarily waive all or a portion of its
management fee and/or absorb certain Fund expenses
without further notification of the commencement or
termination of such waiver or absorption. Any waivers
or absorptions will have the effect of temporarily
lowering the Fund's overall expense ratio and
increasing the Fund's overall return to investors.
Under the Investment Advisory Agreement, not only is
the Advisor responsible for management of the Fund's
assets, but also for portfolio transactions and
brokerage.
Portfolio Manager
President of the Advisor, Robert Zuccaro received
a Bachelor's Degree from the University of Bridgeport
in 1965 and a Master's in Business Administration from
Pace University in 1968. Prior to founding Advisor in
1983, Mr. Zuccaro spent six years with Axe-Houghton,
where he was President and Director of Axe-Houghton
Stock Fund and Vice President and Director of portfolio
management of E.W. Axe & Co. Mr. Zuccaro is a
Chartered Financial Analyst.
Custodian and Transfer Agent
Fifth Third Bank ("Fifth Third") acts as custodian
of the Fund's assets ("Custodian"). Sunstone Investor
Services, LLC serves as transfer agent for the Fund
("Transfer Agent").
Administrator
Pursuant to an Administration and Fund Accounting
Agreement, Sunstone Financial Group, Inc. performs
certain compliance and tax reporting functions for the
Fund. For these services, Sunstone Financial Group,
Inc. receives from the Fund a fee, computed daily and
payable monthly, based on the Fund's average net assets
at an annual rate beginning at 0.20% and decreasing as
the assets of the Fund reach certain levels, subject to
an annual minimum of $65,000, plus out-of-pocket
expenses.
Fund Expenses
The Fund is responsible for its own expenses,
including interest charges; taxes; brokerage
commissions; organizational expenses; expenses of
registering or qualifying shares for sale with the
states and the SEC; expenses of issue, sale,
repurchase, or redemption of shares; expenses of
printing and distributing reports and prospectuses to
existing shareholders; charges of custodians; expenses
for accounting, administrative, audit, and legal
services; fees for outside directors; expenses of
fidelity bond coverage and other insurance; expenses of
indemnification; extraordinary expenses; and costs of
shareholder and director meetings.
YOUR ACCOUNT
Purchasing Shares
The Fund is no-load, so you may purchase, redeem
or exchange shares directly at the Fund's net asset
value without paying a sales charge. Because the
Fund's net asset value changes daily, your purchase
price will be the next net asset value determined after
the Fund receives your purchase request in good order.
See "Determination of Net Asset Value."
<PAGE>
ADDITIONAL
INITIAL MINIMUM
TYPE OF ACCOUNT MINIMUM INVESTMENT
INVESTMENT
Regular $5,000 $1,000
Automatic Investment Plan $5,000 $1,000
Gift to Minors $5,000 $1,000
The Fund reserves the right to reject any order
for the purchase of its shares or to limit or suspend,
without prior notice, the offering of its shares. The
required minimum investments may be waived in the case
of qualified retirement plans. The Fund will not
accept your account if you are investing for another
person as attorney-in-fact. The Fund also will not
accept accounts with a "Power of Attorney" or "POA" in
the registration section of the Purchase Application.
Opening an Account by Mail. Please complete the
Purchase Application. You may duplicate any
application or you can obtain additional copies of the
Purchase Application from the Fund by calling
1-800-432-4741.
Your completed Purchase Application should be
mailed directly to:
Grand Prix Funds, Inc.
P.O. Box 1177
Milwaukee, WI 53201-1177
To purchase shares by overnight or express mail,
please use the following street address:
Grand Prix Funds, Inc.
c/o Sunstone Investor Services, LLC
207 East Buffalo Street, Suite 315
Milwaukee, WI 53202-5712
All applications must be accompanied by payment in
the form of a check made payable to "Grand Prix Funds."
All purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks. No cash, credit cards or
third party checks will be accepted. Payment may be
delayed for up to 10 calendar days on redemption
requests for recent purchases made by check in order to
ensure that the check has cleared. If you contemplate
redeeming your investment shortly after purchase, you
should purchase the shares by wire as discussed below.
Opening an Account by Wire. You may make
purchases by direct wire transfers. To ensure proper
credit to your account, you must call the Fund at
1-800-432-4741 for instructions and to obtain an
investor account number prior to wiring funds. Funds
should be wired through the Federal Reserve System as
follows:
Fifth Third Bank
A.B.A. Number 042000314
For credit to: Grand Prix Funds
Account Number 71575856
For further credit to:
(investor account number)
(name or account registration)
(Social Security or Taxpayer Identification Number)
A Purchase Application must be received by the
Fund to establish privileges and to verify your account
information. Payment of redemption proceeds may be
delayed and taxes may be withheld unless the Fund
receives
<PAGE>
a properly completed and executed purchase
application. The Fund reserves the right to refuse a
telephone transaction if it believes it advisable to do
so. If you have any questions, please call the Fund at
1-800-432-4741.
Adding to an Account by Mail. You may make
additional investments by mail or by wire in the
minimums listed previously. When adding to an account
by mail, you should send your check to the Fund,
together with a subsequent investment slip from a
recent statement. If this investment slip is
unavailable, you should send a signed note giving the
full name of the account and the account number. See
"Additional Purchase Information" for more information
regarding purchases made by check or electronic funds
transfer.
Adding to an Account by Electronic Funds Transfer.
You may also make additional investments by telephone
or in writing through electronic funds transfers if you
have previously selected this service. By selecting
this service, you authorize the Fund to draw on your
preauthorized bank account as shown on the records of
the Fund and receive the proceeds by electronic funds
transfer. Electronic funds transfers may be made
commencing 10 business days after receipt by the Fund
of your request to adopt this service. This time
period allows the Fund to verify your bank information.
Investments made by electronic funds transfer in any
one account must be in an amount of at least $1,000 and
will be effective at the net asset value next computed
after receipt by the Fund of the proceeds from your
bank account. See "Additional Purchase Information"
for more information regarding purchases made by check.
Changes to bank information must be made in writing and
signed by all registered holders of the account with
the signatures guaranteed by a commercial bank or trust
company in the United States, a member firm of the NASD
or other eligible guarantor institution. A Notary
Public is not an acceptable guarantor. This service
may be selected by calling the Fund at 1-800-432-4741
for the necessary form and instructions.
Adding to an Account by Wire. For additional
investments made by wire transfer, you should use the
wiring instructions listed previously. Be sure to
include your account number. Wired funds are
considered received in good order on the day they reach
the Fund's bank account by the Fund's cut-off time for
purchases and all required information is provided in
the wire instructions. The wire instructions will
determine the terms of the purchase transaction.
Automatic Investment Plan. You may make purchases
of shares of the Fund automatically on a regular basis
($1,000 minimum per transaction). You must meet the
Fund's minimum initial investment of $5,000 before the
Automatic Investment Plan (the "Plan" or the "AIP
Plan") may be established. Under the Plan, your
designated bank or other financial institution debits a
preauthorized amount on your account each designated
period and applies the amount to the purchase of Fund
shares. The Fund requires 10 business days after
receipt of your request to initiate the Plan to verify
your account information. Generally, the Plan will
begin on the next transaction date scheduled by the
Fund for the Plan following this 10 business day
period. AIP Plan transactions are scheduled for the
fifth and/or twentieth of every month. AIP Plan
transactions also may be scheduled monthly, quarterly
or annually. The Plan can be implemented with any
financial institution that is a member of the Automated
Clearing House. No service fee is currently charged by
the Fund for participation in the Plan. You will
receive a statement on a quarterly basis showing the
purchases made under the Plan. A $23 fee will be
imposed by the Fund if sufficient funds are not
available in your account or your account has been
closed at the time of the automatic transaction and
your purchase will be canceled. You will also be
responsible for any losses suffered by the Fund as a
result. When a purchase is made pursuant to the Plan,
and a redemption of such shares is requested shortly
thereafter, the Fund may delay payment of the
redemption proceeds until the Fund verifies that the
proceeds used to purchase the shares were properly
debited from your designated bank or other financial
institution. You may adopt the Plan at the time an
account is opened by completing the appropriate section
of the Purchase Application. You may obtain an
application to establish the Plan after an account is
opened by calling the Fund at 1-800-432-4741. A
signature guarantee is required. In the event you
discontinue participation in the Plan, the Fund
reserves the right to redeem your Fund account
involuntarily, upon 60 days' written notice, if the
account's net asset value is $5,000 or less. Changes to
bank information must be made in writing and signed by
all registered holders of the account with the
signatures guaranteed by a commercial bank or trust
company in the United States, a member firm of the NASD
or other eligible guarantor institution. A Notary
Public is not an acceptable guarantor. A redemption of
all funds from your Plan account will automatically
discontinue plan privileges.
<PAGE>
Purchasing Shares Through Other Institutions. If
you purchase shares through a program of services
offered or administered by a broker-dealer, financial
institution, or other service provider, you should read
the program materials, including information relating
to fees, in addition to the Fund's Prospectus. Certain
services of the Fund may not be available or may be
modified in connection with the program of services
provided. The Fund may only accept requests to
purchase additional shares into a broker-dealer street
name account from the broker-dealer.
Certain broker-dealers, financial institutions, or
other service providers that have entered into an
agreement with the Corporation may enter purchase
orders on behalf of their customers by telephone, with
payment to follow within several days as specified in
the agreement. The Fund may effect such purchase
orders at the net asset value next determined after
receipt of the telephone purchase order. It is the
responsibility of the broker-dealer, financial
institution, or other service provider to place the
order with the Fund on a timely basis. If payment is
not received within the time specified in the
agreement, the broker-dealer, financial institution, or
other service provider could be held liable for any
resulting fees or losses.
Additional Purchase Information. The Fund will
charge a $23 service fee against your account for any
check or electronic funds transfer that is returned
unpaid and your purchase will be canceled. You will
also be responsible for any losses suffered by the Fund
as a result. In order to relieve you of responsibility
for the safekeeping and delivery of stock certificates,
the Fund does not issue certificates.
When a purchase is made by check and a redemption
is requested shortly thereafter, payment may be delayed
for up to 10 calendar days on redemption requests for
recent purchases made by check in order to ensure that
the check has cleared. This delay allows the Fund to
verify that proceeds used to purchase Fund shares will
not be returned due to insufficient funds and is
intended to protect the remaining investors from loss.
New shareholders of the Fund are automatically
provided with the privilege to initiate telephone
inquiries, exchanges and redemptions unless expressly
waived by the shareholder. Consequently, Purchase
Applications provide that investors automatically
authorize the telephone privileges unless they check
the appropriate box on the Purchase Application to
waive the privilege. If you have any questions as to
how to waive this privilege, or how to add or delete a
privilege after an account is established, please call
the Fund at 1-800-432-4741. Generally, after the
account has been established, a request to authorize,
waive, add or delete a privilege must be in writing and
signed by each registered holder of the account with
signatures guaranteed by a commercial bank or trust
company in the United States, a member of the NASD or
other eligible guarantor institution. A Notary Public
is not an acceptable guarantor. For a more detailed
discussion of the rights, responsibilities and risks of
telephone transactions, please refer to "Redeeming by
Telephone."
Exchanging Shares
You may exchange all or a portion of your
investment from the Grand Prix Fund to the Fountain
Square Money Market Fund (the "Money Market Fund").
This exchange feature is subject to the minimum
purchase and redemption amounts set forth in this
Prospectus ($5,000 minimum, $1,000 subsequent). You
may obtain a copy of the Money Market Fund prospectus
from the Fund by calling 1-800-432-4741, and you are
advised to read it carefully, before authorizing any
investment in shares of the Money Market Fund.
Generally, exchange requests received in good
order and accepted by the Fund by the close of the New
York Stock Exchange ("Exchange"), generally 4:00 p.m.
Eastern Standard Time, on a day during which the Fund's
net asset value is determined will be effective that
day for both the Fund being purchased and the Fund
being redeemed. Please note that when exchanging from
the Fund to the Money Market Fund, you will begin
accruing income from the Money Market Fund the day
following the exchange. When exchanging less than all
of the balance from the Money Market Fund to the Fund,
your exchange proceeds will exclude accrued and unpaid
income from the Money Market Fund through the date of
exchange. When exchanging your entire balance from the
Money Market Fund, accrued income will automatically be
exchanged into the Fund when the income is collected
and paid
<PAGE>
from the Money Market Fund, at the end of the
month. An exchange between the Fund and the Money
Market Fund is treated the same as an ordinary sale and
purchase for federal income tax purposes.
Because of the risks associated with common stock
investments, the Fund is intended to be a long-term
investment vehicle and is not designed to provide
investors with a means of speculating on short-term
stock market movements. In addition, because excessive
trading can hurt the Fund's performance and
shareholders, the Fund reserves the right to
temporarily or permanently terminate, with or without
advance notice, the exchange privilege of any investor
who makes excessive use of the exchange privilege
(e.g., more than five exchanges per calendar year).
Your exchanges may be restricted or refused if the Fund
receives or anticipates simultaneous orders affecting
significant portions of the Fund's assets. In
particular, a pattern of exchanges with a "market
timer" strategy may be disruptive to the Fund.
Therefore, the maximum number of exchanges you wish to
make may be restricted. Contact the Fund for
additional information concerning the exchange
privilege.
Automatic Exchange Plan. You may make automatic
monthly exchanges from the Money Market Fund account to
a Fund account ($1,000 minimum per transaction). An
exchange from one Fund to another is treated the same
as an ordinary sale and purchase for federal income tax
purposes and generally, you will realize a capital gain
or loss. You must meet the Fund's minimum initial
investment requirements before this plan is
established. You may adopt the plan at the time an
account is opened by completing the appropriate section
of the Purchase Application. To establish the
Automatic Exchange Plan after an account is open, call
the Fund at 1-800-432-4741.
New shareholders of the Fund are automatically
provided with the privilege to initiate telephone
inquiries, exchanges and redemptions unless expressly
waived by the shareholder. Consequently, Purchase
Applications provide that investors automatically
authorize the telephone privileges unless they check
the appropriate box on the Purchase Application to
waive the privilege. If you have any questions as to
how to waive this privilege, or how to add or delete a
privilege after an account is established, please call
the Fund at 1-800-432-4741. Generally, after the
account has been established, a request to authorize,
waive, add or delete a privilege must be in writing and
signed by each registered holder of the account with
signatures guaranteed by a commercial bank or trust
company in the United States, a member of the NASD or
other eligible guarantor institution. A Notary Public
is not an acceptable guarantor. For a more detailed
discussion of the rights, responsibilities and risks of
telephone transactions, please refer to "Redeeming by
Telephone."
Redeeming Shares
You may redeem shares of the Fund at any time.
The price at which the shares will be redeemed is the
net asset value per share next determined after proper
redemption instructions are received by the Fund. See
"Determination of Net Asset Value." There are no
charges for the redemption of shares except that a fee
of $10 is charged for each wire redemption and a $15
fee is charged when redeeming shares in an IRA. Refer
to the IRA Disclosure Statement and Custodial Agreement
for additional information on IRA accounts and fees.
Depending upon the redemption price you receive, you
may realize a capital gain or loss for federal income
tax purposes.
Redeeming by Mail. To redeem shares by mail,
simply send an unconditional written request to the
Fund specifying the number of shares or dollar amount
to be redeemed, the name(s) on the account registration
and the account number. If the dollar amount requested
to be redeemed is greater than the current account
value as determined by the net asset value on the
effective date of the redemption, the entire account
balance will be redeemed. A request for redemption
must be signed exactly as the shares are registered.
If the amount requested is greater than $10,000, the
proceeds are to be sent to a person other than the
shareholder(s) of record, to a location other than the
address of record or is made within 30 days of an
address exchange, each signature must be guaranteed by
a commercial bank or trust company in the United
States, a member firm of the NASD or other eligible
guarantor institution. A Notary Public is not an
acceptable guarantor. Additional documentation may be
required for the redemption of shares held in
corporate, partnership or fiduciary accounts. See
"Additional Redemption Information" for instructions on
redeeming shares in corporate accounts. Additional
documentation is required for the redemption of shares
held by persons acting pursuant to a Power of Attorney.
In case of any questions, contact the Fund in advance.
<PAGE>
The Fund will mail payment for redemption proceeds
within seven days after it receives proper instructions
for redemption. However, the Fund may delay payment on
redemptions of recent purchases made by check until the
Fund verifies that the check used to purchase Fund
shares will not be returned due to insufficient funds.
This is intended to protect the remaining investors
from loss.
Redeeming by Telephone. Shares may be redeemed,
in an amount up to $10,000, by calling the Fund at
1-800-432-4741. Proceeds redeemed by telephone will be
mailed to your address, or wired or transmitted by
electronic funds transfer to your preauthorized bank
account as shown on the records of the Fund. A
redemption request in excess of $10,000 must be made in
writing and signed by each registered holder of the
account with signatures guaranteed by a commercial bank
or trust company in the United States, a member firm of
the NASD or other eligible guarantor institution. A
Notary Public is not an acceptable guarantor. A
telephone redemption request will not be processed
within 30 calendar days after an address change. A
redemption request within that 30 day time period must
be in writing and signed by each registered holder of
the account with signatures guaranteed. A Notary
Public is not an acceptable guarantor. Telephone
redemptions must be in amounts of $1,000 or more.
Payment of the redemption proceeds for Fund shares
redeemed by telephone when you request wire payment
will normally be made in federal funds on the next
business day. There is currently a $10 fee for each
wire redemption. It will be deducted from your
redemption proceeds. Electronically transferred funds
will ordinarily arrive at your bank within two to three
banking days after transmission. To change the
designated account, send a written request with the
signature(s) guaranteed to the Fund. Once the funds
are transmitted, the time of receipt and the
availability of the funds are not within the Fund's
control. The Fund reserves the right to delay payment
for a period of up to seven days after receipt of the
redemption request.
The Fund reserves the right to refuse a telephone
redemption or exchange transaction if it believes it is
advisable to do so. Procedures for redeeming or
exchanging shares of the Fund by telephone may be
modified or terminated by the Fund at any time. In an
effort to prevent unauthorized or fraudulent redemption
or exchange requests by telephone, the Fund has
implemented procedures designed to reasonably assure
that telephone instructions are genuine. These
procedures include: requesting verification of certain
personal information; recording telephone transactions;
confirming transactions in writing; and restricting
transmittal of redemption proceeds to preauthorized
designations. Other procedures may be implemented from
time to time. If reasonable procedures are not
implemented, the Fund may be liable for any loss due to
unauthorized or fraudulent transactions. In all other
cases, you are liable for any loss for unauthorized
transactions.
You should be aware that during periods of
substantial economic or market change, telephone or
wire redemptions may be difficult to implement. If
you are unable to contact the Fund by telephone, you
may also redeem shares by delivering or mailing the
redemption request to: Grand Prix Funds, Inc., P.O. Box
1177, Milwaukee, WI 53201-1177. If you wish to send
the information via overnight delivery, you may send it
to: Grand Prix Funds, Inc., c/o Sunstone Investor
Services, LLC, 207 East Buffalo Street, Suite 315,
Milwaukee, WI 53202-5712. Redemption requests made via
fax will not be accepted by the Fund.
Redeeming Shares Through Other Institutions.
Investors may be charged a fee if they redeem shares of
the Fund through a broker or an agent.
Additional Redemption Information. When a
purchase is made by check and a redemption is requested
shortly thereafter, payment may be delayed on
redemption requests for recent purchases made by check
until the Fund verifies that proceeds used to purchase
Fund shares will not be returned due to insufficient
funds. This is intended to protect the remaining
investors from loss.
New shareholders of the Fund are automatically
provided with the privilege to initiate telephone
inquiries, exchanges and redemptions unless expressly
waived by the shareholder. Consequently, Purchase
Applications provide that investors automatically
authorize the telephone privileges unless they check
the appropriate box on the Purchase Application to
waive the privilege. If you have any questions as to
how to waive this privilege, or how to
<PAGE>
add or delete a
privilege after an account is established, please call
the Fund at 1-800-432-4741. Generally, after the
account has been established, a request to authorize,
waive, add or delete a privilege must be in writing and
signed by each registered holder of the account with
signatures guaranteed by a commercial bank or trust
company in the United States, a member of the NASD or
other eligible guarantor institution. A Notary Public
is not an acceptable guarantor. For a more detailed
discussion of the rights, responsibilities and risks of
telephone transactions, please refer to "Redeeming by
Telephone."
Any redemption or transfer of ownership request
for corporate accounts will require the following
written documentation:
1. A written letter of instruction signed by the
required number of authorized officers, along
with their respective positions. For
redemption requests in excess of $10,000, the
written request must be signature guaranteed.
A signature guarantee may be obtained from a
commercial bank or trust company in the United
States, a member firm of the NASD or other
guarantor and "Signature Guaranteed" must
appear with the signature. A Notary Public is
not an acceptable guarantor.
2. A certified Corporate Resolution that states
the date the Resolution was adopted and who is
empowered to act, transfer or sell assets on
behalf of the corporation.
3. If the Corporate Resolution is more than 60
days old from the date of the transaction
request, a Certificate of Incumbency from the
Corporate Secretary which specifically states
that the officer or officers named in the
resolution have the authority to act on the
account. The Certificate of Incumbency must be
dated within 60 days of the requested
transaction. If the Corporate Resolution
confers authority on officers by title and not
by name, the Certificate of Incumbency must
name the officer(s) and their title(s).
The Fund reserves the right to suspend or postpone
redemptions during any period when: trading on the
Exchange is restricted, as determined by the SEC, or
the Exchange is closed for other than customary weekend
and holiday closing; the SEC has by order permitted
such suspension; or an emergency, as determined by the
SEC, exists, making disposal of portfolio securities or
valuation of net assets of the Fund not reasonably
practicable.
Due to the relatively high cost of maintaining
small accounts, if your account balance falls below the
$5,000 minimum as a result of a redemption or exchange,
you may be given a 60-day notice to reestablish the
minimum balance. If this requirement is not met, your
account may be closed and the proceeds sent to you. If
your account balance in the Money Market Fund is
redeemed, accrued interest will be paid at the end of
the following month.
Shareholder Reports And Information
The Fund will provide the following statements and
reports:
Confirmation Statements. Except for AIP Plan
transactions, after each transaction that affects the
account balance or account registration, you will
receive a confirmation statement. Participants in the
Plan will receive quarterly confirmations of all
automatic transactions.
Account Statements. All shareholders will receive
quarterly account statements. If you need additional
copies of previous statements, you may order statements
for the current and preceding year at no charge.
Statements for earlier years are available for $5 each.
Call 1-800-432-4741 to order past statements. If you
need information on your account with the Fund or if
you wish to submit any applications, redemption
requests, inquiries or notifications, you should
contact: Grand Prix Funds, Inc., P.O. Box 1177,
Milwaukee, WI 53201-1177 or call 1-800-432-4741. If
you wish to send the information via overnight
delivery, you may send it to: Grand Prix Funds, Inc.,
c/o Sunstone Investor Services, LLC, 207 East Buffalo
Street, Suite 315, Milwaukee, WI 53202-5712.
<PAGE>
Financial Reports. Financial reports are provided
to shareholders semi-annually. Annual reports will
include audited financial statements. To reduce Fund
expenses, one copy of each report will be mailed to
each Taxpayer Identification Number even though the
investor may have more than one account in the Fund.
DETERMINATION OF NET ASSET VALUE
The net asset value per share is determined as of
the close of trading (generally 4:00 p.m. Eastern
Standard Time) on each day the Exchange is open for
business. Purchase orders and redemption requests
received in good order on a day the Exchange is open
for trading, prior to the close of trading on that day,
will be valued as of the close of trading on that day.
Applications for purchase of shares and requests for
redemption of shares received after the close of
trading on the Exchange will be valued as of the close
of trading on the next day the Exchange is open. The
Fund is not required to calculate its net asset value
on days during which the Fund receives no orders to
purchase or redeem shares. Net asset value per share
is calculated by taking the fair value of the Fund's
total assets, including interest or dividends accrued,
but not yet collected, less all liabilities, and
dividing by the total number of shares outstanding.
The result, rounded to the nearest cent, is the net
asset value per share.
In determining net asset value, expenses are
accrued and applied daily and securities and other
assets for which market quotations are available are
valued at fair value. Common stocks and other equity-
type securities are valued at the last sales price on
the national securities exchange or NASDAQ on which
such securities are primarily traded; however,
securities traded on a national securities exchange or
NASDAQ for which there were no transactions on a given
day, and securities not listed on a national securities
exchange or NASDAQ, are valued at the average of the
most recent bid and asked prices. Any securities or
other assets for which market quotations are not
readily available are valued at fair value as
determined in good faith by the Board of Directors of
the Corporation or its delegate. The Board of
Directors may approve the use of pricing services to
assist the Fund in the determination of net asset
value. All money market instruments with maturities
less than 60 days will be valued on an amortized cost
basis.
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN
The Fund has adopted a plan pursuant to Rule 12b-1
under the 1940 Act (the "12b-1 Plan"). The 12b-1 Plan
provides for the payment of a 12b-1 fee of up to 0.25%
of the average daily net assets to finance activities
primarily intended to result in the sale of Fund
shares. The Fund is authorized to, in turn, pay all or
a portion of these fees to any registered securities
dealer, financial institution, or other person
("Recipient") who renders assistance in distributing or
promoting the sale of Fund shares, or who provides
certain shareholder services to Fund shareholders,
pursuant to a written agreement ("Rule 12b-1 Related
Agreement"). The 12b-1 Plan is a "reimbursement" plan,
which means that the fees paid by the Fund under the
Plan are intended as reimbursement for services
rendered and commission fees borne up to the maximum
allowable distribution and shareholder servicing fees.
If more money for services rendered and commission fees
is due than is immediately payable because of the
expense limitation under the Plan, the unpaid amount is
carried forward from period to period while the Plan is
in effect until such time as it may be paid. No
interest, carrying, or other finance charges will be
borne by the Fund with respect to unpaid amounts
carried forward. Payment of the distribution and
servicing fees is to be made quarterly, within 30 days
after the close of the quarter for which the fee is
payable.
The 12b-1 Plan, including a form of the 12b-1
Related Agreement, has been unanimously approved by the
Board of Directors of the Corporation, including all of
the members of the Board who are not "interested
persons" of the Corporation as defined in the 1940 Act
and who have no direct or indirect financial interest
in the operation of the 12b-1 Plan or any related
agreements ("Disinterested Directors") voting
separately.
The 12b-1 Plan, and any Rule 12b-1 Related
Agreement which is entered into, will continue in
effect for a period of more than one year only so long
as its continuance is specifically approved at least
annually by a vote of a majority of the Corporation's
Board of Directors, and of the Disinterested Directors,
cast in person at a meeting called for the purpose of
voting on the 12b-1 Plan, or the Rule 12b-1 Related
Agreement, as applicable. In addition, the 12b-1 Plan,
and any Rule 12b-1 Related Agreement, may be terminated
without penalty, by vote of a majority of the Fund's
<PAGE>
outstanding voting securities, or by vote of a majority
of Disinterested Directors (on not more than sixty (60)
days' written notice in the case of the Rule 12b-1
Related Agreement only).
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX TREATMENT
The Fund intends to qualify for treatment as a
"Regulated Investment Company" under Subchapter M of
the Code and, if so qualified, will not be liable for
federal income taxes to the extent earnings are
distributed to shareholders on a timely basis.
However, for federal income tax purposes, all dividends
and distributions of net realized short-term capital
gains you receive from the Fund are taxable as ordinary
income, whether reinvested in additional shares or
received in cash, unless you are exempt from taxation
or entitled to a tax deferral. Distributions of net
realized long-term capital gains you receive from the
Fund, whether reinvested in additional shares or
received in cash, are taxable as a capital gain. The
capital gain holding period is determined by the length
of time the Fund has held the security and not the
length of time you have held shares in the Fund. You
will be informed annually as to the amount and nature
of all dividends and capital gains paid during the
prior year. Such capital gains and dividends may also
be subject to state or local taxes. If you are not
required to pay taxes on your income, you are generally
not required to pay federal income taxes on the amounts
distributed to you.
The Fund intends to pay dividends from net
investment income annually and to distribute all net
realized capital gains at least annually. In addition,
the Fund may make additional distributions if necessary
to avoid imposition of a 4% excise tax or other tax on
undistributed income and gains. Please note, however,
that the objective of the Fund is capital appreciation,
not the production of distributions. You should
measure the success of your investment by the value of
your investment at any given time and not by the
distributions you receive.
When a dividend or capital gain is distributed,
the Fund's net asset value decreases by the amount of
the payment. If you purchase shares shortly before a
distribution, you will be subject to income taxes on
the distribution, even though the value of your
investment (plus cash received, if any) remains the
same. All dividends and capital gain distributions
will automatically be reinvested in additional Fund
shares at the then prevailing net asset value unless
you specifically request that dividends or capital
gains or both be paid in cash. The election to receive
dividends or reinvest them may be changed by writing to
the Fund at Grand Prix Funds, Inc., P.O. Box 1177,
Milwaukee, WI 53201-1177. The election is effective
for distributions with a dividend record date on or
after the date on which the Fund receives notice of the
election.
If you do not furnish the Fund with your correct
social security number or taxpayer identification
number, the Fund is required by current federal law to
withhold federal income tax from your distributions
(including applicable Fund share reinvestments) and
redemption proceeds at a rate of 31%.
This section is not intended to be a full
discussion of federal income tax laws and the effect of
such laws on you. There may be other federal, state,
or local tax considerations applicable to a particular
investor. You are urged to consult your own tax
advisor.
FUND PERFORMANCE
The Fund may from time to time compare its
investment results to various passive indices or other
mutual funds and cite such comparisons in reports to
shareholders, sales literature, and advertisements.
The results may be calculated on several bases,
including average annual total return, total return and
cumulative total return.
Average annual total return and total return
figures measure both the net investment income
generated by, and the effect of any realized and
unrealized appreciation or depreciation of, the
underlying investments in the Fund over a specified
period of time, assuming the reinvestment of all
dividends and distributions. Average annual total
return figures are annualized and therefore represent
the average annual percentage change over the specified
period. Total return figures are not annualized and
represent the aggregate percentage or dollar value
change over the period. Cumulative total return simply
reflects performance over a stated period of time.
<PAGE>
ADDITIONAL INFORMATION
DIRECTORS
Robert Zuccaro
Phillipp Villhauer
Mary Jane Boyle
Edward F. Ronan, Jr.
Dennis K. Waldman
OFFICERS
Robert Zuccaro, President
Phillipp Villhauer, Vice-President and Secretary
Mary Jane Boyle, Vice-President and Treasurer
INVESTMENT ADVISOR
Target Holdings Corporation, d.b.a. Target Investors
15 River Road, Suite 220
Wilton, Connecticut 06897
CUSTODIAN
Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
ADMINISTRATOR
Sunstone Financial Group, Inc.
207 East Buffalo Street, Suite 400
Milwaukee, Wisconsin 53202
TRANSFER AGENT
Sunstone Investor Services, LLC
For overnight deliveries, use: For regular mail deliveries, use:
Grand Prix Funds, Inc. Grand Prix Funds, Inc.
c/o Sunstone Investor Services, LLC P.O. Box 1177
207 East Buffalo Street, Suite 315 Milwaukee, WI 53201-1177
Milwaukee, Wisconsin 53202-5712
INDEPENDENT AUDITORS
Ernst & Young LLP
111 East Kilbourn Avenue
Milwaukee, Wisconsin 53202
<PAGE>
LEGAL COUNSEL
Godfrey & Kahn, S.C.
780 N. Water Street
Milwaukee, Wisconsin 53202
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
GRAND PRIX FUNDS, INC.
GRAND PRIX FUND
Wilton Executive Campus
15 River Road, Suite 220
Wilton Connecticut 06897
Telephone: 1-800-432-4741
This Statement of Additional Information is not a
prospectus and should be read in conjunction with the
Prospectus of the Grand Prix Fund ("Fund"), dated
December 31, 1997. The Prospectus, which may be
revised from time to time, is available without charge
upon request to the above-noted address or telephone
number.
This Statement of Additional Information is dated December 31, 1997.
<PAGE>
CONTENTS
INVESTMENT OBJECTIVE AND RESTRICTIONS 3
INVESTMENT POLICIES AND TECHNIQUES 4
DIRECTORS AND OFFICERS 6
PRINCIPAL SHAREHOLDERS 8
INVESTMENT ADVISOR 8
FUND TRANSACTIONS AND BROKERAGE 8
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT 10
PLAN OF DISTRIBUTION 10
TAXES 11
DETERMINATION OF NET ASSET VALUE 11
SHAREHOLDER MEETINGS 11
PERFORMANCE INFORMATION 11
INDEPENDENT AUDITORS 13
FINANCIAL STATEMENTS 13
No person has been authorized to give any
information or to make any representations other than
those contained in this Statement of Additional
Information ("SAI") and the Prospectus dated December
31, 1997, and if given or made, such information or
representations may not be relied upon as having been
authorized by the Fund. This SAI does not constitute
an offer to sell securities in any state or
jurisdiction in which such offering may not lawfully be
made.
<PAGE>
INVESTMENT OBJECTIVE AND RESTRICTIONS
The Fund's investment objective is capital
appreciation. The Fund's investment objective and
policies are described in detail in the Prospectus
under the captions "Investment Objective and
Restrictions" and "Implementation of Policies and
Risks." The following are the Fund's fundamental
investment restrictions which cannot be changed without
shareholder approval.
The Fund:
1. May not issue senior securities, except as
permitted under the Investment Company Act of
1940, as amended (the "1940 Act");
2. May not act as an underwriter of another company's
securities, except to the extent that the Fund may
be deemed to be an underwriter within the meaning
of the Securities Act of 1933, as amended, in
connection with the purchase and sale of portfolio
securities;
3. May not purchase or sell physical commodities
unless acquired as a result of ownership of
securities or other instruments (but this shall
not prevent the Fund from purchasing or selling
options, futures contracts, or other derivative
instruments, or from investing in securities or
other instruments backed by physical commodities);
4. May not make loans if, as a result, more than 33
1/3% of the Fund's assets would be lent to other
persons, except through purchases of debt
securities or other debt instruments or engaging
in repurchase agreements;
5. May not invest more than 25% of its assets in
securities of companies in any one industry;
6. May not purchase or sell real estate unless
acquired as a result of ownership of securities or
other instruments (but this shall not prohibit the
Fund from purchasing or selling securities or
other instruments backed by real estate or of
issuers engaged in real estate activities);
7. May (i) borrow money from banks for temporary or
emergency purposes (but not for leverage or the
purchase of investments), and (ii) make other
investments or engage in other transactions
permissible under the 1940 Act, which may involve
a borrowing, provided that the combination of (i)
and (ii) shall not exceed 33 1/3% of the value of
the Fund's total assets (including the amount
borrowed), less the Fund's liabilities (other than
borrowings). The Fund may also borrow money from
other persons to the extent permitted by
applicable law;
8. Notwithstanding any other fundamental investment
policy or restriction, may invest all of its
assets in the securities of a single open-end
management investment company with substantially
the same fundamental investment objective,
policies, and restrictions.
The following non-fundamental operating policies
may be changed by the Board of Directors without
shareholder approval.
The Fund may not:
1. Sell securities short, unless the Fund owns or has
the right to obtain securities equivalent in kind
and amount to the securities sold short, or unless
it covers such short sale as required by the
current rules and positions of the Securities and
Exchange Commission ("SEC") or its staff, and
provided that transactions in options, futures
contracts, options on futures contracts, or other
derivative instruments are not deemed to
constitute selling securities short.
2. Purchase securities on margin, except that the
Fund may obtain such short-term credits as are
necessary for the clearance of transactions; and
provided that margin deposits in connection with
futures contracts, options on futures contracts,
or other derivative instruments shall not
constitute purchasing securities on margin.
<PAGE>
3. Invest in illiquid securities if, as a result of
such investment, more than 5% of its net assets
would be invested in illiquid securities.
4. Purchase securities of other investment companies
except in compliance with the 1940 Act.
5. Engage in futures or options on futures
transactions which are impermissible pursuant to
Rule 4.5 under the Commodity Exchange Act ("CEA")
and, in accordance with Rule 4.5, will use futures
or options on futures transactions solely for bona
fide hedging transactions (within the meaning of
the CEA); provided, however, that the Fund may,
in addition to bona fide hedging transactions, use
futures and options on futures transactions if the
aggregate initial margin and premiums required to
establish such positions, less the amount by which
any such options positions are in the money
(within the meaning of the CEA), do not exceed 5%
of the Fund's net assets.
6. Make any loans other than loans of portfolio
securities, except through purchases of debt
securities or other debt instruments or engaging
in repurchase agreements with respect to portfolio
securities.
7. Borrow money except from banks or through reverse
repurchase agreements or mortgage dollar rolls,
and will not purchase securities when bank
borrowings exceed 5% of its assets.
Except for the fundamental investment restrictions
listed above and the Fund's investment objective, the
other investment policies described in the Prospectus
and this SAI are not fundamental and may be changed
with approval of the Fund's Board of Directors. Unless
noted otherwise, if a percentage restriction is adhered
to at the time of investment, a later increase or
decrease in percentage resulting from a change in the
Fund's assets (i.e., due to cash inflows or
redemptions) or in market value of the investment or
the Fund's assets will not constitute a violation of
that restriction.
INVESTMENT POLICIES AND TECHNIQUES
The following information supplements the
discussion of the Fund's investment objective,
strategy, and policies that are described in the
Prospectus under the captions "Investment Strategy,"
"Implementation of Policies and Risks," and "Investment
Objective and Restrictions."
Depositary Receipts
The Fund may invest in foreign securities by
purchasing depositary receipts, including American
Depositary Receipts ("ADRs") and European Depositary
Receipts ("EDRs") or other securities convertible into
securities of companies based in foreign countries.
These securities may not necessarily be denominated in
the same currency as the securities into which they may
be converted. Generally, ADRs, in registered form, are
denominated in U.S. dollars and are designed for use in
the U.S. securities markets, while EDRs, in bearer
form, may be denominated in other currencies and are
designed for use in European securities markets. ADRs
are receipts typically issued by a U.S. bank or trust
company evidencing ownership of the underlying
securities. EDRs are European receipts evidencing a
similar arrangement. For purposes of the Fund's
investment policies, ADRs and EDRs are deemed to have
the same classification as the underlying securities
they represent. Thus, an ADR or EDR representing
ownership of common stock will be treated as common
stock.
ADR facilities may be established as either
"unsponsored" or "sponsored." While ADRs issued under
these two types of facilities are in some respects
similar, there are distinctions between them relating
to the rights and obligations of ADR holders and the
practices of market participants. For example, a non-
sponsored depositary may not provide the same
shareholder information that a sponsored depositary is
required to provide under its contractual arrangements
with the issuer, including reliable financial
statements. Under the terms of most sponsored
arrangements, depositaries agree to distribute notices
of shareholder meetings and voting instructions, and to
provide shareholder communications and other
information to the ADR holders at the request of the
issuer of the deposited securities.
<PAGE>
Convertible Securities
The Fund may invest in convertible securities,
which are bonds, debentures, notes, preferred stocks,
or other securities that may be converted into or
exchanged for a specified amount of common stock or
warrants of the same or a different company within a
particular period of time at a specified price or
formula. A convertible security entitles the holder to
receive interest normally paid or accrued on debt or
the dividend paid on preferred stock until the
convertible security matures or is redeemed, converted,
or exchanged. Convertible securities have unique
investment characteristics in that they generally (i)
have higher yields than common stocks, but lower yields
than comparable non-convertible securities, (ii) are
less subject to fluctuation in value than the
underlying stock (or warrant) since they have fixed
income characteristics, and (iii) provide the potential
for capital appreciation if the market price of the
underlying common stock (or warrant) increases. A
convertible security may be subject to redemption at
the option of the issuer at a price established in the
convertible security's governing instrument. If a
convertible security held by the Fund is called for
redemption, the Fund will be required to permit the
issuer to redeem the security, convert it into the
underlying common stock (or warrant), or sell it to a
third party.
Non-diversification and Sector Concentration
While the Fund is "non-diversified," which means
that it is permitted to invest its assets in a more
limited number of issuers than other investment
companies, the Fund intends to diversify its assets to
qualify for tax treatment as a regulated investment
company under the Internal Revenue Code of 1986, as
amended ("Code"). To so qualify (i) not more than 25%
of the total value of the Fund's assets may be invested
in securities of any one issuer (other than U.S.
Government securities and the securities of other
regulated investment companies under the Code) or of
any two or more issuers controlled by the Fund, which,
pursuant to the regulations under the Code, may be
deemed to be engaged in the same, similar, or related
trades or businesses, and (ii) with respect to 50% of
the total value of the Fund's assets (a) not more than
5% of its total assets may be invested in the
securities of any one issuer (other than U.S.
Government securities and the securities of other
regulated investment companies under the Code) and (b)
the Fund may not own more than 10% of the outstanding
voting securities of any one issuer (other than U.S.
Government securities and the securities of other
regulated investment companies under the Code).
In addition, the Fund has adopted a fundamental
investment restriction which prohibits the Fund from
investing more than 35% of its assets in securities of
companies in any one industry. An industry is defined
as a business-line subsector of a stock-market sector.
While the Fund may be heavily invested in one single
market sector like technology or health care, for
example, it will not invest more than 25% of its assets
in securities of companies in any one industry. While
the Fund may be heavily invested in technology or any
other market sector from time to time, rotation in
asset management may be experienced.
To the extent that a relatively high percentage of
the Fund's assets may be invested in the securities of
a limited number of companies, the Fund's portfolio
securities may be more susceptible to any single
economic, political, or regulatory occurrence than the
portfolio securities of a diversified investment
company.
Temporary Strategies
As described in the Prospectus under the heading
"Implementation of Policies and Risks," prior to
investing proceeds from sales of Fund shares, to meet
ordinary daily cash needs, and to retain the
flexibility to respond promptly to changes in market
and economic conditions, the Fund may hold cash and/or
invest up to 25% of its total assets in money market
instruments. The money market instruments which the
Fund may purchase include U.S. Government securities,
bank obligations, obligations of savings institutions,
fully insured certificates of deposit, commercial
paper, and securities issued by registered investment
companies holding themselves out as money market funds.
Such securities include:
U.S. Government Securities. Obligations issued or
guaranteed as to principal and interest by the United
States or its agencies (such as the Export-Import Bank
of the United States, Federal Housing Administration
and
<PAGE>
Government National Mortgage Association) or its
instrumentalities (such as the Federal Home Loan Bank),
including Treasury bills, notes, and bonds;
Bank Obligations. Obligations (including
certificates of deposit, bankers' acceptances,
commercial paper (see below) and other debt
obligations) of banks subject to regulation by the U.S.
Government and having total assets of $1 billion or
more, and instruments secured by such obligations, not
including obligations of foreign branches of domestic
banks;
Obligations of Savings Institutions. Certificates
of deposit of savings banks and savings and loan
associations, having total assets of $1 billion or
more;
Fully Insured Certificates of Deposit.
Certificates of deposit of banks and savings
institutions, having total assets of less than $1
billion, if the principal amount of the obligation is
insured by the Bank Insurance Fund or the Savings
Association Insurance Fund (each of which is
administered by the Federal Deposit Insurance
Corporation), limited to $100,000 principal amount per
certificate and to 5% or less of the Fund's total
assets in all such obligations and in all illiquid
assets, in the aggregate;
Commercial Paper. Commercial paper rated Prime-1
or better by Moody's Investors Service, Inc.
("Moody's"), A-1 or better by Standard & Poor's
Corporation ("S&P"), Duff 2 or higher by Duff & Phelps,
Inc. ("D&P"), or Fitch 2 or higher by Fitch Investor
Services, Inc. ("Fitch"); and
Money Market Funds. Securities issued by
registered investment companies holding themselves out
as money market funds which attempt to maintain a
stable net asset value of $1.00 per share.
DIRECTORS AND OFFICERS
The directors and officers of Grand Prix Funds,
Inc. ("Corporation"), of which the Fund is a series,
together with information as to their principal
business occupations during the last five years, and
other information, are shown below. Each director and
officer who is deemed an "interested person" as defined
in the 1940 Act is indicated by an asterisk. Mr.
Zuccaro has served as a director and officer of the
Corporation since its inception on October 30, 1997.
The other directors and officers have served as such
since December 10, 1997.
*Robert Zuccaro, President and a Director of the
Corporation.
Mr. Zuccaro, 55 years old, received a Bachelor's
Degree from the University of Bridgeport in 1965 and a
Master's Degree in Business Administration from Pace
University in 1968. Prior to founding what is now
Target Holdings Corporation, doing business as Target
Investors ("Advisor") in 1983, Mr. Zuccaro spent six
years with Axe-Houghton, where he was President and
Director of Axe-Houghton Stock Fund and Vice President
and Director of portfolio management of E.W. Axe & Co.
Mr. Zuccaro is a Chartered Financial Analyst.
Mr. Zuccaro's address is 15 River Road, Suite 220,
Wilton, Connecticut 06897.
*Phillipp Villhauer, Vice-President, Secretary and
a Director of the Corporation.
Mr. Villhauer, 32 years old, earned a Master's
Degree in Business Administration from Fordham
University in 1994. Prior to joining Advisor as a
portfolio manager/analyst in 1993, Mr. Villhauer was a
trader at Brown Brothers Harriman & Company and an
Assistant Vice-President Trader/Analyst at Gabelli &
Company, Inc.
Mr. Villhauer's address is 15 River Road, Suite
220, Wilton, Connecticut 06897.
<PAGE>
*Mary Jane Boyle, Vice-President, Treasurer and a
Director of the Corporation.
Ms. Boyle, 52 years old, earned a Master's Degree
from the University of Bridgeport in 1971. Prior to co-
founding Advisor in 1983, where she serves as Vice-
President, Client Service, Ms. Boyle was a Regional
Sales Director with Mondessa Enterprises, Inc.
Ms. Boyle's address is 15 River Road, Suite 220,
Wilton, Connecticut 06897.
Edward F. Ronan, Jr., a Director of the
Corporation.
Mr. Ronan, 45 years old, earned a B.S. in
accounting from the University of Bridgeport in 1977.
Mr. Ronan is a C.P.A. and a member of Actis-Grande,
Ronan, Carbone & Company, LLC, a certified public
accounting firm and has been with the firm since 1984.
Mr. Ronan has also served as a director of 2.E.P. Co.,
Inc., a flooring tool manufacturer and distributor,
since 1993.
Mr. Ronan's address is 30 Main Street, Danbury,
Connecticut 06810.
Dennis K. Waldman, a Director of the Corporation.
Mr. Waldman, 43 years old, graduated from the
Massachusetts Institute of Technology in 1976 with a
Bachelor's of Science degree in aeronautical and
astronautical engineering and in electrical engineering
and in 1978 with a Master's of Science degree in
aeronautical and astronautical engineering. Since
1994, Mr. Waldman has served as Vice-President of Sales
for Strategic Information Associates, prior to which
time, Mr. Waldman worked at ITS as Vice-President of
Sales. From 1992 to 1994, Mr. Waldman was a sales
representative at Tartan where he was involved in
engineering sales.
Mr. Waldman's address is 62 Windsor Road, Waban,
Massachusetts 02168.
[As of December ____, 1997, officers and directors
of the Corporation did not beneficially own any of the
shares of common stock of the Fund's then outstanding
shares; however, Advisor, which is controlled by Mr.
Zuccaro, owned 100% of such shares. Directors and
officers of the Corporation who are also officers,
directors, employees, or shareholders of Advisor do not
receive any remuneration from the Fund for serving as
directors or officers.]
The following table provides information relating
to annual compensation to be paid to directors of the
Corporation for their services as such:
Name Cash Other Total
Compensation Compensation
Robert Zuccaro $0 $0 $0
Phillipp Villhauer $0 $0 $0
Mary Jane Boyle $0 $0 $0
Edward F. Ronan, Jr. $500 $0 $500
Dennis K. Waldman $500 $0 $500
<PAGE>
PRINCIPAL SHAREHOLDERS
As of December ____, 1997, the following persons
owned of record or are known by the Fund to own of
record or beneficially 5% or more of the outstanding
shares of the Fund:
Name and Address No. Shares Percentage
[Target Holdings Corporation, d.b.a.
Target Investors [ ] ____%
15 River Road, Suite 200
Wilton, Connecticut 06897]
Based on the foregoing, as of December ____, 1997,
___________________ owned a controlling interest in the
Fund. Shareholders with a controlling interest could
effect the outcome of proxy voting or the direction of
management of the Fund.
INVESTMENT ADVISOR
Target Holdings Corporation, d.b.a. Target
Investors ("Advisor") is the investment advisor to the
Fund. The Advisor is controlled by Robert Zuccaro who
owns 80% of the Advisor.
The investment advisory agreement between the
Corporation and the Advisor dated as of December 31,
1997 ("Advisory Agreement") has an initial term of two
years and thereafter is required to be approved
annually by the Board of Directors of the Corporation
or by vote of a majority of the Fund's outstanding
voting securities (as defined in the 1940 Act). Each
annual renewal must also be approved by the vote of a
majority of the Corporation's directors who are not
parties to the Advisory Agreement or interested persons
of any such party, cast in person at a meeting called
for the purpose of voting on such approval. The
Advisory Agreement was approved by the Board of
Directors, including a majority of the disinterested
directors on December 10, 1997, and by the initial
shareholder[s] on December ___, 1997. The Advisory
Agreement is terminable without penalty on 60 days'
written notice by the Board of Directors, by vote of a
majority of the Fund's outstanding voting securities,
or by the Advisor, and will terminate automatically in
the event of its assignment.
Under the terms of the Advisory Agreement, the
Advisor manages the Fund's investments and business
affairs, subject to the supervision of the Board of
Directors. At its expense, the Advisor provides office
space and all necessary office facilities, equipment,
and personnel for managing the investments of the Fund.
As compensation for its services, the Corporation pays
the Advisor an annual management fee of 1.00% of the
Fund's average daily net assets. The advisory fee is
accrued daily and paid monthly. The organizational
expenses of the Fund were advanced by the Advisor and
will be reimbursed by the Fund over a period of not
more than 60 months. The organizational expenses were
approximately $_______________.
The Advisor has agreed to limit the total
operating expenses of the Fund (excluding interest,
taxes, brokerage and extraordinary expenses) to an
annual rate of 1.65% of the Fund's average net assets
until December 31, 1998. After such date, the Advisor
may from time to time voluntarily (but is not required
or obligated to) waive all or a portion of its fee
and/or absorb certain Fund expenses. Any waiver of
fees or absorption of expenses will be made on a
monthly basis and, with respect to the latter, will be
paid to the Fund by reduction of Advisor's fee.
FUND TRANSACTIONS AND BROKERAGE
Under the Advisory Agreement, Advisor, in its
capacity as portfolio manager, is responsible for
decisions to buy and sell securities for the Fund and
for the placement of the Fund's securities business,
the negotiation of the commissions to be paid on such
transactions, and the allocation of portfolio brokerage
business. The Fund has no
<PAGE>
obligation to deal with any
particular broker or dealer; in executing transactions,
the Advisor seeks to obtain the best execution at the
best security price available with respect to each
transaction. The best price to the Fund means the best
net price without regard to the mix between purchase or
sale price and commission, if any. While the Advisor
seeks reasonably competitive commission rates, the Fund
does not necessarily pay the lowest available
commission. Brokerage will not be allocated based on
the sale of the Fund's shares.
Section 28(e) of the Securities Exchange Act of
1934, as amended ("Section 28(e)"), permits an
investment advisor, under certain circumstances, to
cause an account to pay a broker or dealer who supplies
brokerage and research services a commission for
effecting a transaction in excess of the amount of
commission another broker or dealer would have charged
for effecting the transaction. Brokerage and research
services include (a) furnishing advice as to the value
of securities, the advisability of investing,
purchasing, or selling securities, and the availability
of securities or purchasers or sellers of securities;
(b) furnishing analyses and reports concerning issuers,
industries, sectors, securities, economic factors and
trends, portfolio strategy, and the performance of
accounts; and (c) effecting securities transactions and
performing functions incidental thereto (such as
clearance, settlement, and custody).
In selecting brokers or dealers, Advisor considers
investment and market information and other research,
such as economic, securities, and performance
measurement research provided by such brokers or
dealers and the quality and reliability of brokerage
services, including execution capability, performance,
and financial responsibility. Accordingly, the
commissions charged by any such broker or dealer may be
greater than the amount another firm might charge if
Advisor determines in good faith that the amount of
such commissions is reasonable in relation to the value
of the research information and brokerage services
provided by such broker or dealer to the Fund. Advisor
believes that the research information received in this
manner provides the Fund with benefits by supplementing
the research otherwise available to the Fund. Such
higher commissions will not be paid by the Fund unless
(a) Advisor determines in good faith that the amount is
reasonable in relation to the services in terms of the
particular transaction or in terms of Advisor's overall
responsibilities with respect to the accounts,
including the Fund, as to which it exercises investment
discretion; (b) such payment is made in compliance with
the provisions of Section 28(e) and other applicable
state and federal laws; and (c) in the opinion of
Advisor, the total commissions paid by the Fund will be
reasonable in relation to the benefits to the Fund over
the long term.
Advisor places portfolio transactions for other
advisory accounts in addition to the Fund. Research
services furnished by firms through which the Fund
effects its securities transactions may be used by
Advisor in servicing all of its accounts; not all of
such services may be used by Advisor in connection with
the Fund. Advisor believes it is not possible to
measure separately the benefits from research services
to each of the accounts (including the Fund) managed by
it. Because the volume and nature of the trading
activities of the accounts are not uniform, the amount
of commissions in excess of those charged by another
broker or dealer paid by each account for brokerage and
research services will vary. However, Advisor believes
such costs to the Fund will not be disproportionate to
the benefits received by the Fund on a continuing
basis. Advisor seeks to allocate portfolio
transactions equitably whenever concurrent decisions
are made to purchase or sell securities by the Fund and
another advisory account. In some cases, this
procedure could have an adverse effect on the price or
the amount of securities available to the Fund. There
can be no assurance that a particular purchase or sale
opportunity will be allocated to the Fund. In making
such allocations between the Fund and other advisory
accounts, certain factors considered by Advisor are the
respective investment objectives, the relative size of
portfolio holdings of the same or comparable
securities, the availability of cash for investment,
and the size of investment commitments generally held.
The Fund anticipates that its annual portfolio
turnover rate will be between 400 and 800% or higher
but generally will not exceed 1,500%. The annual
portfolio turnover rate indicates changes in the Fund's
securities holdings; for instance, a rate of 100% would
result if all the securities in a portfolio (excluding
securities whose maturities at acquisition were one
year or less and U.S. government securities) at the
beginning of an annual period had been replaced by the
end of the period. The turnover rate may vary from
year to year, as well as within a year, and may be
affected by portfolio sales necessary to meet cash
requirements for redemptions of the Fund's shares.
<PAGE>
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
As custodian of the Fund's assets, Fifth Third
Bank ("Fifth Third"), 38 Fountain Square Plaza,
Cincinnati, Ohio 45263, has custody of all securities
and cash of the Fund, delivers and receives payment for
portfolio securities sold, receives and pays for
portfolio securities purchased, collects income from
investments, if any, and performs other duties, all as
directed by the officers of the Corporation. Sunstone
Investor Services, LLC ("Sunstone"), 207 East Buffalo
Street, Suite 315, Milwaukee, Wisconsin 53202-5712,
acts as transfer agent and dividend-disbursing agent
for the Fund.
PLAN OF DISTRIBUTION
Distribution and Shareholder Servicing Plan
As described more fully in the Prospectus under
the heading "Distribution and Shareholder Servicing
Plan," the Fund has adopted a plan pursuant to Rule 12b-
1 under the 1940 Act ("Plan") with respect to which
certain distribution and shareholder servicing fees may
be paid to registered securities dealers, financial
institutions, or other persons ("Recipients") who
render assistance in distributing or promoting the sale
of Fund shares, or who provide certain shareholder
services to Fund shareholders, pursuant to a written
agreement ("Rule 12b-1 Related Agreement"). Under the
terms of the Plan, the Fund may be required to pay the
Recipients a fee of up to 0.25% of the average daily
net assets to finance activities primarily intended to
result in the sale of Fund shares. The Plan is a
"reimbursement" plan, which means that the fees paid by
the Fund under the Plan are intended as reimbursement
for services rendered and commission fees borne up to
the maximum allowable distribution and shareholder
servicing fees. If more money for services rendered
and commission fees is due than is immediately payable
because of the expense limitation under the Plan, the
unpaid amount is carried forward from period to period
while the Plan is in effect until such time as it may
be paid. No interest, carrying, or other finance
charges will be borne by the Fund with respect to
unpaid amounts carried forward.
Anticipated Benefits to the Fund
The Board of Directors of the Corporation
considered various factors in connection with its
decision to approve the Plan, including: (a) the
nature and causes of the circumstances which make
implementation of the Plan necessary and appropriate;
(b) the way in which the Plan would address those
circumstances, including the nature and potential
amount of expenditures; (c) the nature of the
anticipated benefits; (d) the merits of possible
alternative plans or pricing structures; and (e) the
possible benefits of the Plan to any other person
relative to those of the Fund.
Based upon its review of the foregoing factors and
the material presented to it, and in light of its
fiduciary duties under relevant state law and the 1940
Act, the Board of Directors determined, in the exercise
of its business judgment, that the Plan was reasonably
likely to benefit the Fund and its shareholders in at
least one or several potential ways. Specifically, the
Board concluded that any Recipients operating under
Rule 12b-1 Related Agreements would have little or no
incentive to incur promotional expenses on behalf of
the Fund if a Rule 12b-1 plan were not in place to
reimburse them, thus making the adoption of the Plan
important to the initial success and thereafter,
continued viability of the Fund. In addition, the
Board determined that the payment of Rule 12b-1 fees to
these persons should motivate them to provide an
enhanced level of service to Fund shareholders, which
would, of course, benefit such shareholders. Finally,
the adoption of the Plan would help to increase net
assets under management in a relatively short amount of
time, given the marketing efforts on the part of the
Recipients to sell Fund shares, which should result in
certain economies of scale.
While there is no assurance that the expenditure
of Fund assets to finance distribution of Fund shares
will have the anticipated results, the Board of
Directors believes there is a reasonable likelihood
that one or more of such benefits will result, and
since the Board will be in a position to monitor the
distribution and shareholder servicing expenses of the
Fund, it will be able to evaluate the benefit of such
expenditures in deciding whether to continue the Plan.
<PAGE>
TAXES
As indicated under "Dividends, Capital Gain
Distributions and Tax Treatment" in the Prospectus, the
Fund intends to qualify annually as a "regulated
investment company" under the Code. This qualification
does not require government supervision of the Fund's
management practices or policies.
A dividend or capital gains distribution received
shortly after the purchase of shares reduces the net
asset value of shares by the amount of the dividend or
distribution and, although in effect a return of
capital, will be subject to income taxes. Net gains on
sales of securities when realized and distributed are
taxable as capital gains. If the net asset value of
shares were reduced below a shareholder's cost by
distribution of gains realized on sales of securities,
such distribution would be a return of investment
although taxable as indicated above.
DETERMINATION OF NET ASSET VALUE
As set forth in the Prospectus under the same
heading, the Fund's net asset value will be determined
as of the close of trading on each day the New York
Stock Exchange ("NYSE") is open for trading. The Fund
does not determine net asset value on days the NYSE is
closed and at other times described in the Prospectus.
The NYSE is closed on New Year's Day, Martin Luther
King, Jr. Day, President's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day. Additionally, if any of the
aforementioned holidays falls on a Saturday, the NYSE
will not be open for trading on the preceding Friday
and when such holiday falls on a Sunday, the NYSE will
not be open for trading on the succeeding Monday,
unless unusual business conditions exist, such as the
ending of a monthly or the yearly accounting period.
SHAREHOLDER MEETINGS
Maryland law permits registered investment
companies, such as the Corporation, to operate without
an annual meeting of shareholders under specified
circumstances if an annual meeting is not required by
the 1940 Act. The Corporation has adopted the
appropriate provisions in its Bylaws and may, at its
discretion, not hold an annual meeting in any year in
which the election of directors is not required to be
acted on by shareholders under the 1940 Act.
PERFORMANCE INFORMATION
As described in the "Fund Performance" section of
the Fund's Prospectus, the Fund's historical
performance or return may be shown in the form of
various performance figures. The Fund's performance
figures are based upon historical results and are not
necessarily representative of future performance.
Factors affecting the Fund's performance include
general market conditions, operating expenses, and
investment management.
Total Return
The average annual total return of the Fund is
computed by finding the average annual compounded rates
of return over the periods that would equate the
initial amount invested to the ending redeemable value,
according to the following formula:
P(1+T)n = ERV
P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
<PAGE>
ERV = ending redeemable value of a
hypothetical $1,000 payment made at
the beginning of the stated periods at
the end of the stated periods.
Performance for a specific period is calculated by
first taking an investment (assumed to be $1,000)
("initial investment") on the first day of the period
and computing the "ending value" of that investment at
the end of the period. The total return percentage is
then determined by subtracting the initial investment
from the ending value and dividing the remainder by the
initial investment and expressing the result as a
percentage. The calculation assumes that all income
and capital gains dividends paid by the Fund have been
reinvested at the Fund's net asset value on the
reinvestment dates during the period. Total return may
also be shown as the increased dollar value of the
hypothetical investment over the period.
Cumulative total return represents the simple
change in value of an investment over a stated period
and may be quoted as a percentage or as a dollar
amount. Total returns may be broken down into their
components of income and capital (including capital
gains and changes in share price) in order to
illustrate the relationship between these factors and
their contributions to total return.
Comparisons
From time to time, in marketing and other Fund
literature, the Fund's performance may be compared to
the performance of other mutual funds in general or to
the performance of particular types of mutual funds
with similar investment goals, as tracked by
independent organizations. Among these organizations,
Lipper Analytical Services, Inc. ("Lipper"), a widely
used independent research firm which ranks mutual funds
by overall performance, investment objectives, and
assets, may be cited. Lipper performance figures are
based on changes in net asset value, with all income
and capital gains dividends reinvested. Such
calculations do not include the effect of any sales
charges imposed by other mutual funds. The Fund will
be compared to Lipper's appropriate fund category, that
is, by fund objective and portfolio holdings.
The Fund's performance may also be compared to the
performance of other mutual funds by Morningstar, Inc.
("Morningstar"), which ranks funds on the basis of
historical risk and total return. Morningstar's
rankings range from five stars (highest) to one star
(lowest) and represent Morningstar's assessment of the
historical risk level and total return of a fund as a
weighted average for 3, 5, and 10 year periods.
Rankings are not absolute or necessarily predictive of
future performance.
Evaluations of the Fund's performance made by
independent sources may also be used in advertisements
concerning the Fund, including reprints of or
selections from, editorials or articles about the Fund.
Sources for Fund performance and articles about the
Fund may include publications such as Money, Forbes,
Kiplinger's, Financial World, Business Week, U.S. News
and World Report, the Wall Street Journal, Barron's,
and a variety of investment newsletters.
The Fund may compare its performance to a wide
variety of indices and measures of inflation. There
are differences and similarities between the
investments that the Fund may purchase and the
investments measured by these indices.
Investors may want to compare the Fund's
performance to that of certificates of deposit offered
by banks and other depository institutions.
Certificates of deposit may offer fixed or variable
interest rates and principal is guaranteed and may be
insured. Withdrawal of the deposits prior to maturity
normally will be subject to a penalty. Rates offered
by banks and other depository institutions are subject
to change at any time specified by the issuing
institution.
Investors may also want to compare the Fund's
performance to that of money market funds. Money
market fund yields will fluctuate and shares are not
insured, but share values usually remain stable.
<PAGE>
INDEPENDENT AUDITORS
Ernst & Young LLP, 111 East Kilbourn Avenue,
Milwaukee, Wisconsin 53202, have been elected as the
independent auditors for the Fund.
FINANCIAL STATEMENTS
The following financial statements of the Fund are
contained herein:
(a) Report of Independent Auditors. *
(b) Statement of Assets and Liabilities. *
(c) Notes to Statement of Assets and
Liabilities. *
_____________
* To be filed by Amendment.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements (Included in Parts A and B)
Report of Independent Auditors
Statement of Assets and Liabilities
Notes to Statement of Assets and Liabilities
(b) Exhibits
(1.1) Registrant's Articles of
Incorporation (1)
(1.2) Amendment to Registrant's Articles
of Incorporation
(2) Registrant's By-Laws (1)
(3) None
(4) None
(5) Investment Advisory Agreement
(6) None
(7) None
(8) Custodian Agreement
(9.1) Transfer Agency Agreement
(9.2) Administration and Fund Accounting
Agreement
(10) Opinion and Consent of Godfrey & Kahn,
S.C.
(11) Consent of Ernst & Young LLP(2)
(12) None
(13) Subscription Agreement (2)
(14) None
(15.1) Rule 12b-1 Distribution and
Shareholder Servicing Plan
<PAGE>
(15.2) Form of 12b-1 Related Agreement
(16) None
(17) None
(18) None
__________________
(1) Incorporated by reference to Registrant's Form N-
1A as filed with the Commission on October 31, 1997.
(2) To be filed by Amendment.
Item 25. Persons Controlled by or under Common Control
with Registrant
Registrant neither controls any person nor is
under common control with any other person.
Item 26. Number of Holders of Securities
Number of Record Holders
Title of Securities as of December , 1997
Common Stock, $.01 par value [ ]
Item 27. Indemnification
Article 6.4 of Registrant's Articles of
Incorporation provides as follows:
The Corporation shall indemnify (a) its Directors
and officers, whether serving the Corporation or at its
request any other entity, to the full extent required
by (i) Maryland law now or hereafter in force,
including the advance of expenses under the procedures
and to the full extent permitted by law, and (ii) the
Investment Company Act of 1940, as amended, and (b)
other employees and agents to such extent as shall be
authorized by the Board of Directors and be permitted
by law. The foregoing rights of indemnification shall
not be exclusive of any other rights to which those
seeking indemnification may be entitled. The Board of
Directors may take such action as is necessary to carry
out these indemnification provisions and is expressly
empowered to adopt, approve and amend from time to time
such resolutions or contracts implementing such
provisions or such further indemnification arrangements
as may be permitted by law.
Item 28. Business and Other Connections of Investment
Advisor
Besides serving as investment advisor to private
accounts, the Advisor is not currently and has not
during the past two fiscal years engaged in any other
business, profession, vocation, or employment of a
substantial nature. Information regarding the
business, profession, vocation, or employment of a
substantial nature of Advisor's directors and officers
is hereby incorporated by reference from the
information contained under "Fund Organization and
Management-Management" in the Prospectus.
Item 29. Principal Underwriters
(a) None.
(b) None.
<PAGE>
(c) None.
Item 30. Location of Accounts and Records
All accounts, books or other documents required to
be maintained by Section 31(a) of the Investment
Company Act of 1940, as amended, and the rules
promulgated thereunder are in the possession of Target
Holdings Corporation, doing business as Target
Investors, Registrant's investment advisor, at
Registrant's corporate offices, except (1) records held
and maintained by Fifth Third Bank, 38 Fountain Square
Plaza, Cincinnati, Ohio 45263, relating to its function
as custodian, (2) records held and maintained by
Sunstone Investor Services, LLC, 207 East Buffalo
Street, Suite 315, Milwaukee, Wisconsin 53202, relating
to its function as transfer agent, and (3) records held
and maintained by Sunstone Financial Group, Inc., 207
East Buffalo Street, Suite 400, Milwaukee, Wisconsin
53202, relating to its function as administrator and
fund accountant.
Item 31. Management Services
All management-related service contracts entered
into by Registrant are discussed in Parts A and B of
this Registration Statement.
Item 32. Undertakings.
(a) Registrant undertakes to file a post-
effective amendment to this Registration
Statement which will contain financial
statements (which need not be certified) no
later than 60 days after the end of the four
to six month period after effectiveness of
this Registration Statement.
(b) Registrant undertakes to call a meeting of
shareholders, if requested to do so by the
holders of at least 10% of the Registrant's
outstanding shares, for the purpose of voting
upon the question of removal of a director or
directors. Registrant also undertakes to
assist in communications with other
shareholders as required by Section 16(c) of
the 1940 Act.
<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 Pre-Effective Amendment
No. 1 to the Registration Statement on Form N-1A to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Wilton and State of
Connecticut on the 10th day of December, 1997.
GRAND PRIX FUNDS, INC.
(Registrant)
By:/s/ Robert Zuccaro
--------------------
Robert Zuccaro
President
Each person whose signature appears below
constitutes and appoints Robert Zuccaro, his true and
lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to
sign any and all pre-effective and post-effective
amendments to this Registration Statement and to file
the same, with all exhibits thereto, and any other
documents in connection therewith, with the Securities
and Exchange Commission and any other regulatory body,
granting unto said attorney-in-fact and agent, full
power and authority to do and perform each and every
act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act
of 1933, this Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A has been signed
below by the following persons in the capacities and on
the date(s) indicated.
Name Title Date
/s/ Robert Zuccaro President and a December 10, 1997
- ------------------- Director
Robert Zuccaro
/s/ Phillipp Villhauer Vice President, December 10, 1997
- ---------------------- Secretary and a
Phillipp Villhauer Director
/s/ Mary Jane Boyle Vice President, December 10, 1997
- --------------------- Treasurer and a
Mary Jane Boyle Director
/s/ Edward F. Ronan, Jr. Director December 10, 1997
- -----------------------
Edward F. Ronan, Jr.
/s/ Dennis K. Waldman Director December 10, 1997
- ------------------------
Dennis K. Waldman
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
(1.1) Registrant's Articles of Incorporation (1)
(1.2) Amendment to Registrant's Articles of
Incorporation
(2) Registrant's By-Laws (1)
(3) None
(4) None
(5) Investment Advisory Agreement
(6) None
(7) None
(8) Custodian Agreement
(9.1) Transfer Agency Agreement
(9.2) Administration and Fund Accounting Agreement
(10) Opinion and Consent of Godfrey & Kahn, S.C.
(11) Consent of Ernst & Young LLP(2)
(12) None
(13) Subscription Agreement(2)
(14) None
(15.1) Rule 12b-1 Distribution and Shareholder
Servicing Plan
(15.2) Form of 12b-1 Related Agreement
(16) None
(17) None
(18) None
___________________
(1) Incorporated by reference to Registrant's N-1A as
filed with the Commission on October 31, 1997.
(2) To be filed by Amendment.
ARTICLES OF AMENDMENT
TO ARTICLES OF INCORPORATION
RZ FUNDS, INC.
The undersigned officer of RZ Funds, Inc., a
corporation duly organized and existing under the
Maryland General Corporation law (the "Corporation"),
does hereby certify:
FIRST: That the name of the Corporation is RZ
Funds, Inc.
SECOND: That Article II of the Corporation's
Articles of Incorporation is amended in its entirety to
read as follows:
ARTICLE II
Name
2.1 Name. The name of the corporation
is Grand Prix Funds, Inc.
(the "Corporation").
THIRD: That the amendment to the Corporation's
Articles of Incorporation (the "Amendment") was
approved by a majority of the entire Board of Directors
of the Corporation.
FOURTH: That the Amendment is limited to a change
expressly permitted by Section 2-605 of the Maryland
General Corporation Law to be made without action by
the stockholders of the Corporation.
FIFTH: That the Corporation is registered as an
open-end investment company under the Investment
Company Act of 1940.
IN WITNESS WHEREOF, the undersigned officer of the
Corporation who executed the foregoing Articles of
Amendment hereby acknowledges the same to be his act
and further acknowledges that to the best of his
knowledge, information and belief, the matters set
forth herein are true in all material respects under
the penalties for perjury.
Dated this 26th day of November, 1997.
RZ FUNDS, INC.
By:/s/ Robert Zuccaro
------------------------
Robert Zuccaro
President
Attest: /s/ Phillipp Villhauy
/s/ Andrea E. Ronistad
GRAND PRIX FUNDS, INC.
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is entered into as of the 31st day
of December, 1997, between Grand Prix Funds, Inc., a
Maryland corporation (the "Corporation") and Target
Holdings Corporation d/b/a Target Investors, a Florida
corporation (the "Adviser").
W I T N E S S E T H
WHEREAS, the Corporation is an open-end investment
company registered under the Investment Company Act of
1940, as amended (the "1940 Act"). The Corporation is
authorized to create separate series, each with its own
separate investment portfolio (the "Funds"), and the
beneficial interest in each such series will be
represented by a separate series of shares (the
"Shares").
WHEREAS, the Adviser is a registered investment
adviser, engaged in the business of rendering
investment advisory services.
WHEREAS, in managing the Corporation's assets, as
well as in the conduct of certain of its affairs, the
Corporation seeks the benefit of the Adviser's services
and its assistance in performing certain managerial
functions. The Adviser desires to furnish such
services and to perform the functions assigned to it
under this Agreement for the consideration provided for
herein.
NOW THEREFORE, the parties mutually agree as
follows:
1. Appointment of the Adviser. The Corporation
hereby appoints the Adviser as investment adviser for
each of the Funds of the Corporation on whose behalf
the Corporation executes an Exhibit to this Agreement,
and the Adviser, by execution of each such Exhibit,
accepts the appointments. Subject to the direction of
the Board of Directors (the "Directors") of the
Corporation, the Adviser shall manage the investment
and reinvestment of the assets of each Fund in
accordance with the Fund's investment objective and
policies and limitations, for the period and upon the
terms herein set forth. The investment of funds shall
also be subject to all applicable restrictions of the
Articles of Incorporation and Bylaws of the Corporation
as may from time to time be in force.
2. Expenses Paid by the Adviser. In addition to the
expenses which the Adviser may incur in the performance
of its responsibilities under this Agreement, and the
expenses which it may expressly undertake to incur and
pay, the Adviser shall incur and pay all reasonable
compensation, fees and related expenses of the
Corporation's officers and its Directors, except for
such Directors who are not interested persons (as that
term is defined in Section 2(a)(19) of the 1940 Act) of
the Adviser, and all expenses related to the rental and
maintenance of the principal offices of the
Corporation.
3. Investment Advisory Functions. In its capacity as
investment adviser, the Adviser shall have the
following responsibilities:
(a) To furnish continuous advice and recommendations
to the Funds, as to the acquisition, holding or
disposition of any or all of the securities or other
assets which the Funds may own or contemplate acquiring
from time to time;
(b) To cause its officers to attend meetings and
furnish oral or written reports, as the Corporation may
reasonably require, in order to keep the Directors and
appropriate officers of the Corporation fully informed
as to the condition of the investments of the Funds,
the investment recommendations of the Adviser, and the
investment considerations which have given rise to
those recommendations; and
(c) To supervise the purchase and sale of securities
or other assets as directed by the appropriate officers
of the Corporation.
The services of the Adviser are not to be
deemed exclusive and the Adviser shall be free to
render similar services to others as long as its
services for others does not in any way
hinder, preclude or prevent the Adviser from performing
its duties and obligations under this Agreement. In
the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or
duties hereunder on the part of the Adviser, the
Adviser shall not be subject to liability to the
Corporation, the Funds, or to any shareholder for any
act or omission in the course of, or in connection
with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale
of any security.
4. Obligations of the Corporation. The Corporation
shall have the following obligations under this
Agreement:
(a) To keep the Adviser continuously and fully
informed as to the composition of the Funds'
investments and the nature of all of their respective
assets and liabilities;
(b) To furnish the Adviser with a copy of any
financial statement or report prepared for it by
certified or independent public accountants, and with
copies of any financial statements or reports made to
the Funds' shareholders or to any governmental body or
securities exchange;
(c) To furnish the Adviser with any further materials
or information which the Adviser may reasonably request
to enable it to perform its functions under this
Agreement; and
(d) To compensate the Adviser for its services in
accordance with the provisions of paragraph 5 hereof.
5. Compensation. The Corporation will pay the
Adviser a fee for its services with respect to each
Fund (the "Advisory Fee") at the annual rate set forth
on the Exhibit(s) hereto. The Advisory Fee shall be
accrued each calendar day during the term of this
Agreement and the sum of the daily fee accruals shall
be paid monthly as soon as practicable following the
last day of each month. The daily fee accruals will be
computed by multiplying 1/365 by the annual rate and
multiplying the product by the net asset value of the
Fund as determined in accordance with the Corporation's
registration statement as of the close of business on
the previous day on which the Fund was open for
business, or in such other manner as the parties agree.
The Adviser may from time to time and for such periods
as it deems appropriate voluntarily reduce its
compensation hereunder (and/or voluntarily assume
expenses) for one or more of the Funds.
6. Expenses Paid by Corporation.
(a) Except as provided in this paragraph, nothing in
this Agreement shall be construed to impose upon the
Adviser the obligation to incur, pay, or reimburse the
Corporation for any expenses not specifically assumed
by the Adviser under paragraph 2 above. Each Fund
shall pay or cause to be paid all of its expenses and
the Fund's allocable share of the Corporation's
expenses, including, but not limited to, investment
adviser fees; any compensation, fees, or reimbursements
which the Corporation pays to its Directors who are not
interested persons (as that phrase is defined in
Section 2(a)(19) of the 1940 Act) of the Adviser; fees
and expenses of the custodian, transfer agent,
registrar or dividend disbursing agent; current legal,
accounting and printing expenses; administrative,
clerical, recordkeeping and bookkeeping expenses;
brokerage commissions and all other expenses in
connection with the execution of Fund transactions;
interest; all federal, state and local taxes (including
stamp, excise, income and franchise taxes); expenses of
shareholders' meetings and of preparing, printing and
distributing proxy statements, notices and reports to
shareholders; expenses of preparing and filing reports
and tax returns with federal and state regulatory
authorities; and all expenses incurred in complying
with all federal and state laws and the laws of any
foreign country applicable to the issue, offer, or sale
of Shares of the Funds, including but not limited to,
all costs involved in the registration or qualification
of Shares of the Funds for sale in any jurisdiction and
all costs involved in preparing, printing and
distributing prospectuses and statements of additional
information to existing shareholders of the Funds.
(b) If expenses borne by a Fund in any fiscal year
(including the Adviser's fee, but excluding taxes,
interest, brokerage commissions, Rule 12b-1 expenses
and similar fees) exceed those set forth in any
statutory or regulatory formula applicable to a Fund,
the Adviser will reimburse the Fund for any excess.
7. Brokerage Commissions. For purposes of this
Agreement, brokerage commissions paid by a Fund upon
the purchase or sale of securities shall be considered
a cost of the securities of the Fund and shall be paid
by the respective Fund. The Adviser is authorized and
directed to place Fund transactions only with brokers
and dealers who render satisfactory service in the
execution of orders at the most favorable prices and at
reasonable commission rates; provided, however, that
the Adviser may pay a broker or dealer an amount of
commission for effecting a securities transaction in
excess of the amount of commission another broker or
dealer would have charged for effecting that
transaction, if the Adviser determines in good faith
that such amount of commission was reasonable in
relation to the value of the brokerage and research
services provided by such broker or dealer viewed in
terms of either that particular transaction or the
overall responsibilities of the Adviser. In placing
Fund business with such broker or dealers, the Adviser
shall seek the best execution of each transaction, and
all such brokerage placement shall be made in
compliance with Section 28(e) of the Securities
Exchange Act of 1934, as amended, and other applicable
state and federal laws. Notwithstanding the foregoing,
the Corporation shall retain the right to direct the
placement of all Fund transactions, and the Directors
may establish policies or guidelines to be followed by
the Adviser in placing Fund transactions for the Funds
pursuant to the foregoing provisions.
8. Proprietary Rights. The Adviser has proprietary
rights in each Fund's name and the Corporation's name.
The Adviser may withdraw the use of such names from the
Funds or the Corporation.
9. Termination. This Agreement may be terminated at
any time, without penalty, by the Directors of the
Corporation or by the shareholders of a Fund acting by
the vote of at least a majority of its outstanding
voting securities (as that phrase is defined in Section
2(a)(42) of the 1940 Act), provided in either case that
60 days' written notice of termination be given to the
Adviser at its principal place of business. This
Agreement may also be terminated by the Adviser at any
time by giving 60 days' written notice of termination
to the Corporation, addressed to its principal place of
business.
10. Assignment. This Agreement shall terminate
automatically in the event of any assignment (as the
term is defined in Section 2(a)(4) of the 1940 Act) of
this Agreement.
11. Term. This Agreement shall begin for each Fund as
of the date of execution of the applicable Exhibit and
shall continue in effect with respect to each Fund (and
any subsequent Funds added pursuant to an Exhibit
during the initial term of this Agreement) for two
years from the date of this Agreement and thereafter
for successive periods of one year, subject to the
provisions for termination and all of the other terms
and conditions hereof if such continuation shall be
specifically approved at least annually by the vote of
a majority of the Directors of the Corporation,
including a majority of the Directors who are not
parties to this Agreement or "interested persons" of
any such party (as defined in the 1940 Act), cast in
person at a meeting called for that purpose. If a Fund
is added after the first approval by the Directors as
described above, this Agreement will be effective as to
that Fund upon execution of the applicable Exhibit and
will continue in effect until the next annual approval
of this Agreement by the Directors and thereafter for
successive periods of one year, subject to approval as
described above.
12. Amendments. This Agreement may be amended by the
mutual consent of the parties, provided that the terms
of each such amendment shall be approved by the
Directors or by the affirmative vote of a majority of
the outstanding voting securities (as that phrase is
defined in Section 2(a)(42) of the 1940 Act) of each
Fund.
13. Governing Law. This Agreement shall be governed
by and construed in accordance with the internal laws
of the State of Connecticut, provided, however that
nothing herein shall be construed in a manner that is
inconsistent with the 1940 Act, the Investment Advisers
Act of 1940, as amended, or the rules and regulations
promulgated with respect to such respective Acts.
This Agreement will become binding on the parties
hereto upon their execution of the Exhibit(s) to this
Agreement.
MW1-99691-2
EXHIBIT A
to the
Investment Advisory Agreement
GRAND PRIX FUND
For all services rendered by the Adviser
hereunder, the Corporation shall pay the Adviser, on
behalf of the above-named Fund, and the Adviser agrees
to accept as full compensation for all services
rendered hereunder, an annual investment advisory fee
equal to 1.00% of the average daily net assets of the
Fund.
The Adviser hereby agrees that until December 31,
1998, the Adviser will waive its fees and/or reimburse
the Fund's operating expenses to the extent necessary
to ensure that the Fund's total operating expenses do
not exceed 1.65% of its average daily net assets.
The annual investment advisory fee shall be
accrued daily at the rate of 1/365th of 1.00% applied
to the daily net assets of the Fund. The advisory fee
so accrued shall be paid by the Corporation to the
Adviser monthly.
Executed as of this 31st day of December, 1997.
The Adviser:
TARGET HOLDINGS CORPORATION
d/b/a TARGET INVESTORS
By:/s/ Robert Zuccaro
-------------------------
Robert Zuccaro, President
The Corporation:
GRAND PRIX FUNDS, INC.
By:/s/ Robert Zuccaro
---------------------------
Robert Zuccaro, President
CUSTODY AGREEMENT
THIS AGREEMENT, is made as of December 31, 1997,
by and between GRAND PRIX FUNDS, INC., a corporation
organized under the laws of the State of Maryland (the
"Company"), and THE FIFTH THIRD BANK, a banking company
organized under the laws of the State of Ohio (the
"Custodian").
WITNESSETH:
WHEREAS, the Company desires that the Securities
and cash of each of the investment portfolios
identified in Exhibit A hereto (such investment
portfolios are individually referred to herein as a
"Fund" and collectively as the "Funds"), be held and
administered by the Custodian pursuant to this
Agreement; and
WHEREAS, the Company is an open-end management
investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Custodian represents that it is a
bank having the qualifications prescribed in Section
26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual
agreements herein made, the Company and the Custodian
hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following
words and phrases, unless the context otherwise
requires, shall have the following meanings:
1.1 "Authorized Person" means any Officer or
other person duly authorized by resolution of the Board
of Directors to give Oral Instructions and Written
Instructions on behalf of the Company and named in
Exhibit B hereto or in such resolutions of the Board of
Directors, certified by an Officer, as may be received
by the Custodian from time to time.
1.2 "Board of Directors" shall mean the Directors
from time to time serving as such under the Company's
Articles of Incorporation and Bylaws as from time to
time amended.
1.3 "Book-Entry System" shall mean a federal book-
entry system as provided in Subpart O of Treasury
Circular No. 300, 31 CFR 306, in Subpart B of 31 CFR
Part 350, or in such book-entry regulations of federal
agencies as are substantially in the form of such
Subpart O.
1.4 "Business Day" shall mean any day recognized
as a settlement day by The New York Stock Exchange,
Inc. and any other day for which the Fund computes the
net asset value of the Fund.
1.5 "NASD" shall mean The National Association of
Securities Dealers, Inc.
1.6 "Officer" shall mean the President, any Vice
President, the Secretary, any Assistant Secretary, the
Treasurer, or any Assistant Treasurer of the Company.
1.7 "Oral Instructions" shall mean instructions
orally transmitted to and accepted by the Custodian
because such instructions are: (i) reasonably believed
by the Custodian to have been given by an Authorized
Person, (ii) recorded and kept among the records of the
Custodian made in the ordinary course of business and
(iii) orally confirmed by the Custodian. The Company
shall cause all Oral Instructions to be confirmed by
Written Instructions. If such Written Instructions
confirming Oral Instructions are not received by the
Custodian prior to a transaction, it shall in no way
affect the validity of the transaction or the
authorization thereof by the Company. If Oral
Instructions vary from the Written Instructions which
purport to confirm them, the Custodian shall notify the
Company of such variance but such Oral Instructions
will govern unless the Custodian has not yet acted.
1.8 "Custody Account" shall mean any account in
the name of the Company, which is provided for in
Section 3.2 below.
1.9 "Proper Instructions" shall mean Oral
Instructions or Written Instructions. Proper
Instructions may be continuing Written Instructions
when deemed appropriate by both parties.
1.10 "Securities Depository" shall mean The
Participants Trust Company or The Depository Trust
Company and (provided that Custodian shall have
received a copy of a resolution of the Board of
Directors, certified by an Officer, specifically
approving the use of such clearing agency as a
depository for the Company) any other clearing agency
registered with the Securities and Exchange Commission
under Section 17A of the Securities and Exchange Act of
1934 (the "1934 Act"), which acts as a system for the
central handling of Securities where all Securities of
any particular class or series of an issuer deposited
within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without
physical delivery of the Securities.
1.11 "Securities" shall include, without
limitation, common and preferred stocks, bonds, call
options, put options, debentures, notes, bank
certificates of deposit, bankers' acceptances, mortgage-
backed securities, other money market instruments or
other obligations, and any certificates, receipts,
warrants or other instruments or documents representing
rights to receive, purchase or subscribe for the same,
or evidencing or representing any other rights or
interests therein, or any similar property or assets
that the Custodian has the facilities to clear and to
service.
1.12 "Shares" shall mean $0.01 par value, common
stock issued by the Company.
1.13 "Written Instructions" shall mean (i) written
communications actually received by the Custodian and
signed by one or more persons as the Board of Directors
shall have from time to time authorized, or (ii)
communications by telex or any other such system from a
person or persons reasonably believed by the Custodian
to be Authorized, or (iii) communications transmitted
electronically through the Institutional Delivery
System (IDS), or any other similar electronic
instruction system acceptable to Custodian and approved
by resolutions of the Board of Directors, a copy of
which, certified by an Officer, shall have been
delivered to the Custodian.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 Appointment. The Company hereby constitutes
and appoints the Custodian as custodian of all
Securities and cash owned by or in the possession of
the Company at any time during the period of this
Agreement, provided that such Securities or cash at all
times shall be and remain the property of the Company.
2.2 Acceptance. The Custodian hereby accepts
appointment as such custodian and agrees to perform the
duties thereof as hereinafter set forth and in
accordance with the 1940 Act as amended. Except as
specifically set forth herein, the Custodian shall have
no liability and assumes no responsibly for any non-
compliance by the Company or a Fund of any laws, rules
or regulations.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 Segregation. All Securities and non-cash
property held by the Custodian for the account of the
Fund, except Securities maintained in a Securities
Depository or Book-Entry System, shall be physically
segregated from other Securities and non-cash property
in the possession of the Custodian and shall be
identified as subject to this Agreement.
3.2 Custody Account. The Custodian shall open
and maintain in its trust department a custody account
in the name of each Fund, subject only to draft or
order of the Custodian, in which the Custodian shall
enter and carry all Securities, cash and other assets
of the Fund which are delivered to it.
3.3 Appointment of Agents. In its discretion,
the Custodian may appoint, and at any time remove, any
domestic bank or trust company, which has been approved
by the Board of Directors and is qualified to act as a
custodian under the 1940 Act, as sub-custodian to hold
Securities and cash of the Funds and to carry out such
other provisions of this Agreement as it may determine,
and may also open and maintain one or more banking
accounts with such a bank or trust company (any such
accounts to be in the name of the Custodian and subject
only to its draft or order), provided, however, that
the appointment of any such agent shall not relieve the
Custodian of any of its obligations or liabilities
under this Agreement.
3.4 Delivery of Assets to Custodian. The Fund
shall deliver, or cause to be delivered, to the
Custodian all of the Fund's Securities, cash and other
assets, including (a) all payments of income, payments
of principal and capital distributions received by the
Fund with respect to such Securities, cash or other
assets owned by the Fund at any time during the period
of this Agreement, and (b) all cash received by the
Fund for the issuance, at any time during such period,
of Shares. The Custodian shall not be responsible for
such Securities, cash or other assets until actually
received by it.
3.5 Securities Depositories and Book-Entry
Systems. The Custodian may deposit and/or maintain
Securities of the Funds in a Securities Depository or
in a Book-Entry System, subject to the following
provisions:
(a) Prior to a deposit of Securities of the
Funds in any Securities Depository or Book-
Entry System, the Fund shall deliver to the
Custodian a resolution of the Board of
Directors, certified by an Officer,
authorizing and instructing the Custodian on
an on-going basis to deposit in such
Securities Depository or Book-Entry System
all Securities eligible for deposit therein
and to make use of such Securities Depository
or Book-Entry System to the extent possible
and practical in connection with its
performance hereunder, including, without
limitation, in connection with settlements of
purchases and sales of Securities, loans of
Securities, and deliveries and returns of
collateral consisting of Securities.
(b) Securities of the Fund kept in a Book-
Entry System or Securities Depository shall
be kept in an account ("Depository Account")
of the Custodian in such Book-Entry System or
Securities Depository which includes only
assets held by the Custodian as a fiduciary,
custodian or otherwise for customers.
(c) The records of the Custodian and the
Custodian's account on the books of the Book-
Entry System and Securities Depository as the
case may be, with respect to Securities of a
Fund maintained in a Book-Entry System or
Securities Depository shall, by book-entry,
or otherwise identify such Securities as
belonging to the Fund.
(d) If Securities purchased by the Fund are
to be held in a Book-Entry System or
Securities Depository, the Custodian shall
pay for such Securities upon (i) receipt of
advice from the Book-Entry System or
Securities Depository that such Securities
have been transferred to the Depository
Account, and (ii) the making of an entry on
the records of the Custodian to reflect such
payment and transfer for the account of the
Fund. If Securities sold by the Fund are
held in a Book-Entry System or Securities
Depository, the Custodian shall transfer such
Securities upon (i) receipt of advice from
the Book-Entry System or Securities
depository that payment for such Securities
has been transferred to the Depository
Account, and (ii) the making of an entry on
the records of the Custodian to reflect such
transfer and payment for the account of the
Fund.
(e) Upon request, the Custodian shall
provide the Fund with copies of any report
(obtained by the Custodian from a Book-Entry
System or Securities Depository in which
Securities of the Fund is kept) on the
internal accounting controls and procedures
for safeguarding Securities deposited in such
Book-Entry System or Securities Depository.
(f) Anything to the contrary in this
Agreement notwithstanding, the Custodian
shall be liable to the Company for any loss
or damage to the Company resulting (i) from
the use of a Book-Entry System or Securities
Depository by reason of any negligence or
willful misconduct on the part of Custodian
or any sub-custodian appointed pursuant to
Section 3.3 above or any of its or their
employees, or (ii) from failure of Custodian
or any such sub-custodian to enforce
effectively such rights as it may have
against a Book-Entry System or Securities
Depository. At its election, the Company
shall be subrogated to the rights of the
Custodian with respect to any claim against a
Book-Entry System or Securities Depository or
any other person for any loss or damage to
the Funds arising from the use of such Book-
Entry System or Securities Depository, if and
to the extent that the Company has been made
whole for any such loss or damage.
3.6 Disbursement of Moneys from Custody Accounts.
Upon receipt of Proper Instructions, the Custodian
shall disburse moneys from a Fund Custody Account but
only in the following cases:
(a) For the purchase of Securities for the
Fund but only upon compliance with Section
4.1 of this Agreement and only (i) in the
case of Securities (other than options on
Securities, futures contracts and options on
futures contracts), against the delivery to
the Custodian (or any sub-custodian appointed
pursuant to Section 3.3 above) of such
Securities registered as provided in Section
3.9 below in proper form for transfer, or if
the purchase of such Securities is effected
through a Book-Entry System or Securities
Depository, in accordance with the conditions
set forth in Section 3.5 above; (ii) in the
case of options on Securities, against
delivery to the Custodian (or such sub-
custodian) of such receipts as are required
by the customs prevailing among dealers in
such options; (iii) in the case of futures
contracts and options on futures contracts,
against delivery to the Custodian (or such
sub-custodian) of evidence of title thereto
in favor of the Company or any nominee
referred to in Section 3.9 below;
and (iv) in the case of repurchase or
reverse repurchase agreements entered into
between the Company and a bank which is a
member of the Federal Reserve System or
between the Company and a primary dealer in
U.S. Government securities, against delivery
of the purchased Securities either in
certificate form or through an entry
crediting the Custodian's account at a Book-
Entry System or Securities Depository for the
account of the Fund with such Securities;
(b) In connection with the conversion,
exchange or surrender, as set forth in
Section 3.7(f) below, of Securities owned by
the Fund;
(c) For the payment of any dividends or
capital gain distributions declared by the
Fund;
(d) In payment of the redemption price of
Shares as provided in Section 5.1 below;
(e) For the payment of any expense or
liability incurred by the Company, including
but not limited to the following payments for
the account of a Fund: interest; taxes;
administration, investment management,
investment advisory, accounting, auditing,
transfer agent, custodian, trustee and legal
fees; and other operating expenses of a Fund;
in all cases, whether or not such expenses
are to be in whole or in part capitalized or
treated as deferred expenses;
(f) For transfer in accordance with the
provisions of any agreement among the
Company, the Custodian and a broker-dealer
registered under the 1934 Act and a member of
the NASD, relating to compliance with rules
of The Options Clearing Corporation and of
any registered national securities exchange
(or of any similar organization or
organizations) regarding escrow or other
arrangements in connection with transactions
by the Company;
(g) For transfer in accordance with the
provisions of any agreement among the
Company, the Custodian, and a futures
commission merchant registered under the
Commodity Exchange Act, relating to
compliance with the rules of the Commodity
Futures Trading Commission and/or any
contract market (or any similar organization
or organizations) regarding account deposits
in connection with transactions by the
Company;
(h) For the funding of any uncertificated
time deposit or other interest-bearing
account with any banking institution
(including the Custodian), which deposit or
account has a term of one year or less; and
(i) For any other proper purposes, but only
upon receipt, in addition to Proper
Instructions, of a copy of a resolution of
the Board of Directors, certified by an
Officer, specifying the amount and purpose of
such payment, declaring such purpose to be a
proper corporate purpose, and naming the
person or persons to whom such payment is to
be made.
3.7 Delivery of Securities from Fund Custody
Accounts. Upon receipt of Proper Instructions, the
Custodian shall release and deliver Securities from a
Custody Account but only in the following cases:
(a) Upon the sale of Securities for the
account of a Fund but only against receipt of
payment therefor in cash, by certified or
cashiers check or bank credit;
(b) In the case of a sale effected through a
Book-Entry System or Securities Depository,
in accordance with the provisions of Section
3.5 above;
(c) To an Offeror's depository agent in
connection with tender or other similar
offers for Securities of a Fund; provided
that, in any such case, the cash or other
consideration is to be delivered to the
Custodian;
(d) To the issuer thereof or its agent (i)
for transfer into the name of the Company,
the Custodian or any sub-custodian appointed
pursuant to Section 3.3 above, or of any
nominee or nominees of any of the foregoing,
or (ii) for exchange for a different number
of certificates or other evidence
representing the same aggregate face amount
or number of units; provided that, in any
such case, the new Securities are to be
delivered to the Custodian;
(e) To the broker selling Securities, for
examination in accordance with the "street
delivery" custom;
(f) For exchange or conversion pursuant to
any plan of merger, consolidation,
recapitalization, reorganization or
readjustment of the issuer of such
Securities, or pursuant to provisions for
conversion contained in such Securities, or
pursuant to any deposit agreement, including
surrender or receipt of underlying Securities
in connection with the issuance or
cancellation of depository receipts; provided
that, in any such case, the new Securities
and cash, if any, are to be delivered to the
Custodian;
(g) Upon receipt of payment therefor
pursuant to any repurchase or reverse
repurchase agreement entered into by a Fund;
(h) In the case of warrants, rights or
similar Securities, upon the exercise
thereof, provided that, in any such case, the
new Securities and cash, if any, are to be
delivered to the Custodian;
(i) For delivery in connection with any
loans of Securities of a Fund, but only
against receipt of such collateral as the
Company shall have specified to the Custodian
in Proper Instructions;
(j) For delivery as security in connection
with any borrowings by the Company on behalf
of a Fund requiring a pledge of assets by
such Fund, but only against receipt by the
Custodian of the amounts borrowed;
(k) Pursuant to any authorized plan of
liquidation, reorganization, merger,
consolidation or recapitalization of the
Company or a Fund;
(l) For delivery in accordance with the
provisions of any agreement among the
Company, the Custodian and a broker-dealer
registered under the 1934 Act and a member of
the NASD, relating to compliance with the
rules of The Options Clearing Corporation and
of any registered national securities
exchange (or of any similar organization or
organizations) regarding escrow or other
arrangements in connection with transactions
by the Company on behalf of a Fund;
(m) For delivery in accordance with the
provisions of any agreement among the Company
on behalf of a Fund, the Custodian, and a
futures commission merchant registered under
the Commodity Exchange Act, relating to
compliance with the rules of the Commodity
Futures Trading Commission and/or any
contract market (or any similar organization
or organizations) regarding account deposits
in connection with transactions by the
Company on behalf of a Fund; or
(n) For any other proper corporate purposes,
but only upon receipt, in addition to Proper
Instructions, of a copy of a resolution of
the Board of Directors, certified by an
Officer, specifying the Securities to be
delivered, setting forth the purpose for
which such delivery is to be made, declaring
such purpose to be a proper corporate
purpose, and naming the person or persons to
whom delivery of such Securities shall be
made.
3.8 Actions Not Requiring Proper Instructions.
Unless otherwise instructed by the Company, the
Custodian shall with respect to all Securities held for
a Fund;
(a) Subject to Section 7.4 below, collect on
a timely basis all income and other payments
to which the Company is entitled either by
law or pursuant to custom in the securities
business;
(b) Present for payment and, subject to
Section 7.4 below, collect on a timely basis
the amount payable upon all Securities which
may mature or be called, redeemed, or
retired, or otherwise become payable;
(c) Endorse for collection, in the name of
the Company, checks, drafts and other
negotiable instruments;
(d) Surrender interim receipts or Securities
in temporary form for Securities in
definitive form;
(e) Execute, as custodian, any necessary
declarations or certificates of ownership
under the federal income tax laws or the laws
or regulations of any other taxing authority
now or hereafter in effect, and prepare and
submit reports to the Internal Revenue
Service ("IRS") and to the Company at such
time, in such manner and containing such
information as is prescribed by the IRS;
(f) Hold for a Fund, either directly or,
with respect to Securities held therein,
through a Book-Entry System or Securities
Depository, all rights and similar securities
issued with respect to Securities of the
Fund; and
(g) In general, and except as otherwise
directed in Proper Instructions, attend to
all non-discretionary details in connection
with sale, exchange, substitution, purchase,
transfer and other dealings with Securities
and assets of the Fund.
3.9 Registration and Transfer of Securities. All
Securities held for a Fund that are issued or issuable
only in bearer form shall be held by the Custodian in
that form, provided that any such Securities shall be
held in a Book-Entry System for the account of the
Company on behalf of a Fund, if eligible therefor. All
other Securities held for a Fund may be registered in
the name of the Company on behalf of such Fund, the
Custodian, or any sub-custodian appointed pursuant to
Section 3.3 above, or in the name of any nominee of any
of them, or in the name of a Book-Entry System,
Securities Depository or any nominee of either thereof;
provided, however, that such Securities are held
specifically for the account of the Company on behalf
of a Fund. The Company shall furnish to the Custodian
appropriate instruments to enable the Custodian to hold
or deliver in proper form for transfer, or to register
in the name of any of the nominees hereinabove referred
to or in the name of a Book-Entry System or Securities
Depository, any Securities registered in the name of a
Fund.
3.10 Records. (a) The Custodian shall maintain,
by Fund, complete and accurate records with respect to
Securities, cash or other property held for the
Company, including (i) journals or other records of
original entry containing an itemized daily record in
detail of all receipts and deliveries of Securities and
all receipts and disbursements of cash; (ii) ledgers
(or other records) reflecting (A) Securities in
transfer, (B) Securities in physical possession, (C)
monies and Securities borrowed and monies and
Securities loaned (together with a record of the
collateral therefor and substitutions of such
collateral), (D) dividends and interest received, and
(E) dividends receivable and interest accrued; and
(iii) canceled checks and bank records related thereto.
The Custodian shall keep such other books and records
of the Company as the Company shall reasonably request,
or as may be required by the 1940 Act, including, but
not limited to Section31 and Rule 31a-1 and Rule 31a-2
promulgated thereunder.
(b) All such books and records maintained by the
Custodian shall (i) be maintained in a form acceptable
to the Company and in compliance with rules and
regulations of the Securities and Exchange Commission,
(ii) be the property of the Company and at all times
during the regular business hours of the Custodian be
made available upon request for inspection by duly
authorized officers, employees or agents of the Company
and employees or agents of the Securities and Exchange
Commission, and (iii) if required to be maintained by
Rule 31a-1 under the 1940 Act, be preserved for the
periods prescribed in Rule 31a-2 under the 1940 Act.
3.11 Fund Reports by Custodian. The Custodian
shall furnish the Company with a daily activity
statement by Fund and a summary of all transfers to or
from the Custody Account on the day following such
transfers. At least monthly and from time to time, the
Custodian shall furnish the Company with a detailed
statement, by Fund, of the Securities and moneys held
for the Company under this Agreement.
3.12 Other Reports by Custodian. The Custodian
shall provide the Company with such reports, as the
Company may reasonably request from time to time, on
the internal accounting controls and procedures for
safeguarding Securities, which are employed by the
Custodian or any sub-custodian appointed pursuant to
Section 3.3 above.
3.13 Proxies and Other Materials. The Custodian
shall cause all proxies if any, relating to Securities
which are not registered in the name of a Fund, to be
promptly executed by the registered holder of such
Securities, without indication of the manner in which
such proxies are to be voted, and shall include all
other proxy materials, if any, promptly deliver to the
Company such proxies, all proxy soliciting materials,
which should include all other proxy materials, if any,
and all notices to such Securities.
3.14 Information on Corporate Actions. Custodian
will promptly notify the Company of corporate actions,
limited to those Securities registered in nominee name
and to those Securities held at a Depository or sub-
Custodian acting as agent for Custodian. Custodian
will be responsible only if the notice of such
corporate actions is published by the Financial Daily
Card Service, J.J. Kenny Called Bond Service, DTC, or
received by first class mail from the agent. For
market announcements not yet received and distributed
by Custodian's services, Company will inform its
custody representative with appropriate instructions.
Custodian will, upon receipt of Company's response
within the required deadline, affect such action for
receipt or payment for the Company. For those
responses received after the deadline, Custodian will
affect such action for receipt or payment, subject to
the limitations of the agent(s) affecting such actions.
Custodian will promptly notify Company for put options
only if the notice is received by first class mail from
the agent. The Company will provide or cause to be
provided to Custodian with all relevant information
contained in the prospectus for any security which has
unique put/option provisions and provide Custodian with
specific tender instructions at least ten business days
prior to the beginning date of the tender period.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
4.1 Purchase of Securities. Promptly upon each
purchase of Securities for the Company, Written
Instructions shall be delivered to the Custodian,
specifying (a) the name of the issuer or writer of such
Securities, and the title or other description thereof,
(b) the number of shares, principal amount (and accrued
interest, if any) or other units purchased, (c) the
date of purchase and settlement, (d) the purchase price
per unit, (e) the total amount payable upon such
purchase, and (f) the name of the person to whom such
amount is payable. The Custodian shall upon receipt of
such Securities purchased by a Fund pay out of the
moneys held for the account of such Fund the total
amount specified in such Written Instructions to the
person named therein. The Custodian shall not be under
any obligation to pay out moneys to cover the cost of a
purchase of Securities for a Fund, if in the relevant
Custody Account there is insufficient cash available to
the Fund for which such purchase was made.
4.2 Liability for Payment in Advance of Receipt
of Securities Purchased. In any and every case where
payment for the purchase of Securities for a Fund is
made by the Custodian in advance of receipt for the
account of the Fund of the Securities purchased but in
the absence of specific Written or Oral Instructions to
so pay in advance, the Custodian shall be liable to the
Fund for such Securities to the same extent as if the
Securities had been received by the Custodian.
4.3 Sale of Securities. Promptly upon each sale
of Securities by a Fund, Written Instructions shall be
delivered to the Custodian, specifying (a) the name of
the issuer or writer of such Securities, and the title
or other description thereof, (b) the number of shares,
principal amount (and accrued interest, if any), or
other units sold, (c) the date of sale and settlement
(d) the sale price per unit, (e) the total amount
payable upon such sale, and (f) the person to whom such
Securities are to be delivered. Upon receipt of the
total amount payable to the Company as specified in
such Written Instructions, the Custodian shall deliver
such Securities to the person specified in such Written
Instructions. Subject to the foregoing, the Custodian
may accept payment in such form as shall be
satisfactory to it, and may deliver Securities and
arrange for payment in accordance with the customs
prevailing among dealers in Securities.
4.4 Delivery of Securities Sold. Notwithstanding
Section 4.3 above or any other provision of this
Agreement, the Custodian, when instructed to deliver
Securities against payment, shall be entitled, if in
accordance with generally accepted market practice, to
deliver such Securities prior to actual receipt of
final payment therefor. In any such case, the Company
shall bear the risk that final payment for such
Securities may not be made or that such Securities may
be returned or otherwise held or disposed of by or
through the person to whom they were delivered, and the
Custodian shall have no liability for any of the
foregoing.
4.5 Payment for Securities Sold, etc. In its
sole discretion and from time to time, the Custodian
may credit the relevant Custody Account, prior to
actual receipt of final payment thereof, with (i)
proceeds from the sale of Securities which it has been
instructed to deliver against payment, (ii) proceeds
from the redemption of Securities or other assets of
the Company, and (iii) income from cash, Securities or
other assets of the Company. Any such credit shall be
conditional upon actual receipt by Custodian of final
payment and may be reversed if final payment is not
actually received in full. The Custodian may, in its
sole discretion and from time to time, permit the
Company to use funds so credited to its Custody Account
in anticipation of actual receipt of final payment.
Any such funds shall be repayable immediately upon
demand made by the Custodian at any time prior to the
actual receipt of all final payments in anticipation of
which funds were credited to the Custody Account.
4.6 Advances by Custodian for Settlement. The
Custodian may, in its sole discretion and from time to
time, advance funds to the Company to facilitate the
settlement of a Company transaction on behalf of a Fund
in its Custody Account. Any such advance shall be
repayable immediately upon demand made by Custodian.
ARTICLE V
REDEMPTION OF TRUST SHARES
5.1 Transfer of Funds. From such funds as may be
available for the purpose in the relevant Custody
Account, and upon receipt of Proper Instructions
specifying that the funds are required to redeem Shares
of a Fund, the Custodian shall wire each amount
specified in such Proper Instructions to or through
such bank as the Company may designate with respect to
such amount in such Proper Instructions. Upon
effecting payment or distribution in accordance with
proper Instruction, the Custodian shall not be under
any obligation or have any responsibility thereafter
with respect to any such paying bank.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian
shall establish and maintain a segregated account or
accounts for and on behalf of each Fund, into which
account or accounts may be transferred cash and/or
Securities, including Securities maintained in a
Depository Account,
(a) in accordance with the provisions of any
agreement among the Company, the Custodian
and a broker-dealer registered under the 1934
Act and a member of the NASD (or any futures
commission merchant registered under the
Commodity Exchange Act), relating to
compliance with the rules of The Options
Clearing Corporation and of any registered
national securities exchange (or the
Commodity Futures Trading commission or any
registered contract market), or of any
similar organization or organizations,
regarding escrow or other arrangements in
connection with transactions by the Company,
(b) for purposes of segregating cash or
Securities in connection with securities
options purchased or written by a Fund or in
connection with financial futures contracts
(or options thereon) purchased or sold by a
Fund,
(c) which constitute collateral for loans of
Securities made by a Fund,
(d) for purposes of compliance by the
Company with requirements under the 1940 Act
for the maintenance of segregated accounts by
registered investment companies in connection
with reverse repurchase agreements and when-
issued, delayed delivery and firm commitment
transactions, and
(e) for other proper corporate purposes, but
only upon receipt of, in addition to Proper
Instructions, a certified copy of a
resolution of the Board of Directors,
certified by an Officer, setting forth the
purpose or purposes of such segregated
account and declaring such purposes to be
proper corporate purposes.
ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 Standard of Care. The Custodian shall be
held to the exercise of reasonable care in carrying out
its obligations under this Agreement, and shall be
without liability to the Company for any loss, damage,
cost, expense (including reasonable attorneys' fees and
disbursements), liability or claim unless such loss,
damages, cost, expense, liability or claim arises from
negligence, bad faith or willful misconduct on its part
or on the part of any sub-custodian appointed pursuant
to Section 3.3 above. The Custodian's cumulative
liability under this Agreement with respect to the
Company or any party claiming by, through or on behalf
of the Company, shall be the actual damages sustained
by the Company (actual damages for uninvested funds
shall be the overnight Feds fund rate). The Custodian
shall be entitled to rely on and may act upon advice of
counsel on all matters, and shall be without liability
for any action reasonably taken or omitted pursuant to
such advice. The Custodian shall promptly notify the
Company of any action taken or omitted by the Custodian
pursuant to advice of counsel. The Custodian shall not
be under any obligation at any time to ascertain
whether the Company is in compliance with the 1940 Act,
the regulations thereunder, the provisions of the
Company's charter documents or by-laws, or its
investment objectives and policies as then in effect.
7.2 Actual Collection Required. The Custodian
shall not be liable for, or considered to be the
custodian of, any cash belonging to the Company or any
money represented by a check, draft or other instrument
for the payment of money, until the Custodian or its
agents actually receive such cash or collect on such
instrument.
7.3 No Responsibility for title, etc. So long as
and to the extent that it is in the exercise of
reasonable care, the Custodian shall not be responsible
for the title, validity or genuineness of any property
or evidence of title thereto received or delivered by
it pursuant to this Agreement.
7.4 Limitation on Duty to Collect. Custodian
shall not be required to enforce collection, by legal
means or otherwise, of any money or property due and
payable with respect to Securities held for the Company
if such Securities are in default or payment is not
made after due demand or presentation.
7.5 Reliance Upon Documents and Instructions.
The Custodian shall be entitled to rely upon any
certificate, notice or other instrument in writing
received by it and reasonably believed by it to be
genuine. The Custodian shall be entitled to rely upon
any Oral Instructions and/or any Written Instructions
actually received by it pursuant to this Agreement.
7.6 Express Duties Only. The Custodian shall
have no duties or obligations whatsoever except such
duties and obligations as are specifically set forth in
this Agreement, and no covenant or obligation shall be
implied in this Agreement against the Custodian.
7.7 Cooperation. The Custodian shall cooperate
with and supply necessary information, by the Company,
to the entity or entities appointed by the Company to
keep the books of account of the Company and/or compute
the value of the assets of the Company. The Custodian
shall take all such reasonable actions as the Company
may from time to time request to enable the Company to
obtain, from year to year, favorable opinions from the
Company's independent accountants with respect to the
Custodian's activities hereunder in connection with (a)
the preparation of the Company's report on Form N-1A
and Form N-SAR and any other reports required by the
Securities and Exchange Commission, and (b) the
fulfillment by the Company of any other requirements of
the Securities and Exchange Commission.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification. The Company shall indemnify
and hold harmless the Custodian and any sub-custodian
appointed pursuant to Section 3.3 above, and any
nominee of the Custodian or of such sub-custodian from
and against any loss, damage, cost, expense (including
reasonable attorneys' fees and disbursements),
liability (including, without limitation, liability
arising under the Securities Act of 1933, the 1934 Act,
the 1940 Act, and any state or foreign securities
and/or banking laws) or claim arising directly or
indirectly (a) from the fact that Securities are
registered in the name of any such nominee, or (b) from
any action or inaction by the Custodian or such sub-
custodian (i) at the request or direction of or in
reliance on the advice of the Company, or (ii) upon
Proper Instructions, or (c) generally, from the
performance of its obligations under this Agreement or
any sub-custody agreement with a sub-custodian
appointed pursuant to Section 3.3 above or, in the case
of any such sub-custodian, from the performance of its
obligations under such custody agreement, provided that
neither the Custodian nor any such sub-custodian shall
be indemnified and held harmless from and against any
such loss, damage, cost, expense, liability or claim
arising from the Custodian's or such sub-custodian's
negligence, bad faith or willful misconduct.
8.2 Indemnity to be Provided. If the Company
requests the Custodian to take any action with respect
to Securities, which may, in the opinion of the
custodian, result in the Custodian or its nominee
becoming liable for the payment of money or incurring
liability of some other form, the Custodian shall not
be required to take such action until the Company shall
have provided indemnity therefor to the Custodian in an
amount and form satisfactory to the Custodian.
ARTICLE IX
FORCE MAJEURE
Neither the Custodian nor the Company shall be
liable for any failure or delay in performance of its
obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond
its reasonable control, including, without limitation,
acts of God; earthquakes; fires; floods; wars; civil or
military disturbances; sabotage; strikes; epidemics;
riots; power failures; computer failure and any such
circumstances beyond its reasonable control as may
cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or
telephone communication service; accidents; labor
disputes, acts of civil or military authority;
governmental actions; or inability to obtain labor,
material, equipment or transportation; provided,
however, that the Custodian in the event of a failure
or delay shall use its best efforts to ameliorate the
effects of any such failure or delay. Notwithstanding
the foregoing, the Custodian shall maintain sufficient
disaster recovery procedures to minimize interruptions.
ARTICLE X
EFFECTIVE PERIOD; TERMINATION
10.1 Effective Period. This Agreement shall
become effective as of the date first set forth above
and shall continue in full force and effect until
terminated as hereinafter provided.
10.2 Termination. Either party hereto may
terminate this Agreement by giving to the other party a
notice in writing specifying the date of such
termination, which shall be not less than ninety (90)
days after the date of the giving of such notice. If a
successor custodian shall have been appointed by the
Board of Directors, the Custodian shall, upon receipt
of a notice of acceptance by the successor custodian,
on such specified date of termination (a) deliver
directly to the successor custodian all Securities
(other than Securities held in a Book-Entry System or
Securities Depository) and cash then owned by the
Company and held by the Custodian as custodian, and (b)
transfer any Securities held in a Book-Entry System or
Securities Depository to an account of or for the
benefit of the Company at the successor custodian,
provided that the Company shall have paid to the
Custodian all fees, expenses and other amounts to the
payment or reimbursement of which it shall then be
entitled. Upon such delivery and transfer, the
Custodian shall be relieved of all obligations under
this Agreement. The Company may at any time
immediately terminate this Agreement in the event of
the appointment of a conservator or receiver for the
Custodian by regulatory authorities in the State of
Ohio or upon the happening of a like event at the
direction of an appropriate regulatory agency or court
of competent jurisdiction.
10.3 Failure to Appoint Successor Custodian. If a
successor custodian is not designated by the Company on
or before the date of termination specified pursuant to
Section 10.2 above, then the Custodian shall have the
right to deliver to a bank or trust company of its own
selection, which is (a) a "Bank" as defined in the 1940
Act, (b) has aggregate capital, surplus and undivided
profits as shown on its then most recent published
report of not less than $25 million, and (c) is doing
business in New York, New York, all Securities, cash
and other property held by Custodian under this
Agreement and to transfer to an account of or for the
Company at such bank or trust company all Securities of
the Company held in a Book-Entry System or Securities
Depository. Upon such delivery and transfer, such bank
or trust company shall be the successor custodian under
this Agreement and the Custodian shall be relieved of
all obligations under this Agreement. If, after
reasonable inquiry, Custodian cannot find a successor
custodian as contemplated in this Section 10.3, then
Custodian shall have the right to deliver to the
Company all Securities and cash then owned by the
Company and to transfer any Securities held in a Book-
Entry System or Securities Depository to an account of
or for the Company. Thereafter, the Company shall be
deemed to be its own custodian and the Custodian shall
be relieved of all obligations under this Agreement.
ARTICLE XI
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as
agreed upon from time to time by the Company and the
Custodian. The fees and other charges in effect on the
date hereof and applicable to the Funds are set forth
in Exhibit C attached hereto.
ARTICLE XII
LIMITATION OF LIABILITY
The Company is a corporation organized under the
laws of the State of Maryland. The obligations of the
Company entered into in the name of the Company or on
behalf thereof by any of the Directors, officers,
employees or agents are made not individually, but in
such capacities, and are not binding upon any of the
Directors, officers, employees, agents or shareholders
of the Company or the Funds personally, but bind only
the assets of the Company, and all persons dealing with
any of the Funds of the Company must look solely to the
assets of the Company belonging to such Fund for the
enforcement of any claims against the Company.
ARTICLE XIII
NOTICES
Unless otherwise specified herein, all demands,
notices, instructions, and other communications to be
given hereunder shall be in writing and shall be sent
or delivered to the address set forth after its name
herein below:
To the Company:
Grand Prix Funds, Inc.
William Executive Campus
15 River Road, Suite 220
Wilton, CT 06897
Attn: Robert Zuccaro
Telephone: (203) 761-9600
Facsimile: (203) 761-9795
To the Custodian:
The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attn: Area Manager-Trust Operations
Telephone: (513) 579-5300
Facsimile: (513) 579-4312
or at such other address as either party shall have
provided to the other by notice given in accordance
with this Article XIII. Writing shall include
transmission by or through teletype, facsimile, central
processing unit connection, on-line terminal and
magnetic tape.
ARTICLE XIV
MISCELLANEOUS
14.1 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws
of the State of Ohio.
14.2 References to Custodian. The Company shall
not circulate any printed matter which contains any
reference to Custodian without the prior written
approval of Custodian, excepting printed matter
contained in the prospectus or statement of additional
information or its registration statement for the
Company and such other printed matter as merely
identifies Custodian as custodian for the Company. The
Company shall submit printed matter requiring approval
to Custodian in draft form, allowing sufficient time
for review by Custodian and its counsel prior to any
deadline for printing.
14.3 No Waiver. No failure by either party hereto
to exercise and no delay by such party in exercising,
any right hereunder shall operate as a waiver thereof.
The exercise by either party hereto of any right
hereunder shall not preclude the exercise of any other
right, and the remedies provided herein are cumulative
and not exclusive of any remedies provided at law or in
equity.
14.4 Amendments. This Agreement cannot be changed
orally and no amendment to this Agreement shall be
effective unless evidenced by an instrument in writing
executed by the parties hereto.
14.5 Counterparts. This Agreement may be executed
in one or more counterparts, and by the parties hereto
on separate counterparts, each of which shall be deemed
an original but all of which together shall constitute
but one and the same instrument.
14.6 Severability. If any provision of this
Agreement shall be invalid, illegal or unenforceable in
any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions
shall not be affected or impaired thereby.
14.7 Successors and Assigns. This Agreement shall
be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and
assigns; provided, however, that this Agreement shall
not be assignable by either party hereto without the
written consent of the other party hereto.
14.8 Headings. The headings of sections in this
Agreement are for convenience of reference only and
shall not affect the meaning or construction of any
provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has
caused this Agreement to be executed and delivered in
its name and on its behalf by its representatives
thereunto duly authorized, all as of the day and year
first above written.
ATTEST: GRAND PRIX FUNDS, INC.
/s/Phillip Villhauer By:/s/Robert Zuccaro
----------------------
Its:President
ATTEST: THE FIFTH THIRD BANK
_________________ By:/s/Traci Hoffman
----------------------
Its:Vice President
Dated: December 31, 1997
EXHIBIT A
TO THE CUSTODY AGREEMENT BETWEEN
GRAND PRIX FUNDS, INC. AND THE FIFTH THIRD BANK
December 31, 1997
Name of Fund Date
Grand Prix Fund 12/31/97
GRAND PRIX FUNDS,INC.
By:/s/ Robert Zaccaro
-----------------------
Its: President
THE FIFTH THIRD BANK
By:/s/ Traci Hoffman
-------------------------
Its: Vice President
Dated: December 31, 1997
EXHIBIT B
TO THE CUSTODY AGREEMENT BETWEEN
GRAND PRIX FUNDS, INC. AND THE FIFTH THIRD BANK
December 31, 1997
AUTHORIZED PERSONS
Set forth below are the names and specimen
signatures of the persons authorized by the Company to
Administer each Custody Account.
Name Signature
Robert Zuccaro /s/ Robert Zuccaro
____________________________________ __________________________________
Phillip Villhauer /s/ Phillip Villhauer
____________________________________ __________________________________
Mary Jane Boyle /s/ Mary Jane Boyle
____________________________________ __________________________________
SIGNATURE RESOLUTION
RESOLVED, That all of the following officers of Grand
Prix Funds, Inc. any of them, namely the Chairman,
President, Vice President, Secretary and Treasurer, are
hereby authorized as signers for the conduct of
business for an on behalf of the Funds with THE FIFTH
THIRD BANK:
Robert Zuccaro /s/ Robert Zuccaro
_____________________ CHAIRMAN ___________________
Robert Zuccaro /s/ Robert Zuccaro
_____________________ PRESIDENT ___________________
_____________________ VICE PRESIDENT ___________________
_____________________ VICE PRESIDENT ____________________
_____________________ VICE PRESIDENT ____________________
_____________________ VICE PRESIDENT ____________________
Mary Jane Boyle /s/ Mary Jane Boyle
_____________________ TREASURER ____________________
Phillip Villhauer /s/ Phillip Villhauer
_____________________ SECRETARY ____________________
In addition, the following Assistant Treasurer is
authorized to sign on behalf of the Company for the
purpose of effecting securities transactions:
_____________________ ASSISTANT TREASURER _________________
The undersigned officers of Grand Prix Funds, Inc.
certify that the foregoing is within the parameters of
a Resolution adopted by Directors of the Company in a
meeting held December 10 ,1997, directing and authorizing
preparation of documents and to do everything necessary
to effect the Custody Agreement between GRAND PRIX FUNDS,
INC. and THE FIFTH THIRD BANK.
By:/s/ Robert Zuccaro
---------------------------
Its:President
By:/s/ Phillip Villhauer
Its:Secretary
TRANSFER AGENCY AGREEMENT
THIS AGREEMENT made as of the 31st day of December
1997 by and between Grand Prix Funds, Inc., a Maryland
corporation (the "Corporation"), and Sunstone Investor
Services, LLC, a Wisconsin limited liability company
("Sunstone"):
WHEREAS, the Corporation is registered under the
Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end management investment company and
is authorized to issue shares of common stock
("Shares") in separate series with each such series
representing the interests in a separate portfolio of
securities and other assets;
WHEREAS, the Corporation desires to retain Sunstone
to render the transfer agency and other services
contemplated hereby with respect to each of the
investment portfolios of the Corporation as are listed
on Schedule A hereto and any additional investment
portfolios the Corporation and Sunstone may agree upon
and include on Schedule A as such Schedule may be
amended from time to time (such investment portfolios
and any additional investment portfolios are
individually referred to as a "Fund" and collectively
the "Funds"), and Sunstone is willing to render such
services.
NOW, THEREFORE, in consideration of the mutual
promises and agreements herein contained and other good
and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto, intending to
be legally bound, do hereby agree as follows:
ARTICLE I
APPOINTMENT OF TRANSFER AGENT
A. Appointment.
1. The Corporation hereby constitutes and
appoints Sunstone as transfer agent and dividend
disbursing agent of all the Shares of the Funds during
the period of this Agreement, and Sunstone hereby
accepts such appointment as transfer agent and dividend
disbursing agent and agrees to perform the duties
thereof as hereinafter set forth.
2. Sunstone shall perform the transfer agent
and dividend disbursing agent services described on
Schedule B hereto. To the extent that the Corporation
requests Sunstone to perform any additional services in
a manner not consistent with Sunstone's usual
processing procedures, Sunstone and the Corporation
shall mutually agree as to the services to be
accomplished, the manner of accomplishment and the
compensation to which Sunstone shall be entitled with
respect thereto.
3. Sunstone may, in its discretion, appoint in
writing other parties qualified to perform transfer
agency and shareholder services reasonably acceptable
to the Corporation (individually, a "Sub-transfer
Agent") to carry out some or all of its
responsibilities under this Agreement with respect to a
Fund; provided, however, that unless the Corporation
shall enter into a written agreement with such Sub-
transfer Agent, the Sub-transfer Agent shall be the
agent of Sunstone and not the agent of the Corporation
or such Fund and, in such event Sunstone shall be fully
responsible for the acts or omissions of such Sub-
transfer Agent and shall not be relieved of any of its
responsibilities hereunder by the appointment of such
Sub-transfer Agent.
4. Subject to Sunstone's duty to act in good
faith with respect to the services described in this
Agreement, Sunstone shall have no duties or
responsibilities whatsoever hereunder except such
duties and responsibilities as are specifically set
forth in this Agreement, and no covenant or obligation
shall be implied in this Agreement against Sunstone.
B. Documents/Records.
1. In connection with such appointment, the
Corporation shall deliver or cause to be delivered the
following documents to Sunstone:
a) A copy of the Articles of Incorporation
and By-laws of the Corporation and all amendments
thereto, and a copy of the resolutions of the Board of
Directors of the Corporation appointing Sunstone and
authorizing the execution of this Transfer Agency
Agreement on behalf of the Funds, each certified by the
Secretary of the Corporation;
b) A certificate signed by a Co-President
and Secretary of the Corporation specifying: the
number of authorized Shares and the number of such
authorized Shares issued and currently outstanding, if
any; the names and specimen signatures of the officers
of the Corporation authorized to sign written stock
certificates, if any, and the individuals authorized to
provide oral instructions and to sign written
instructions and requests on behalf of the Corporation
(hereinafter referred to as "Authorized Persons").
c) In the event the Corporation issues
Share certificates, specimen Share certificates for
each Fund in the form approved by the Board of
Directors of the Corporation (and in a format
compatible with Sunstone's operating system), together
with a Certificate signed by the Secretary of the
Corporation as to such approval;
d) Copies of the Corporation's Registration
Statement, as amended to date, and the most recently
filed Post-Effective Amendment thereto, filed by the
Corporation with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "1933
Act"), and under the 1940 Act, as amended, together
with any applications filed in connection therewith;
and
e) Opinion of counsel for the Corporation
with respect to the Corporation's organization and
existence under the laws of its state of organization,
the validity of the authorized and outstanding Shares,
whether such Shares are fully paid and non-assessable
and the status of such Shares under the Securities Act
of 1933, as amended, and any other applicable federal
law or regulation (i.e., if subject to registration,
that they have been registered and that the
Registration Statement has become effective or, if
exempt, the specific grounds therefor.)
2. The Corporation agrees to deliver or to
cause to be delivered to Sunstone in Milwaukee,
Wisconsin, at the Corporation's expense, all of its
shareholder account records relating to the Funds in a
format acceptable to Sunstone and all such other
documents, records and information as Sunstone may
reasonably request in order for Sunstone to perform its
services hereunder.
ARTICLE II
COMPENSATION & EXPENSES
A. Compensation. In consideration for its services
hereunder as transfer agent and dividend disbursing
agent, each Fund will pay to Sunstone such compensation
as shall be set forth in a separate fee schedule to be
agreed to by each Fund and Sunstone from time to time.
A copy of the initial fee schedule is attached hereto
as Schedule C.
B. Expenses. The Corporation on behalf of each
Fund also agrees to promptly reimburse Sunstone for all
reasonable out-of-pocket expenses or disbursements
incurred by Sunstone in connection with the performance
of services under this Agreement including, but not
limited to, expenses for postage, express delivery
services, freight charges, envelopes, checks, drafts,
forms (continuous or otherwise), specially requested
reports and statements, bank account service fees and
charges, telephone calls, telegraphs, stationery
supplies, outside printing and mailing firms, magnetic
tapes, reels or cartridges (if sent to a Fund or to a
third party at a Fund's request) and magnetic tape
handling charges, off-site record storage, media for
storage of records (e.g., microfilm, microfiche,
optical platters, computer tapes and disks), computer
equipment installed at a Fund's request at a Fund's or
a third party's premises, telecommunications equipment,
telephone/telecommunication lines between the
Corporation and its agents, on one hand, and Sunstone
on the other, proxy soliciting, processing and/or
tabulating costs, second site back-up computer
facility, transmission of statement data for remote
printing or processing, and transaction fees to the
extent any of the foregoing are paid by Sunstone. Such
expenses shall not include personnel charges except
with the prior approval of an Authorized Person. If
requested by Sunstone, postage and other out-of-pocket
expenses are payable in advance, and in the event
requested, postage is due at least seven days prior to
the anticipated mail date. Other out-of pocket expenses
are payable in advance if so requested by Sunstone. In
the event Sunstone requests advance payment, Sunstone
shall not be obligated to incur such expenses or
perform the related service(s) until payment is
received. Sunstone may, at its option, arrange to have
various service providers submit invoices directly to
the Corporation for payment of out-of pocket expenses
reimbursable hereunder.
C. Payment Procedures.
1. Amounts due hereunder shall be due and paid
by the respective Fund on or before the thirtieth
(30th) day after the date of the statement therefor
(the "Due Date"). Service fees are billed monthly, and
out-of-pocket expenses are billed as incurred (unless
prepayment is requested by Sunstone). Sunstone may, at
its option, arrange to have various service providers
submit invoices directly to the Funds for payment of
out-of-pocket expenses reimbursable hereunder. The
Corporation is aware that its failure to pay all
amounts in a timely fashion so that they will be
received by Sunstone on or before the Due Date will
give rise to costs to Sunstone not contemplated by this
Agreement, including but not limited to carrying,
processing and accounting charges. Accordingly, in the
event that any amounts due hereunder are not received
by Sunstone by the Due Date, the Corporation shall pay
a late charge equal to one percent (1.0%) per month or
the maximum amount permitted by law, whichever is less,
until paid in full. In addition, the Corporation shall
pay reasonable attorney's fees and court costs of
Sunstone if any amounts due Sunstone are collected by
or through an attorney. The parties hereby agree that
such late charge represents a fair and reasonable
computation of the costs incurred by reason of late
payment or payment of amounts not properly due.
Acceptance of such late charge shall in no event
constitute a waiver of a Fund's default or prevent
Sunstone from exercising any other rights and remedies
available to it.
2. In the event that any charges are disputed,
the Fund shall, on or before the Due Date, pay all
undisputed amounts due hereunder and notify Sunstone in
writing of any disputed charges for out-of-pocket
expenses which it is disputing in good faith. Payment
for such disputed charges shall be due on or before the
close of the fifth (5th) business day after the day on
which Sunstone provides to the Corporation
documentation which an objective observer would agree
reasonably supports the disputed charges (the "Revised
Due Date"). Late charges shall not begin to accrue as
to charges disputed in good faith until the first day
after the Revised Due Date.
ARTICLE III
PROCESSING AND PROCEDURES
A. Issuance, Redemption and Transfer of Shares
1. Sunstone acknowledges that it has received a
copy of each Fund's Prospectus (as hereinafter
defined), which Prospectus describes how sales and
redemptions of shares of each Fund shall be made and
Sunstone agrees to accept purchase orders and
redemption requests with respect to Fund shares on each
Fund Business Day in accordance with such Prospectus.
"Fund Business Day" shall be deemed to be each day on
which the New York Stock Exchange is open for trading,
and "Prospectus" shall mean the last Fund prospectus
actually received by Sunstone from the Fund with
respect to which the Fund has indicated a registration
statement under the 1933 Act has become effective,
including the Statement of Additional Information,
incorporated by reference therein.
2. On each Fund Business Day Sunstone shall, as
of the time at which the net asset value of each Fund
is computed, issue to and redeem from the accounts
specified in a purchase order or redemption request in
proper form and accepted by the Corporation, which in
accordance with the Prospectus is effective on such
day, the appropriate number of full and fractional
Shares based on the net asset value per Share of the
respective Fund specified in an advice received on such
Fund Business Day from or on behalf of the Fund.
3. Upon the issuance of any Shares in
accordance with this Agreement, Sunstone shall not be
responsible for the payment of any original issue or
other taxes required to be paid by the Fund in
connection with such issuance of any Shares.
4. Sunstone shall not be required to issue any
Shares after it has received from an Authorized Person
or from an appropriate federal or state authority
written notification that the sale of Shares has been
suspended or discontinued, and Sunstone shall be
entitled to rely upon such written notification.
5. Upon receipt of a proper redemption request
and monies paid to it by the Custodian in connection
with a redemption of Shares, Sunstone shall cancel the
redeemed Shares and after making appropriate deduction
for any withholding of taxes required of it by
applicable law, make payment in accordance with the
Fund's redemption and payment procedures described in
the Prospectus.
6. (a) Except as otherwise provided in sub-
paragraph (b) of this paragraph, Shares will be
transferred or redeemed upon presentation to Sunstone
of Share certificates, if any, or instructions properly
endorsed for transfer or redemption, accompanied by
such documents as Sunstone deems necessary to evidence
the authority of the person making such transfer or
redemption, and bearing satisfactory evidence of the
payment of stock transfer taxes. Sunstone reserves the
right to refuse to transfer or redeem Shares until it
is satisfied that the endorsement on the stock
certificate, if any, or instructions is valid and
genuine, and for that purpose it will require, unless
otherwise instructed by an Authorized Person or except
as provided in sub-paragraph (b) of this paragraph, a
guarantee of signature by an "Eligible Guarantor
Institution" as that term is defined by SEC Rule 17Ad-
15. Sunstone also reserves the right to refuse to
transfer or redeem Shares until it is satisfied that
the requested transfer or redemption is legally
authorized, and it shall incur no liability for the
refusal, in good faith, to make transfers or
redemptions which Sunstone, in its judgment, deems
improper or unauthorized, or until it is satisfied that
there is no reasonable basis to any claims adverse to
such transfer or redemption. Sunstone may, in
effecting transfers and redemptions of Shares, rely
upon those provisions of the Uniform Act for the
Simplification of Fiduciary Security Transfers or the
Uniform Commercial Code, as the same may be amended
from time to time, applicable to the transfer of
securities, and the applicable Fund or Funds shall
indemnify Sunstone for any act done or omitted by it in
good faith in reliance upon such laws. In no event will
a Fund indemnify Sunstone for any act done by it as a
result of willful misfeasance, bad faith, negligence or
reckless disregard of its duties.
(b) Notwithstanding the foregoing or any
other provision contained in this Agreement to the
contrary, Sunstone shall be fully protected by each
Fund in not requiring any instruments, documents,
assurances, endorsements or guarantees, including,
without limitation, any signature guarantees, in
connection with a redemption, or transfer, of Shares
whenever Sunstone reasonably believes that requiring
the same would be inconsistent with the transfer and
redemption procedures as described in the Prospectus.
7. Notwithstanding any provision contained in
this Agreement to the contrary, Sunstone shall not be
required or expected to require, as a condition to any
transfer or redemption of any Shares pursuant to
paragraph 6 of this Article or any redemption of shares
pursuant to a computer tape or electronic data
transmission, any documents to evidence the authority
of the person requesting the transfer or redemption
and/or the payment of any stock transfer taxes, unless
Sunstone has some reasonable basis upon which to
question said authority, and shall be fully protected
in acting in accordance with the applicable provisions
of this Article.
8. In connection with each purchase and each
redemption of Shares, Sunstone shall send such
statements as are prescribed by the Federal securities
laws applicable to transfer agents or as described in
the Prospectus. If the Prospectus indicates that
certificates for Shares are available and if
specifically requested in writing by any shareholder,
or if otherwise required hereunder, Sunstone will
countersign, issue and mail to such shareholder at the
address set forth in the records of Sunstone a Share
certificate for any full Share requested.
9. On each Fund Business Day Sunstone shall
supply the Corporation with a statement specifying with
respect to the immediately preceding Fund Business Day:
the total number of Shares of the Funds (including
fractional Shares) issued and outstanding at the
opening of business on such day; the total number of
Shares of the Funds sold on such day; the total number
of Shares of the Funds and the dollar amount redeemed
from Shareholders by Sunstone on such day; and the
total number of Shares of the Funds issued and
outstanding.
10. Procedures for effecting purchase,
redemption or transfer transactions accepted from
investors by telephone or other methods shall be
established by mutual agreement between the Corporation
and Sunstone consistent with the terms of the
Prospectus. Sunstone upon written notice to the
Corporation may establish such additional procedures,
rules and regulations governing the transfer or
registration of Share certificates, if any, or the
purchase, redemption or transfer of Shares, as it may
deem advisable and consistent with such rules and
regulations generally adopted by mutual fund transfer
agents.
B. Dividends and Distributions.
1. The Corporation shall furnish to Sunstone a
copy of a resolution of its Board of Directors,
certified by the Secretary or any Assistant Secretary,
either (i) setting forth the date of the declaration of
a dividend or distribution, the date of accrual or
payment, as the case may be, thereof, the record date
as of which shareholders entitled to payment, or
accrual, as the case may be, shall be determined, the
amount per Share of such dividend or distribution, the
payment date on which all previously accrued and unpaid
dividends are to be paid, and the total amount, if any,
payable to Sunstone on such payment date, or (ii)
authorizing the declaration of dividends and
distributions on a daily or other periodic basis and
authorizing Sunstone to rely on a certificate of an
Authorized Person setting forth the information
described in subsection (i) of this paragraph.
2. In connection with a reinvestment of a
dividend or distribution of Shares of a Fund, Sunstone
shall as of each Fund Business Day, as specified in a
certificate or resolution described in paragraph 1,
issue Shares of the Fund based on the net asset value
per Share of such Fund specified in an advice received
from or on behalf of the Fund on such Fund Business
Day.
3. Upon the mail date specified in such
certificate or resolution, as the case may be, the
Corporation shall, in the case of a cash dividend or
distribution, cause the Custodian to deposit in an
account in the name of Sunstone on behalf of a Fund, an
amount of cash, if any, sufficient for Sunstone to make
the payment, as of the mail date, specified in such
Certificate or resolution, as the case may be, to the
Shareholders who were of record on the record date.
Sunstone will, upon receipt of any such cash, make
payment of such cash dividends or distributions to the
shareholders of record as of the record date. Sunstone
shall not be liable for any improper payments made in
good faith and without negligence, in accordance with a
certificate or resolution described in the preceding
paragraph. If Sunstone shall not receive from the
Custodian sufficient cash to make payments of any cash
dividend or distribution to all shareholders of a Fund
as of the record date, Sunstone shall, upon notifying
the Fund, withhold payment to all shareholders of
record as of the record date until sufficient cash is
provided to Sunstone.
4. It is understood that Sunstone in its
capacity as transfer agent and dividend disbursing
agent shall in no way be responsible for the
determination of the rate or form of dividends or
capital gain distributions due to the shareholders
pursuant to the terms of this Agreement. It is
expressly agreed and understood that Sunstone is not
liable for any loss as a result of processing a
distribution based on information provided in the
Certificate that is incorrect. The Funds agree to pay
Sunstone for any and all costs, both direct and out-of-
pocket expenses, incurred in such corrective work as
necessary to remedy such error, provided that Sunstone
has acted in good faith and without negligence.
5. It is understood that Sunstone shall file
with the Internal Revenue Service and deliver to
shareholders such appropriate federal tax forms
concerning the payment of dividend and capital gain
distributions but shall in no way be responsible for
the collection or withholding of taxes due on such
dividends or distributions due to shareholders, except
and only to the extent, required by applicable law.
C. Authorization and Issuance of Shares;
Recapitalization or Capital Adjustment.
1. Prior to the effective date of any increase
or decrease in the total number of Shares authorized to
be issued, or the issuance of any additional Shares of
a Fund pursuant to stock dividends, stock splits,
recapitalizations, capital adjustments or similar
transactions, the Corporation agrees to deliver to
Sunstone such documents, certificates, reports and
legal opinions as Sunstone may reasonably request.
2. In the event a Fund issues Share
certificates, the Corporation at its expense shall
furnish Sunstone with a sufficient supply of blank
Share certificates in the new form and from time to
time will replenish such supply upon the request of
Sunstone. Such blank Share certificates shall be
compatible with Sunstone's system and shall be properly
signed by facsimile or otherwise by officers of the
Corporation authorized by law or by the By-Laws to sign
Share certificates and, if required, shall bear the
corporate Seal or facsimile thereof. The Corporation
agrees to indemnify and exonerate, save and hold
Sunstone harmless, from and against any and all claims
or demands that may be asserted against Sunstone with
respect to the genuineness of any Share certificate
supplied to Sunstone pursuant to this section.
3. Sunstone may issue new Share certificates in
place of certificates represented to have been lost,
stolen, or destroyed upon receiving written
instructions from the shareholder accompanied by proof
of an indemnity or surety bond issued by a recognized
insurance institution specified by the Corporation or
Sunstone. If Sunstone receives written notification
from the shareholder or broker dealer that the
certificate issued was never received, and such
notification is made within 30 days of the date of
issuance, Sunstone may reissue the certificate without
requiring a surety bond. Sunstone may also reissue
certificates which are represented as lost, stolen, or
destroyed without requiring a surety bond provided that
the notification is in writing and accompanied by an
indemnification signed on behalf of a member firm of
the New York Stock Exchange and signed by an officer of
said firm with the signature guaranteed.
Notwithstanding the foregoing, Sunstone will reissue a
certificate upon written authorization from an
Authorized Person.
D. Records.
1. Sunstone shall keep such records as are
specified in Schedule D hereto in the form and manner,
and for such period, as it may deem advisable but not
inconsistent with the rules and regulations of
appropriate government authorities, in particular Rules
31a-2 and 31a-3 under the 1940 Act. Sunstone may
deliver to the Corporation from time to time at its
discretion, for safekeeping or disposition by the
Corporation in accordance with law, such records,
papers and documents accumulated in the execution of
its duties as such transfer agent, as Sunstone may deem
expedient, other than those which Sunstone is itself
required to maintain pursuant to applicable laws and
regulations. The Corporation shall assume all
responsibility for any failure thereafter to produce
any record, paper, canceled Share certificate, or other
document so returned, if and when required. To the
extent required by Section 31 of the 1940 Act and the
rules and regulations thereunder, the records specified
in Schedule D hereto maintained by Sunstone, which have
not been previously delivered to the Corporation
pursuant to the foregoing provisions of this paragraph,
shall be considered to be the property of the
Corporation, shall be made available upon request for
inspection by the officers, employees, and auditors of
the Corporation, and shall be delivered to the
Corporation promptly upon request and in any event upon
the date of termination of this Agreement, in the form
and manner kept by Sunstone on such date of termination
or such earlier date as may be requested by the
Corporation.
2. Sunstone agrees to keep all records and
other information relative to the Corporation, the
Funds and their shareholders confidential. In case of
any requests or demands for the inspection of the
shareholder records of a Fund, Sunstone will endeavor
to notify the Fund promptly and to secure instructions
from an Authorized Person as to such inspection.
Sunstone reserves the right, however, to exhibit the
shareholder records to any person whenever it receives
advice from its counsel that there is a reasonable
likelihood that Sunstone will be held liable for the
failure to exhibit the shareholder records to such
person; provided, however, that in connection with any
such disclosure Sunstone shall promptly notify the
Corporation that such disclosure has been made or is to
be made. Notwithstanding the foregoing, Sunstone may
disclose information when requested by a shareholder
concerning an account as to which such shareholder
claims a legal or beneficial interest or when requested
by the Corporation, the shareholder or the dealer of
record as to such account.
ARTICLE IV
CONCERNING THE CORPORATION
A. Representations. The Corporation represents and
warrants to Sunstone that:
(a) It is a corporation duly organized and
existing under the laws of the State of Maryland, it is
empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform
this Agreement, and all requisite corporate proceedings
have been taken to authorize it to enter into and
perform this Agreement.
(b) It is an investment company registered under
the 1940 Act.
(c) A registration statement under the 1933 Act
with respect to the Shares is effective.
B. Covenants.
1. The Corporation will provide to Sunstone
copies of all amendments to its Articles of
Incorporation and By-laws made after the date of this
Agreement. If requested by Sunstone, each copy of the
Articles of Incorporation of the Corporation and copies
of all amendments thereto shall be certified by the
Secretary of the Corporation. Each copy of the By-Laws
and copies of all amendments thereto, and copies of
resolutions of the Board of Directors, shall be
certified by the Secretary of the Corporation, if
requested by Sunstone.
2. The Corporation shall promptly deliver to
Sunstone written notice of any change in the Authorized
Persons, together with a specimen signature of each new
Authorized Person. In the event any Officer who shall
have signed manually or whose facsimile signature shall
have been affixed to blank Share certificates shall
die, resign or be removed prior to issuance of such
Share certificates, Sunstone may issue such Share
certificates of the Fund notwithstanding such death,
resignation or removal, and the Corporation shall
promptly deliver to Sunstone such approval, adoption or
ratification as may be required by law.
3. The Corporation shall deliver to Sunstone
the Fund's currently effective Prospectus and, for
purposes of this Agreement, Sunstone shall not be
deemed to have notice of any information contained in
such Prospectus until five (5) business days after it
is actually received by Sunstone.
4. All requisite steps will be taken by the
Corporation from time to time when and as necessary to
register the Corporation's shares for sale in all
states in which the Corporation's shares shall at the
time be offered for sale and require registration. If
at any time the Corporation receives notice of any stop
order or other proceeding in any such state affecting
such registration or the sale of the Corporation's
shares, or of any stop order or other proceeding under
the federal securities laws affecting the sale of the
Corporation's shares, the Corporation will give prompt
notice thereof to Sunstone.
5. The Corporation will comply with all
applicable requirements of the 1933 Act, the Securities
Exchange Act of 1934, as amended, the 1940 Act, blue
sky laws, and any other applicable laws, rules and
regulations.
6. The Corporation agrees that prior to
effecting any change in the Prospectus which would
increase or alter the duties and obligations of
Sunstone hereunder, it shall advise Sunstone of such
proposed change at least 30 days prior to the intended
date of the same, and shall proceed with such change
only if it shall have received the written consent of
Sunstone thereto, which shall not be unreasonably
withheld.
ARTICLE V
CONCERNING THE TRANSFER AGENT
A. Representations. Sunstone represents and
warrants to the Fund that:
(a) It is a corporation duly organized and
existing under the laws of the State of Wisconsin, is
empowered under applicable law and by its Articles of
Incorporation and By-Laws to enter into and perform
this Agreement, and all requisite corporate proceedings
have been taken to authorize it to enter into and
perform this Agreement.
(b) It is duly registered as a transfer agent
under Section 17A of the Securities Exchange Act of
1934, as amended, to the extent required.
B. Limitation of Liability.
1. Sunstone shall not be liable for any loss or
damage, including counsel fees, resulting from its
actions or omissions to act or otherwise, except for
any loss or damage arising out of its bad faith,
willful misfeasance, negligence or reckless disregard
of its duties under this Agreement. Sunstone shall not
be liable and shall be indemnified in acting upon any
writing or document reasonably believed by it to be
genuine and to have been signed or made by an
Authorized Person or verbal instructions which the
individual receiving the instructions on behalf of
Sunstone reasonably believes in good faith to have been
given by an Authorized Person, and Sunstone shall not
be held to have any notice of any change of authority
of any person until receipt of written notice thereof
from a Fund or such person. It shall also be protected
in processing Share certificates, if any, which bear
the proper countersignature of Sunstone and which it
reasonably believes to bear the proper manual or
facsimile signature of the officers.
2. Sunstone assumes no responsibility
hereunder, and shall not be liable, for any damage,
loss of data, errors, delay or any other loss
whatsoever caused by events beyond its reasonable
control. Sunstone will, however, take all reasonable
steps to minimize service interruptions for any period
that such interruption continues beyond Sunstone's
control.
3. In no event and under no circumstances shall
either party to this Agreement be liable to anyone,
including, without limitation to the other party, for
consequential or punitive damages for any act or
failure to act under any provision of this Agreement
even if advised of the possibility thereof.
C. Indemnification.
1. The Corporation shall indemnify and
exonerate, save and hold harmless Sunstone from and
against any and all claims (whether with or without
basis in fact or law), demands, expenses (including
reasonable attorney's fees) and liabilities of any and
every nature which the Indemnified Party (as defined
below) may sustain or incur or which may be asserted
against the Indemnified Party by any person by reason
of or as a result of any action taken or omitted to be
taken by any prior transfer agent of the Corporation or
as a result of any action taken or omitted to be taken
by the Indemnified Party in good faith and without
negligence or willful misconduct or in reliance upon
(i) any provision of this Agreement; (ii) the
Prospectus; (iii) any instrument, order or Share
certificate reasonably believed by it to be genuine and
to be signed, countersigned or executed by an
Authorized Person; (iv) any Certificate or other
instructions of an Authorized Person; or (v) any
opinion of legal counsel for the Corporation or, if
approved by the Corporation, for the Indemnified Party.
The Corporation shall indemnify and exonerate, save and
hold the Indemnified Party harmless from and against
any and all claims (whether with or without basis in
fact or law), demands, expenses (including reasonable
attorney's fees) and liabilities of any and every
nature which the Indemnified Party may sustain or incur
or which may be asserted against the Indemnified Party
by any person by reason of or as a result of any action
taken or omitted to be taken by the Indemnified Party
in good faith in connection with its appointment or in
reliance upon any law, act, regulation or any
interpretation of the same.
2. Sunstone shall indemnify and hold the
Corporation harmless from and against any and all
losses, damages, costs, charges, counsel fees,
payments, expenses and liability arising out of or
attributable to any action or failure or omission to
act by Sunstone as a result of Sunstone's lack of good
faith, negligence or willful misconduct.
3. The party seeking indemnification under this
Section (C) (the "Indemnified Party") shall not settle
any claim, demand, expense or liability to which it may
seek indemnity (each, an "Indemnifiable Claim") without
the express written consent of the party against which
indemnification is sought (the "Indemnifying Party").
The Indemnified Party shall notify the Indemnifying
Party promptly after receipt of notification of an
Indemnifiable Claim, provided that the failure to
furnish such notification shall not impair the
Indemnified Party's right to seek indemnification
unless the Indemnifying Party is unable to adequately
defend the Indemnifiable Claim as a result of such
failure, and further provided, that if as a result of
the failure to provide timely notice of the institution
of litigation a judgment by default is entered, prior
to seeking indemnification, the Indemnified Party, at
its own cost and expense, shall open such judgment.
The Indemnifying Party shall have the right to defend
any Indemnifiable Claim at its own expense, provided
that such defense shall be conducted by counsel
selected by the Indemnifying Party and reasonably
acceptable to the Indemnified Party. The Indemnified
Party may join in such defense at its own expense, but
to the extent that it shall so desire the Indemnifying
Party shall direct such defense. The Indemnifying
Party shall not settle any Indemnifiable Claim without
the express written consent of the Indemnified Party if
the Indemnified Party determines that such settlement
would have an adverse effect on the Indemnified Party
beyond the scope of this Agreement. In such event,
each of the Indemnifying Party and the Indemnified
Party shall be responsible for their own defense at
their own cost and expense, and such claim shall not be
deemed an Indemnifiable Claim hereunder. If the
Indemnifying Party shall fail or refuse to defend an
Indemnifiable Claim, the Indemnified Party may provide
its own defense at the cost and expense of the
Indemnifying Party. Anything in this Agreement to the
contrary notwithstanding, the Indemnifying Party shall
not indemnify the Indemnified Party against any
liability or expense arising out of the Indemnified
Party's willful misfeasance, bad faith, negligence or
reckless disregard of its duties and obligations under
this Agreement.
4. The indemnity and defense provisions
provided hereunder shall indefinitely survive the
termination of this Agreement.
D. Procedures.
1. At any time Sunstone may apply to an
Authorized Person of the Corporation for written
instructions with respect to any matter arising in
connection with Sunstone's duties and obligations under
this Agreement, and Sunstone shall not be liable for
any action taken or permitted by it in good faith in
accordance with such written instructions. Such
application by Sunstone for written instructions from
an Authorized Person of the Corporation may set forth
in writing any action proposed to be taken or omitted
by Sunstone with respect to its duties or obligations
under this Agreement and the date on and/or after which
such action shall be taken. Sunstone shall not be
liable for any action taken or omitted in accordance
with a proposal included in any such application on or
after the date specified therein unless, prior to
taking or omitting any such action, Sunstone has
received written instructions in response to such
application specifying the action to be taken or
omitted. Sunstone may consult counsel of the
Corporation, or upon notice and approval from the
Corporation, its own counsel, at the expense of the
Corporation and shall be fully protected with respect
to anything done or omitted by it in good faith in
accordance with the advice or opinion of counsel to the
Corporation or its own counsel.
2. Notwithstanding any of the foregoing
provisions of this Agreement, Sunstone shall be under
no duty or obligation under this Agreement to inquire
into, and shall not be liable for:
(a) The legality of the issue or sale of any
Shares, the sufficiency of the amount to be received
therefor, or the authority of the Corporation, as the
case may be, to request such sale or issuance;
(b) The legality of a transfer of Shares, or
of a redemption of any Shares, the propriety of the
amount to be paid therefor, or the authority of the
Corporation, as the case may be, to request such
transfer or redemption;
(c) The legality of the declaration of any
dividend by the Corporation, on behalf of a Fund or
Funds, or the legality of the issue of any Shares in
payment of any stock dividend; or
(d) The legality of any recapitalization or
readjustment of Shares.
ARTICLE V
TERM
1. This Agreement shall remain in full force
and effect for a one-year period from the date hereof
(the "Initial Term"), and thereafter shall
automatically extend for additional, successive twelve
(12) month terms unless earlier terminated as provided
below. Each party, in addition to any other rights and
remedies, shall have the right to terminate this
Agreement at any time upon the material breach of this
Agreement by the other party. In the event of a
material breach, the non-breaching party shall notify
the breaching party in writing of such breach and upon
receipt of such notice, the breaching party shall have
45 days to remedy the breach or the non-breaching party
may forthwith terminate this Agreement upon the
expiration of said period.
2. Either of the parties hereto may terminate
this Agreement only after the Initial Term, except as
noted in paragraph 1 above, by giving to the other
party a notice in writing specifying the date of such
termination, which shall be not less than sixty (60)
days after the date of receipt of such notice. In the
event such notice is given by the Corporation, it shall
be accompanied by a copy of a resolution of the Board
of Directors of the Corporation, certified by the
Secretary or any Assistant Secretary, electing to
terminate this Agreement and designating the successor
transfer agent or transfer agents. In the event such
notice is given by Sunstone, the Corporation shall on
or before the termination date, deliver to Sunstone a
copy of a resolution of its Board of Directors
certified by the Secretary or any Assistant Secretary
designating a successor transfer agent or transfer
agents. In the absence of such designation by the
Corporation, the Corporation shall upon the date
specified in the notice of termination of this
Agreement and delivery of the records maintained
hereunder, be deemed to be its own transfer agent and
Sunstone shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement. Fees and
out-of-pocket expenses incurred by Sunstone, but unpaid
by the Corporation upon such termination, shall be
immediately due and payable upon and notwithstanding
such termination.
3. In the event this Agreement is terminated as
provided herein, Sunstone, upon the written request of
the Corporation, shall deliver the records of the
Corporation to the Corporation or its successor
transfer agent in the form maintained by Sunstone. The
Corporation shall be responsible to Sunstone for all
out-of-pocket expenses and for the reasonable costs and
expenses associated with the preparation and delivery
of such media, including: (a) any custom programming
requested by the Corporation in connection with the
preparation of such media; (b) transportation of forms
and other Corporation materials used in connection with
the processing of Fund transactions by Sunstone; and
(c) transportation of the Corporation's records and
files in the possession of Sunstone. Sunstone shall
not reduce the level of service provided to the
Corporation following notice of termination by the
Corporation.
ARTICLE VI
MISCELLANEOUS
A. Notices. Any notice or other instrument in
writing, authorized or required by this Agreement to be
given to the Corporation with respect to any Fund shall
be sufficiently given if addressed to the Corporation
and mailed and delivered to the President at Wilton
Executive Campus, 15 River Road, Suite 200, Wilton,
Connecticut 06897, or at such other place as the
Corporation may from time to time designate in writing.
Any notice or other instrument in writing, authorized
or required by this Agreement to be given to Sunstone
shall be sufficiently given if addressed to Sunstone
and mailed or delivered to the President at 207 East
Buffalo Street, Suite 400, Milwaukee, Wisconsin 53202,
or at such other place as Sunstone may from time to
time designate in writing.
B. Amendments/Assignments.
1. This Agreement may not be amended or
modified in any manner except by a written agreement
executed by both parties with the formality of this
Agreement.
2. This Agreement shall extend to and shall be
binding upon the parties hereto, and their respective
successors and assigns. This Agreement shall not be
assignable by either party without the written consent
of the other party except that Sunstone may assign this
Agreement to an affiliate with advance written notice
to the Corporation; provided, however, the personnel of
the affiliate have the same or better qualifications
and experience as Sunstone.
C. Wisconsin Law. This Agreement shall be governed
by and construed in accordance with the laws of the
State of Wisconsin. If any part, term or provision of
this Agreement is determined by the courts or any
regulatory authority having jurisdiction over the issue
to be illegal, in conflict with any law or otherwise
invalid, the remaining portion or portions shall be
considered severable and shall not be affected, and the
rights and obligations of the parties shall be
construed and enforced as if the Agreement did not
contain the particular part, term or provision held to
be illegal or invalid.
D. Counterparts. This Agreement may be executed in
any number of counterparts each of which shall be
deemed to be an original; but such counterparts shall,
together, constitute only one instrument.
E. Back-up Facility. During the terms of this
Agreement, Sunstone shall provide a facility capable of
safeguarding the transfer agency and dividend
disbursing records of the Corporation in case of damage
to the primary facility providing those services (the
"Back-Up Facility"). Transfer of the transfer agency
and dividend records of the Fund to the Back-Up
Facility shall commence as soon as practicable after
damage to the primary facility results in an inability
to provide the transfer agency and dividend disbursing
services. After the primary facility has recovered,
Sunstone shall again utilize it to provide the transfer
agency and dividend disbursing services to the Fund.
Sunstone shall use reasonable efforts to provide the
services described in this Agreement from the Back-Up
Facility.
This space intentionally left blank.
F. Non-Exclusive; Other Agreements. The services
of Sunstone hereunder are not deemed exclusive and
Sunstone shall be free to render similar services to
others. Except as specifically provided herein, this
Agreement does not in any way affect any other
agreements entered into among the parties hereto and
any actions taken or omitted by any party hereunder
shall not affect any rights or obligations of any other
party hereunder.
G. Captions. The captions in the Agreement are
included for convenience of reference only, and in no
way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective
corporate officer, thereunto duly authorized and their
respective corporate seals to be hereunto affixed, as
the day and year first above written.
SUNSTONE INVESTOR SERVICES, LLC GRAND PRIX FUNDS, INC.
By:/s/ Miriam M. Allison By:/s/ Robert Zuccaro
- ------------------------------ ------------------------------
(Signature) (Signature)
Miriam M. Allison Robert Zucarro
- ------------------------------- -------------------------------
(Name) (Name)
President President
- ------------------------------- -------------------------------
(Title) (Title)
December 31, 1997 December 31, 1997
- -------------------------------- --------------------------------
(Date Signed) (Date Signed)
SCHEDULE A
Grand Prix Fund
Schedule B
to the
Transfer Agent Agreement
by and between
Grand Prix Funds, Inc.
and
Sunstone Investor Services LLC
SERVICES
Maintenance of shareholder accounts
Maintain records for each shareholder account;
Scan account documents for electronic storage;
Record changes to shareholder account information;
Maintain account documentation files for each
shareholder; and
Establish and maintain retirement plan accounts.
Shareholder servicing and shareholder transactions
Respond to written and telephone (recorded
lines) inquiries from shareholders for
information about their accounts;
Process shareholder purchase and redemption
orders, including those of automatic investment
and systematic withdrawal plans;
Set up account information, including address,
dividend options, taxpayer identification
numbers and wire instructions;
Issue transaction confirmations;
Process transfers and exchanges;
Process dividend payments by check, wire or ACH
or purchase new shares through dividend
reinvestment; and
Issue customer statements.
Compliance reporting and proxy processing
Provide required reports to the Securities and
Exchange Commission, the National Association of
Securities Dealers and the states in which each
fund is registered;
Prepare and distribute to the Internal Revenue
Service required Internal Revenue Service forms
1099, 1042, 5498 and 945 relating to earned
income and capital gains;
Issue tax withholding reports to the Internal
Revenue Service; and
Mail, process and tabulate proxies.
Dealer/load processing (if applicable)
Provide dealer access through NSCC's FundSERV;
Calculate fees due under 12b-1 plans for
distribution and marketing expenses; and
Issue periodic statements for broker/dealers and
interested parties.
Telephone service representatives on-line access
Respond to shareholder or dealer inquiries
related to:
Account registration;
Share balances;
Account options;
Dividend and capital gain distribution status;
Withholding status;
Transaction dates and types;
Shares traded;
External account number;
Address;
Customer or account type;
Dealer, branch and rep information;
Dollars available/not available in the account;
Shares purchased/redeemed today;
Dividend accrual, current dividend period; and
Market value of shares.
Standard reports
Shareholder base analysis (monthly)
New account listing (weekly)
Purchases, redemptions, exchanges (monthly)
Servicing summary (quarterly)
Rule 12b-1 reports (quarterly)
Other Service Features
In addition to the standard features listed above,
Sunstone's system offers additional features to meet
specialized needs.
Specialized needs
12b-1 fee calculations
Multiple account look-up options
Cross-fund account queries
Cross-account queries
Consolidated statements
Duplicate statements to third parties
Cross-fund dividend reinvestment
Fund-level processing options
Correspondence system capabilities
Schedule C
to the
Transfer Agent Agreement
by and between
Grand Prix Funds, Inc.
and
Sunstone Investor Services LLC
FEE SCHEDULE
Base fees
Annual
Shareholder Minimum Annual
Account Fee Fee Per Fund
Open/Closed
$21,000 $21,000*
*The minimum annual fee shall be $15,000 per Fund until
such time as each Fund as 250 shareholders.
Thereafter, the $21,000 minimum annual fee per Fund
shall apply.
The base fee assumes a single class of shares,
availability of automatic investment plans and
systematic withdrawal plans, quarterly or less frequent
dividend distributions for equity funds, monthly
dividends on fixed income and money market funds,
annual capital gains distributions, and includes all
standard reports.
One-time set-up fees
New funds set up (per fund) $2,000
NSCC Fund/SERV and Networking set-up (per fund
group) 2,500
Remote access set-up (per location) 500
Voice Response Unit (VRU) set-up 2,000
Account maintenance and processing fees
(per occurrence)
Omnibus account transaction $2.50
Certificate issuance $4.00
Locating lost shareholders $8.00
Out-of-pocket expenses
Per statement confirmation and check processing $0.25
Per tax form processing $0.15
Per label printing for proxy or marketing purposes $0.05
Production of ad hoc reports starting at $100
Bulk mailings/insert handling charge
1 insert $0.06
2 - 3 inserts $0.08
4 or more inserts as quoted
Bank account service fees and any other bank charges at cost
Statement paper, check stock, envelopes, tax forms at cost
Postage and express delivery charges at cost
Telephone and long distance charges at cost
Fax charges at cost
P.O. box rental at cost
800-phone number at cost
Inventory and records storage at cost
Fund/SERV charges at cost
Monthly remote access user charges
First user and password $250
Additional users and passwords (each) $100
Remote access line charge at cost
Additional fees
(which may be passed on to shareholders)
Outgoing wire fee varies by bank
Account transcripts older than 2 years $5.00
(per year, per fund)
Non-sufficient funds varies by bank
IRA/SEP/SIMPLE/403(b) processing
Annual maintenance or custodial fee
(per account) $15.00
Account termination (transfer or rollover) $15.00
Custom programming
Additional fees may apply for special programming to
meet your servicing requirements or to create custom
reports.
Schedule D
to the
Transfer Agent Agreement
by and between
Grand Prix Funds, Inc.
and
Sunstone Investor Services LLC
RECORDS MAINTAINED BY SUNSTONE
Account applications
Canceled certificates plus stock powers and
supporting documents
Checks including check registers, reconciliation
records, any adjustment records and tax
withholding documentation
Indemnity bonds for replacement of lost or missing
stock certificates and checks
Liquidation, redemption, withdrawal and transfer
requests including stock powers, signature
guarantees and any supporting documentation
Shareholder correspondence
Shareholder transaction records
Share transaction history of the Funds
ADMINISTRATION AND FUND ACCOUNTING AGREEMENT
THIS AGREEMENT is made as of this 31st day of
December, 1997, by and between Grand Prix Funds, Inc.,
a Maryland corporation (the "Corporation"), and
Sunstone Financial Group, Inc., a Wisconsin corporation
(the "Administrator").
WHEREAS, the Corporation is an open-end investment
company registered under the Investment Company Act of
1940, as amended (the "1940 Act") and is authorized to
issue shares of common stock (the "Shares") in separate
series with each such series representing interests in
a separate portfolio of securities and other assets;
and
WHEREAS, the Corporation and the Administrator
desire to enter into an agreement pursuant to which the
Administrator shall provide administration and fund
accounting services to such investment portfolios of
the Corporation as are listed on Schedule A hereto and
any additional investment portfolios the Corporation
and Administrator may agree upon and include on
Schedule A as such Schedule may be amended from time to
time (such investment portfolios and any additional
investment portfolios are individually referred to as a
"Fund" and collectively the "Funds").
NOW, THEREFORE, in consideration of the mutual
promises and agreements herein contained and other good
and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto, intending to
be legally bound, do hereby agree as follows:
1. Appointment
The Corporation hereby appoints the Administrator as
administrator and fund accountant of the Funds for the
period and on the terms set forth in this Agreement.
The Administrator accepts such appointment and agrees
to render the services herein set forth, for the
compensation herein provided.
2. Services as Administrator
(a) Subject to the direction and control of the
Corporation's Board of Directors and utilizing
information provided by the Corporation and its agents,
the Administrator will: (1) provide office space,
facilities, equipment and personnel to carry out its
services hereunder; (2) compile data for and prepare
with respect to the Funds timely Notices to the
Securities and Exchange Commission (the "Commission")
required pursuant to Rule 24f-2 under the 1940 Act and
Semi-Annual Reports on Form N-SAR; (3) assist in the
preparation of, for execution by the Corporation, and
file all federal income and excise tax returns and
state income tax returns (and such other required tax
filings as may be agreed to by the parties) other than
those required to be made by the Corporation's
custodian or transfer agent, subject to review and
approval of the Corporation and the Corporation's
independent accountants; (4) prepare and/or file
securities registration compliance filings with the
states identified by the Corporation to maintain the
Funds' securities registrations with the advice of the
Corporation's legal counsel; (5) prepare the financial
statements for the Annual and Semi-Annual Reports
required pursuant to Section 30(d) under the 1940 Act;
(6) assist the Corporation's legal counsel in the
preparation of the Registration Statement for the
Corporation (on Form N-1A or any replacement therefor)
and any amendments thereto; (7) determine and
periodically monitor each Fund's income and expense
accruals and cause all appropriate expenses to be paid
from Corporation assets on proper authorization from
the Corporation; (8) calculate daily net asset values
and income factors of each Fund; (9) maintain all
general ledger accounts and related subledgers; (10)
perform security valuations in accordance with the
terms of the Funds' then current Prospectus and
instructions of the Corporation's Board of Directors;
(11) assist in the acquisition of the Corporation's
fidelity bond required by the 1940 Act, monitor the
amount of the bond and make the necessary Commission
filings related thereto; (12) from time to time as the
Administrator deems appropriate, check each Fund's
compliance with the policies and limitations of each
Fund relating to the portfolio investments as set forth
in the Prospectus, Statement of Additional Information,
Articles and By-Laws and monitor each Fund's status as
a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended (but
these functions shall not relieve the Corporation's
investment advisor and sub-advisors, if any, of their
primary day-to-day responsibility for assuring such
compliance); (13) maintain, and/or coordinate with the
other service providers the maintenance of, the
accounts, books and other documents required pursuant
to Rule 31a-1(a) and (b) under the 1940 Act; (14)
develop with legal counsel and secretary of the
Corporation an agenda for each board meeting and, if
requested by the Directors, attend board meetings and
prepare minutes; (15) prepare Form 1099s for directors
and other Fund vendors; (16) calculate dividend and
capital gains distributions subject to review and
approval by the Corporation and its independent
accountants; and (17) generally assist in the
Corporation's administrative operations as mutually
agreed to by the parties. The duties of the
Administrator shall be confined to those expressly set
forth herein, and no implied duties are assumed by or
may be asserted against the Administrator hereunder.
(b) The Directors of the Corporation shall cause the
officers, investment advisor, legal counsel,
independent accountants, transfer agent and custodian
for the Funds to cooperate with the Administrator and
to provide the Administrator, upon request, with such
information, documents and advice relating to the Funds
and the Corporation as is within the possession or
knowledge of such persons, in order to enable the
Administrator to perform its duties hereunder. In
connection with its duties hereunder, the Administrator
shall be entitled to rely, and shall be held harmless
by the Corporation when acting in reliance, upon the
instruction, advice, information or any documents
relating to the Funds provided to the Administrator by
an officer or representative of the Funds or by any of
the aforementioned persons. Fees charged by such
persons shall be an expense of the respective Fund.
The Administrator shall be entitled to rely on any
document which it reasonably believes to be genuine and
to have been signed or presented by the proper party.
The Administrator shall not be held to have notice of
any change of authority of any officer, agent,
representative or employee of the Corporation until
receipt of written notice thereof from the Corporation.
The Administrator shall cooperate with the Corporation
and its legal counsel, independent accountants,
custodian and transfer agent upon reasonable request in
order to enable the Corporation's service providers to
perform their duties with respect to the Funds.
(c) In compliance with the requirements of Rule 31a-
3 under the 1940 Act, the Administrator hereby agrees
that all records which it maintains for the Corporation
are the property of the Corporation and further agrees
to surrender promptly to the Corporation any of such
records upon the Corporation's request free of any
liens and charges. Subject to the terms of Section 6,
the Administrator further agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the
records described in (a) above which are maintained by
the Administrator for the Corporation.
(d) It is understood that in determining security
valuations, the Administrator employs one or more
pricing services to determine valuations of portfolio
securities for purposes of calculating net asset values
of the Funds. The Administrator shall identify to the
Corporation and the Board of Directors any such pricing
service utilized on behalf of the Corporation. The
Administrator is authorized to rely on the prices
provided by such service(s) or by the Funds' investment
advisor or other authorized representative of the
Funds, and shall not be liable for losses to the
Corporation or its securityholders as a result of its
reliance on the valuations provided by the approved
pricing service(s) or the representative.
(e) The Administrator shall perform its duties
hereunder in compliance with all applicable laws.
(f) The Corporation'sFunds' Board of Directors and
the Funds' investment advisor have and retain primary
responsibility for all compliance matters relating to
the Funds including but not limited to compliance with
the Investment Company Act of 1940, as amended, the
Internal Revenue Code of 1986, as amended, and the
policies and limitations of each Fund relating to the
portfolio investments as set forth in the Prospectus
and Statement of Additional Information. The
Administrator's monitoring and other functions
hereunder shall not relieve the Board and the
investment advisor of their responsibilities for
assuring such compliance.
3. Fees; Delegation; Expenses
(a) In consideration of the services rendered
pursuant to this Agreement, the Corporation will pay
the Administrator a fee, computed daily and payable
monthly, as provided in Schedule B hereto, plus out-of-
pocket expenses. The Corporation shall also pay the
Administrator for organizational start-up services
provided on behalf of the Funds as specified in
Schedule B. Out-of-pocket expenses include, but are
not limited to, travel, lodging and meals in connection
with travel on behalf of the Corporation, programming
and related expenses (previously incurred or to be
incurred by Administrator) in connection with providing
electronic transmission of data between the
Administrator and the Funds' other service providers,
brokers, dealers and depositories, and photocopying,
postage and overnight delivery expenses. Fees shall be
paid by each Fund at a rate that would aggregate at
least the applicable minimum fee for each Fund.
(b) For the purpose of determining fees payable to
the Administrator, net asset value shall be computed in
accordance with the Corporation's Prospectuses and
resolutions of the Corporation's Board of Directors.
The fee for the period from the day of the month this
Agreement is entered into until the end of that month
shall be pro-rated according to the proportion which
such period bears to the full monthly period. Upon any
termination of this Agreement before the end of any
month, the fee for such part of a month shall be pro-
rated according to the proportion which such period
bears to the full monthly period and shall be payable
upon the date of termination of this Agreement. Should
the Corporation be liquidated, merged with or acquired
by another fund or investment company, any accrued fees
shall be immediately payable. Such fee as is
attributable to each Fund shall be a separate charge to
each Fund and shall be the several (and not joint or
joint and several) obligation of each such Fund.
(c) The Administrator will bear all expenses in
connection with the performance of its services under
this Agreement except as otherwise provided herein.
Other costs and expenses to be incurred in the
operation of the Funds, including, but not limited to:
taxes; interest; brokerage fees and commissions, if
any; salaries, fees and expenses of officers and
Directors; Commission fees and state Blue Sky fees;
advisory fees; charges of custodians, transfer agents,
dividend disbursing and accounting services agents;
security pricing services; insurance premiums; outside
auditing and legal expenses; costs of organization and
maintenance of corporate existence; typesetting,
printing, proofing and mailing of prospectuses,
statements of additional information, supplements,
notices and proxy materials for regulatory purposes and
for distribution to current shareholders; typesetting,
printing, proofing and mailing and other costs of
shareholder reports; expenses in connection with the
electronic transmission of documents and information
including electronic filings with the Commission and
the states; expenses incidental to holding meetings of
the Fund's shareholders and Directors; and any
extraordinary expenses; will be borne by the Funds or
their investment advisor. Expenses incurred for
distribution of shares, including the typesetting,
printing, proofing and mailing of prospectuses for
persons who are not shareholders of the Corporation,
will be borne by the investment advisor, except for
such expenses permitted to be paid by the Corporation
under a distribution plan adopted in accordance with
applicable laws.
4. Proprietary and Confidential Information
The Administrator agrees on behalf of itself and its
employees to treat confidentially and as proprietary
information of the Corporation all records and other
information relative to the Funds and prior, present or
potential shareholders of the Corporation (and clients
of said shareholders), and not to use such records and
information for any purpose other than performance of
its responsibilities and duties hereunder, except after
prior notification to and approval in writing by the
Corporation, which approval shall not be unreasonably
withheld and may not be withheld where the
Administrator may be exposed to civil or criminal
proceedings for failure to comply, when requested to
divulge such information by duly constituted
authorities, when subject to governmental or regulatory
audit or investigation, or when so requested by the
Corporation.
5. Limitation of Liability
(a) The Administrator shall not be liable
for any error of judgment or mistake of law or for any
loss suffered by the Funds in connection with the
matters to which this Agreement relates, except for a
loss resulting from the Administrator's willful
misfeasance, bad faith or gross negligence in the
performance of its duties or from reckless disregard by
it of its obligations and duties under this Agreement.
Furthermore, the Administrator shall not be liable for
any action taken or omitted to be taken in accordance
with instructions received by the Administrator from
an officer or representative of the Corporation.
(b) The Administrator assumes no
responsibility hereunder, and shall not be liable, for
any damage, loss of data, errors, delay or any other
loss whatsoever caused by events beyond its reasonable
control. The Administrator will, however, take all
reasonable steps to minimize service interruptions for
any period that such interruption continues beyond its
control.
6. Term
(a) This Agreement shall become effective with
respect to each Fund listed on Schedule A hereof as of
the date hereof and, with respect to each Fund not in
existence on that date, on the date an amendment to
Schedule A to this Agreement relating to that Fund is
executed. This Agreement shall continue in effect with
respect to each Fund for a period of one-year from the
date hereof. Thereafter, if not terminated as provided
herein, this Agreement shall continue automatically in
effect as to each Fund for successive annual periods.
(b) This Agreement may be terminated with respect to
any one or more particular Funds without penalty (i)
upon mutual consent of the parties, or (ii) by either
party upon not less than ninety (90) days' written
notice to the other party (which notice may be waived
by the party entitled to the notice). The terms of
this Agreement shall not be waived, altered, modified,
amended or supplemented in any manner whatsoever except
by a written instrument signed by the Administrator and
the Corporation.
(c) Notwithstanding anything herein to the contrary,
upon the termination of this Agreement or the
liquidation of a Fund or the Corporation, the
Administrator shall deliver the records of the Fund(s)
and/or Corporation as the case may be to the
Corporation or person(s) designated by the Corporation
and thereafter the Corporation or its designee shall be
solely responsible for preserving the records for the
periods required by all applicable laws, rules and
regulations. In addition, in the event of termination
of this Agreement, or the proposed liquidation or
merger of the Corporation or a Fund(s), and the
Corporation requests the Administrator to provide
services in connection therewith, the Administrator
shall provide such services and be entitled to such
compensation as the parties may mutually agree.
7. Non-Exclusivity
The services of the Administrator rendered to the
Corporation are not deemed to be exclusive. The
Administrator may render such services and any other
services to others, including other investment
companies. The Corporation recognizes that from time
to time directors, officers and employees of the
Administrator may serve as trustees, directors,
officers and employees of other entities (including
other investment companies), that such other entities
may include the name of the Administrator as part of
their name and that the Administrator or its affiliates
may enter into investment advisory or other agreements
with such other entities.
8. Governing Law; Invalidity
This Agreement shall be governed by and construed in
accordance with the laws of the State of Wisconsin. To
the extent that the applicable laws of the State of
Wisconsin, or any of the provisions herein, conflict
with the applicable provisions of the 1940 Act, the
latter shall control, and nothing herein shall be
construed in a manner inconsistent with the 1940 Act or
any rule or order of the Commission thereunder. Any
provision of this Agreement which may be determined by
competent authority to be prohibited or unenforceable
in any jurisdiction and shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in
any other jurisdiction.
9. Notices
Any notice required or to be permitted to be given
by either party to the other shall be in writing and
shall be deemed to have been given when sent by
registered or certified mail, postage prepaid, return
receipt requested, as follows: Notice to the
Administrator shall be sent to Sunstone Financial
Group, Inc., 207 East Buffalo Street, Suite 400,
Milwaukee, WI, 53202, Attention Miriam M. Allison, and
notice to the Corporation shall be sent to Grand Prix
Funds, Inc., Wilton Executive Campus, 15 River Road,
Suite 200, Wilton, Connecticut 06897, Attn: Robert
Zuccaro.
10. Entire Agreement
This Agreement constitutes the entire Agreement of
the parties hereto.
11. Counterparts
This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an
original agreement but such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by a duly authorized
officer as of the day and year first above written.
GRAND PRIX FUNDS, INC.
(the "Corporation")
By:/s/Robert Zucarro
------------------------------
President
SUNSTONE FINANCIAL GROUP, INC.
("Administrator")
By:/s/Miriam M. Allison
--------------------------------
President
Schedule A
to the
Administration and Fund Accounting Agreement
by and between
Grand Prix Funds, Inc.
and
Sunstone Financial Group, Inc.
Fund Effective Date
Grand Prix Fund December __, 1997
Schedule B
to the
Administration and Fund Accounting Agreement
by and between
Grand Prix Funds, Inc.
and
Sunstone Financial Group, Inc.
Minimum
Name of Fund Annual Fees Annual Fee
Fund Up to $50 Million 20.00 basis points $65,000
$50 Million to $100 Million 13.00 basis points
Over $100 Million 6.00 basis points
The fees quoted assume a single class of shares. In
addition, the Corporation shall also pay/reimburse the
Administrator's out-of-pocket expenses as described in
the Agreement. The minimum annual fee is subject to
annual escalation in the amount of 6%. Fees for
additional series shall be determined separately and
reflected in an amended Schedule B.
GODFREY & KAHN, S.C.
Attorneys-At-Law
780 North Water Street
Milwaukee, WI 53202-3590
Tel: 414-273-3500 Fax: 414-273-5198
December 17, 1997
Grand Prix Funds, Inc.
Wilton Executive Campus
15 River Road, Suite 220
Wilton, Connecticut 06897
Ladies and Gentlemen:
We have acted as your counsel in connection with
the preparation of a Registration Statement on Form N-
1A (Registration Nos. 333-39133 and 811-8461) (the
"Registration Statement") relating to the sale by you
of an indefinite number of shares of Grand Prix Funds,
Inc. (the "Company") common stock, $0.01 par value (the
"Shares"), in the manner set forth in the Registration
Statement (and the prospectus included therein).
We have examined: (a) the Registration Statement
(and the prospectus included therein), (b) the
Company's Articles of Incorporation and By-Laws, (c)
certain resolutions of the Company's Board of
Directors, and (d) such other proceedings, documents
and records as we have deemed necessary to enable us to
render this opinion.
Based upon the foregoing, we are of the opinion
that the Shares, when sold as contemplated in the
Registration Statement, will be duly authorized and
validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an
exhibit to the Registration Statement. In giving this
consent, however, we do not admit that we are "experts"
within the meaning of Section 11 of the Securities Act
of 1933, as amended, or within the category of persons
whose consent is required by Section 7 of said Act.
Very truly yours,
/s/ Godfrey & Kahn, S.C.
GODFREY & KAHN, S.C.
RH:ica
GRAND PRIX FUNDS, INC.
GRAND PRIX FUND
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN
The following Distribution and Shareholder
Servicing Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940,
as amended (the "Act"), by Grand Prix Funds, Inc. (the
"Corporation"), a Maryland corporation, on behalf of
the Grand Prix Fund (the "Fund"). The Plan has been
approved by a majority of the Corporation's Board
of Directors, including a majority of the directors who
are not interested persons of the Corporation and who
have no direct or indirect financial interest in the
operation of the Plan or in any Rule 12b-1 related
agreement (as defined below) (the "Disinterested
Directors"), cast in person at a meeting called for the
purpose of voting on such plan.
In approving the Plan, the Board of Directors
determined that adoption of the Plan would be prudent
and in the best interests of the Fund and its
shareholders. Such approval by the Board of Directors
included a determination, in the exercise of its
reasonable business judgment and in light of its
fiduciary duties, that there is a reasonable likelihood
that the Plan will benefit the Fund and its
shareholders.
The provisions of the Plan are as follows:
1. PAYMENTS BY THE FUND TO PROMOTE THE SALE OF FUND
SHARES
(a) The Fund will act as a distributor of
its shares. In connection with the promotion and
distribution of Fund shares and the provision of
personal services to shareholders the Fund may
assess a distribution and shareholder servicing
fee which will not exceed 0.25% of the average
daily net assets of the Fund. The Fund may pay
all or a portion of these fees to any registered
securities dealer, financial institution or any
other person (the "Recipient") who renders
assistance in distributing or promoting the sale
of shares, or who provides certain shareholder
services, pursuant to a written agreement (the
"Rule 12b-1 Related Agreement"), a form of which
is attached hereto as Appendix A. To the extent
such fees are not paid to such persons, the Fund
may use the fees for its distribution expenses
incurred in connection with the sale of shares, or
any of its shareholder servicing expenses.
Payment of these fees shall be made quarterly,
within 30 days after the close of the quarter for
which the fee is payable, upon the Fund forwarding
to the Corporation's Board of Directors the
written report required by Section 2 of this Plan;
provided that the aggregate payments under the
Plan to the Fund and all Recipients shall not
exceed 0.25% (on an annualized basis) of the
average daily net assets for that quarter; and
provided further that no fees shall be paid in
excess of the distribution and shareholder
servicing expenses verified in a written report
and submitted by the Fund to the Corporation's
Board of Directors as required under Section 2 of
this Plan.
(b) No Rule 12b-1 Related Agreement shall be
entered into, and no payments shall be made
pursuant to any Rule 12b-1 Related Agreement,
unless such Rule 12b-1 Related Agreement is in
writing and has first been delivered to and
approved by a vote of a majority of the
Corporation's Board of Directors, and of the
Disinterested Directors, cast in person at a
meeting called for the purpose of voting on such
Rule 12b-1 Related Agreement. The form of Rule
12b-1 Related Agreement attached hereto as
Appendix A has been approved by the Corporation's
Board of Directors as specified above.
(c) Any Rule 12b-1 Related Agreement shall
describe the services to be performed by the
Recipient and shall specify the amount of, or the
method for determining, the compensation to the
Recipient.
(d) No Rule 12b-1 Related Agreement may be
entered into unless it provides (i) that it may be
terminated at any time, without the payment of any
penalty, by vote of a majority of the
shareholders, or by vote of a majority of the
Disinterested Directors, on not more than 60 days'
written notice to the other party to the Rule
12b-1 Related Agreement, and (ii) that it shall
automatically terminate in the event of its
assignment.
(e) The Rule 12b-1 Related Agreement shall
continue in effect for a period of more than one
year from the date of its execution only if such
continuance is specifically approved at least
annually by a vote of a majority of the Board of
Directors, and of the Disinterested Directors,
cast in person at a meeting called for the purpose
of voting on such Rule 12b-1 Related Agreement.
2. QUARTERLY REPORTS
The Fund shall provide to the Board of
Directors, and the Directors shall review, at
least quarterly, a written report of all amounts
expended pursuant to the Plan. This report shall
include the identity of the Recipient of each
payment and the purpose for which the amounts were
expended and such other information as the Board
of Directors may reasonably request.
3. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan shall become effective immediately
upon approval by the vote of a majority of the
Board of Directors, and of the Disinterested
Directors, cast in person at a meeting called for
the purpose of voting on the approval of the Plan.
The Plan shall continue in effect for a period of
one year from its effective date unless terminated
pursuant to its terms. Thereafter, the Plan shall
continue from year to year, provided that such
continuance is approved at least annually by a
vote of a majority of the Board of Directors, and
of the Disinterested Directors, cast in person at
a meeting called for the purpose of voting on such
continuance. The Plan may be terminated at any
time by a majority vote of shareholders, or by
vote of a majority of the Disinterested Directors.
4. SELECTION OF DISINTERESTED DIRECTORS
During the period in which the Plan is
effective, the selection and nomination of those
Directors who are Disinterested Directors of the
Corporation shall be committed to the discretion
of the Disinterested Directors.
5. AMENDMENTS
All material amendments of the Plan shall be
in writing and shall be approved by a vote of a
majority of the Board of Directors, and of the
Disinterested Directors, cast in person at a
meeting called for the purpose of voting on such
amendment. In addition, the Plan may not be
amended to increase materially the amount to be
expended by the Fund hereunder without the
approval by a majority vote of shareholders.
APPENDIX A
Rule 12b-1 Related Agreement
Grand Prix Funds, Inc.
Wilton Executive Campus
15 River Road, Suite 220
Wilton, Connecticut 06897
____________, 1997
[Recipient's Name and Address]
Ladies and Gentlemen:
This letter will confirm our understanding and
agreement with respect to payments to be made to you
pursuant to a Distribution and Shareholder Servicing
Plan (the "Plan") adopted by Grand Prix Funds, Inc.
(the "Corporation"), on behalf of the Grand Prix
Fund (the "Fund"), pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "Act").
The Plan and this related agreement (the "Rule 12b-1
Related Agreement") have been approved by a majority of
the Board of Directors of the Corporation, including a
majority of the Board of Directors who are not
"interested persons" of the Corporation, as defined in
the Act, and who have no direct or indirect financial
interest in the operation of the Plan or in this or any
other Rule 12b-1 Related Agreement (the "Disinterested
Directors"), cast in person at a meeting called for the
purpose of voting thereon. Such approval included a
determination by the Board of Directors that, in the
exercise of its reasonable business judgment and in
light of its fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Fund's
shareholders.
1. To the extent you provide distribution and
marketing services in the promotion of the Fund's
shares, including furnishing services and assistance to
your customers who invest in and own shares, including,
but not limited to, answering routine inquiries
regarding the Fund and assisting in changing account
designations and addresses, we shall pay you a fee of
up to 0.25% of the average daily net assets of the Fund
(computed on an annual basis) which are owned of record
by your firm as nominee for your customers or which are
owned by those customers of your firm whose records, as
maintained by the Corporation or its agent, designate
your firm as the customer's dealer or service provider
of record. We reserve the right to increase, decrease
or discontinue the fee at any time in our sole
discretion upon written notice to you.
We shall make the determination of the net asset
value, which determination shall be made in the manner
specified in the Fund's current Prospectus, and pay to
you quarterly, on the basis of such determination, the
fee specified above, to the extent permitted under the
Plan. No such quarterly fee will be paid to you with
respect to shares purchased by you and redeemed or
repurchased by the Fund, its agent or us within seven
(7) business days after the date of our confirmation of
such purchase. In addition, no such quarterly fee will
be paid to you with respect to any of your customers if
the amount of such fee based upon the value of such
customer's shares will be less than $25.00. Payment of
such quarterly fee shall be made within 45 days after
the close of each quarter for which such fee is
payable.
2. You shall furnish us with such information as
shall reasonably be requested by the Board of
Directors, on behalf of the Fund, with respect to the
fees paid to you pursuant to this Rule 12b-1 Related
Agreement.
3. We shall furnish to the Board of Directors,
for its review, on a quarterly basis, a written report
of the amounts expended under the Plan by us and the
purposes for which such expenditures were made.
4. This Rule 12b-1 Related Agreement may be
terminated by the vote of (a) a majority vote of
shareholders, or (b) a majority of the Disinterested
Directors, on sixty (60) days' written notice, without
payment of any penalty. In addition, this Rule 12b-1
Related Agreement shall terminate immediately in the
event of its assignment. This Rule 12b-1 Related
Agreement may be amended by us upon written notice to
you, and you shall be deemed to have consented to such
amendment upon effecting any purchases of shares for
your own account or on behalf of any of your customer's
accounts following your receipt of such notice.
5. This Rule 12b-1 Related Agreement shall
become effective on the date accepted by you and shall
continue in full force and effect so long as the
continuance of the Plan and this Rule 12b-1 Related
Agreement are approved at least annually by a vote of
the Board of Directors of the Corporation and of the
Disinterested Directors, cast in person at a meeting
called for the purpose of voting thereon. All
communications to us should be sent to the above
address. Any notice to you shall be duly given if
mailed or telegraphed to you at the address specified
by you below. This Rule 12b-1 Related Agreement shall
be construed under the laws of the State of Maryland.
GRAND PRIX FUNDS, INC.,
on behalf of Grand Prix Equity Fund
By:_________________________
Robert Zuccaro
Accepted:
_________________________________
(Dealer or Service Provider Name)
_________________________________
(Street Address)
__________________________________
(City) (State) (ZIP)
___________________________________
(Telephone No.)
____________________________________
(Facsimile No.)
By:_________________________________
(Name and Title)
