As filed with the Securities and Exchange Commission on July 29, 1999
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. [ ]
Post-Effective Amendment No. 6 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 8 [X]
GRAND PRIX FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
Wilton Executive Campus
15 River Road, Suite 220
Wilton, Connecticut 06897
(Address of Principal Executive Offices) (Zip Code)
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
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on August 2, 1999 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new
effective date for a previously filed post-effective amendment.
<PAGE>
PROSPECTUS
August 2, 1999
[Logo]
Grand Prix Funds, Inc.
GRAND PRIX FUND
Wilton Executive Campus
15 River Road, Suite 220
Wilton, Connecticut 06897
1-800-307-4880 (Fund Information)
1-800-432-4741 (Account Information)
Website: www.grandprixfund.com
Fund Symbol: GPFFX
The investment objective of the Grand Prix Fund
(the "Fund") 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, Inc. (the "Advisor"), believes that the use
of this momentum strategy has the potential for higher
returns than other investment strategies.
This Prospectus contains information you should
consider before you invest in the Fund. Please read
this Prospectus carefully and keep it for future
reference.
____________________
The Securities and Exchange Commission (the "SEC")
has not approved or disapproved of these securities or
passed upon the adequacy of this Prospectus. Any
representation to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
SUMMARY 3
PERFORMANCE 4
FUND FEES AND EXPENSES 5
INVESTMENT OBJECTIVE 6
IMPLEMENTATION OF INVESTMENT OBJECTIVE 7
FUND MANAGEMENT 8
OPENING AN ACCOUNT 9
FINANCIAL HIGHLIGHTS 15
VALUATION OF FUND SHARES 16
DISTRIBUTION AND SHAREHOLDER SERVICING PLANS 16
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX TREATMENT 16
YEAR 2000 ISSUE 17
ADDITIONAL INFORMATION 18
<PAGE>
SUMMARY
What is the goal of the Fund?
The Fund's goal is capital appreciation. This
goal is sometimes referred to as the investment
objective. The Fund attempts to achieve this goal by
choosing investments that the Advisor believes have the
potential for growth. The Fund will trade actively to
try to increase returns. The Advisor will not consider
dividend or interest income in the selection of
investments. See "Investment Objective."
What will the Fund invest in?
The Fund invests primarily in common stocks of
companies which the Advisor characterizes as "growth"
companies. The Advisor selects common stocks without
regard to a company's market capitalization, so the
Fund's investments may be in companies that have small,
medium or large market capitalizations. The Fund may
also invest a limited amount of assets in short-term
money market securities. For more information, see
"Implementation of Investment Objective."
Is the Fund an appropriate investment for me?
The Fund is suitable for long-term investors only.
The Fund is not a short-term investment vehicle. An
investment in the Fund may be appropriate if:
* your goal is capital appreciation;
* you want to allocate some portion of your long-
term investments to aggressive equity investing;
* you have no immediate financial requirements for
this investment;
* you are willing to accept a high degree of
volatility; and
* you have the financial ability to undertake
greater risk in exchange for the possibility to realize
greater financial gains in the future.
What are the main risks of investing in the Fund?
The main risks of investing in the Fund are:
* Stock Market Risk: Equity mutual funds like the
Fund are subject to stock market risks and significant
fluctuations in value. If the stock market declines in
value, the Fund is likely to decline in value. Stocks
are generally more volatile than bonds.
* Stock Selection Risk: The stocks selected by the
Advisor may decline in value or not increase in value
when the stock market in general is rising.
* Liquidity Risk: The Advisor may not be able to
sell stocks at an optimal time or price.
* Non-Diversification Risk: The Fund may invest a
relatively large amount of assets in a few companies
which may increase volatility.
* Leveraging Risk: The Fund may borrow money to
purchase investments. Leverage is a speculative
technique that provides the opportunity for greater
total return but also involves risks. If the Fund's
return on its investment from a borrowing is lower than
the interest rate on the borrowed funds, the Fund's
return will be lower than if the Fund had not borrowed
money.
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* Short-Term Trading Risk: The Fund trades actively
and frequently. You may realize taxable capital gains
as a result of such frequent trading of the Fund's
assets and the Fund will incur transaction costs in
connection with buying and selling securities. Tax and
transaction costs lower the Fund's effective return for
investors.
You should be aware that you may lose money by investing in the Fund.
PERFORMANCE
The performance information that follows gives
some indication of the risks of an investment in the
Fund by comparing the Fund's performance with a broad
measure of market performance. Please remember that
the Fund's past performance does not reflect how the
Fund may perform in the future.
1998 Calendar Year Total Return
111.83%
The Fund's fiscal year end is October 31st. The
Fund's year-to-date total return as of June 30, 1999
was 22.00%.
Best and Worst Quarterly Returns
BEST WORST
48.65 % 5.71 %
(4th quarter, 1998) (3rd quarter, 1998)
Total Returns as of 12/31/98
1 Year
Fund 100.79 %
S&P 500 Index* 28.58 %
* The S&P 500 Index is an unmanaged index generally representative
of the U.S. stock market.
Please note that the returns presented in the
chart entitled "1998 Calendar Year Total Return" and in
the table entitled "Best and Worst Quarterly Returns"
do not reflect the 5.25% maximum sales charge imposed
on the Fund's Class A shares. The returns presented in
the "Total Returns" table do, however, reflect this
sales charge.
<PAGE>
FUND FEES AND EXPENSES
The following table describes the fees and
expenses that you may pay if you buy and hold shares of
the Fund:
Shareholder Fees (fees paid directly from your investment)(1)
Class A Class C
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 5.25%(2) 1.00%
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends (as a percentage of offering price) None None
Annual Fund Operating Expenses (expenses that are
deducted from Fund assets)(3)
Management Fees 1.00% 1.00%
Rule 12b-1 (Distribution and Service) Fees(4) 0.25% 1.00%
Other Expenses 1.60%(5) 1.60%(6)
Total Annual Fund Expenses 2.85% 3.60%
Fee Waiver/Expense Reimbursement 1.13%(5) 1.13%(6)
Net Expenses 1.72% 2.47%
____________
(1) A $25 fee will be charged for returned checks
or electronic funds transfers. If you redeem shares
by wire, you will be charged a $12 fee. For
additional information, see "Opening an Account."
(2) Certain investors are exempt from paying some
or all of this sales load. For more information,
see "Opening an Account."
(3) Fund operating expenses are deducted from Fund
assets before computing the daily share price or
making distributions. As a result, they will not
appear on your account statement, but instead reduce
the amount of total return you receive.
(4) Because Rule 12b-1 fees are paid out of the
Fund's assets on an on-going basis, over time these
fees will increase the cost of your investment and
could cost long-term investors of the Fund more than
other types of sales charges. For more information,
see "Distribution and Shareholder Servicing Plans."
(5) Pursuant to an expense cap agreement dated
February 26, 1999, as amended August 2, 1999,
between the Advisor and the Fund, the Advisor has
agreed to limit the total operating expenses of the
Fund's Class A shares to an annual rate of 1.72% of
the Fund's average net assets attributable to the
Class A shares until February 29, 2000. From
February 29, 2000 until February 28, 2002, the
Advisor has agreed to limit the Class A shares'
total operating expenses to 1.75%. After such date,
the expense limitation may be terminated or revised
at any time. "Other expenses" are presented before
any waivers or reimbursements.
(6) Pursuant to an expense cap agreement dated
February 26, 1999, as amended August 2, 1999,
between the Advisor and the Fund, the Advisor has
agreed to limit the total operating expenses of the
Fund's Class C shares to an annual rate of 2.47% of
the Fund's average net assets attributable to the
Class C shares until February 29, 2000. From
February 29, 2000 until February 28, 2002, the
Advisor has agreed to limit the Class C shares'
total operating expenses to 2.50%. After such date,
the expense cap may be terminated or revised at any
time. "Other expenses" are presented before any
waivers or reimbursements and have been estimated.
<PAGE>
Example
The following Example is intended to help you
compare the cost of investing in the Fund with the cost
of investing in other mutual funds. The Example
assumes that you invest $10,000 in the Fund for the
time periods indicated and then redeem all of your
shares at the end of those periods. The Example also
assumes that you have a 5% return each year and that
each class's total annual operating expenses remain the
same each year. Please note that the one- and three-
year numbers are based on each class's net expenses
resulting from the expense cap agreements described
above. The five- and ten- year numbers are based on
the Fund's expenses before any waiver or
reimbursements. Although your actual costs may be
higher or lower, based on these assumptions your costs
would be as follows:
Class A (1) Class C (2)
1 year $ 694 $ 351
3 years $1,043 $ 865
5 years $1,638 $1,627
10 years $3,239 $3,627
(1) The 5.25% maximum sales charge imposed on
purchases of Class A shares is reflected in the
Example.
(2) The 1.00% sales charge imposed on purchases of
Class C shares is reflected in the Example.
INVESTMENT OBJECTIVE
The Fund's investment objective is capital
appreciation. The Fund seeks to achieve its investment
objective by investing primarily in common stocks of
companies which the Advisor characterizes as "growth"
companies. The Fund may invest in companies of all
sizes.
The Advisor focuses on companies which exhibit
fast earnings growth and are rising in price.
Companies considered by the Advisor as "growth"
companies are often in the same or related market
sectors. One sector, however, like technology, may
include various industries, like networking,
telecommunications, software, semiconductors or
voice-processing. Thus, the Fund may be heavily
invested in one sector, while being diversified among
several industries and may take relatively large
positions in a single issuer. The Fund will be more
susceptible to adverse economic, political, regulatory
or market developments affecting a single sector,
industry or issuer. This may increase the Fund's
volatility.
In identifying securities for the Fund, the
Advisor uses a computer-driven model. In the research
process, the Advisor screens for certain fundamental
and quantitative attributes that it believes a security
should have for the Fund to invest in it, including:
* projected earnings growth of at least 20%;
* top 10% relative price strength; and
* projected positive earnings surprises of at least 5%.
The Advisor values securities by assigning scores to
them 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. The Advisor rescores stocks and rebalances
the portfolio weekly according to the highest ranked
scores.
The Advisor will sell a stock when the price has
deteriorated significantly or other securities are a
better value. As a means to increase returns, the Fund
expects to trade actively and frequently. The annual
portfolio turnover rate could range from 300% to 600%,
but generally will not exceed 800%. The annual
portfolio turnover rate indicates
<PAGE>
changes in the Fund's
securities holdings; generally if all the securities in
the Fund at the beginning of an annual period are
replaced by the end of the period, the turnover rate
would be 100%. You may realize taxable capital gains
as a result of such frequent trading of the Fund's
assets and the Fund will incur transaction costs in
connection with buying and selling securities. Tax and
transaction costs lower the Fund's effective return for
investors.
Under normal market conditions, the Fund expects
to be fully invested with at least 95% of its assets in
equity securities. Pending investment or to pay
redemption requests and Fund expenses, the Fund may
hold a portion of its assets in short-term money market
securities and cash. The Fund may also invest a
limited amount of assets in American Depositary
Receipts.
IMPLEMENTATION OF INVESTMENT OBJECTIVE
In implementing its investment objective, the Fund
may invest in the following securities and use the
following investment techniques. Some of these
securities and investment techniques involve special
risks, which are described below and 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
depositary receipts and warrants and other securities
convertible or exchangeable into common stock. Common
stocks are units of ownership of a corporation. Equity
mutual funds like the Fund are subject to stock market
risks and significant fluctuations in value. If the
stock market declines in value, the Fund is likely to
decline in value. Increases or decreases in the value
of stocks are generally greater than for bonds or other
debt instruments. In addition, the stocks selected by
the Advisor may decline in value or not increase in
value when the stock market in general is rising.
Unseasoned Companies
The Fund may invest up to 10% of its total assets
in securities of unseasoned companies. These are
companies that have been in operation less than three
years. The securities of such companies may have
limited liquidity and the prices of such securities may
be volatile.
Non-Diversification
As a "non-diversified" fund, the Fund invests in a
more limited number of companies than other mutual
funds. The Fund may invest up to 50% of its total
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. The Fund may also
invest the other 50% of its total assets in the
securities of as few as 10 companies, up to 5% each,
provided that the Fund does not own more than 10% of
any company's outstanding voting stock. Non-
diversification involves an increased risk of loss to
the Fund if the market value of a security declines.
The Fund may invest in fewer than 25 companies.
As a result, the volatility of investment performance
may increase and the Fund could incur greater losses
than mutual funds that invest in a greater number of
companies.
Temporary Strategies
Prior to investing the proceeds from sales of Fund
shares, to meet ordinary daily cash needs, and to
respond to adverse market, economic, political or other
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. Short-term fixed income securities
include:
* Short-term U.S. government securities;
* Certificates of deposit;
* Bank time deposits;
<PAGE>
* Bankers' acceptances;
* Commercial paper and commercial paper master notes;
* Repurchase agreements; and
* Other short-term fixed-income securities.
If these temporary strategies are used for adverse
market, economic or political conditions, it is
impossible to predict when or for how long the Advisor
may employ these strategies for the Fund. To the
extent the Fund engages in this temporary strategy, the
Fund may not achieve its investment objective.
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. Investments
in securities of foreign issuers involve risks which
are in addition to the usual risks inherent in domestic
investments. 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. Although the Fund's investments will be
denominated in U.S. currency, the underlying foreign
securities will be denominated in foreign currency.
Accordingly, the value of the Fund's assets will
increase or decrease in response to fluctuations in the
value of those foreign currencies.
FUND MANAGEMENT
Management
The Fund 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 Fund's Board of
Directors.
Advisor
Target Investors, Inc. (the "Advisor"), 15 River
Road, Suite 220, Wilton, Connecticut 06897, is a
Florida corporation. The Advisor has been serving
clients since 1983. As of June 30, 1999, the Advisor
managed approximately $550 million for individual and
institutional clients. The Advisor is controlled by
Robert Zuccaro, who owns 80% of the Advisor. Under the
Investment Advisory Agreement, the Fund 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. Pursuant to an expense cap
agreement, 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 1.72% of
the Fund's average daily net assets attributable to the
Class A shares and 2.47% of the Fund's average daily
net assets attributable to the Class C shares until
February 29, 2000. From February 29, 2000 until
February 28, 2002, the Advisor has agreed to limit the
Class A total operating expenses to 1.75% and the Class
C total operating expenses to 2.50%. 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 and brokerage
transactions.
<PAGE>
Portfolio Manager
President of the Advisor since 1983, 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.
Mr. Zuccaro entered the investment management business
in 1967 as an analyst with the Value Line Survey.
Prior to founding the Advisor in 1983, Mr. Zuccaro
spent six years with Axe-Houghton, where he was
President and a 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 and has more than 30 years of experience in the
investment business.
Custodian
Firstar Bank Milwaukee, N.A. ("Firstar Bank"), 777
East Wisconsin Avenue, Milwaukee, Wisconsin 53202, acts
as custodian of the Fund's assets.
Transfer Agent and Administrator
Firstar Mutual Fund Services, LLC ("Firstar"), 615
East Michigan Street, Milwaukee, Wisconsin 53202,
serves as transfer agent for the Fund (the "Transfer
Agent") and as the Fund's administrator.
Distributor
T. O. Richardson Securities, Inc., 2 Bridgewater
Road, Farmington, Connecticut 06032-2256, a registered
broker-dealer and member of the National Association of
Securities Dealers, Inc. (the "NASD"), acts as
distributor of the Fund's shares (the "Distributor").
As compensation for its services, the Distributor may
retain a portion of (i) the initial sales charge from
purchases of Fund shares and (ii) the Rule 12b-1 fees.
The Distributor may pay all or a portion of its fee to
registered dealers who sell Fund shares, pursuant to a
written dealer agreement. The Distributor may pay Rule
12b-1 fees to persons entering into 12b-1 related
agreements. Such persons may include the Advisor. The
Distributor and the Advisor, at their own expense, may
also periodically sponsor programs that offer
additional compensation in connection with the sale of
Fund shares. In some circumstances, this compensation
may be made available only to certain dealers whose
representatives have sold or are expected to sell
significant amounts of Fund shares.
OPENING AN ACCOUNT
Choosing a Class
The Fund offers two classes of shares: Class A
and Class C. Each Class has its own cost structure.
Class A Class C
* Maximum front-end * Maximum front-end sales
sales charge of 5.25% charge of 1.00%.
with break points and
certain exceptions.
* Distribution and * Distribution and
service expenses equal to service expenses equal to
0.25% of average net 1.00% of average net assets.
assets.
Purchasing Shares
In General. Fund shares may be purchased through
any dealer that has entered into a sales agreement with
the Distributor, or through the Distributor directly.
The Transfer Agent may also accept purchase
applications.
<PAGE>
Class A Shares. Class A shares are offered and
sold on a continual basis at the next offering price
(the "Offering Price"), which is the sum of the net
asset value per share (next computed following receipt
of a purchase request in good order by a dealer, the
Distributor or the Transfer Agent, as the case may be)
and the sales charge as set forth below. See
"Valuation of Fund Shares." No sales charge is imposed
on the reinvestment of dividends or capital gains. The
sales charge imposed on purchases of Class A shares is
as follows:
Total Sales Charge
As a Percentage As a Percentage
Your Investment of Offering of Your
Price Investment
Less than $50,000 5.25% 5.54%
$50,000 but less than $100,000 4.50% 4.71%
$100,000 but less than $250,000 3.50% 3.63%
$250,000 but less than $500,000 2.50% 2.56%
$500,000 but less than $1,000,000 2.00% 2.04%
$1,000,000 or more 1.00% 1.01%
Class A shares are also subject to Rule 12b-1 fees
in an aggregate amount of 0.25% of the average daily
net assets of the Fund attributable to the Class A
shares. See "Distribution and Shareholder Servicing
Plans."
Class C Shares. Class C shares are offered and
sold on a continual basis at the next Offering Price,
which is the sum of the net asset value per share (next
computed following receipt of a purchase request in
good order by a dealer, the Distributor or the Transfer
Agent, as the case may be) and the 1.00% initial sales
charge. See "Valuation of Fund Shares." No sales
charge is imposed on the reinvestment of dividends or
capital gains. Class C shares are also subject to Rule
12b-1 fees in an aggregate amount of 1.00% of the
average daily net assets of the Fund attributable to
the Class C shares. See "Distribution and Shareholder
Servicing Plans."
Sales Charge Waivers
The following investors may purchase Class A
shares at net asset value without the imposition of any
sales charge:
* certain retirement plans, such as profit-sharing,
pension, 401(k) and simplified employee pension plans
(SEPs and SIMPLEs), subject to minimum requirements
with respect to the amount of purchase (minimum of at
least $250,000);
* beneficial owners of wrap accounts who are clients
of registered broker/dealers having a selling or
service agreement with the Distributor;
* clients of fee-only financial planners or fee-only
registered investment advisors and financial planners
or investment advisors who have entered into an
agreement with the Distributor or Advisor for clients
participating in comprehensive fee programs;
* owners of private accounts managed by the Advisor;
* persons who owned Fund shares on November 30, 1998;
* persons who sell Fund shares, invest the proceeds
in the Firstar Money Market Funds and subsequently
reinvest in the Fund;
* directors, officers and full-time employees of the
Fund, the Distributor, Firstar and affiliates of such
companies (including the Advisor) and spouses and
family members of such persons; and
<PAGE>
* registered broker/dealers who have entered into a
selling or service agreement with the Distributor for
their investment account only, and registered personnel
and employees of such broker/dealers.
Certain investors may purchase Class A shares at a
reduced sales charge. For additional information on
sales charge reductions for Class A shares, please see
the SAI or call the Fund at 1-800-307-4880.
Minimum Investment. Required minimum investments
are as follows:
INITIAL ADDITIONAL
MINIMUM MINIMUM
TYPE OF ACCOUNT INVESTMENT INVESTMENT
Regular $5,000 $1,000
Automatic Investment Plan $5,000 $ 250
Gift to Minors $5,000 $1,000
IRAs $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 by the Fund
at any time.
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
1-800-307-4880.
Your completed Purchase Application should be
mailed directly to:
Grand Prix Funds, Inc.
P.O. Box 701
Milwaukee, WI 53201-0701
To purchase shares by overnight or express mail,
please use the following street address:
Grand Prix Funds, Inc.
c/o Firstar Mutual Fund Services, LLC
Third Floor
615 East Michigan Street
Milwaukee, WI 53202
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 12 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, please call the Fund at
1-800-432-4741 for instructions. A Purchase
Application must be submitted prior to or at the time
of wiring funds. Funds should be wired through the
Federal Reserve System as follows:
<PAGE>
Firstar Bank Milwaukee, N.A.
A.B.A. Number: 075000022
For credit to: Firstar Mutual Fund Services, LLC
Account Number: 112-952-137
For further credit to: Grand Prix Funds, Inc.
(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 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. 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 an 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 13 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 Offering Price next computed
after receipt by the Fund of the proceeds from your
bank account, which is typically the same day. See
"Additional Purchase Information" for more information.
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. To select this
service, please call the Fund at 1-800-307-4880 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
($250 minimum per transaction). You must meet the
Fund's minimum initial investment of $5,000 before the
Automatic Investment Plan ("AIP") may be established.
You may adopt the AIP at the time an account is opened
by completing the appropriate section of the Purchase
Application. You may obtain an application to
establish the AIP after an account is opened by calling
the Fund at 1-800-307-4880. For additional information
on the AIP, please see the SAI.
Individual Retirement Accounts. You may invest in
the Fund by establishing a tax-sheltered individual
retirement account ("IRA"). The Fund offers the
Traditional IRA, Roth IRA, SEP-IRA and SIMPLE IRA. For
additional information on IRA options, please see the
SAI.
Purchasing Shares through Other Broker/Dealers.
If you choose to purchase Fund shares through a
securities dealer that has not entered into a sales
agreement with the Distributor, you may also pay a
transaction fee, as determined by the dealer. That fee
will be in addition to the sales charge payable by you
upon purchase of such shares.
<PAGE>
Additional Purchase Information. Payment may be
delayed for up to 12 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. The Fund will charge a $25 service fee against
your account for any check or electronic funds transfer
that is returned for any reason and your purchase will
be canceled. You may also be responsible for any
losses suffered by the Fund as a result.
You are automatically provided with the privilege
to initiate telephone redemptions. 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."
In order to relieve you of responsibility for the
safekeeping and delivery of stock certificates, the
Fund does not issue certificates.
Money Market Exchange
The Fund has established a program through which
you can exchange shares of the Fund for shares of the
Firstar Money Market Funds (the "Firstar Funds").
Exchange requests are available for exchanges of $1,000
or more. The Firstar Funds are no-load money market
funds managed by an affiliate of Firstar. The Firstar
Funds are unrelated to the Fund. However, the Advisor
may be compensated by the Firstar Funds for servicing
and related services. This exchange privilege is a
convenient way to buy shares in money market funds. To
use the exchange privilege you must first invest in the
Fund. Before exchanging into the Firstar Funds, please
read the applicable prospectus, which may be obtained
by calling 1-800-307-4880. Firstar will charge a $5.00
fee for each exchange transaction that is executed via
the telephone.
Redeeming Shares
In General. You may redeem shares of either class
at any time; provided, however, that the Fund reserves
the right to refuse any redemption request and may
limit the amount involved or the number of redemptions.
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
"Valuation of Fund Shares." There are no sales charges
for the redemption of shares except that a fee of $12
is charged for each wire redemption. 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, the entire account balance will be redeemed. A
request for redemption must be signed exactly as the
shares are registered. 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 if:
* the proceeds are to be sent to a person other than
the shareholder(s) of record;
* the proceeds are to be sent to a location other
than the address of record;
* the redemption request is made within 30 days of
an address change; or
* the redemption request is for $50,000 or more.
<PAGE>
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. Additional documentation is
required for the redemption of shares held by persons
acting pursuant to a Power of Attorney.
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 of $1,000 to $50,000, 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 $50,000 must be made in
writing and signed by each registered holder. A
redemption request within 30 calendar days after an
address change must be in writing and signed by each
registered holder of the account with signatures
guaranteed. A Notary Public is not an acceptable
guarantor.
A wire payment of redemption proceeds will
normally be made in federal funds on the next business
day. There is currently a $12 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 request if it believes it is advisable to do
so. Procedures for redeeming 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 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
701, Milwaukee, WI 53201-0701. If you wish to send the
information via overnight delivery, you may send it to:
Grand Prix Funds, Inc., c/o Firstar Mutual Fund
Services, LLC, Third Floor, 615 East Michigan Street,
Milwaukee, WI 53202. Redemption requests made via fax
will not be accepted by the Fund.
Redeeming Shares through Broker/Dealers.
Investors may be charged a fee if they redeem shares of
the Fund through a broker or dealer.
Systematic Withdrawal Plan. The System Withdrawal
Plan ("SWP") allows you to make automatic withdrawals
from your account at regular intervals. Redemptions
for the purpose of satisfying such withdrawals may
reduce or even exhaust your account. If the amount
remaining in your account is not sufficient to make a
SWP payment, the remaining amount will be redeemed and
the SWP will be terminated. Please see the SAI for
more information.
Additional Redemption Information. The Fund
reserves the right to suspend or postpone redemptions
during any period when: trading on the New York Stock
Exchange (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.
<PAGE>
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, 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.
For redemption requests for corporate accounts,
please see the SAI for more information.
Redemption in Kind
The Fund has reserved the right to redeem in kind
(i.e., in securities) any redemption request during any
90-day period in excess of the lesser of: (i) $250,000
or (ii) 1% of the net asset value of the class of
shares being redeemed. Please see the SAI for more
information.
Shareholder Reports And Information
The Fund will provide the following statements and
reports:
Confirmation Statements. Except for AIP
transactions, after each transaction that affects the
account balance or account registration, you will
receive a confirmation statement. Participants in the
AIP 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. Call
1-800-432-4741 to order past statements.
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 you may
have more than one account in the Fund.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help
you understand the Fund's financial results for the
period from January 1, 1998 (commencement of
operations) to October 31, 1998 (fiscal year-end) and
for the sixth months ended April 30, 1999. The total
returns presented in the table represent the rate that
an investor would have earned on an investment in the
Fund for the stated period (assuming reinvestment of
all dividends and distributions). The information for
the period from January 1, 1998 to October 31, 1998 has
been audited by Ernst & Young LLP, whose report, along
with the Fund's financial statements, is included in
the Fund's annual report, which is available upon
request. The information for the six months ended
April 30, 1999 has not been audited. The information
below is for the Fund's Class A shares only. The
Fund's Class C shares were not offered until the date
of this Prospectus.
Six Months Period From
Ended January 1, 1998
April 30, 1999 to October 31, 1998
Net asset value, beginning of period $ 14.42 $ 10.00
Net investment loss (0.05) (0.10)
Net realized and unrealized gains
on investments 10.00 4.52
Total from investment operations 9.95 4.42
Less distributions from net realized gains (2.63) --
<PAGE>
Net asset value, end of period $ 21.74 $ 14.42
Total Return (1) (2) 78.41% 44.20%
Ratios/supplemental data:
Net assets, end of period $44,633,031 $1,595,408
Ratio of expenses to average
net assets (3)(4) 1.70% 1.65%
Ratio of net investment loss
to average net assets (3)(4) (1.15)% (1.03)%
Portfolio turnover rate 441.9% 521.6%
______________________
(1) The total return calculation does not
reflect any sales load imposed on the purchase
of shares.
(2) Not annualized.
(3) Annualized.
(4) Net of expense reimbursements and waivers.
Without expense reimbursements and waivers, the
ratio of operating expenses to average net
assets would have been 2.84% and 15.93%, and
the ratio of net investment loss to average net
assets would have been (2.29)% and (15.31)% for
the periods ended April 30, 1999 and October
31, 1998, respectively.
VALUATION OF FUND SHARES
Net asset value is calculated using the fair value
of the Fund's total assets, including interest or
dividends accrued, 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. The net asset value per share is determined as
of the close of trading (generally 4:00 p.m. Eastern
Time) on each day the Exchange is open for business.
Net asset value is not determined on days the Exchange
is closed for trading. The price at which a purchase
order or redemption request is effected is based on the
next calculation of net asset value after the order is
placed or the request is received.
DISTRIBUTION AND SHAREHOLDER SERVICING PLANS
The Fund has adopted a plan pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended
(the "12b-1 Plan") with respect to each class of
shares, which authorizes it to pay the Distributor
certain distribution and shareholder servicing fees.
Under the Class A 12b-1 Plan, the Class A shares may be
required to pay the Distributor a distribution and
shareholder servicing fee of up to 0.25% of the Fund's
average daily net assets attributable to the Class A
shares. The Class C Plan provides that the Class C
shares will be required to pay the Distributor (i) a
distribution fee of 0.75% of the Fund's average daily
net assets attributable to the Class C shares and (ii)
a shareholder servicing fee of 0.25% of the Fund's
average daily net assets attributable to the Class C
shares. The 12b-1 Plan has the effect of increasing
each class's expenses from what they would otherwise
be. Because Rule 12b-1 fees are paid out of the Fund's
net assets on an ongoing basis, over time these fees
will increase the cost of your investment and could
cost long-term investors of the Fund more than paying
other types of sales charges. For additional
information on the 12b-1 Plans, please see the SAI.
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX TREATMENT
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
<PAGE>
time the Fund has held the security and not the
length of time you have held shares in the Fund. The
Fund expects that, because of its investment objective,
its distributions will consist primarily of long- and
short-term capital gains. 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. The election to receive dividends or reinvest
them may be changed by writing to the Fund at Grand
Prix Funds, Inc., P.O. Box 701, Milwaukee, WI
53201-0701. 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.
YEAR 2000 ISSUE
The Fund's operations depend on the seamless
functioning of computer systems in the financial
service industry, including those of the Advisor,
Firstar Bank and Firstar. Many computer systems in use
today cannot properly process date-related information
after December 31, 1999 because of the method by which
dates are encoded and calculated. This failure,
commonly referred to as the "Year 2000 Issue," could
adversely affect the handling of security trades,
pricing and account servicing for the Fund.
The Advisor has made compliance with the Year 2000
Issue a high priority and is taking steps that it
believes are reasonably designed to address the Year
2000 Issue with respect to its computer systems. The
Advisor has also been informed that comparable steps
are being taken by the Fund's other major service
providers. The Advisor does not currently anticipate
that the Year 2000 Issue will have a material impact on
its ability to continue to fulfill its duties as
investment advisor to the Fund. However, there can be
no assurance that the computer systems of the domestic
and foreign companies in which the Fund invests will be
timely converted or that the value of such investments
will not be adversely affected by the Year 2000 Issue.
<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
Mary Jane Boyle, Vice-President and Treasurer
Andrea Romstad, Vice-President and Secretary
INVESTMENT ADVISOR
Target Holdings Corporation, d.b.a. Target
Investors, Inc.
15 River Road, Suite 220
Wilton, Connecticut 06897
CUSTODIAN
Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
ADMINISTRATOR AND TRANSFER AGENT
Firstar Mutual Fund Services, LLC
For overnight deliveries, use: For regular mail deliveries, use:
Grand Prix Funds, Inc. Grand Prix Funds, Inc.
c/o Firstar Mutual Fund Services, LLC P.O. Box 701
Third Floor Milwaukee, WI 53201-0701
615 East Michigan Street
Milwaukee, Wisconsin 53202
INDEPENDENT AUDITORS
Ernst & Young LLP
111 East Kilbourn Avenue
Milwaukee, Wisconsin 53202
DISTRIBUTOR
T. O. Richardson Securities, Inc.
2 Bridgewater Road
Farmington, Connecticut 06032-2256
<PAGE>
LEGAL COUNSEL
Godfrey & Kahn, S.C.
780 N. Water Street
Milwaukee, Wisconsin 53202
<PAGE>
The SAI contains additional information about the
Fund. Additional information about the Fund's
investments is contained in the Fund's annual and semi-
annual reports to shareholders. The Fund's annual
report provides a discussion of the market conditions
and investment strategies that significantly affected
the Fund's performance during its last fiscal year.
The Fund's SAI, which is incorporated by reference into
this Prospectus, annual reports and semi-annual reports
are available without charge upon request to the
address or toll-free telephone number noted in this
Prospectus. The Fund's SAI is also available on the
Website noted in this Prospectus. These documents may
also be obtained from certain financial intermediaries,
including the Distributor, who purchase and sell Fund
shares. General inquiries regarding the Fund can be
directed to the Fund at the address and toll-free
telephone numbers in this Prospectus.
Information about the Fund (including the SAI) can
be reviewed and copied at the SEC's Public Reference
Room in Washington, D.C. Please call the SEC at 1-800-
SEC-0330 for information relating to the operation of
the Public Reference Room. Reports and other
information about the Fund are available on the SEC's
Internet Website located at http://www.sec.gov.
Alternatively, copies of this information may be
obtained, upon payment of a duplicating fee, by writing
the Public Reference Section of the SEC, Washington,
D.C. 20549-6009.
The Fund's 1940 Act File Number is 811-8461.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
GRAND PRIX FUNDS, INC.
GRAND PRIX FUND
Wilton Executive Campus
15 River Road, Suite 220
Wilton, Connecticut 06897
1-800-307-4880 (Fund Information)
1-800-432-4741 (Account Information)
Website: www.grandprixfund.com
Fund Symbol: GPFFX
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
August 2, 1999. The Fund is a series of Grand Prix
Funds, Inc. (the "Corporation").
The Fund's audited financial statements for the
period January 1, 1998 to October 31, 1998, are
incorporated herein by reference to the Fund's Annual
Report. In addition, the Fund's unaudited financial
statements for the period ended April 30, 1999, are
incorporated herein by reference to the Fund's Semi-
Annual Report.
A copy of the Prospectus is available without
charge upon request to the above-noted address, toll-
free telephone number or website.
This Statement of Additional Information is dated August 2, 1999.
<PAGE>
TABLE OF CONTENTS
FUND ORGANIZATION 4
INVESTMENT RESTRICTIONS 4
IMPLEMENTATION OF INVESTMENT OBJECTIVE 5
DEPOSITARY RECEIPTS 5
CONVERTIBLE SECURITIES 6
NON-DIVERSIFICATION AND SECTOR CONCENTRATION 6
LEVERAGING STRATEGIES 7
TEMPORARY STRATEGIES 7
ILLIQUID SECURITIES 7
DIRECTORS AND OFFICERS 8
PRINCIPAL SHAREHOLDERS 9
INVESTMENT ADVISOR 10
FUND TRANSACTIONS AND BROKERAGE 10
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT 11
ADMINISTRATOR 11
DISTRIBUTOR 12
PLAN OF DISTRIBUTION 13
DISTRIBUTION AND SHAREHOLDER SERVICING PLANS 13
INTERESTS OF CERTAIN PERSONS 14
ANTICIPATED BENEFITS TO THE FUND 14
AMOUNTS EXPENSED UNDER THE PLANS 14
PURCHASE, REDEMPTION AND PRICING OF SHARES 14
FINANCIAL INTERMEDIARIES 14
SALES CHARGE REDUCTIONS FOR CLASS A SHARES 15
LETTER OF INTENT FOR CLASS A SHARES 15
RIGHT OF ACCUMULATION FOR CLASS A SHARES 15
<PAGE>
AUTOMATIC INVESTMENT PLAN 16
INDIVIDUAL RETIREMENT ACCOUNTS 16
REDEMPTIONS FOR CORPORATE ACCOUNTS 17
SYSTEMATIC WITHDRAWAL PLAN 18
PRICING OF SHARES 18
REDEMPTION IN KIND 18
TAXATION OF THE FUND 19
PERFORMANCE INFORMATION 19
TOTAL RETURN 19
COMPARISONS 20
INDEPENDENT AUDITORS 20
FINANCIAL STATEMENTS 21
IN DECIDING WHETHER TO INVEST IN THE FUND, YOU
SHOULD RELY ON INFORMATION IN THIS STATEMENT OF
ADDITIONAL INFORMATION ("SAI") AND RELATED PROSPECTUS.
THE FUND HAS NOT AUTHORIZED OTHERS TO PROVIDE
ADDITIONAL INFORMATION. THE FUND HAS NOT AUTHORIZED
THE USE OF THIS SAI IN ANY STATE OR JURISDICTION IN
WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
<PAGE>
FUND ORGANIZATION
THE CORPORATION IS AN OPEN-END MANAGEMENT
INVESTMENT COMPANY, COMMONLY REFERRED TO AS A MUTUAL
FUND. THE FUND IS A SERIES OF COMMON STOCK OF THE
CORPORATION, A MARYLAND CORPORATION INCORPORATED ON
OCTOBER 30, 1997. THE CORPORATION IS AUTHORIZED TO
ISSUE SHARES OF COMMON STOCK IN SERIES AND CLASSES.
THE CORPORATION CURRENTLY OFFERS ONE SERIES OF SHARES:
THE GRAND PRIX FUND. THE SHARES OF COMMON STOCK OF THE
FUND ARE FURTHER DIVIDED INTO TWO CLASSES: CLASS A AND
CLASS C. EACH SHARE OF COMMON STOCK OF EACH CLASS IS
ENTITLED TO ONE VOTE, AND EACH SHARE IS ENTITLED TO
PARTICIPATE EQUALLY IN DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS BY THE RESPECTIVE CLASS OF SHARES AND IN
THE RESIDUAL ASSETS OF THE RESPECTIVE CLASS IN THE
EVENT OF LIQUIDATION. HOWEVER, EACH CLASS OF SHARES
BEARS ITS OWN EXPENSES, IS SUBJECT TO ITS OWN SALES
CHARGES AND HAS EXCLUSIVE VOTING RIGHTS ON MATTERS
PERTAINING TO THE RULE 12B-1 DISTRIBUTION AND
SHAREHOLDER SERVICING PLAN AS IT RELATES TO THAT CLASS.
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
INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "1940
ACT") OR MARYLAND LAW.
INVESTMENT RESTRICTIONS
THE FUND'S INVESTMENT OBJECTIVE IS CAPITAL
APPRECIATION. THE FOLLOWING ARE THE FUND'S FUNDAMENTAL
INVESTMENT RESTRICTIONS WHICH CANNOT BE CHANGED WITHOUT
THE APPROVAL OF A MAJORITY OF THE FUND'S OUTSTANDING
VOTING SECURITIES. A "MAJORITY OF THE FUND'S
OUTSTANDING VOTING SECURITIES" MEANS THE LESSER OF (I)
67% OF THE SHARES OF COMMON STOCK OF THE FUND
REPRESENTED AT A MEETING AT WHICH MORE THAN 50% OF THE
OUTSTANDING SHARES ARE PRESENT, OR (II) MORE THAN 50%
OF THE OUTSTANDING SHARES OF COMMON STOCK OF THE FUND.
THE FUND:
1. MAY NOT ISSUE SENIOR SECURITIES, EXCEPT AS
PERMITTED UNDER 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 (THE
"1933 ACT"), 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 TOTAL 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 TOTAL 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, 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;
<PAGE>
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.
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.
EXCEPT FOR THE FUNDAMENTAL INVESTMENT RESTRICTIONS
LISTED ABOVE AND THE FUND'S INVESTMENT OBJECTIVE, THE
FUND'S OTHER INVESTMENT POLICIES ARE NOT FUNDAMENTAL
AND MAY BE CHANGED WITH APPROVAL OF THE CORPORATION'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.
IMPLEMENTATION OF INVESTMENT OBJECTIVE
THE FOLLOWING INFORMATION SUPPLEMENTS THE
DISCUSSION OF THE FUND'S INVESTMENT OBJECTIVE AND
STRATEGY DESCRIBED IN THE PROSPECTUS UNDER THE CAPTIONS
"INVESTMENT OBJECTIVE," AND "IMPLEMENTATION OF
INVESTMENT OBJECTIVE."
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
<PAGE>
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.
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
THE EXTENT NECESSARY 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) 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) 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).
IN ADDITION, THE FUND HAS ADOPTED A FUNDAMENTAL
INVESTMENT RESTRICTION WHICH PROHIBITS THE FUND FROM
INVESTING MORE THAN 25% OF ITS TOTAL 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 TOTAL ASSETS IN SECURITIES OF COMPANIES IN
ANY ONE INDUSTRY. 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.
<PAGE>
LEVERAGING STRATEGIES
THE FUND MAY BORROW UP TO 33 1/3% OF ITS TOTAL
ASSETS FOR ANY PURPOSE INCLUDING TO LEVERAGE ITS
PORTFOLIO. BORROWING MAY EXAGGERATE CHANGES IN THE NET
ASSET VALUE OF THE FUND'S SHARES AND IN THE RETURN ON
THE FUND'S PORTFOLIO. ALTHOUGH THE PRINCIPAL OF ANY
BORROWING WILL BE FIXED, THE FUND'S ASSETS MAY CHANGE
IN VALUE DURING THE TIME THE BORROWING IS OUTSTANDING.
THE FUND MAY BE REQUIRED TO LIQUIDATE SECURITIES AT A
TIME WHEN IT WOULD BE DISADVANTAGEOUS TO DO SO IN ORDER
TO MAKE PAYMENTS WITH RESPECT TO AN OUTSTANDING
BORROWING. IN ADDITION, THE FUND MAY BE REQUIRED TO
SEGREGATE LIQUID ASSETS IN AN AMOUNT SUFFICIENT TO MEET
ITS OBLIGATIONS IN CONNECTION WITH SUCH BORROWINGS.
TEMPORARY STRATEGIES
PRIOR TO INVESTING PROCEEDS FROM SALES OF FUND
SHARES, TO MEET ORDINARY DAILY CASH NEEDS, AND TO
RETAIN THE FLEXIBILITY TO RESPOND PROMPTLY TO ADVERSE
CHANGES IN MARKET, ECONOMIC, POLITICAL AND OTHER
CONDITIONS, THE FUND MAY HOLD CASH AND/OR INVEST UP TO
35% 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 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");
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; AND
REPURCHASE AGREEMENTS. REPURCHASE AGREEMENTS WITH
RESPECT TO OBLIGATIONS OF THE U.S. GOVERNMENT, ITS
AGENCIES OR INSTRUMENTALITIES.
ILLIQUID SECURITIES
THE FUND MAY INVEST UP TO 5% OF ITS NET ASSETS IN
ILLIQUID SECURITIES (I.E., SECURITIES THAT ARE NOT
READILY MARKETABLE). FOR PURPOSES OF THIS RESTRICTION,
ILLIQUID SECURITIES INCLUDE, BUT ARE NOT LIMITED TO,
RESTRICTED SECURITIES (SECURITIES THE DISPOSITION OF
WHICH IS RESTRICTED UNDER THE FEDERAL SECURITIES LAWS),
REPURCHASE AGREEMENTS WITH MATURITIES IN EXCESS OF
SEVEN DAYS AND OTHER SECURITIES THAT ARE NOT READILY
MARKETABLE. THE BOARD OF DIRECTORS OF THE CORPORATION,
OR ITS DELEGATE, HAS THE ULTIMATE AUTHORITY TO
DETERMINE, TO THE EXTENT PERMISSIBLE UNDER THE FEDERAL
<PAGE>
SECURITIES LAWS, WHICH SECURITIES ARE LIQUID OR
ILLIQUID FOR PURPOSES OF THIS 5% LIMITATION. CERTAIN
SECURITIES EXEMPT FROM REGISTRATION OR ISSUED IN
TRANSACTIONS EXEMPT FROM REGISTRATION UNDER THE 1933
ACT, SUCH AS SECURITIES THAT MAY BE RESOLD TO
INSTITUTIONAL INVESTORS UNDER RULE 144A UNDER THE 1933
ACT, MAY BE CONSIDERED LIQUID UNDER GUIDELINES ADOPTED
BY THE BOARD OF DIRECTORS.
DIRECTORS AND OFFICERS
UNDER THE LAWS OF THE STATE OF MARYLAND, THE BOARD
OF DIRECTORS OF THE CORPORATION IS RESPONSIBLE FOR
MANAGING ITS BUSINESS AND AFFAIRS. THE DIRECTORS AND
OFFICERS OF THE CORPORATION, TOGETHER WITH INFORMATION
AS TO THEIR PRINCIPAL BUSINESS OCCUPATIONS DURING THE
LAST FIVE YEARS, AND OTHER INFORMATION, ARE SHOWN
BELOW. EACH DIRECTOR 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,
WITH THE EXCEPTION OF MS. ROMSTAD, HAVE SERVED AS SUCH
SINCE DECEMBER 10, 1997. MS. ROMSTAD HAS SERVED AS AN
OFFICER OF THE CORPORATION SINCE OCTOBER 2, 1998.
*ROBERT ZUCCARO, PRESIDENT AND A DIRECTOR OF THE CORPORATION.
MR. ZUCCARO, 56 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, INC. ("ADVISOR") IN 1983, MR. ZUCCARO SPENT
SIX YEARS WITH AXE-HOUGHTON, WHERE HE WAS PRESIDENT AND
A DIRECTOR OF AXE-HOUGHTON STOCK FUND AND VICE
PRESIDENT AND DIRECTOR OF PORTFOLIO MANAGEMENT OF E.W.
AXE & CO. MR. ZUCCARO IS THE PRESIDENT OF THE ADVISOR
AND IS A CHARTERED FINANCIAL ANALYST.
MR. ZUCCARO'S ADDRESS IS 15 RIVER ROAD, SUITE 220,
WILTON, CONNECTICUT 06897.
*PHILLIPP VILLHAUER, VICE-PRESIDENT AND A DIRECTOR OF THE CORPORATION.
MR. VILLHAUER, 33 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.
*MARY JANE BOYLE, VICE-PRESIDENT, TREASURER AND A
DIRECTOR OF THE CORPORATION.
MS. BOYLE, 53 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, 46 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 SERVED AS A DIRECTOR OF Q.E.P. CO., INC., A
FLOORING TOOL MANUFACTURER AND DISTRIBUTOR, FROM 1993
TO 1998.
MR. RONAN'S ADDRESS IS 30 MAIN STREET, DANBURY, CONNECTICUT 06810.
<PAGE>
DENNIS K. WALDMAN, A DIRECTOR OF THE CORPORATION.
MR. WALDMAN, 44 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.
ANDREA ROMSTAD, VICE-PRESIDENT AND SECRETARY OF THE CORPORATION.
MS. ROMSTAD, 36 YEARS OLD, RECEIVED A BACHELOR'S
OF BUSINESS ADMINISTRATION IN MARKETING MANAGEMENT FROM
BERNARD M. BARUCH COLLEGE OF THE CITY UNIVERSITY OF NEW
YORK IN 1985. PRIOR TO JOINING ADVISOR AS AN ANALYST
IN 1993, MS. ROMSTAD WAS A CREDIT ASSISTANT AT
SKANDINAVISKA ENSKILDA BANKEN CORPORATION AND A
FINANCIAL ASSISTANT AT FINANSSKANDIC CORPORATION.
MS. ROMSTAD'S ADDRESS IS 15 RIVER ROAD, SUITE 220,
WILTON, CONNECTICUT 06897.
AS OF JUNE 30, 1999, OFFICERS AND DIRECTORS OF THE
CORPORATION BENEFICIALLY OWNED 176,982.922 SHARES OF
COMMON STOCK, OR 7.18%, OF THE FUND'S THEN OUTSTANDING
SHARES (INCLUDING 59,170.328 SHARES OWNED BY THE
ADVISOR, WHICH IS CONTROLLED BY MR. ZUCCARO, AND
98,386.014 SHARES OWNED BY MARC ZUCCARO - UTMA FOR
WHICH MR. ZUCCARO IS THE CUSTODIAN). 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. ACCORDINGLY, MESSRS. ZUCCARO
AND VILLHAUER, MS. BOYLE AND MS. ROMSTAD DO NOT RECEIVE
ANY REMUNERATION FROM THE FUND FOR THEIR SERVICES AS
DIRECTORS AND OFFICERS. THE FOLLOWING TABLE PROVIDES
INFORMATION RELATING TO COMPENSATION PAID TO DIRECTORS
OF THE CORPORATION FOR THEIR SERVICES AS SUCH FOR
FISCAL 1998:
NAME CASH OTHER TOTAL
COMPENSATION COMPENSATION
EDWARD F. RONAN, JR. $250 $0 $250
DENNIS K. WALDMAN $250 $0 $250
EACH DIRECTOR WHO IS NOT DEEMED AN "INTERESTED
PERSON" OF THE FUND, AS DEFINED IN THE 1940 ACT,
RECEIVES $125 PER MEETING AND REIMBURSEMENT OF
REASONABLE EXPENSES. THE BOARD HELD TWO MEETINGS
DURING FISCAL 1998. DISINTERESTED DIRECTORS MAY ELECT
TO RECEIVE THEIR COMPENSATION IN THE FORM OF CASH,
SHARES OF THE FUND, OR BOTH.
PRINCIPAL SHAREHOLDERS
AS OF JUNE 30, 1999, NO PERSON OWNED OF RECORD OR
WAS KNOWN BY THE FUND TO OWN OF RECORD OR BENEFICIALLY
5% OR MORE OF THE OUTSTANDING CLASS A SHARES OF THE
FUND (CLASS C SHARES WERE NOT AVAILABLE FOR INVESTMENT
UNTIL THE DATE OF THIS SAI). ACCORDINGLY, AS OF JUNE
30, 1999, NO PERSON 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.
<PAGE>
INVESTMENT ADVISOR
TARGET HOLDINGS CORPORATION, D.B.A. TARGET
INVESTORS, INC. ("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. 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 ON DECEMBER 23, 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 $79,558.
PURSUANT TO AN EXPENSE CAP AGREEMENT, THE ADVISOR
HAS AGREED TO LIMIT THE TOTAL OPERATING EXPENSES OF THE
FUND TO AN ANNUAL RATE OF 1.72% OF THE FUND'S AVERAGE
NET ASSETS ATTRIBUTABLE TO THE CLASS A SHARES AND 2.47%
OF THE FUND'S AVERAGE NET ASSETS ATTRIBUTABLE TO THE
CLASS C SHARES UNTIL FEBRUARY 29, 2000. FROM FEBRUARY
29, 2000 UNTIL FEBRUARY 28, 2002, THE ADVISOR HAS
AGREED TO LIMIT THE CLASS A TOTAL OPERATING EXPENSES TO
AN ANNUAL RATE OF 1.75% AND THE CLASS C TOTAL OPERATING
EXPENSES TO AN ANNUAL RATE OF 2.50%. 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 THE ADVISOR'S
FEE. FOR THE FISCAL PERIOD ENDED OCTOBER 31, 1998, THE
FUND DID NOT PAY AN ADVISORY FEE TO THE ADVISOR BECAUSE
THE ADVISOR WAIVED ITS ENTIRE ADVISORY FEE. IF THE
ADVISOR HAD NOT AGREED TO WAIVE THE ADVISORY FEE FOR
THE FISCAL PERIOD ENDED OCTOBER 31, 1998, THE ADVISOR
WOULD HAVE RECEIVED $10,435 FOR ITS INVESTMENT ADVISORY
SERVICES.
FUND TRANSACTIONS AND BROKERAGE
UNDER THE ADVISORY AGREEMENT, THE 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 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 MAY 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
<PAGE>
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, THE 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
THE 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. THE
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) THE 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 THE 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 THE ADVISOR, THE TOTAL
COMMISSIONS PAID BY THE FUND WILL BE REASONABLE IN
RELATION TO THE BENEFITS TO THE FUND OVER THE LONG
TERM. THE AGGREGATE AMOUNT OF BROKERAGE COMMISSIONS
PAID BY THE FUND FOR THE FISCAL PERIOD ENDED OCTOBER
31, 1998 WAS $10,048.
THE 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
THE ADVISOR IN SERVICING ALL OF ITS ACCOUNTS; NOT ALL
OF SUCH SERVICES MAY BE USED BY THE ADVISOR IN
CONNECTION WITH THE FUND. THE 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, THE ADVISOR BELIEVES SUCH COSTS TO THE FUND
WILL NOT BE DISPROPORTIONATE TO THE BENEFITS RECEIVED
BY THE FUND ON A CONTINUING BASIS. THE 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 THE 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.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
AS CUSTODIAN OF THE FUND'S ASSETS, FIRSTAR BANK
MILWAUKEE, N.A., 777 EAST WISCONSIN AVENUE, MILWAUKEE,
WISCONSIN 53202, HAS CUSTODY OF ALL SECURITIES AND CASH
OF THE FUND, DELIVERS AND RECEIVES PAYMENT FOR
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. FIRSTAR
MUTUAL FUND SERVICES, LLC ("FIRSTAR"), THIRD FLOOR, 615
EAST MICHIGAN STREET, MILWAUKEE, WISCONSIN 53202, ACTS
AS TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT FOR THE
FUND.
ADMINISTRATOR
PURSUANT TO A FUND ADMINISTRATION SERVICING
AGREEMENT AND A FUND ACCOUNTING SERVICING AGREEMENT,
FIRSTAR ALSO PERFORMS CERTAIN ADMINISTRATIVE AND TAX
REPORTING FUNCTIONS FOR THE FUND, INCLUDING PREPARING
AND FILING FEDERAL AND STATE TAX RETURNS, PREPARING AND
FILING SECURITIES REGISTRATION COMPLIANCE FILINGS WITH
VARIOUS STATES, COMPILING DATA FOR AND PREPARING
NOTICES TO THE SEC, PREPARING FINANCIAL STATEMENTS FOR
THE ANNUAL AND SEMI-ANNUAL REPORTS TO THE SEC AND
CURRENT INVESTORS, MONITORING THE FUND'S EXPENSE
ACCRUALS AND PERFORMING SECURITIES VALUATIONS AND, FROM
TIME TO TIME, MONITORING THE FUND'S COMPLIANCE WITH THE
FUND'S INVESTMENT OBJECTIVE AND RESTRICTIONS. PURSUANT
TO THE FUND
<PAGE>
ADMINISTRATION SERVICING AGREEMENT, FIRSTAR
IS ENTITLED TO RECEIVE FROM THE FUND A FEE, COMPUTED
DAILY AND PAYABLE MONTHLY, BASED ON THE FUND'S AVERAGE
NET ASSETS: AT AN ANNUAL RATE OF .07 OF 1% ON THE FIRST
$200 MILLION, .06 OF 1% ON THE NEXT $500 MILLION AND
.04 OF 1% ON AVERAGE NET ASSETS IN EXCESS OF $700
MILLION, SUBJECT TO AN ANNUAL MINIMUM FEE OF $40,000,
PLUS OUT-OF-POCKET EXPENSES. THERE IS ALSO A 20%
ADDITIONAL CHARGE FOR EACH ADDITIONAL CLASS. PURSUANT
TO THE FUND ACCOUNTING SERVICING AGREEMENT, FIRSTAR IS
ENTITLED TO RECEIVE A FEE OF $22,000 FOR THE FIRST $40
MILLION OF AVERAGE NET ASSETS, .01 OF 1% ON THE NEXT
$200 MILLION ON AVERAGE NET ASSETS AND .005 OF 1% ON
AVERAGE NET ASSETS IN EXCESS OF $240 MILLION, PLUS OUT-
OF-POCKET EXPENSES. THERE IS A 25% CHARGE FOR EACH
ADDITIONAL CLASS. FOR THE FISCAL PERIOD ENDED OCTOBER
31, 1998, SUNSTONE FINANCIAL GROUP, INC. ("SUNSTONE"),
THE FUND'S PRIOR ADMINISTRATOR, RECEIVED $54,139 UNDER
AN ADMINISTRATION AND FUND ACCOUNTING AGREEMENT BETWEEN
THE FUND AND SUNSTONE.
DISTRIBUTOR
UNDER A DISTRIBUTION AGREEMENT DATED JULY 13,
1999, (THE "DISTRIBUTION AGREEMENT"), T. O. RICHARDSON
SECURITIES, INC., 2 BRIDGEWATER ROAD, FARMINGTON,
CONNECTICUT 06032-2256, ACTS AS THE PRINCIPAL
DISTRIBUTOR OF THE FUND'S SHARES ("DISTRIBUTOR"). THE
DISTRIBUTION AGREEMENT PROVIDES THAT THE DISTRIBUTOR
WILL USE ITS BEST EFFORTS TO DISTRIBUTE THE FUND'S
SHARES. THE FUND'S SHARES ARE OFFERED FOR SALE
CONTINUOUSLY AT (I) NET ASSET VALUE PER SHARE PLUS A
MAXIMUM INITIAL SALES CHARGE OF 5.25% OF THE OFFERING
PRICE, IN THE CASE OF CLASS A SHARES, AND (II) NET
ASSET VALUE PER SHARE PLUS AN INITIAL SALES CHARGE OF
1.00% OF THE OFFERING PRICE, IN THE CASE OF CLASS C
SHARES. EXISTING CLASS A SHAREHOLDERS AS OF NOVEMBER
30, 1998, ARE NOT SUBJECT TO THE SALES CHARGE ON
ADDITIONAL PURCHASES OF CLASS A SHARES. DIRECTORS AND
OFFICERS OF THE CORPORATION ARE NOT SUBJECT TO THE
SALES CHARGE. IN ADDITION, NO SALES CHARGE IS IMPOSED
ON THE REINVESTMENT OF DIVIDENDS OR CAPITAL GAINS WITH
RESPECT TO CLASS A AND CLASS C SHARES. CERTAIN OTHER
EXCEPTIONS TO THE IMPOSITION OF THE SALES CHARGE APPLY
IN THE CASE OF CLASS A SHARES, AS DISCUSSED MORE FULLY
IN THE PROSPECTUS UNDER THE CAPTION "OPENING AN
ACCOUNT." THE DISTRIBUTION AGREEMENT IS SUBJECT TO THE
SAME TERMINATION AND RENEWAL PROVISIONS AS ARE
DESCRIBED ABOVE WITH RESPECT TO THE ADVISORY AGREEMENT,
EXCEPT THAT THE DISTRIBUTION AGREEMENT NEED NOT BE
APPROVED BY THE FUND'S SHAREHOLDERS.
WITH RESPECT TO CLASS A SHARES, THE DISTRIBUTOR
MAY PAY A PORTION OF THE APPLICABLE INITIAL SALES
CHARGE DUE UPON THE PURCHASE OF SUCH SHARES TO THE
BROKER, IF ANY, INVOLVED IN THE TRADE, AS FOLLOWS:
DOLLAR AMOUNT OF INITIAL SALES PORTION OF INITIAL SALES CHARGE
SHARES PURCHASED CHARGE (1) PAID TO BROKER-DEALERS(1)(2)
LESS THAN $50,000 5.25% 5.00%
$50,000 BUT LESS THAN $100,000 4.50% 4.50%
$100,000 BUT LESS THAN $250,000 3.50% 3.50%
$250,000 BUT LESS THAN $500,000 2.50% 2.50%
$500,000 BUT LESS THAN $1,000,000 2.00% 2.00%
$1,000,000 OR MORE 1.00% 1.00%
(1) REFLECTED AS A PERCENTAGE OF THE OFFERING
PRICE OF CLASS A SHARES. THE OFFERING PRICE IS
THE SUM OF THE NET ASSET VALUE PER SHARE PLUS
THE INITIAL SALES CHARGE INDICATED IN THE TABLE
(THE "OFFERING PRICE").
(2) ALL SALES CHARGES MAY AT TIMES BE PAID TO
THE BROKER-DEALER INVOLVED IN THE TRADE, IF
ANY. A BROKER-DEALER PAID ALL OR SUBSTANTIALLY
ALL OF THE SALES CHARGE MAY BE DEEMED AN
"UNDERWRITER" UNDER THE 1933 ACT.
WITH RESPECT TO CLASS C SHARES, THE DISTRIBUTOR
MAY PAY ALL OF THE INITIAL SALES CHARGE DUE UPON THE
PURCHASE OF SUCH SHARES TO THE BROKER, IF ANY, INVOLVED
IN THE TRADE. A BROKER-DEALER PAID ALL OR
SUBSTANTIALLY ALL OF THE SALES CHARGE MAY BE DEEMED AN
"UNDERWRITER" UNDER THE 1933 ACT.
<PAGE>
AS COMPENSATION FOR ITS SERVICES UNDER THE
DISTRIBUTION AGREEMENT, THE DISTRIBUTOR MAY RETAIN ALL
OR A PORTION OF (I) THE INITIAL SALES CHARGE FROM
PURCHASES OF FUND SHARES AND (II) THE RULE 12B-1 FEES
PAYABLE WITH RESPECT TO FUND SHARES (AS DESCRIBED UNDER
"DISTRIBUTION AND SHAREHOLDER SERVICING PLANS," BELOW).
PLAN OF DISTRIBUTION
DISTRIBUTION AND SHAREHOLDER SERVICING PLANS
THE CORPORATION, ON BEHALF OF EACH CLASS OF
SHARES, 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 CLASS A PLAN, THE CLASS A SHARES MAY BE
REQUIRED TO PAY THE RECIPIENTS A FEE OF UP TO 0.25% OF
THE AVERAGE DAILY NET ASSETS ATTRIBUTABLE TO THE CLASS
A SHARES TO FINANCE ACTIVITIES PRIMARILY INTENDED TO
RESULT IN THE SALE OF CLASS A SHARES. THE CLASS A PLAN
IS A "REIMBURSEMENT" PLAN, WHICH MEANS THAT THE FEES
PAID BY THE FUND UNDER THE CLASS A 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
CLASS A PLAN, THE UNPAID AMOUNT IS CARRIED FORWARD FROM
PERIOD TO PERIOD WHILE THE CLASS A 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.
THE CLASS C PLAN PROVIDES THAT THE CLASS C SHARES
ARE REQUIRED TO PAY THE RECIPIENTS (I) A DISTRIBUTION
FEE OF 0.75% OF THE AVERAGE DAILY NET ASSETS
ATTRIBUTABLE TO THE CLASS C SHARES AND (II) A
SHAREHOLDER SERVICING FEE OF 0.25% OF THE AVERAGE DAILY
NET ASSETS ATTRIBUTABLE TO THE CLASS C SHARES.
PAYMENTS UNDER THE CLASS C PLAN ARE BASED UPON A
PERCENTAGE OF AVERAGE DAILY NET ASSETS ATTRIBUTABLE TO
THE CLASS C SHARES REGARDLESS OF AMOUNTS ACTUALLY PAID
OR EXPENSES ACTUALLY INCURRED BY THE RECIPIENTS,
HOWEVER, IN NO EVENT, MAY SUCH PAYMENTS EXCEED THE
MAXIMUM ALLOWABLE FEE. IT IS, THEREFORE, POSSIBLE THAT
THE RECIPIENTS MAY REALIZE A PROFIT IN A PARTICULAR
YEAR AS A RESULT OF THESE PAYMENTS. EACH PLAN HAS THE
EFFECT OF INCREASING THE APPLICABLE CLASS'S EXPENSES
FROM WHAT THEY WOULD OTHERWISE BE. THE BOARD OF
DIRECTORS REVIEWS EACH CLASS'S DISTRIBUTION AND
SHAREHOLDER SERVICING FEE PAYMENTS IN CONNECTION WITH
ITS DETERMINATION AS TO CONTINUANCE OF EACH PLAN.
FROM TIME TO TIME, THE RECIPIENTS MAY ENGAGE IN
ACTIVITIES WHICH JOINTLY PROMOTE THE SALES OF BOTH
CLASSES OF SHARES, THE COST OF WHICH MAY NOT BE READILY
IDENTIFIABLE OR RELATED TO ANY ONE CLASS. GENERALLY,
THE DISTRIBUTION EXPENSES ATTRIBUTABLE TO SUCH JOINT
DISTRIBUTION ACTIVITIES WILL BE ALLOCATED AMONG EACH
CLASS OF SHARES ON THE BASIS OF ITS RESPECTIVE NET
ASSETS, ALTHOUGH THE BOARD OF DIRECTORS MAY ALLOCATE
SUCH EXPENSES IN ANY OTHER MANNER IT DEEMS FAIR AND
EQUITABLE.
THE PLANS, INCLUDING A FORM OF THE RULE 12B-1
RELATED AGREEMENT, HAVE 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 PLANS OR ANY RULE 12B-1 RELATED
AGREEMENT ("DISINTERESTED DIRECTORS") VOTING
SEPARATELY.
THE PLANS, 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 THEIR
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 PLANS, OR THE RULE 12B-1 RELATED AGREEMENTS, AS
APPLICABLE. IN ADDITION, A PLAN, AND ANY RULE 12B-1
RELATED AGREEMENT, MAY BE TERMINATED WITHOUT PENALTY,
BY VOTE OF A MAJORITY OF THE RESPECTIVE CLASS'S
OUTSTANDING VOTING SECURITIES, OR BY VOTE OF A MAJORITY
OF DISINTERESTED DIRECTORS (ON NOT MORE THAN 60 DAYS'
WRITTEN NOTICE IN THE CASE OF THE RULE 12B-1 RELATED
AGREEMENT ONLY). PAYMENT OF THE DISTRIBUTION AND
SHAREHOLDER SERVICING FEES IS TO BE MADE MONTHLY,
WITHIN 30 DAYS AFTER THE MONTH FOR WHICH THE FEE IS
PAYABLE.
<PAGE>
INTERESTS OF CERTAIN PERSONS
WITH THE EXCEPTION OF THE ADVISOR AND THE
DISTRIBUTOR, NO "INTERESTED PERSON" OF THE FUND, AS
DEFINED IN THE 1940 ACT, AND NO DISINTERESTED DIRECTOR
HAS OR HAD A DIRECT OR INDIRECT FINANCIAL INTEREST IN
THE PLANS OR ANY RULE 12B-1 RELATED AGREEMENT.
ANTICIPATED BENEFITS TO THE FUND
THE BOARD OF DIRECTORS OF THE CORPORATION
CONSIDERED VARIOUS FACTORS IN CONNECTION WITH ITS
DECISION TO CONTINUE THE CLASS A PLAN AND TO IMPLEMENT
THE CLASS C PLAN, INCLUDING: (A) THE NATURE AND CAUSES
OF THE CIRCUMSTANCES WHICH MAKE CONTINUATION AND
IMPLEMENTATION OF THE PLANS NECESSARY AND APPROPRIATE;
(B) THE WAY IN WHICH THE PLANS 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 PLANS 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 EACH PLAN WAS REASONABLY
LIKELY TO BENEFIT THE RESPECTIVE CLASS 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 PLANS 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 PLANS 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 PLANS.
AMOUNTS EXPENSED UNDER THE PLANS
FOR THE FISCAL PERIOD ENDED OCTOBER 31, 1998, THE
CLASS A SHARES INCURRED $2,609 UNDER THE PLAN, ALL OF
WHICH WAS SPENT ON PRINTING AND MAILING PROSPECTUSES TO
OTHER THAN CURRENT SHAREHOLDERS. NO AMOUNTS WERE
INCURRED UNDER THE CLASS C PLAN FOR THE FISCAL PERIOD
ENDED OCTOBER 31, 1998 BECAUSE SUCH SHARES WERE NOT
AVAILABLE FOR INVESTMENT UNTIL THE DATE OF THIS SAI.
PURCHASE, REDEMPTION AND PRICING OF SHARES
FINANCIAL INTERMEDIARIES
Broker-dealers, financial institutions and other
financial intermediaries that have entered into
agreements with the Advisor and/or Distributor on
behalf of the Fund may enter purchase or redemption
orders on behalf of their customers. If you
purchase or redeem shares of the Fund through a
financial intermediary, certain features of the
Fund may not be available or may be modified in
accordance with the terms of the intermediaries'
agreement with the Advisor and/or Distributor. In
addition, certain operational policies of the Fund,
including those relating to settlement and dividend
accrual, may vary from those applicable to direct
shareholders of the Fund and may vary among
intermediaries. We urge you to consult your
financial intermediary for more information
regarding these matters. In addition, the Fund may
pay, directly or indirectly, amounts to financial
intermediaries that provide transfer agent and/or
other administrative services relating to their
customers provided, however, that the Fund will
<PAGE>
not pay more for these services through intermediary
relationships than it would if the intermediaries'
customers were direct shareholders in the Fund.
Certain financial intermediaries may charge a
commission or other transaction fee for their
services.
Sales Charge Reductions for Class A Shares
The sales charge for Class A shares will be
reduced to 1% for sponsored arrangements with
organizations that make recommendations to or permit
group solicitations of the organization's employees,
members or participants. The Fund may, at its
discretion, name a single registered representative as
servicing agent for the organization.
The sales charge for Class A shares will also be
reduced to 1% for those persons who sell shares of a
mutual fund, other than the Fund, and use any amount of
the proceeds to purchase Fund shares within 90 days of
such sale. A qualification form must be completed and
included with the required account application(s) for
initial purchases, and must accompany or precede
subsequent purchase orders, including orders submitted
electronically.
Letter of Intent for Class A Shares
The Fund's Letter of Intent ("LOI") allows for
reduction of the initial sales charge for Class A
shares when multiple purchases of Class A shares are
combined by taking advantage of the breakpoints in the
sales charge schedule. By completing the LOI
application, you express an intention to invest during
the next 10-month period a specified amount (minimum of
at least $50,000) which, if made at one time, would
qualify for a reduced sales charge.
Any Class A shares you own on the date you execute
the LOI may be used as a credit toward the completion
of the LOI. However, the reduced sales charge will
only be applied to new purchases. Any redemptions made
during the 10-month period will be subtracted from the
amount of the purchases for purposes of determining
whether the terms of the LOI have been satisfied. If,
at the end of the 10-month period covered by the LOI,
the total amount of purchases (less redemptions) does
not equal the amount indicated, you will be required to
pay the difference between the sales charge paid at the
reduced rate and the sales charge applicable to the
purchases actually made. Shares equal to 5% of the
amount specified in the LOI will be held in escrow
during the 10-month period and are subject to
involuntary redemption to assure any payment of a
higher applicable sales charge.
By signing the LOI application, you grant to the
Distributor a security interest in the reserved shares
and appoint the Distributor as attorney-in-fact to sell
any or all of the reserved shares to cover any
additional sales charges if you do not fulfill your
undertaking. Signing the LOI application does not bind
you to purchase the full amount indicated, but you must
complete the intended purchase in accordance with the
terms of the LOI to obtain the reduced sales charge.
For more information on the LOI, please contact your
investment professional, the Distributor or Firstar.
Right of Accumulation for Class A Shares
The Fund's Right of Accumulation ("ROA") program
also allows for reduction of the Fund's initial sales
charge for Class A shares when multiple purchases of
Class A shares are combined by taking advantage of the
breakpoints in the sales charge schedule. Using the
ROA, you may purchase Class A shares at the sales
charge applicable to the sum of (i) the dollar amount
then being purchased, plus (ii) the current market
value (calculated at the maximum Offering Price) of all
Class A shares already held by you, your spouse and
your minor children or you and members of a "qualified
group." A "qualified group" is one that was formed at
least one year prior to the ROA purchase, has a purpose
other than buying Class A shares at a discount, has
more than 10 members, can arrange meetings between the
Distributor and group members, agrees to include Fund
literature in mailings to its members, agrees to
arrange for payroll deductions or other bulk
transmissions of investment to the Fund and meets other
uniform criteria that allow the Distributor to achieve
cost savings in distributing Class A shares of the
Fund. To receive the
<PAGE>
ROA, at the time of purchase, you
must give your investment professional, the Distributor
or Firstar, the Fund's transfer agent, sufficient
information to determine whether the purchase will
qualify for a reduced sales charge.
Automatic Investment Plan
You may make purchases of shares of the Fund
automatically on a regular basis provided you invest at
least $250 per transaction. You must meet the Fund's
minimum initial investment of $5,000 before the
Automatic Investment Plan ("AIP") may be established.
Under the AIP, your designated bank or other financial
institution debits a preauthorized amount from your
account each designated period and applies the amount
to the purchase of Fund shares. The Fund requires 13
business days after receipt of your request to initiate
the AIP to verify your account information. Generally,
the AIP will begin on the next transaction date
scheduled by the Fund for the AIP following this 13
business day period. AIP transactions may be scheduled
for any day. If the purchase date is a weekend or a
holiday, the purchase will be made on the next business
day. The AIP 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 AIP. You will receive a
statement on a quarterly basis showing the purchases
made under the AIP. A $25 fee will be imposed by the
Fund if for any reason the transaction cannot be
completed. You may also be responsible for any losses
suffered by the Fund as a result. If you make a
purchase pursuant to the AIP, and request a redemption
of such shares 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 AIP
when you open an account by completing the appropriate
section of the Purchase Application. You may obtain an
application to establish the AIP after an account is
opened by calling the Fund at 1-800-307-4880. A
signature guarantee is required. 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.
Individual Retirement Accounts
In addition to purchasing Fund shares as described
in the Prospectus under "Opening an Account,"
individuals may establish their own tax-sheltered
individual retirement accounts ("IRAs"). The Fund
offers two types of IRAs, a Traditional IRA and a Roth
IRA.
Traditional IRA. In a Traditional IRA, amounts
contributed to the IRA may be tax deductible at the
time of contribution depending on whether the investor
is an "active participant" in an employer-sponsored
retirement plan and the investor's income.
Distributions from a Traditional IRA will be taxed at
distribution except to the extent that the distribution
represents a return of the investor's own contributions
for which the investor did not claim (or was not
eligible to claim) a deduction. Distributions prior to
age 59-1/2 may be subject to an additional 10% tax
applicable to certain premature distributions.
Distributions must commence by April 1 following the
calendar year in which the investor attains age 70-1/2.
Failure to begin distributions by this date (or
distributions that do not equal certain minimum
thresholds) may result in adverse tax consequences.
Roth IRA. In a Roth IRA, amounts contributed to
the IRA are taxed at the time of contribution, but
distributions from the IRA are not subject to tax if
you have held the IRA for at least five years and the
distributions are on account of one of four specified
events, i.e., attainment of age 59-1/2, disability, the
purchase of a first home or death. Investors whose
income exceeds certain limits are ineligible to
contribute to a Roth IRA. Distributions that do not
satisfy the requirements for tax-free withdrawal are
subject to income taxes (and possibly penalty taxes) to
the extent that the distribution exceeds your
contributions to the IRA. The minimum distribution
rules applicable to Traditional IRAs do not apply
during the lifetime of the investor. Following the
death of the investor, certain minimum distribution
rules apply.
Simplified Employee Pension Plan. A Traditional
IRA may also be used in conjunction with a Simplified
Employee Pension Plan ("SEP-IRA"). A SEP-IRA is
established through execution of Form 5305-SEP together
with a Traditional IRA established for each eligible
employee. Generally, a SEP-IRA allows an employer
(including a self-employed individual) to purchase
shares with tax deductible contributions not exceeding
annually
<PAGE>
for any one participant 15% of compensation
(disregarding for this purpose compensation in excess
of $160,000 per year). The $160,000 compensation limit
is adjusted periodically for cost of living increases.
A number of special rules apply to SEP Plans, including
a requirement that contributions generally be made on
behalf of all employees of the employer (including for
this purpose a sole proprietorship or partnership) who
satisfy certain minimum participation requirements.
SIMPLE IRA. An IRA may also be used in connection
with a SIMPLE Plan established by the investor's
employer (or by a self-employed individual). When this
is done, the IRA is known as a SIMPLE IRA, although it
is similar to a Traditional IRA with the exceptions
described below. Under a SIMPLE Plan, the investor may
elect to have his or her employer make salary reduction
contributions of up to $6,000 per year to the SIMPLE
IRA. The $6,000 limit is adjusted periodically for
cost of living increases. In addition, the employer
will contribute certain amounts to the investor's
SIMPLE IRA, either as a matching contribution to those
participants who make salary reduction contributions or
as a non-elective contribution to all eligible
participants whether or not making salary reduction
contributions. A number of special rules apply to
SIMPLE Plans, including (1) a SIMPLE Plan generally is
available only to employers with fewer than 100
employees; (2) contributions must be made on behalf of
all employees of the employer (other than bargaining
unit employees) who satisfy certain minimum
participation requirements; (3) contributions are made
to a special SIMPLE IRA that is separate and apart from
the other IRAs of employees; (4) the distribution
excise tax (if otherwise applicable) is increased to
25% on withdrawals during the first two years of
participation in a SIMPLE IRA; and (5) amounts
withdrawn during the first two years of participation
may be rolled over tax-free only into another SIMPLE
IRA (and not to a Traditional IRA or to a Roth IRA). A
SIMPLE IRA is established by executing Form 5304-SIMPLE
together with an IRA established for each eligible
employee.
For Traditional and Roth IRAs, the maximum annual
contribution generally is equal to the lesser of $2,000
or 100% of your compensation (earned income). You may
also contribute to a Traditional IRA or Roth IRA on
behalf of your spouse provided that the individual has
sufficient compensation (earned income). Contributions
to a Traditional IRA reduce the allowable contributions
under a Roth IRA, and contributions to a Roth IRA
reduce the allowable contribution to a Traditional IRA.
Under current IRS regulations, all IRA applicants
must be furnished a disclosure statement containing
information specified by the IRS. Applicants generally
have the right to revoke their account within seven
days after receiving the disclosure statement and
obtain a full refund of their contributions. The
custodian may, in its discretion, hold the initial
contributions uninvested until the expiration of the
seven-day revocation period. The custodian does not
anticipate that it will exercise its discretion but
reserves the right to do so.
Redemptions for Corporate Accounts
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.
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 dated more than 60
days prior to 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 resolutions 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).
<PAGE>
Systematic Withdrawal Plan
You may set up automatic withdrawals from your
Fund account at regular intervals. To begin
distributions, your account must have an initial
balance of $25,000 and at least $250 per payment must
be withdrawn. To establish the systematic withdrawal
plan ("SWP"), the appropriate section in your Purchase
Application must be completed. Redemptions will take
place on a monthly, quarterly, semi-annual or annual
basis (or the following business day) as indicated on
your Purchase Application. The amount or frequency of
withdrawal payments may be varied or temporarily
discontinued by calling 1-800-432-4741. Depending upon
the size of the account and the withdrawals requested
(and fluctuations in the net asset value of the shares
redeemed), redemptions for the purpose of satisfying
such withdrawals may reduce or even exhaust your
account. If the amount remaining in your account is
not sufficient to meet a plan payment, the remaining
amount will be redeemed and the SWP will be terminated.
Pricing of Shares
Shares of the Fund are offered and sold on a
continuous basis at the Offering Price, which is the
sum of the net asset value per share (next computed
following receipt of a purchase request in good order
by a dealer, the Distributor or Firstar, the Fund's
transfer agent, as the case may be) and the applicable
sales charge. The Class A sales charge may be waived
for certain investors. For more information, please
see "Opening an Account" in the Prospectus.
The net asset value per share for each class is
determined as of the close of trading (generally
4:00 p.m. Eastern Time) on each day the New York Stock
Exchange (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
for each class is calculated by taking the fair value
of the total assets per class, including interest or
dividends accrued, but not yet collected, less all
liabilities, and dividing by the total number of shares
outstanding in that class. 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. 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 has approved 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.
REDEMPTION IN KIND
The Fund has filed a Notification under Rule 18f-1
under the 1940 Act, pursuant to which it has undertaken
to pay in cash all requests for redemption by any
shareholder of record, limited in amount with respect
to each shareholder during any 90-day period to the
lesser amount of (i) $250,000, or (ii) 1% of the net
asset value of the class of shares of the Fund being
redeemed, valued at the beginning of such election
period. The Fund intends to pay redemption proceeds in
excess of such lesser amount in cash, but reserves the
right to pay such excess amount in kind, if it is
deemed to be in the best interest of the Fund to do so.
If you receive an in kind distribution you will likely
incur a brokerage charge on the disposition of such
securities through a securities dealer.
<PAGE>
TAXATION OF THE FUND
The Fund intends to qualify annually as a
"regulated investment company" under Subchapter M of
the Code, and, if so qualified will not be liable for
federal income taxes to the extent earnings are
distributed to shareholders on a timely basis. In the
event the Fund fails to qualify as a "regulated
investment company," it will be treated as a regular
corporation for federal income tax purposes.
Accordingly, the Fund would be subject to federal
income taxes and any distributions that it makes would
be taxable and non-deductible by the Fund. This would
increase the cost of investing in the Fund for
shareholders and would make it more economical for
shareholders to invest directly in securities held by
the Fund instead of investing indirectly in such
securities through the Fund.
PERFORMANCE INFORMATION
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.
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. This calculation reflects the deduction of
the maximum 5.25% initial sales charge applicable to
Class A shares and the 1.00% initial sales charge
applicable to Class C shares. In addition, this
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.
The total returns for the Class A shares of the
Fund for the ten months ended October 31, 1998 and the
six months ended April 30, 1999 were 44.20% and 78.41%,
respectively, which does not reflect the sales load
that took effect on December 1, 1998. Class C shares
were not available for investment until the date of
this SAI.
<PAGE>
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. 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.
The Fund's performance may also be discussed
during television interviews of Advisor personnel
conducted by news organizations to be broadcast in the
United States and elsewhere.
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.
INDEPENDENT AUDITORS
Ernst & Young LLP, 111 East Kilbourn Avenue,
Milwaukee, Wisconsin 53202, independent auditors for
the Fund, audit and report on the Fund's financial
statements.
<PAGE>
FINANCIAL STATEMENTS
The following audited financial statements of the
Fund are incorporated herein by reference to the Fund's
Annual Report for the period January 1, 1998 to October
31, 1998, as filed with the Securities and Exchange
Commission on December 29, 1998:
(a) Schedule of Investments as of October 31, 1998.
(b) Statement of Assets and Liabilities as of October 31, 1998.
(c) Statement of Operations for the period
January 1, 1998 to October 31, 1998.
(d) Statement of Changes in Net Assets for
the period January 1, 1998 to October 31, 1998.
(e) Financial Highlights for the period
January 1, 1998 to October 31, 1998.
(f) Notes to the Financial Statements.
(g) Report of Independent Auditors dated November 30, 1998.
In addition, the unaudited financial statements
and related notes contained in the Company's Semi-
Annual Report for the period ended April 30, 1999, are
incorporated herein by reference.
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits
(a.1) Registrant's Articles of Incorporation(1)
(a.2) Amendment to Registrant's Articles of Incorporation (2)
(a.3) Amendment to Registrant's Articles of
Incorporation (to create Class C shares)
(b) Registrant's By-Laws (1)
(c) None
(d.1) Investment Advisory Agreement (2)
(d.2) Expense Cap/Reimbursement Agreement (3)
(d.3) Expense Cap/Reimbursement Agreement (to add Class C shares)
(d.4) Amended Expense Cap/Reimbursement Agreement
(for Class A shares)
(e.1) Distribution Agreement
(e.2) Form of Dealer Agreement
(f) None
(g) Custodian Servicing Agreement
(h.1) Transfer Agent Servicing Agreement
(h.2) Fund Administration Servicing Agreement
(h.3) Fund Accounting Servicing Agreement
(i) Opinion and Consent of Godfrey & Kahn, S.C.(2)
(j) Consent of Ernst & Young LLP
(k) None
(l) Subscription Agreement (4)
(m.1) Rule 12b-1 Distribution and Shareholder Servicing Plan (2)
(m.2) Form of 12b-1 Related Agreement (2)
(m.3) Rule 12b-1 Distribution and Shareholder
Servicing Plan, as amended November 30, 1998 (5)
<PAGE>
(m.4) Rule 12b-1 Distribution and Shareholder
Servicing Plan, as amended July 13, 1999 (for Class A shares)
(m.5) Form of Rule 12b-1 Related Agreement, as
amended (for Class A shares) (5)
(m.6) Form of Rule 12b-1 Related Agreement, as
amended (for Class A shares)
(m.7) Rule 12b-1 Distribution and Shareholder
Servicing Plan (for Class C shares)
(m.8) Form of 12b-1 Related Agreement (for Class C shares)
(n) Financial Data Schedule (6)
(o) Rule 18f-3 Multi-Class Plan
(p) Powers of Attorney for Directors and Officers
(see signature page)
__________________
(1) Incorporated by reference to Registrant's Form
N-1A as filed with the Commission on October 31, 1997.
(2) Incorporated by reference to Registrant's Pre-
Effective Amendment No. 1 as filed with the
Commission on December 23, 1997.
(3) Incorporated by reference to Registrant's Post-
Effective Amendment No. 4 as filed with the
Commission on February 25, 1999.
(4) Incorporated by reference to Registrant's Pre-
Effective Amendment No. 2 as filed with the
Commission on December 30, 1997.
(5) Incorporated by reference to Registrant's Post-
Effective Amendment No. 2 as filed with the
Commission on November 30, 1998.
(6) Incorporated by reference to Registrant's Semi-
Annual Report for the period ended April 30, 1999,
as filed with the Commission on June 29, 1999.
Item 24. Persons Controlled by or under Common Control with Registrant
Registrant neither controls any person nor is
under common control with any other person.
Item 25. Indemnification
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.
<PAGE>
Item 26. 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 "Directors and Officers" in
the SAI.
Item 27. Principal Underwriters
(a) The Distributor also acts as distributor for
T. O. Richardson Trust, The Internet Fund,
Inc., The Barrett Funds and The Simms Funds.
(b) The principal business address of T. O.
Richardson Securities, Inc., the Registrant's
principal underwriter, is 2 Bridgewater Road,
Farmington, Connecticut 06032-2256. The
following information relates to each officer
and director of the Distributor:
Positions and Offices Position and
with Offices with
Name Underwriter Registrant
Samuel Bailey, Jr. President and a None
Director
Loyd Austine Crowe, Jr. Vice President and a
Director
Lloyd P. Griffiths Vice President and a
Director
(c) None.
Item 28. Location of Accounts and Records
All accounts, books or other documents required to
be maintained by Section 31(a) of the Investment
Company Act of 1940, as amended, and the rules
promulgated thereunder are in the possession of Target
Holdings Corporation, doing business as Target
Investors, Inc., Registrant's investment advisor, at
Registrant's corporate offices, except (1) records held
and maintained by Firstar Bank Milwaukee, N.A., 777
East Wisconsin Avenue, Milwaukee, Wisconsin 53202,
relating to its function as custodian and (2) records
held and maintained by Firstar Mutual Fund Services,
LLC, Third Floor, 615 East Michigan Street, Milwaukee,
Wisconsin 53202, relating to its function as transfer
agent, administrator and fund accountant.
Item 29. Management Services
All management-related service contracts entered
into by Registrant are discussed in Parts A and B of
this Registration Statement.
Item 30. Undertakings.
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 Post-Effective
Amendment No. 6 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 22nd day of July, 1999.
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 post-effective amendments to this
Registration Statement and to file the same, with all
exhibits thereto, and any other documents in connection
therewith, with the Securities and Exchange Commission
and any other regulatory body, granting unto said
attorney-in-fact and agent, full power and authority to
do and perform each and every act and thing requisite
and necessary to be done, as fully to all intents and
purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact
and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act
of 1933, this Post-Effective Amendment No. 6 to 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 Director July 22, 1999
- -------------------
Robert Zuccaro
/s/ Phillipp Villhauer Vice President and a Director July 22, 1999
- -----------------------
Phillipp Villhauer
/s/ Mary Jane Boyle Vice President, Treasurer and July 22, 1999
- -------------------- a Director
Mary Jane Boyle
/s/ Edward J.Ronan, Jr. Director July 21, 1999
________________________
Edward F. Ronan, Jr.
- ----------------------- Director
Dennis K. Waldman
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
(a.1) Registrant's Articles of Incorporation (previously filed as Exhibit
1 to Registrant's Form N-1A, File Nos. 333-39133 and 811-8461)
(a.2) Amendment to Registrant's Articles of Incorporation (previously
filed as Exhibit 1.2 to Registrant's Pre-Effective Amendment
No. 1 to Registrant's Form N-1A, File Nos. 333-39133 and 811-8461)
(a.3) Amendment to Registrant's Articles of Incorporation
(to create Class C shares)
(b) Registrant's By-Laws (previously filed as Exhibit 2 to Registrant's
Form N-1A, File Nos. 333-39133 and 811-8461)
(c) None
(d.1) Investment Advisory Agreement (previously filed as Exhibit 5 to
Registrant's Pre-Effective Amendment No. 1 to
Registrant's Form N-1A, File Nos. 333-39133 and 811-8461)
(d.2) Expense Cap/Reimbursement Agreement (previously filed as Exhibit d.2
to Registrant's Post-Effective Amendment No. 4
to Registrant's Form N-1A, File Nos. 333-39133 and 811-8461)
(d.3) Expense Cap/Reimbursement Agreement (to add Class C shares)
(d.4) Amended Expense Cap/Reimbursement Agreement (for Class A shares)
(e.1) Distribution Agreement
(e.2) Form of Dealer Agreement
(f) None
(g) Custodian Servicing Agreement
(h.1) Transfer Agent Servicing Agreement
(h.2) Fund Administration Servicing Agreement
(h.3) Fund Accounting Servicing Agreement
(i) Opinion and Consent of Godfrey & Kahn, S.C. (previously filed as
Exhibit 10 to Registrant's Pre-Effective Amendment No. 1 to
Registrant's Form N-1A, File Nos. 333-39133 and 811-8461)
(j) Consent of Ernst & Young LLP
(k) None
(l) Subscription Agreement (previously filed as Exhibit 13 to
Registrant's Pre-Effective Amendment No. 2 to Registrant's
Form N-1A, File Nos. 333-39133 and 811-8461)
<PAGE>
(m.1) Rule 12b-1 Distribution and Shareholder Servicing Plan (previously
filed as Exhibit 15.1 to Registrant's Pre-Effective Amendment
No. 1 to Registrant's Form N-1A, File Nos. 333-39133 and 811-8461)
(m.2) Form of 12b-1 Related Agreement (previously filed as Exhibit 15.2
to Registrant's Pre-Effective Amendment No. 1 to
Registrant's Form N-1A, File Nos. 333-39133 and 811-8461)
(m.3) Rule 12b-1 Distribution and Shareholder Servicing Plan, as amended
November 30, 1998 (previously filed as Exhibit m.3 to Registrant's
Post-Effective Amendment No. 2 to Registrant's Form N-1A,
File Nos. 333-39133 and 811-8461)
(m.4) Rule 12b-1 Distribution and Shareholder Servicing Plan, as amended
July 13, 1999 (for Class A shares)
(m.5) Form of Rule 12b-1 Related Agreement, as amended (for Class A shares)
(previously filed as Exhibit m.4 to Registrant's Post-Effective
Amendment No. 2 to Registrant's Form N-1A, File Nos. 333-39133 and
811-8461)
(m.6) Form of Rule 12b-1 Related Agreement, as amended (for Class A shares)
(m.7) Rule 12b-1 Distribution and Shareholder Servicing Plan
(for Class C shares)
(m.8) Form of 12b-1 Related Agreement (for Class C shares)
(n) Financial Data Schedule (previously filed as Exhibit 27 to
Registrant's Semi- Annual Report for the period ended April 30, 1999,
File Nos. 333-39133 and 811-8461)
(o) Rule 18f-3 Multi-Class Plan
(p) Powers of Attorney for Directors and Officers (see signature page)
GRAND PRIX FUNDS, INC.
Articles of Amendment
Grand Prix Funds, Inc., a Maryland
corporation having its principal office in Maryland in
Baltimore City (hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments
and Taxation of Maryland that:
FIRST: The Articles of Incorporation are
amended by redesignating all of the Fifty Million
(50,000,000) issued and unissued shares of capital
stock of the Corporation currently designated as Grand
Prix Fund series stock as Class A stock of the Grand
Prix Fund series.
SECOND: The foregoing amendment to the
charter of the Corporation was unanimously approved by
the entire Board of Directors of the Corporation at a
meeting held in person on June 15, 1999.
THIRD: The charter amendment is limited to
a change expressly permitted by Section 2-605 of Title
II of the Maryland General Corporation Law to be made
without action by the stockholders of the Corporation.
FOURTH: The Corporation is registered as an
open-end investment company under the Investment
Company Act of 1940.
FIFTH: The Articles of Amendment will
become effective at 12:00 a.m. on August 2, 1999.
IN WITNESS WHEREOF, Grand Prix Funds, Inc.
has caused these Articles of Amendment to be signed as
of the 28th day of July, 1999 in its name and on its
behalf by its duly undersigned authorized officers, who
acknowledge that these Articles of Amendment are the
act of the Corporation and that, to the best of their
knowledge, information and belief, all matters and
facts set forth herein relating to the authorization
and approval of the Articles of Amendment are true in
all material respects and that this statement is made
under penalties of perjury.
Witness: Grand Prix Funds, Inc.
/s/ Andrea Romstad By: /s/ Robert Zuccaro
- ------------------- --------------------
Andrea Romstad Robert Zuccaro
Secretary President
<PAGE>
GRAND PRIX FUNDS, INC.
Articles Supplementary
Grand Prix Funds, Inc., a Maryland
corporation having its principal office in Maryland in
Baltimore City (hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments
and Taxation of Maryland that:
FIRST: The Board of Directors of the
Corporation on June 15, 1999, unanimously approved the
adoption of a resolution reclassifying Twenty-Five
Million (25,000,000) shares of the Fifty Million
(50,000,000) shares of Class A stock of the Grand Prix
Fund series as Twenty-Five Million (25,000,000) shares
of Class C stock of the Grand Prix Fund series.
SECOND: The Class C shares of the Grand
Prix Fund series as so classified by the Board of
Directors of the Corporation shall have the
preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption
as set forth in Article V, Section 5.5 of the Articles
of Incorporation of the Corporation, and shall be
subject to all of the provisions of the Articles of
Incorporation of the Corporation relating to the stock
of the Corporation generally, and to the following:
The Class C shares of the Grand Prix Fund series shall
be invested in a common investment portfolio with the
Class A shares of the Grand Prix Fund series and with
the shares of any other class of the Grand Prix Fund
series hereafter established, and the assets,
liabilities, income, expenses, dividends and related
liquidation rights of the various classes of the shares
of the Grand Prix Fund series shall be allocated among
the various classes of the series in such manner as
shall be determined by the Board of Directors of the
Corporation in accordance with law.
THIRD: The Class C shares of the Grand
Prix Fund series aforesaid have been duly classified by
the Board of Directors pursuant to authority and power
contained in the Articles of Incorporation of the
Corporation.
FOURTH: These Articles Supplementary will
become effective at 12:01 a.m. on August 2, 1999.
IN WITNESS WHEREOF, Grand Prix Funds, Inc.
has caused these Articles Supplementary to be signed as
of the 28th day of July, 1999,in its name and on its
behalf by its duly undersigned authorized officers, who
acknowledge that these Articles Supplementary are the
act of the Corporation and that, to the best of their
knowledge, information and belief, all matters and
facts set forth herein relating to the authorization
and approval of these Articles Supplementary are true
in all material respects and that this statement is
made under penalties of perjury.
<PAGE>
Witness: Grand Prix Funds, Inc.
/s/ Andrea Romstad By: /s/ Robert Zuccaro
- ------------------- -----------------------
Andrea Romstad Robert Zuccaro
Secretary President
EXPENSE CAP/REIMBURSEMENT AGREEMENT
This Agreement is entered into as of the 2nd day
of August, 1999, between Target Holdings Corporation
d/b/a/ Target Investors (the "Adviser") and Grand Prix
Funds, Inc. (the "Company") on behalf of the Class C
shares of the Grand Prix Fund (the "Fund").
WHEREAS, the Adviser desires to contractually
agree to waive a portion of its advisory fee or
reimburse certain of the Fund's operating expenses to
ensure that the Fund's total operating expenses do not
exceed the level described below.
NOW THEREFORE, the parties agree as follows:
The Adviser agrees that until February 29, 2000,
it will reduce its compensation as provided for in the
Investment Advisory Agreement between the Fund and the
Adviser dated December 31, 1997, and/or assume expenses
for the Fund to the extent necessary to ensure that the
Fund's Class C shares total operating expenses do not
exceed 2.47%, on an annual basis of the Fund's Class C
shares average daily net assets. Further, the Adviser
agrees that from February 29, 2000 until February 28,
2002, it will reduce its compensation and/or assume
expenses for the Fund to the extent necessary to ensure
that the Fund's Class C shares total operating expenses
do not exceed 2.50%, on an annual basis of the Fund's
Class C shares average daily net assets.
The Adviser shall be entitled to recoup such
amounts for a period of up to three (3) years from the
date the Adviser reduced its compensation and/or
assumed expenses for the Fund.
This Agreement shall terminate on August 2, 2002
unless extended by the mutual agreement of the parties,
as provided for in an amendment to this Agreement.
TARGET HOLDINGS CORPORATION d/b/a
TARGET INVESTORS
By: /s/ Robert Zuccaro
--------------------------
Robert Zuccaro, President
GRAND PRIX FUNDS, INC.
By: /s/ Robert Zuccaro
---------------------------
Robert Zuccaro, President
EXPENSE CAP/REIMBURSEMENT AGREEMENT, AS AMENDED
This Agreement is entered into as of the 26th day
of February, 1999, as amended June 15, 1999 between
Target Holdings Corporation d/b/a/ Target Investors
(the "Adviser") and Grand Prix Funds, Inc. (the
"Company") on behalf of the Grand Prix Fund (the
"Fund").
WHEREAS, the Adviser has previously voluntarily
agreed to reduce its advisory fee and/or reimburse the
Fund for certain operating expenses to the extent
necessary to cap the Fund's total operating expenses at
a certain level.
WHEREAS, the Adviser now desires to contractually
agree to waive a portion of its advisory fee or
reimburse certain of the Fund's operating expenses to
ensure that the Fund's total operating expenses do not
exceed the level described below.
NOW THEREFORE, the parties agree as follows:
The Adviser agrees that until February 29, 2000,
it will reduce its compensation as provided for in the
Investment Advisory Agreement between the Fund and the
Adviser dated December 31, 1997, and/or assume expenses
for the Fund to the extent necessary to ensure that the
Fund's Class A shares total operating expenses do not
exceed 1.72%, on an annual basis of the Fund's Class A
average daily net assets. Further, the Adviser agrees
that from February 29, 2000 until February 28, 2002, it
will reduce its compensation and/or assume expenses for
the Fund to the extent necessary to ensure that the
Fund's Class A shares total operating expenses do not
exceed 1.75%, on an annual basis of the Fund's Class A
shares total operating expenses.
The Adviser shall be entitled to recoup such
amounts for a period of up to three (3) years from the
date the Adviser reduced its compensation and/or
assumed expenses for the Fund.
This Agreement shall terminate on February 26,
2002 unless extended by the mutual agreement of the
parties, as provided for in an amendment to this
Agreement.
TARGET HOLDINGS CORPORATION d/b/a
TARGET INVESTORS
By: /s/ Robert Zuccaro
---------------------------
Robert Zuccaro, President
GRAND PRIX FUNDS, INC.
By: /s/ Robert Zuccaro
---------------------------
Robert Zuccaro, President
DISTRIBUTION AGREEMENT
between
The Grand Prix Fund
and
T.O. Richardson Securities, Inc.
THIS AGREEMENT is made effective as of the 15th
day of June, 1999, by and between The Grand Prix Fund,
a Maryland Corporation (the "Fund") and T.O. Richardson
Securities, a corporation organized and existing under
the laws of the State of Connecticut ("TORS").
WHEREAS the Fund is registered under the
Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end management investment company,
and will register one or more distinct series of shares
of beneficial interest ("Shares") for sale to the
public under the Securities Act of 1933, as amended
(the "1933 Act"), and will qualify its shares for sale
to the public under various state securities laws; and
WHEREAS, TORS is registered as a broker-dealer
under the Securities Exchange Act of 1934, as amended
(the "1934 Act") and under each state's securities
laws, and is also a member of the National Association
of Securities Dealers, Inc. (the "NASD"); and
WHEREAS the Fund desires to retain TORS as
principal underwriter and national distributor in
connection with the offering and sale of the Shares of
each series listed on Schedule A (as amended from time
to time) to this Agreement and TORS is willing to act
as principal underwriter and national distributor for
the Fund on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the promises
and mutual covenants herein contained, it is agreed
between the parties hereto as follows:
1. Appointment. The Fund hereby appoints TORS as
its agent to be the principal underwriter and national
distributor of its Shares and to hold itself out as
available to receive and accept orders for the purchase
and redemption of the Shares on behalf of the Fund,
subject to the terms and for the period set forth in
this Agreement. TORS hereby accepts such appointment
and agrees to act hereunder. The Fund understands that
any solicitation activities conducted on behalf of the
Fund will be conducted primarily by employees of the
Fund's sponsor who shall become registered
representatives of TORS.
2. Services and Duties of TORS
(a) TORS agrees to distribute Shares on a best
efforts basis from time to time during the term of this
Agreement as agent for the Fund and upon the terms
described in the Registration Statement. As used in
this Agreement, the term "Registration Statement" shall
mean the currently effective registration statement of
the Fund, and any supplements thereto, under the 1933
Act and the 1940 Act.
<PAGE>
(b) TORS, with the operational assistance of the
Fund's transfer agent, will hold itself available to
receive purchase and redemption orders satisfactory to
T.O.R. for shares and will accept such orders on behalf
of the Fund. Such purchase orders shall be deemed
effective at the time and in the manner set forth in
the Registration Statement.
(c) TORS, with the operational assistance of the
Fund's transfer agent, shall make Shares available
through the National Securities Clearing Corporation's
Fund/SERV System.
(d) TORS and its registered personnel shall
provide to investors and potential investors only such
information regarding the Fund as the Fund shall
provide or approve. TORS shall review and file all
proposed advertisements and sales literature with
regulators, as appropriate, and consult with the Fund
regarding any comments provided by regulators with
respect to such materials.
(e) The offering price of the Shares shall be the
price determined in accordance with, and in the manner
set forth in, the most-current Prospectus. The Fund
shall make available to TORS a statement of each
computation of net asset value and the details of
entering into such computation.
(f) TORS in its sole discretion may repurchase
Shares offered for sale by the shareholders.
Repurchase of Shares by TORS shall be at the price
determined in accordance with, and in the manner set
forth in, the most current Prospectus. At the end of
each business day, T.O.R shall notify, by any
appropriate means, the Fund and its transfer agent of
the orders for repurchase of Shares received by TORS
since the last such report, the amount to be paid for
such Shares, and the identity of the shareholders
offering Shares for repurchase. The Fund reserves the
right to suspend such repurchase right upon written
notice to TORS. TORS further agrees to act as agent
for the Fund to receive and transmit promptly to the
Fund's transfer agent shareholder requests for
redemption of Shares.
(g) TORS shall not be obligated to sell any
certain number of Shares.
(h) TORS shall prepare reports for the Board
regarding its activities under this Agreement as from
time to time shall be reasonably requested by the
Board.
(i) TORS shall at all times during the term of
this Agreement remain registered as a broker-dealer
under the 1934 Act and with all 50 states, and shall
also remain a member in good standing of the NASD.
TORS shall immediately notify the Fund in writing if it
receives written notification that such registrations
or membership have been temporarily or permanently
suspended, limited or terminated.
(j) TORS will serve as licensing/regulatory agent
for employees and other personnel of the Fund's
sponsor, Target Investors, Inc., who will be registered
as TORS broker-dealer representatives.
3. Duties of the Fund.
(a) The Fund shall keep TORS fully informed of
its affairs and shall provide to TORS from time to time
copies of all information, financial statements, and
other papers that TORS
<PAGE>
may reasonably request for use
in connection with the distribution of Shares,
including, without limitation, certified copies of any
financial statements prepared for the Fund by its
independent public accountant and such reasonable
number of copies of the most current Prospectus,
Statement of Additional Information ("SAI"), and annual
and interim reports as TORS may request, and the fund
shall fully cooperate in the efforts of TORS to
distribute and arrange for the distribution of Shares.
(b) The Fund shall maintain a currently effective
Registration Statement on Form N-1A with the Securities
and Exchange Commission (the "SEC"), satisfy proper
notice filing and fee payment provisions of applicable
states and file such reports and other documents as may
be required under applicable federal and state laws.
The Fund shall notify TORS in writing of the states in
which the Shares may be sold and shall notify TORS in
writing of any changes to such information. The Fund
shall bear all expenses related to preparing and
typesetting such Prospectuses, SAI and other materials
required by law and such other expenses, including
printing and mailing expenses, related to the Fund's
communication with persons who are shareholders.
(c) The Fund shall not use any advertisements or
other sales materials that have not been (i) submitted
to TORS for its review and approval, and (ii) if
required, filed with the appropriate regulators.
(d) The Fund represents and warrants that its
Registration Statement and any advertisements and sales
literature (excluding statements relating to TORS and
the services it provides that are based upon written
information furnished by TORS expressly for inclusion
therein) of the Fund shall not contain any untrue
statement of material fact or omit to state any
material fact required to be stated therein or
necessary to make the statements therein not
misleading, and that all statements or information
furnished to TORS pursuant to Section 3(a) hereof,
shall be true and correct in all material respects.
4. Other Fund Operating Agreements. The Fund and
TORS further agree that the Fund has entered into the
Fund Administrative Servicing Agreement, Fund
Accounting Servicing Agreement, Transfer Agent
Servicing Agreement, Custodian Servicing Agreement and
Fulfillment Services Agreement with Firstar Mutual Fund
Services, LLC of Milwaukee, Wisconsin ("FMFS"), copies
of which are in the hands of the parties hereto and to
which reference may be had (which agreements are herein
collectively referred to as the "Fund Operating
Agreements.") The Fund agrees to maintain the Fund
Operating Agreements in effect during the term of this
Agreement. The parties hereto agree that TORS is a
third party beneficiary to the Fund Operating
Agreements and that portions of the duties and services
to be provided by TORS hereunder can be performed by
FMFS for TORS' and the Fund's benefit. The Fund shall
be responsible for all amounts due under the Fund
Operating Agreements and TORS shall not be responsible
for duplication of duties or services provided for in
the Fund Operating Agreements or any fees or expenses
thereunder.
5. Other Broker-Dealers. TORS in its discretion
shall enter into agreements to sell Shares to such
registered and qualified retail dealers, as reasonably
requested by the Fund. In making agreements with such
dealers, TORS shall act only as principal and not as
agent for the
<PAGE>
Fund. The form of any such dealer
agreement shall be mutually agreed upon and approved by
the Fund and TORS.
6. Withdrawal of Offering. The Fund reserves the
right at any time to withdraw all offerings of any or
all Shares by written notice to TORS at its principal
office. No Shares shall be offered by either TORS or
the Fund under any provisions of this Agreement and no
orders for the purchase of Shares hereunder shall be
accepted by the Fund if and so long as effectiveness of
the Registration Statement then in effect or any
necessary amendments thereto shall be suspended under
any of the provisions of the 1933 Act, or if and so
long as a current prospectus as required by Section
5(b)(2) of the 1933 Act is not on file with the SEC.
7. Services Not Exclusive. The services
furnished by TORS hereunder are not to be deemed
exclusive. TORS shall be free to furnish similar
services to others so long as its services under this
Agreement are not impaired thereby. The Fund reserves
the right to (i) sell Shares to investors on
applications received and accepted by the Fund; (ii)
issue Shares in connection with a merger,
consolidation, or recapitalization of the Fund; (iii)
issue additional Shares to holders of Shares; or (iv)
issue Shares in connection with any offer of exchange
permitted by Section 11 of the 1940 Act.
8. Expenses of the Fund. The Fund shall bear all
costs and expenses of registering the Shares with the
SEC and state and other regulatory bodies, and shall
assume expenses related to communications with
shareholders of the Fund including, but not limited to,
(i) fees and disbursements of its counsel and
independent public accountant; (ii) the preparation,
filing, and printing of Registration Statements and/or
Prospectuses or SAIs; (iii) the preparation and mailing
of annual and interim reports, Prospectuses, SAIs, and
proxy materials to shareholders; (iv) such other
expenses related to the communications with persons who
are shareholders of the Fund; and (v) the
qualifications of Shares for sale under the securities
laws of such jurisdictions as shall be selected by the
Fund pursuant to the Paragraph 3(b) hereof, and the
costs and expenses, payable to each jurisdiction for
continuing qualification therein. In addition, the
Fund shall, bear all costs of preparing, printing,
mailing, and filing any advertisements and sales
literature. TORS does not assume responsibility for
any expenses not assumed hereunder.
9. Compensation. As compensation for the
services performed and the expenses assumed by TORS
under this Agreement including, but not limited to, any
commissions paid for sales of Shares, TORS shall be
entitled to the fees and expenses set forth in Schedule
B to this Agreement which are payable promptly after
the last day of each month. Such fees shall be paid to
TORS by the Fund pursuant to its Rule 12b-1 plan or, if
Rule 12b-1 payments are not sufficient to pay such fees
and expenses, or if the Rule 12b-1 plan is
discontinued, or if the Fund's sponsor, Target
Investors, Inc. otherwise determines that Rule 12b-1
fees shall not, in whole or in part, be used to pay
TORS, Target Investors, Inc. shall be responsible for
the payment of the amount of such fees not covered by
Rule 12b-1 payments. Target Investors, Inc. will
arrange for the monthly payment to be paid directly
from their advisory fee by Firstar's Fund
Administration and Compliance department or the fund's
12b-1 plan.
10. Status of TORS. TORS is an independent
contractor and shall be agent of the Fund only with
respect to the sale and redemption of Shares.
<PAGE>
11. Indemnification.
(a) The Fund agrees to indemnify, defend, and
hold TORS, its officers, and directors, and any person
who controls TORS within the meaning of Section 15 of
the 1933 Act, free and harmless from and against any
and all claims, demands, or liabilities, and expenses
(including the cost of investigating or defending such
claims, demands, liabilities, and any counsel fees
incurred in connection therewith) that TORS, its
officers and directors, or any such controlling person
may incur under the 1933 Act, or under common law or
otherwise, arising out of or based upon any (i) alleged
untrue statement of a material fact contained in the
Registration Statement, Prospectus, SAI, or sales
literature; (ii) alleged omission to state a material
fact required to be stated in the Fund's registration
statement or necessary to make the statements therein
not misleading; or (iii) failure by the Fund to comply
with the terms of the Agreement; provided, that in no
event shall anything contained herein be so construed
as to protect TORS against any liability to the Fund or
its shareholders to which TORS would otherwise be
subject by reason of willful misfeasance, bad faith, or
gross negligence in the performance of its duties or by
reason of its reckless disregard of its obligations
under this Agreement.
(b) The Fund shall not be liable to TORS under
this Agreement with respect to any claim made against
TORS or any person indemnified unless TORS or other
such person shall have notified the Fund in writing of
the claim within a reasonable time after the summons or
other first written notification giving information of
the nature of the claim shall have been served upon
TORS or such other person (or after TORS or other
person shall have received notice of service on any
designated agent). However, failure to notify the Fund
of any claim shall not relieve the Fund from any
liability that it may have to TORS or any person
against whom such action is brought otherwise than on
account of this Agreement.
(c) The Fund shall be entitled to participate at
its own expense in the defense or, if it so elects, to
assume the defense of any suit brought to enforce any
claims subject to this Agreement. If the Fund elects
to assume the defense of any such claim, the defense
shall be conducted by counsel chosen by the Fund and
satisfactory indemnified defendants in the suit whose
consent shall not be unreasonably withheld. In the
event that the Fund elects to assume the defense of any
suit and retain counsel, the indemnified defendants
shall bear the fees and expenses of any additional
counsel retained by them. If the Fund does not elect
to assume the defense of a suit, it will reimburse the
indemnified defendants for the reasonable fees and
expenses of any counsel retained by the indemnified
defendants. The Fund agrees to promptly notify TORS of
the commencement of any litigation or proceedings
against it or any of its officers and directors in
connection with the issuance or sale of any of its
Shares.
(d) TORS agrees to indemnify, defend, and hold
the Fund, its officers and directors, and any person
who controls the Fund within the meaning of Section 15
of the 1933 Act, free and harmless from and against any
and all claims, demands, liabilities, and expenses
(including the cost of investigating or defending
against such claims, demands or liabilities, and any
counsel fees incurred in connection therewith) that the
Fund, its directors and officers, or any such
controlling person may incur under the 1933 Act, or
under common law or otherwise, resulting from TORS'
willful misfeasance, bad faith, or gross negligence in
the performance of its obligations and duties under
this Agreement, or arising out of or based upon any
alleged untrue statement of a material fact contained
in information furnished in writing by TORS to the Fund
<PAGE>
for use in the Registration Statement, Prospectus, or
SAI arising out of or based upon any alleged omission
to state a material fact in connection with such
information required to be stated in any such document
or necessary to make such information not misleading.
(e) TORS shall be entitled to participate, at its
own expense, in the defense or, if it so elects, to
assume the defense of any suit brought to enforce the
claim, but if TORS elects to assume the defense, the
defense shall be conducted by counsel chosen by TORS
and satisfactory to the indemnified defendants whose
approval shall not be unreasonably withheld. In the
event that TORS elects to assume the defense of any
suit and retain counsel, the defendants in the suit
shall bear the fees and expenses of any additional
counsel retained by them. If TORS does not elect to
assume the defense of any suit, it will reimburse the
indemnified defendants in the suit for the reasonable
fees and expenses of any counsel retained by them.
12. Duration and Termination.
(a) This Agreement shall become effective on the
date first written above or such later date as
indicated in Schedule A and, will continue in effect
for a minimum of one year from the above written date.
Thereafter, if not terminated, this Agreement shall
continue in effect for successive annual periods,
provided that such continuance is specifically approved
at least annually (i) by a vote of a majority of the
Fund's Board who are neither interested persons (as
defined in the 1940 Act) of the Fund ("Independent
Trustees") or TORS cast in person at a meeting called
for the purpose of voting on such approval, and (ii) by
the Board or by vote of a majority of the outstanding
voting securities of the Fund.
(b) Notwithstanding the foregoing, this Agreement
may be terminated in its entirety at any time, without
the, payment of any penalty, by vote of the Board, by
vote of a majority of the Independent Trustees, or by
vote of a majority of the outstanding voting securities
of the Fund on sixty days' written notice to TORS or by
TORS at any time, without the payment of any penalty,
on sixty days' written notice to the Fund. This
Agreement will automatically terminate in the event of
its assignment.
13. Amendment of this Agreement. No provision of
this Agreement may be changed, waived, discharged, or
terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the
change, waiver, discharge, or termination is sought.
This Agreement may be amended with the approval of the
Board or of a majority of the outstanding voting
securities of the Fund; provided, that in either case,
such amendment also shall be approved by a majority of
the Independent trustees/directors.
14. Limitation of Liability. The Board and
shareholders of the Fund shall not be personally liable
for obligations of the Fund in connection with any
matter arising from or in connection with this
Agreement. This Agreement is not binding upon any
trustee, officer, or shareholder of the Fund
individually, and no such person shall be individually
liable with respect to any action or inaction resulting
from this Agreement.
15. Notice. Any notice required or permitted to
be given by either party to the other shall be deemed
sufficient upon receipt in writing at the other party's
principal offices.
<PAGE>
16. Miscellaneous. The captions in this
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. If any provision of this
Agreement shall be held or made invalid by a court
decision, statute, rule, or otherwise, the remainder of
this Agreement shall not be affected thereby. This
Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective
successors. As used in this Agreement, the terms
"majority of the outstanding voting securities,"
"interested person," and "assignment" shall have the
same meaning as such terms have in the 1940 Act.
17. Governing Law. This Agreement shall be
construed in accordance with the laws of the State of
Connecticut and the 1940 Act (without regard, however,
to the conflicts of law principles). To the extent
that the applicable laws of the state of Connecticut
conflict with the applicable provisions of the 1940
Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their officers
designated as of the day and year first above written.
Target Investors, Inc./Grand Prix Fund T.O. Richardson Securities, Inc.
By: /s/ Robert Zuccaro By: /s/ Samuel Bailey, Jr.
-------------------- -----------------------
Print: Robert Zuccaro Print: Samuel Bailey, Jr.
------------------ ----------------------
Title: President Title: President
------------------ ----------------------
Date: June 15, 1999 Date: June 15,1999
------------------ ----------------------
Attest: Mary Jane Boyle Attest: Kathleen M. Russo
----------------- --------------------
<PAGE>
SCHEDULE A
to the
DISTRIBUTION AGREEMENT
between
The Grand Prix Fund
and
T.O. Richardson Securities, Inc.
Pursuant to Section 1 of the Distribution
Agreement between The Grand Prix Fund ("Fund") and T.O.
Richardson Securities (`TORS"), the Fund hereby
appoints TORS as its agent to be the principal
underwriter of Fund with respect to its following series;
The Grand Prix Fund
Dated: June 15, 1999
<PAGE>
AMENDMENT A
The Grand Prix Fund (the "Trust") and T.O.
Richardson Securities, Inc. (TORS) further agree that
the Trust has entered into the Fund Administration
Services Agreement, Fund Accounting Services Agreement,
Transfer Agent Agreement, Custodian Agreement and
Fulfillment Services Agreement with Firstar Mutual Fund
Service, LLC of Milwaukee, Wisconsin (FMFS) or an
affiliate, copies of which are in the hands of the
parties hereto and to which reference may be had (which
agreements are herein collectively referred to as the
"Trust Operating Agreements.") The Trust agrees to
maintain the Trust Operating Agreements in effect
during the term of this Agreement. The parties hereto
agree that TORS is a third party beneficiary to the
Trust Operating Agreements and that substantial
portions of the duties and services to be provided by
TORS, hereunder are to be performed by FMFS for TORS's
and the Trust's benefit. The Trust shall be
responsible for all amounts due under the Trust
Operating Agreements and TORS shall not be responsible
for duplication of duties or services provided for in
the Trust Operating Agreements or any fees or expenses
thereunder. Furthermore, TORS has entered into an
exclusive servicing agreement with FMFS. The minimum
term for the distribution services with TORS is a one
year period.
The Grand Prix Fund/Target Investors, Inc. T.O. Richardson Securities, Inc.
By: /s/ Robert Zuccaro By: /s/ Samuel Bailey, Jr.
---------------------- ---------------------------
Print: Robert Zuccaro Print: Samuel Bailey, Jr.
------------------- ------------------------
Title: President Title: President
------------------- ------------------------
Date: June 15, 1999 Date: June 15, 1999
------------------- ------------------------
Attest: /s/ Mary Jane Boyle Attest: /s/ Kathleen M. Russo
--------------------- -----------------------
<PAGE>
SCHEDULE B
to the
DISTRIBUTION AGREEMENT
between
The Grand Prix Fund
and
T.O. Richardson Securities, Inc.
As compensation pursuant to Section 9 of the
Distribution Agreement between The Grand Prix Fund
("Fund") and T.O. Richardson Securities, Inc. ("TORS"),
the Fund shall pay to TORS the sum of:
1. an annual fee of $15,000 for the first series
of the Fund and $7,500 for each series or
class thereafter or .01% (1 basis point) of
the average daily net assets of each series,
computed daily and paid monthly, whichever is
greater;
2. an annual compliance fee of $500 for each
employee of the Fund's investment adviser who
is designated by the Fund to become a series
6 or series 7 registered representative of
TORS (compliance costs for other types of
licenses may vary), as well as the ongoing
license fees and incidental costs associated
with such registrations;
3. the compensation paid by TORS to such
registered representatives in accordance with
compensation schedules, as agreed upon by
TORS and the Fund from time to time;
4. the reasonable fees associated with listing
and maintaining shares on the National
Securities Clearing Corporation's Fund/SERV
System, on a "pass through" basis, as agreed
upon by TORS and the Fund and as reflected in
the attached NSCC fee schedule, which may
change without notice; and
5. incidental expenses associated with printing
and distribution advertising and sales
literature;
6. fees for legal review of advertisements and
sales literature at the rate of $150 per job
for the first ten pages of an advertisement
and $20 per page thereafter, plus NASD filing
fees which are billed on an out of pocket
basis;
7. plus out of pocket expenses including, but
not limited to travel expenses and retention
of records.
Dated: June 15, 1999
date
Selected Dealer Agreement
company
address
city/state
zip
RE: Grand Prix Funds, Inc.
Ladies and Gentlemen:
As the principal underwriter of shares in registered
investment companies managed by Target Investors, Inc., we invite
you to participate as principal in the distribution of one or
more series and classes of the shares of Grand Prix Funds, Inc.,
a Maryland corporation ("Fund" or "Funds"), upon the following
terms and conditions:
1. You will offer and sell shares only at the public
offering prices that are currently in effect, in accordance with
the terms of the then current prospectus of the Fund. You agree
to act only as principal in such transactions and have no
authority to act as agent for the Funds, for us, or for any other
dealer in any respect. All orders are subject to acceptance by
us and become effective only upon confirmation by us.
2. Upon each purchase of shares by you from us, the total
sales charges and discount to selected dealers shall be as stated
in each Fund's then current prospectus. Such sales charges and
discount to selected dealers are subject to waiver or reduction
under a variety of circumstances as described in each Fund's then
current prospectus. To obtain a waiver or reduction, we must be
satisfactorily informed at the time a qualifying purchase occurs.
3. As a selected dealer, you are authorized to place orders
directly with the Funds for their shares to be sold by us to you
subject to the applicable terms and conditions governing the
placement of orders set forth in the Distribution Agreement
between each Fund and us and further subject to the applicable
compensation provisions set forth in each Fund's then current
prospectus. You may tender shares directly to the Funds or their
transfer agent for redemption.
4. Redemption and repurchase of shares will be made at the
net asset value of such shares in accordance with the then
current prospectus of the Fund.
5. You represent that you are a member in good standing of
the National Association of Securities Dealers, Inc. (NASD), and
are therefore subject to the Rules of the NASD.
6. This Agreement is in all respects subject to Rule 2830
of the Conduct Rules of the NASD, which shall control any
provisions to the contrary in this Agreement.
<PAGE>
7. In addition to the other provisions in this Agreement,
you expressly agree:
(a) to purchase shares from us only for the purpose of
covering purchase orders previously received or for your own
bona fide investment;
(b) that you will not purchase any shares from your
customers at a price lower than the redemption or repurchase
price next quoted by the Fund;
(c) that you will not withhold placing customers'
orders so as to profit as a result of such withholding; and
(d) that if any shares confirmed to you hereunder are
redeemed or repurchased by a Fund within thirty business
days after such confirmation of your original order, you
will refund to us the full discount reallowed to you on such
sale. We or a paying agent appointed by us, will pay to the
appropriate Fund our share of the charge on the original
sale and will also pay to such Fund the refund from you as
herein provided.
8. We accept no conditional orders for shares. Shares
purchased shall be issued only against receipt of the purchase
price, subject to deduction for the discount reallowed to you and
our portion of the sales charge on such sale. If payment for the
shares purchased is not received within the time customary for
such payment, the sale may be canceled without any responsibility
or liability on our part or on the part of the Fund (in which
case you will be responsible for any loss, including loss of
profit, suffered by the Fund resulting from your failure to make
payment as aforesaid) or, at our option, we may sell the shares
ordered back to the Fund (in which case we may hold you
responsible for any loss, including loss of profit, suffered by
us resulting from your failure to make payment as aforesaid).
9. You will offer and sell shares in compliance with
applicable federal and state securities laws. You will furnish
to each person to whom any such offer or sale is made a copy of
the then current prospectus for the Fund, and, with respect to
persons who purchase shares, you agree to deliver to such
purchasers copies of each Fund's annual and interim reports and
proxy solicitation materials. We shall be under no liability to
you except for obligations expressly assumed by us in this
Agreement. Nothing herein contained shall be deemed to be a
condition, stipulation, or provision binding any persons
acquiring any security to waive compliance with any applicable
provision of federal or state securities law.
10. No person is authorized to make any representations
concerning shares of the Funds except those contained in the
current prospectus and printed information issued by each Fund or
by us as information supplemental to each prospectus. We shall
supply reasonable quantities of prospectuses, supplemental sale
literature, and additional information as issued. You agree not
to use other advertising or sales material relating to the Funds
unless approved in writing by us in advance of such use. Any
printed information furnished by us other than the current
prospectus for each Fund, periodic reports, and proxy
solicitation materials, if any, are our sole responsibility and
not the responsibility of the Fund. You agree that each Fund
shall have no liability to you unless expressly assumed
otherwise. All expenses incurred by you under this Agreement
shall be borne by you.
<PAGE>
11. Neither of us shall be liable to the other except for
(1) acts or failures to act which constitute a lack of good faith
or negligence and (2) obligations expressly assumed under this
Agreement. In addition, you agree to indemnify us and hold us
harmless from any claims or assertions relating to the lawfulness
of your participation in this Agreement and the transactions
contemplated hereby or relating to any activities of any persons
or entities affiliated with your organization which are performed
in connection with the discharge of your responsibilities under
this Agreement. If such claims are asserted, we shall have the
right to manage our own defense, including the selection and
engagement of legal counsel, and all costs of such defense shall
be borne by you.
12. Either party to this Agreement may cancel this
Agreement by giving written notice to the other. Such notice
shall be deemed to have been given on the date on which it was
either delivered personally to the other party or was received by
the other party at its address as shown in this Agreement. This
Agreement may be amended by us at any time, and your placing of
an order after the effective date of any such amendment
constitutes your acceptance thereof.
13. All communications to us shall be sent to the address
set forth on page 1 hereof or at such other address as we may
designate in writing. Any notice to you shall be duly given if
mailed or telecopied to you at the address set forth below or at
such other address as you may provide in writing.
Firm: _____________________
Address: _____________________
Suite/Floor: _____________________
City, State: _____________________
Telephone: _____________________
Facsimile: _____________________
Attention: _____________________
14. This Agreement constitutes the entire agreement between
us and shall not be assignable by you. It shall be construed in
accordance with the laws of the State of Connecticut and shall be
binding upon both parties when signed by us and accepted by you
in the space provided below. Please return one signed copy of
this Agreement.
Sincerely yours,
T.O. RICHARDSON SECURITIES, INC.
By:_________________________
___________, Authorized Signer
Accepted: company
By: __________________ Date:_______________________
Authorized Signer
Date:_________________
CUSTODIAN SERVICING AGREEMENT
THIS AGREEMENT made as of August 2, 1999, between
Grand Prix Funds, Inc., a Maryland corporation
(hereinafter called the "Company"), and Firstar Bank
Milwaukee, N.A., a Wisconsin corporation (hereinafter
called "Custodian").
WHEREAS, the Company is an open-end management
investment company which is registered under the
Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Company is authorized to create
separate series, each with its own separate investment
portfolio; and
WHEREAS, the Company desires that the securities
and cash of the Grand Prix Fund and each additional
series of the Company listed on Exhibit A attached
hereto (each, a "Fund"), as may be amended from time to
time, shall be hereafter held and administered by
Custodian pursuant to the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual
agreements herein made, the Company and Custodian agree
as follows:
1. Definitions
The word "securities" as used herein includes
stocks, shares, bonds, debentures, notes, mortgages or
other obligations, and any certificates, receipts,
warrants or other instruments representing rights to
receive, purchase or subscribe for the same, or
evidencing or representing any other rights or
interests therein, or in any property or assets.
The words "officers' certificate" shall mean a
request or direction or certification in writing signed
in the name of the Company by any two of the President,
a Vice President, the Secretary and the Treasurer of
the Company, or any other persons duly authorized to
sign by the Board of Directors.
The word "Board" shall mean the Board of Directors
of the Company.
2. Names, Titles, and Signatures of the Company's Officers
An officer of the Company will certify to
Custodian the names and signatures of those persons
authorized to sign the officers' certificates described
in Section 1 hereof, and the names of the members of
the Board of Directors, together with any changes which
may occur from time to time.
<PAGE>
3. Receipt and Disbursement of Money
A. Custodian shall open and maintain a separate
account or accounts in the name of the Company, subject
only to draft or order by Custodian acting pursuant to
the terms of this Agreement. Custodian shall hold in
such account or accounts, subject to the provisions
hereof, all cash received by it from or for the account
of the Company. Custodian shall make payments of cash
to, or for the account of, the Company from such cash
only:
(a) for the purchase of securities for the
portfolio of the Fund upon the delivery
of such securities to Custodian,
registered in the name of the Company or
of the nominee of Custodian referred to
in Section 7 or in proper form for
transfer;
(b) for the purchase or redemption of shares
of the common stock of the Fund upon
delivery thereof to Custodian, or upon
proper instructions from the Company;
(c) for the payment of interest, dividends,
taxes, investment adviser's fees or
operating expenses (including, without
limitation thereto, fees for legal,
accounting, auditing and custodian
services, expenses for printing and
postage and payments under any Rule 12b-
1 plan);
(d) for payments in connection with the
conversion, exchange or surrender of
securities owned or subscribed to by the
Fund held by or to be delivered to
Custodian; or
(e) for other proper corporate purposes
certified by resolution of the Board of
Directors of the Company.
Before making any such payment, Custodian shall
receive (and may rely upon) an officers' certificate
requesting such payment and stating that it is for a
purpose permitted under the terms of items (a), (b),
(c), or (d) of this Subsection A, and also, in respect
of item (e), upon receipt of an officers' certificate
specifying the amount of such payment, setting forth
the purpose for which such payment is to be made,
declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom such
payment is to be made, provided, however, that an
officers' certificate need not precede the disbursement
of cash for the purpose of purchasing a money market
instrument, or any other security with same or next-day
settlement, if the President, a Vice President, the
Secretary or the Treasurer of the Company issues
appropriate oral or facsimile instructions to Custodian
and an appropriate officers' certificate is received by
Custodian within two business days thereafter.
B. Custodian is hereby authorized to endorse and
collect all checks, drafts or other orders for the
payment of money received by Custodian for the account
of the Company.
<PAGE>
C. Custodian shall, upon receipt of proper
instructions, make federal funds available to the
Company as of specified times agreed upon from time to
time by the Company and the Custodian in the amount of
checks received in payment for shares of the Fund which
are deposited into the Fund's account.
D. If so directed by the Company, Custodian will
invest any and all available cash in overnight cash-
equivalent investments as specified by the investment
manager.
4. Segregated Accounts
Upon receipt of proper instructions, the Custodian
shall establish and maintain a segregated account(s)
for and on behalf of the Fund, into which account(s)
may be transferred cash and/or securities.
5. Transfer, Exchange, Redelivery, etc. of Securities
Custodian shall have sole power to release or
deliver any securities of the Company held by it
pursuant to this Agreement. Custodian agrees to
transfer, exchange or deliver securities held by it
hereunder only:
(a) for sales of such securities for the account of
the Fund upon receipt by Custodian of payment
therefore;
(b) when such securities are called, redeemed or
retired or otherwise become payable;
(c) for examination by any broker selling any such
securities in accordance with "street
delivery" custom;
(d) in exchange for, or upon conversion into, other
securities alone or other securities and cash
whether pursuant to any plan of merger,
consolidation, reorganization,
recapitalization or readjustment, or
otherwise;
(e) upon conversion of such securities pursuant to
their terms into other securities;
(f) upon exercise of subscription, purchase or
other similar rights represented by such
securities;
(g) for the purpose of exchanging interim receipts
or temporary securities for definitive
securities;
(h) for the purpose of redeeming in kind shares of
common stock of the Fund upon delivery
thereof to Custodian; or
(i) for other proper corporate purposes.
<PAGE>
As to any deliveries made by Custodian pursuant to
items (a), (b), (d), (e), (f), and (g), securities or
cash receivable in exchange therefor shall be
deliverable to Custodian.
Before making any such transfer, exchange or
delivery, Custodian shall receive (and may rely upon)
an officers' certificate requesting such transfer,
exchange or delivery, and stating that it is for a
purpose permitted under the terms of items (a), (b),
(c), (d), (e), (f), (g), or (h) of this Section 5 and
also, in respect of item (i), upon receipt of an
officers' certificate 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, provided, however, that an officers' certificate
need not precede any such transfer, exchange or
delivery of a money market instrument, or any other
security with same or next-day settlement, if the
President, a Vice President, the Secretary or the
Treasurer of the Company issues appropriate oral or
facsimile instructions to Custodian and an appropriate
officers' certificate is received by Custodian within
two business days thereafter.
6. Custodian's Acts Without Instructions
Unless and until Custodian receives an officers'
certificate to the contrary, Custodian shall: (a)
present for payment all coupons and other income items
held by it for the account of the Fund, which call for
payment upon presentation and hold the cash received by
it upon such payment for the account of the Fund; (b)
collect interest and cash dividends received, with
notice to the Company, for the account of the Fund; (c)
hold for the account of the Fund hereunder all stock
dividends, rights and similar securities issued with
respect to any securities held by it hereunder; and (d)
execute, as agent on behalf of the Company, all
necessary ownership certificates required by the
Internal Revenue Code of 1986, as amended (the "Code")
or the Income Tax Regulations (the "Regulations") of
the United States Treasury Department (the "Treasury
Department") or under the laws of any state now or
hereafter in effect, inserting the Company's name on
such certificates as the owner of the securities
covered thereby, to the extent it may lawfully do so.
7. Registration of Securities
Except as otherwise directed by an officers'
certificate, Custodian shall register all securities,
except such as are in bearer form, in the name of a
registered nominee of Custodian as defined in the Code
and any Regulations of the Treasury Department issued
thereunder or in any provision of any subsequent
federal tax law exempting such transaction from
liability for stock transfer taxes, and shall execute
and deliver all such certificates in connection
therewith as may be required by such laws or
regulations or under the laws of any state. All
securities held by Custodian hereunder shall be at all
times identifiable in its records as being held in an
account or accounts of Custodian containing only the
assets of the Company.
The Company shall from time to time furnish to
Custodian appropriate instruments to enable Custodian
to hold or deliver in proper form for transfer, or to
register in the name of its
<PAGE>
registered nominee, any
securities which it may hold for the account of the
Company and which may from time to time be registered
in the name of the Company.
8. Voting and Other Action
Neither Custodian nor any nominee of Custodian
shall vote any of the securities held hereunder by or
for the account of the Fund, except in accordance with
the instructions contained in an officers' certificate.
Custodian shall deliver, or cause to be executed and
delivered, to the Company all notices, proxies and
proxy soliciting materials with respect to such
securities, such proxies to be executed by the
registered holder of such securities (if registered
otherwise than in the name of the Company), but without
indicating the manner in which such proxies are to be
voted.
9. Transfer Tax and Other Disbursements
The Company shall pay or reimburse Custodian from
time to time for any transfer taxes payable upon
transfers of securities made hereunder, and for all
other necessary and proper disbursements and expenses
made or incurred by Custodian in the performance of
this Agreement.
Custodian shall execute and deliver such
certificates in connection with securities delivered to
it or by it under this Agreement as may be required
under the provisions of the Code and any Regulations of
the Treasury Department issued thereunder, or under the
laws of any state, to exempt from taxation any exempt
transfers and/or deliveries of any such securities.
10. Concerning Custodian
Custodian shall be paid as compensation for its
services pursuant to this Agreement such compensation
as may from time to time be agreed upon in writing
between the two parties. Until modified in writing,
such compensation shall be as set forth in Exhibit A
attached hereto.
Custodian shall not be liable for any action taken
in good faith upon any certificate herein described or
certified copy of any resolution of the Board, and may
rely on the genuineness of any such document which it
may in good faith believe to have been validly
executed.
The Company agrees to indemnify and hold harmless
Custodian and its nominee from all taxes, charges,
expenses, assessments, claims and liabilities
(including reasonable counsel fees) incurred or
assessed against it or by its nominee in connection
with the performance of this Agreement, except such as
may arise from its or its nominee's own bad faith,
negligent action, negligent failure to act or willful
misconduct. Custodian is authorized to charge any
account of the Fund for such items. In the event of
any advance of cash for any purpose made by Custodian
resulting from orders or instructions of the Company,
or in the event that Custodian or its nominee shall
incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with
the performance of this Agreement, except such as may
arise from its or its
<PAGE>
nominee's own bad faith,
negligent action, negligent failure to act or willful
misconduct, any property at any time held for the
account of the Company shall be security therefor.
Custodian agrees to indemnify and hold harmless
the Company from all charges, expenses, assessments,
and claims/liabilities (including reasonable counsel
fees) incurred or assessed against it in connection
with the performance of this Agreement, except such as
may arise from the Fund's own bad faith, negligent
action, negligent failure to act, or willful
misconduct.
11. Subcustodians
Custodian is hereby authorized to engage another
bank or trust company as a subcustodian for all or any
part of the Company's assets, so long as any such bank
or trust company is itself qualified under the 1940 Act
and the rules and regulations thereunder and provided
further that, if the Custodian utilizes the services of
a subcustodian, the Custodian shall remain fully liable
and responsible for any losses caused to the Company by
the subcustodian as fully as if the Custodian was
directly responsible for any such losses under the
terms of this Agreement.
Notwithstanding anything contained herein, if the
Company requires the Custodian to engage specific
subcustodians for the safekeeping and/or clearing of
assets, the Company agrees to indemnify and hold
harmless Custodian from all claims, expenses and
liabilities incurred or assessed against it in
connection with the use of such subcustodian in regard
to the Company's assets, except as may arise from
Custodian's own bad faith, negligent action, negligent
failure to act or willful misconduct.
12. Reports by Custodian
Custodian shall furnish the Company periodically
as agreed upon with a statement summarizing all
transactions and entries for the account of Company.
Custodian shall furnish to the Company, at the end of
every month, a list of the portfolio securities for the
Fund showing the aggregate cost of each issue. The
books and records of Custodian pertaining to its
actions under this Agreement shall be open to
inspection and audit at reasonable times by officers
of, and by auditors employed by, the Company.
13. Termination or Assignment
This Agreement may be terminated by the Company,
or by Custodian, on ninety (90) days notice, given in
writing and sent by registered mail to:
Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, WI 53202
<PAGE>
or to the Company at:
Grand Prix Funds, Inc.
Wilton Executive Campus
15 River Road, Suite 220
Wilton, CT 06897
Attn: Corporate Secretary
as the case may be. Upon any termination of this
Agreement, pending appointment of a successor to
Custodian or a vote of the shareholders of the Fund to
dissolve or to function without a custodian of its
cash, securities and other property, Custodian shall
not deliver cash, securities or other property of the
Fund to the Company, but may deliver them to a bank or
trust company of its own selection that meets the
requirements of the 1940 Act as a Custodian for the
Company to be held under terms similar to those of this
Agreement, provided, however, that Custodian shall not
be required to make any such delivery or payment until
full payment shall have been made by the Company of all
liabilities constituting a charge on or against the
properties then held by Custodian or on or against
Custodian, and until full payment shall have been made
to Custodian of all its fees, compensation, costs and
expenses, subject to the provisions of Section 10 of
this Agreement.
If the Company elects to terminate this Agreement
prior to the one year anniversary of this Agreement,
for reasons other than unacceptable service levels, the
Company agrees to reimburse Firstar for the difference
between the termination date and the anniversary date
in annual fees based on the current annual fees of the
Company.
This Agreement may not be assigned by Custodian
without the consent of the Company, authorized or
approved by a resolution of its Board of Directors.
14. Deposits of Securities in Securities Depositories
No provision of this Agreement shall be deemed to
prevent the use by Custodian of a central securities
clearing agency or securities depository, provided,
however, that Custodian and the central securities
clearing agency or securities depository meet all
applicable federal and state laws and regulations, and
the Board of Directors of the Company approves by
resolution the use of such central securities clearing
agency or securities depository.
15. Records
Custodian shall keep records relating to its
services to be performed hereunder, in the form and
manner, and for such period, as it may deem advisable
and is agreeable to the Company but not inconsistent
with the rules and regulations of appropriate
government authorities, in particular Section 31 of the
1940 Act and the rules thereunder. Custodian agrees
that all such records prepared or maintained by the
Custodian relating to the services performed by
Custodian hereunder are the property of the Company and
will be preserved, maintained, and made
<PAGE>
available in accordance with such section and rules of the
1940 Act and will be promptly surrendered to the Company on
and in accordance with its request.
16. Governing Law
This Agreement shall be governed by Wisconsin law.
However, nothing herein shall be construed in a manner
inconsistent with the 1940 Act or any rule or
regulation promulgated by the Securities and Exchange
Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by a duly authorized
officer in one or more counterparts as of the day and
year first written above.
GRAND PRIX FUNDS, INC. FIRSTAR BANK MILWAUKEE, N.A.
By: /s/ Robert Zuccaro By: /s/ Paul Rock
------------------- ------------------
Its: President Its: Vice President
----------------- ------------------
<PAGE>
Custody Services
Annual Fee Schedule - Domestic Funds
Exhibit A
Separate Series of Grand Prix Funds, Inc.
Name of Series Date Added
Grand Prix Fund August 2, 1999
Class A
Class C
Annual fee based upon market value
.75 basis point from $0 to $100 million
.50 basis point from $100 to $200 million
.25 basis point on excess assets of the the fund
Minimum annual fee per fund - $3,000
Investment transactions (purchase, sale, exchange, tender, redemption,
maturity, receipt, delivery):
$10.00 per book entry security (depository or Federal Reserve system)
$25.00 per definitive security (physical)
$25.00 per mutual fund trade
$75.00 per Euroclear
$ 8.00 per principal reduction on pass-through certificates
$35.00 per option/futures contract
$15.00 per variation margin
$15.00 per Fed wire deposit or withdrawal
Variable Amount Demand Notes: Used as a short-term
investment, variable amount notes offer safety and
prevailing high interest rates. Our charge, which is
1/4 of 1%, is deducted from the variable amount note
income at the time it is credited to your account.
Plus out-of-pocket expenses. Foreign securities
custody services quoted separately.
Fees and out-of-pocket expenses are billed to the Fund
monthly, based upon market value at the beginning of
the month.
TRANSFER AGENT SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this
2nd day of August, 1999, by and between Grand Prix
Funds, Inc., a Maryland corporation (hereinafter
referred to as the "Company"), and Firstar Mutual Fund
Services, LLC, a Wisconsin limited liability company
(hereinafter referred to as the "Firstar").
WHEREAS, the Company is an open-end management
investment company which is registered under the
Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Company is authorized to create
separate series, each with its own separate investment
portfolio;
WHEREAS, Firstar is in the business of
administering transfer and dividend disbursing agent
functions for investment companies; and
WHEREAS, the Company desires to retain Firstar to
provide transfer and dividend disbursing agent services
to the Grand Prix Fund and each additional series of
the Company listed on Exhibit A attached hereto (each,
a "Fund"), as may be amended from time to time.
NOW, THEREFORE, in consideration of the mutual
agreements herein made, the Company and Firstar agree
as follows:
1. Appointment of Transfer Agent
The Company hereby appoints Firstar as Transfer
Agent of the Company on the terms and conditions set
forth in this Agreement, and Firstar hereby accepts
such appointment and agrees to perform the services and
duties set forth in this Agreement in consideration of
the compensation provided for herein.
2. Duties and Responsibilities of Firstar
Firstar shall perform all of the customary
services of a transfer agent and dividend disbursing
agent, and as relevant, agent in connection with
accumulation, open account or similar plans (including
without limitation any periodic investment plan or
periodic withdrawal program), including but not limited
to:
A. Receive orders for the purchase of shares;
B. Process purchase orders with prompt delivery,
where appropriate, of payment and supporting
documentation to the Company's custodian, and
issue the appropriate number of
uncertificated shares with such
uncertificated shares being held in the
appropriate shareholder account;
<PAGE>
C. Process redemption requests received in good
order and, where relevant, deliver
appropriate documentation to the Company's
custodian;
D. Pay monies upon receipt from the Company's
custodian, where relevant, in accordance with
the instructions of redeeming shareholders;
E. Process transfers of shares in accordance with
the shareholder's instructions;
F. Process exchanges between funds and/or classes
of shares of funds both within the same
family of funds and with the Firstar Money
Market Funds, if applicable;
G. Prepare and transmit payments for dividends and
distributions declared by the Company with
respect to the Fund;
H. Make changes to shareholder records, including,
but not limited to, address changes in plans
(i.e., systematic withdrawal, automatic
investment, dividend reinvestment, etc.);
I. Record the issuance of shares of the Fund and
maintain, pursuant to Rule 17ad-10(e)
promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), a
record of the total number of shares of the
Fund which are authorized, issued and
outstanding;
J. Prepare shareholder meeting lists and, if
applicable, mail, receive and tabulate
proxies;
K. Mail shareholder reports and prospectuses to
current shareholders;
L. Prepare and file U.S. Treasury Department Forms
1099 and other appropriate information
returns required with respect to dividends
and distributions for all shareholders;
M. Provide shareholder account information upon
request and prepare and mail confirmations
and statements of account to shareholders for
all purchases, redemptions and other
confirmable transactions as agreed upon with
the Company;
N. Provide a Blue Sky System which will enable the
Company to monitor the total number of shares
of the Fund sold in each state. In addition,
the Company or its agent, including Firstar,
shall identify to Firstar in writing those
transactions and assets to be treated as
exempt from the Blue Sky reporting for each
state. The responsibility of Firstar for the
Company's Blue Sky state registration status
under this Agreement is solely limited to the
initial compliance by the Company and the
reporting of such transactions to the Company
or its agent.
<PAGE>
O. Answer telephone calls and correspondence from
shareholders relating to their accounts
during Firstar's normal business hours.
Firstar shall strive to promptly respond to
all such telephone or written inquiries from
shareholders. Copies of all correspondence
from shareholders involving complaints about
the management of the Company, services
provided by or for the Company, Firstar or
others, shall be promptly forwarded to the
Company. Firstar shall keep records of
substantive shareholder telephone calls and
correspondence and replies thereto, and of
the lapse of time between receipt of such
calls and correspondence and replies.
P. Prepare such reports as may be reasonably
requested from time to time by the Company or
its Board of Directors relating to fees paid
out under a Fund's Rule 12b-1 plan.
3. Compensation
The Company agrees to pay Firstar for the
performance of the duties listed in this Agreement as
set forth on Exhibit A attached hereto; the fees and
out-of-pocket expenses include, but are not limited to
the following: printing, postage, forms, stationery,
record retention (if requested by the Company),
mailing, insertion, programming (if requested by the
Company), labels, shareholder lists and proxy expenses.
These fees and reimbursable expenses may be
changed from time to time subject to mutual written
agreement between the Company and Firstar.
The Company agrees to pay all fees and
reimbursable expenses within ten (10) business days
following the receipt of the billing notice.
4. Representations of Firstar
Firstar represents and warrants to the Company that:
A. It is a limited liability company duly
organized, existing and in good standing
under the laws of Wisconsin;
B. It is a registered transfer agent under the
Exchange Act.
C. It is duly qualified to carry on its business in
the State of Wisconsin;
D. It is empowered under applicable laws and by its
charter and bylaws to enter into and perform
this Agreement;
E. All requisite corporate proceedings have been
taken to authorize it to enter and perform
this Agreement;
<PAGE>
F. It has and will continue to have access to the
necessary facilities, equipment and personnel
to perform its duties and obligations under
this Agreement; and
G. It will comply with all applicable requirements
of the Securities Act of 1933, as amended
(the "Securities Act"), and the Exchange Act,
the 1940 Act, and any laws, rules, and
regulations of governmental authorities
having jurisdiction.
5. Representations of the Company
The Company represents and warrants to Firstar that:
A. The Company is an open-end diversified
investment company under the 1940 Act;
B. The Company is a corporation organized,
existing, and in good standing under the laws
of Maryland;
C. The Company is empowered under applicable laws
and by its Articles of Incorporation and
Bylaws to enter into and perform this
Agreement;
D. All necessary proceedings required by the
Articles of Incorporation have been taken to
authorize it to enter into and perform this
Agreement;
E. The Company will comply with all applicable
requirements of the Securities Act, the
Exchange Act, the 1940 Act, and any laws,
rules and regulations of governmental
authorities having jurisdiction; and
F. A registration statement under the Securities
Act will be made effective and will remain
effective, and appropriate state securities
law filings have been made and will continue
to be made, with respect to all shares of the
Company being offered for sale.
6. Covenants of the Company and Firstar
The Company shall furnish Firstar a certified copy
of the resolution of the Board of Directors of the
Fund authorizing the appointment of Firstar and the
execution of this Agreement. The Company shall provide
to Firstar a copy of its Articles of Incorporation and
Bylaws, and all amendments thereto.
Firstar shall keep records relating to the
services to be performed hereunder, in the form and
manner as it may deem advisable and as required under
the Exchange Act. To the extent required by Section 31
of the 1940 Act, and the rules thereunder, Firstar
agrees that all such records prepared or maintained by
Firstar relating to the services to be performed by
Firstar hereunder are the property of the Company and
will be preserved, maintained and made available
<PAGE>
in maccordance with such section and rules and will be
surrendered to the Company on and in accordance with
its request.
7. Performance of Service; Limitation of Liability
Firstar shall exercise reasonable care in the
performance of its duties under this Agreement.
Firstar shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the
Company in connection with matters to which this
Agreement relates, including losses resulting from
mechanical breakdowns or the failure of communication
or power supplies beyond Firstar's control, except a
loss resulting from Firstar's refusal or failure to
comply with the terms of this Agreement or from bad
faith, negligence, or willful misconduct on its part in
the performance of its duties under this Agreement.
Notwithstanding any other provision of this Agreement,
the Company shall indemnify and hold harmless Firstar
from and against any and all claims, demands, losses,
expenses, and liabilities (whether with or without
basis in fact or law) of any and every nature
(including reasonable attorneys' fees) which Firstar
may sustain or incur or which may be asserted against
Firstar by any person arising out of any action taken
or omitted to be taken by it in performing the services
hereunder (i) in accordance with the foregoing
standards, or (ii) in reliance upon any written or oral
instruction provided to Firstar by any duly authorized
officer of the Company, such duly authorized officer to
be included in a list of authorized officers furnished
to Firstar and as amended from time to time in writing
by resolution of the Board of Directors of the Company.
Firstar shall indemnify and hold the Company
harmless from and against any and all claims, demands,
losses, expenses, and liabilities (whether with or
without basis in fact or law) of any and every nature
(including reasonable attorneys' fees) which the
Company may sustain or incur or which may be asserted
against the Company by any person arising out of any
action taken or omitted to be taken by Firstar as a
result of Firstar's refusal or failure to comply with
the terms of this Agreement, its bad faith, negligence,
or willful misconduct.
In the event of a mechanical breakdown or failure
of communication or power supplies beyond its control,
Firstar shall take all reasonable steps to minimize
service interruptions for any period that such
interruption continues beyond Firstar's control.
Firstar will make every reasonable effort to restore
any lost or damaged data and correct any errors
resulting from such a breakdown at the expense of
Firstar. Firstar agrees that it shall, at all times,
have reasonable contingency plans with appropriate
parties, making reasonable provision for emergency use
of electrical data processing equipment to the extent
appropriate equipment is available. Representatives of
the Company shall be entitled to inspect Firstar's
premises and operating capabilities at any time during
regular business hours of Firstar, upon reasonable
notice to Firstar.
Regardless of the above, Firstar reserves the
right to reprocess and correct administrative errors at
its own expense.
In order that the indemnification provisions
contained in this section shall apply, it is understood
that if in any case the indemnitor may be asked to
indemnify or hold the indemnitee
<PAGE>
harmless, the
indemnitor shall be fully and promptly advised of all
pertinent facts concerning the situation in question,
and it is further understood that the indemnitee will
use all reasonable care to notify the indemnitor
promptly concerning any situation which presents or
appears likely to present the probability of a claim
for indemnification. The indemnitor shall have the
option to defend the indemnitee against any claim which
may be the subject of this indemnification. In the
event that the indemnitor so elects, it will so notify
the indemnitee and thereupon the indemnitor shall take
over complete defense of the claim, and the indemnitee
shall in such situation initiate no further legal or
other expenses for which it shall seek indemnification
under this section. The indemnitee shall in no case
confess any claim or make any compromise in any case in
which the indemnitor will be asked to indemnify the
indemnitee except with the indemnitor's prior written
consent.
8. Proprietary and Confidential Information
Firstar agrees on behalf of itself and its
directors, officers, and employees to treat
confidentially and as proprietary information of the
Company all records and other information relative to
the Company and prior, present, or potential
shareholders (and clients of said shareholders) and not
to use such records and information for any purpose
other than the performance of its responsibilities and
duties hereunder, except after prior notification to
and approval in writing by the Company, which approval
shall not be unreasonably withheld and may not be
withheld where Firstar may be exposed to civil or
criminal contempt proceedings for failure to comply
after being requested to divulge such information by
duly constituted authorities, or when so requested by
the Company.
9. Term of Agreement; Amendment
This Agreement shall become effective as of the
date hereof and, unless sooner terminated as provided
herein, shall continue automatically in effect for
successive annual periods. The Agreement may be
terminated by either party upon giving ninety (90) days
prior written notice to the other party or such shorter
period as is mutually agreed upon by the parties. This
Agreement may be amended only by mutual written consent
of the parties.
If the Company elects to terminate this Agreement
prior to the one year anniversary of this Agreement,
for reasons other than unacceptable service levels, the
Company agrees to reimburse Firstar for the difference
between the termination date and the anniversary date
in annual fees based on the current annual fees of the
Company.
10. Notices
Notices of any kind to be given by either party to
the other party shall be in writing and shall be duly
given if mailed or delivered as follows: Notice to
Firstar shall be sent to:
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
<PAGE>
and notice to the Company shall be sent to:
Grand Prix Funds, Inc.
Wilton Executive Campus
15 River Road, Suite 220
Wilton, CT 06897
Attention: Corporate Secretary
11. Duties in the Event of Termination
In the event that, in connection with termination,
a successor to any of Firstar's duties or
responsibilities hereunder is designated by the Company
by written notice to Firstar, Firstar will promptly,
upon such termination and at the expense of the
Company, transfer to such successor all relevant books,
records, correspondence, and other data established or
maintained by Firstar under this Agreement in a form
reasonably acceptable to the Company (if such form
differs from the form in which Firstar has maintained,
the Company shall pay any expenses associated with
transferring the data to such form), and will cooperate
in the transfer of such duties and responsibilities,
including provision for assistance from Firstar's
personnel in the establishment of books, records, and
other data by such successor.
12. Governing Law
This Agreement shall be construed and the
provisions thereof interpreted under and in accordance
with the laws of the State of Wisconsin. However,
nothing herein shall be construed in a manner
inconsistent with the 1940 Act or any rule or
regulation promulgated by the Securities and Exchange
Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by a duly authorized
officer in one or more counterparts as of the day and
year first written above.
GRAND PRIX FUNDS, INC. FIRSTAR MUTUAL FUND SERVICES, LLC
By: /s/ Robert Zuccaro By: /s/ Paul Rock
------------------- -----------------------
Its: President Its: Senior Vice President
------------------ -----------------------
<PAGE>
Transfer Agent and Shareholder Servicing
Load Fund Annual Fee Schedule
Exhibit A
Separate Series of Grand Prix Funds, Inc.
Name of Series Date Added
Grand Prix Fund August 2, 1999
Class A
Class C
Annual Fee
$16.00 per shareholder account
Minimum annual fees of $25,000 for the first
fund and $15,000 for each additional fund or
class
Plus Out-of-Pocket Expenses, including but not limited to:
Telephone - toll-free lines Proxies
Postage Retention of records
(with prior approval)
Programming (with prior approval) Microfilm/fiche of records
Stationery/envelopes Special reports
Mailing ACH fees
Insurance NSCC charges
$1.00 per shareholder call
ACH Shareholder Services
$125.00 per month per Fund group
$ .50 per account setup and/or change
$ .50 per ACH item
$ .50 per item for EFT payments and purchases
$ 3.50 per correction, reversal, return item
Qualified Plan Fees (Billed to Investors)
Annual maintenance fee per account $12.50 /acct. (Cap at $25.00 per SSN)
Transfer to successor trustee $15.00 / trans.
Distribution to participant $15.00 / trans. (Exclusive of SWP)
Refund of excess contribution $15.00 / trans.
Additional Shareholder Fees (Billed to Investors)
Any outgoing wire transfer $12.00 / wire
Telephone Exchange $ 5.00 / exchange transaction
Return check fee $20.00 / item
Stop payment $20.00 / stop
(Liquidation, dividend, draft check)
Research fee $ 5.00 / item
(For requested items of the second calendar year [or previous]
to the request)(Cap at $25.00)
<PAGE>
NSCC and PR
Out-of-Pocket Charges
NSCC Interfaces
Setup
Fund/SERV, Networking ACATS, Exchanges $5,000 setup (one time)
DCCS, RAT
Commissions $5,000 setup (one time)
Processing
Fund/SERV $ 50 / month
Networking $ 250 / month
CPU Access $ 40 / month
Fund/SERV Transactions $ .350 / trade
Networking - per item $ .025 /monthly dividend
fund
Networking - per item $ .015 /non-mo. dividend
fund
First Data $ .100 / next-day Fund/
SERV trade
First Data $ .150 / same-day Fund/
SERV trade
NSCC Implementation
8 to 10 weeks lead time
Fees and out-of-pocket expenses are billed to the Fund monthly.
<PAGE>
Additional Out-of-Pocket Expenses
Database Select Requests $200 per select request
Postage $.34 per one ounce pre-sort first class envelope
Shareholder Records Search $3.00 per search of lost shareholder
(based upon 2 returned mail items)
PAR System Restore $1,500 per restore
Data and Report Transmission
Monthly Service and Support $160 per month
Per Record Transmitted $.01 per record
New Fund Programming
Fund Group Setup $2,000 per fund group
Fund Addition to Existing Group $1,000 per fund
Additional Classes of Existing Fund $250 per class
Additional Programming $150 per hour
FUND ADMINISTRATION SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this
2nd day of August, 1999, by and between Grand Prix
Funds, Inc., a Maryland corporation (hereinafter
referred to as the "Company"), and Firstar Mutual Fund
Services, LLC, a Wisconsin limited liability company
(hereinafter referred to as "Firstar").
WHEREAS, the Company is an open-end management
investment company which is registered under the
Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Company is authorized to create
separate series, each with its own separate investment
portfolio;
WHEREAS, Firstar is in the business of providing,
among other things, fund administration services to
investment companies; and
WHEREAS, the Company desires to retain Firstar to
act as Administrator for the Grand Prix Fund and for
each additional series of the Company listed on Exhibit
A attached hereto (each, a "Fund"), as may be amended
from time to time.
NOW, THEREFORE, in consideration of the mutual
agreements herein made, the Company and Firstar agree
as follows:
1. Appointment of Administrator
The Company hereby appoints Firstar as
Administrator of the Company on the terms and
conditions set forth in this Agreement, and Firstar
hereby accepts such appointment and agrees to perform
the services and duties set forth in this Agreement in
consideration of the compensation provided for herein.
2. Duties and Responsibilities of Firstar
A. General Fund Management
1. Act as liaison among all Fund service
providers
2. Coordinate board communication by:
a. Assisting Company counsel in
establishing meeting agendas
b. Preparing board reports based on
financial and administrative data
c. Evaluating independent auditor
<PAGE>
d. Securing and monitoring fidelity bond
and director and officer liability
coverage, and making the necessary
SEC filings relating thereto
e. Preparing minutes of meetings of the
board and shareholders
3. Audits
a. Prepare appropriate schedules and
assist independent auditors
b. Provide information to SEC and
facilitate audit process
c. Provide office facilities
4. Assist in overall operations of the Fund
5. Pay Fund expenses upon written
authorization from the Company
B. Compliance
1. Regulatory Compliance
a. Monitor compliance with 1940 Act
requirements, including:
1) Asset diversification tests
2) Total return and SEC yield calculations
3) Maintenance of books and records
under Rule 31a-3
4) Code of Ethics for the
disinterested directors of the
Fund (if requested by the Fund)
b. Monitor Fund's compliance with the
policies and investment limitations
of the Company as set forth in its
Prospectus and Statement of
Additional Information
2. Blue Sky Compliance
a. Prepare and file with the appropriate
state securities authorities any
and all required compliance filings
relating to the registration of the
securities of the Company so as to
enable the Company to make a
continuous offering of its shares
in all states
b. Monitor status and maintain
registrations in each state
3. SEC Registration and Reporting
a. Assist Company counsel in updating
Prospectus and Statement of
Additional Information and in
preparing proxy statements and
Rule 24f-2 notices
b. Prepare annual and semiannual reports
<PAGE>
c. Coordinate the printing of publicly
disseminated Prospectuses and
reports
d. File fidelity bond under Rule 17g-1
e. File shareholder reports under Rule 30b2-1
4. IRS Compliance
a. Monitor Company's status as a
regulated investment company under
Subchapter M through review of the
following:
1) Asset diversification requirements
2) Qualifying income requirements
3) Distribution requirements
b. Calculate required distributions
(including excise tax distributions)
C. Financial Reporting
1. Provide financial data required by Fund's
Prospectus and Statement of Additional Information
2. Prepare financial reports for shareholders,
the board, the SEC, and independent auditors
3. Supervise the Company's Custodian and
Company Accountants in the maintenance
of the Company's general ledger and in
the preparation of the Fund's financial
statements, including oversight of
expense accruals and payments, of the
determination of net asset value of the
Company's net assets and of the
Company's shares, and of the declaration
and payment of dividends and other
distributions to shareholders
D. Tax Reporting
1. Prepare and file on a timely basis
appropriate federal and state tax
returns including Forms 1120/8610 with
any necessary schedules
2. Prepare state income breakdowns where relevant
3. File Form 1099 Miscellaneous for payments
to directors and other service providers
4. Monitor wash losses
5. Calculate eligible dividend income for
corporate shareholders
<PAGE>
3. Compensation
The Company, on behalf of the Fund, agrees to pay
Firstar for the performance of the duties listed in
this Agreement, the fees and out-of-pocket expenses as
set forth in the attached Exhibit A.
These fees may be changed from time to time,
subject to mutual written Agreement between the Company
and Firstar.
The Company agrees to pay all fees and
reimbursable expenses within ten (10) business days
following the receipt of the billing notice.
4. Performance of Service; Limitation of Liability
A. Firstar shall exercise reasonable care in the
performance of its duties under this Agreement.
Firstar shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the
Company in connection with matters to which this
Agreement relates, including losses resulting from
mechanical breakdowns or the failure of communication
or power supplies beyond Firstar's control, except a
loss resulting from Firstar's refusal or failure to
comply with the terms of this Agreement or from bad
faith, negligence, or willful misconduct on its part in
the performance of its duties under this Agreement.
Notwithstanding any other provision of this Agreement,
the Company shall indemnify and hold harmless Firstar
from and against any and all claims, demands, losses,
expenses, and liabilities (whether with or without
basis in fact or law) of any and every nature
(including reasonable attorneys' fees) which Firstar
may sustain or incur or which may be asserted against
Firstar by any person arising out of any action taken
or omitted to be taken by it in performing the services
hereunder (i) in accordance with the foregoing
standards, or (ii) in reliance upon any written or oral
instruction provided to Firstar by any duly authorized
officer of the Company, such duly authorized officer to
be included in a list of authorized officers furnished
to Firstar and as amended from time to time in writing
by resolution of the Board of Directors of the Company.
Firstar shall indemnify and hold the Company
harmless from and against any and all claims, demands,
losses, expenses, and liabilities (whether with or
without basis in fact or law) of any and every nature
(including reasonable attorneys' fees) which the
Company may sustain or incur or which may be asserted
against the Company by any person arising out of any
action taken or omitted to be taken by Firstar as a
result of Firstar's refusal or failure to comply with
the terms of this Agreement, its bad faith, negligence,
or willful misconduct.
In the event of a mechanical breakdown or
failure of communication or power supplies beyond its
control, Firstar shall take all reasonable steps to
minimize service interruptions for any period that such
interruption continues beyond Firstar's control.
Firstar will make every reasonable effort to restore
any lost or damaged data and correct any errors
resulting from such a breakdown at the expense of
Firstar. Firstar agrees that it shall, at all times,
have reasonable contingency plans with appropriate
parties, making reasonable provision for emergency use
of electrical data processing equipment to the extent
appropriate equipment is
<PAGE>
available. Representatives of
the Company shall be entitled to inspect Firstar's
premises and operating capabilities at any time during
regular business hours of Firstar, upon reasonable
notice to Firstar.
Regardless of the above, Firstar reserves the
right to reprocess and correct administrative errors at
its own expense.
B. In order that the indemnification provisions
contained in this section shall apply, it is understood
that if in any case the indemnitor may be asked to
indemnify or hold the indemnitee harmless, the
indemnitor shall be fully and promptly advised of all
pertinent facts concerning the situation in question,
and it is further understood that the indemnitee will
use all reasonable care to notify the indemnitor
promptly concerning any situation which presents or
appears likely to present the probability of a claim
for indemnification. The indemnitor shall have the
option to defend the indemnitee against any claim which
may be the subject of this indemnification. In the
event that the indemnitor so elects, it will so notify
the indemnitee and thereupon the indemnitor shall take
over complete defense of the claim, and the indemnitee
shall in such situation initiate no further legal or
other expenses for which it shall seek indemnification
under this section. The indemnitee shall in no case
confess any claim or make any compromise in any case in
which the indemnitor will be asked to indemnify the
indemnitee except with the indemnitor's prior written
consent.
5. Proprietary and Confidential Information
Firstar agrees on behalf of itself and its
directors, officers, and employees to treat
confidentially and as proprietary information of the
Company all records and other information relative to
the Company and prior, present, or potential
shareholders of the Company (and clients of said
shareholders), and not to use such records and
information for any purpose other than the performance
of its responsibilities and duties hereunder, except
after prior notification to and approval in writing by
the Company, which approval shall not be unreasonably
withheld and may not be withheld where Firstar may be
exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such
information by duly constituted authorities, or when so
requested by the Company.
6. Data Necessary to Perform Services
The Company or its agent, which may be Firstar,
shall furnish to Firstar the data necessary to perform
the services described herein at times and in such form
as mutually agreed upon.
7. Term of Agreement
This Agreement shall become effective as of the
date hereof and, unless sooner terminated as provided
herein, shall continue automatically in effect for
successive annual periods. The Agreement may be
terminated by either party upon giving ninety (90) days
prior
<PAGE>
written notice to the other party or such shorter
period as is mutually agreed upon by the parties.
However, this Agreement may be amended by mutual
written consent of the parties.
If the Company elects to terminate this Agreement
prior to the one year anniversary of this Agreement,
for reasons other than unacceptable service levels, the
Company agrees to reimburse Firstar for the difference
between the termination date and the anniversary date
in annual fees based on the current annual fees of the
Company.
8. Notices
Notices of any kind to be given by either party to
the other party shall be in writing and shall be duly
given if mailed or delivered as follows: Notice to
Firstar shall be sent to:
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
and notice to the Company shall be sent to:
Grand Prix Funds, Inc.
Wilton Executive Campus
15 River Road, Suite 220
Wilton, CT 06897
Attn: Corporate Secretary
9. Duties in the Event of Termination
In the event that, in connection with termination,
a successor to any of Firstar's duties or
responsibilities hereunder is designated by the Company
by written notice to Firstar, Firstar will promptly,
upon such termination and at the expense of the
Company, transfer to such successor all relevant books,
records, correspondence, and other data established or
maintained by Firstar under this Agreement in a form
reasonably acceptable to the Company (if such form
differs from the form in which Firstar has maintained,
the Company shall pay any expenses associated with
transferring the data to such form), and will cooperate
in the transfer of such duties and responsibilities,
including provision for assistance from Firstar's
personnel in the establishment of books, records, and
other data by such successor.
10. Governing Law
This Agreement shall be construed and the
provisions thereof interpreted under and in accordance
with the laws of the State of Wisconsin. However,
nothing herein shall be construed in a manner
inconsistent with the 1940 Act or any rule or
regulation promulgated by the Securities and Exchange
Commission thereunder.
<PAGE>
11. Records
Firstar shall keep records relating to the
services to be performed hereunder, in the form and
manner, and for such period as it may deem advisable
and is agreeable to the Company but not inconsistent
with the rules and regulations of appropriate
government authorities, in particular, Section 31 of
the 1940 Act and the rules thereunder. Firstar agrees
that all such records prepared or maintained by Firstar
relating to the services to be performed by Firstar
hereunder are the property of the Company and will be
preserved, maintained, and made available in accordance
with such section and rules of the 1940 Act and will be
promptly surrendered to the Company on and in
accordance with its request.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by a duly authorized
officer in one or more counterparts as of the day and
year first written above.
GRAND PRIX FUNDS, INC. FIRSTAR MUTUAL FUND
SERVICES, LLC
By: /s/ Robert Zuccaro By: /s/ Paul Rock
------------------- ----------------------
Its: President Its: Senior Vice President
------------------ ----------------------
<PAGE>
Fund Administration and Compliance
Annual Fee Schedule - Domestic Funds
Exhibit A
Separate Series of Grand Prix Funds, Inc.
Name of Series Date Added
Grand Prix Fund August 2, 1999
Class A
Class C
Annual fee based upon average assets per Fund
7 basis points on the first $200 million
6 basis points on the next $500 million
4 basis points on the balance
Minimum annual fee: $40,000 for the first Fund
$35,000/Fund for next three Funds
$25,000/Fund for additional Funds
20% additional charge for additional class
Plus out-of-pocket expense reimbursements, including but not limited to:
Postage
Programming
Stationery
Proxies
Retention of records
Special reports
Federal and state regulatory filing fees
Certain insurance premiums
Expenses from board of directors meetings
Auditing and legal expenses
Fees and out-of-pocket expense reimbursements are billed to the Fund monthly.
FUND ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this
2nd day of August, 1999, by and between Grand Prix
Funds, Inc., a Maryland corporation (hereinafter
referred to as the "Company"), and Firstar Mutual Fund
Services, LLC, a Wisconsin limited liability company
(hereinafter referred to as "Firstar").
WHEREAS, the Company is an open-end management
investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Company is authorized to create
separate series, each with its own separate investment
portfolio;
WHEREAS, Firstar is in the business of providing,
among other things, mutual fund accounting services to
investment companies; and
WHEREAS, the Company desires to retain Firstar to
provide accounting services to the Grand Prix Fund and
each additional series of the Company listed on Exhibit
A attached hereto (each, a "Fund"), as it may be
amended from time to time.
NOW, THEREFORE, in consideration of the mutual
agreements herein made, the Company and Firstar agree
as follows:
1. Appointment of Fund Accountant
The Company hereby appoints Firstar as Fund
Accountant of the Company on the terms and conditions
set forth in this Agreement, and Firstar hereby accepts
such appointment and agrees to perform the services and
duties set forth in this Agreement in consideration of
the compensation provided for herein.
2. Duties and Responsibilities of Firstar
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade
date +1 basis using security trade information
communicated from the investment manager.
(2) For each valuation date, obtain prices
from a pricing source approved by the Board of
Directors of the Company and apply those prices to
the portfolio positions. For those securities
where market quotations are not readily available,
the Board of Directors of the Company shall
approve, in good faith, the method for determining
the fair value for such securities.
<PAGE>
(3) Identify interest and dividend accrual
balances as of each valuation date and calculate
gross earnings on investments for the accounting
period.
(4) Determine gain/loss on security sales
and identify them as, short-term or long-term;
account for periodic distributions of gains or
losses to shareholders and maintain undistributed
gain or loss balances as of each valuation date.
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the
expense accrual amounts as directed by the Company
as to methodology, rate or dollar amount.
(2) Record payments for Fund expenses upon
receipt of written authorization from the Company.
(3) Account for Fund expenditures and
maintain expense accrual balances at the level of
accounting detail, as agreed upon by Firstar and
the Company.
(4) Provide expense accrual and payment reporting.
C. Fund Valuation and Financial Reporting Services:
(1) Account for Fund share purchases, sales,
exchanges, transfers, dividend reinvestments, and
other Fund share activity as reported by the
transfer agent on a timely basis.
(2) Apply equalization accounting as
directed by the Company.
(3) Determine net investment income
(earnings) for the Fund as of each valuation date.
Account for periodic distributions of earnings to
shareholders and maintain undistributed net
investment income balances as of each valuation
date.
(4) Maintain a general ledger and other
accounts, books, and financial records for the
Fund in the form as agreed upon.
(5) Determine the net asset value of the
Fund according to the accounting policies and
procedures set forth in the Fund's Prospectus.
(6) Calculate per share net asset value, per
share net earnings, and other per share amounts
reflective of Fund operations at such time as
required by the nature and characteristics of the
Fund.
(7) Communicate, at an agreed upon time, the
per share price for each valuation date to parties
as agreed upon from time to time.
<PAGE>
(8) Prepare monthly reports which document
the adequacy of accounting detail to support month-
end ledger balances.
D. Tax Accounting Services:
(1) Maintain accounting records for the
investment portfolio of the Fund to support the
tax reporting required for IRS-defined regulated
investment companies.
(2) Maintain tax lot detail for the investment portfolio.
(3) Calculate taxable gain/loss on security
sales using the tax lot relief method designated
by the Company.
(4) Provide the necessary financial
information to support the taxable components of
income and capital gains distributions to the
transfer agent to support tax reporting to the
shareholders.
E. Compliance Control Services:
(1) Support reporting to regulatory bodies
and support financial statement preparation by
making the Fund's accounting records available to
the Company, the Securities and Exchange
Commission, and the outside auditors.
(2) Maintain accounting records according to
the 1940 Act and regulations provided thereunder.
3. Pricing of Securities
For each valuation date, obtain prices from a
pricing source selected by Firstar but approved by the
Company's Board of Directors and apply those prices to
the portfolio positions of the Fund. For those
securities where market quotations are not readily
available, the Company's Board of Directors shall
approve, in good faith, the method for determining the
fair value for such securities.
If the Company desires to provide a price which
varies from the pricing source, the Company shall
promptly notify and supply Firstar with the valuation
of any such security on each valuation date. All
pricing changes made by the Company will be in writing
and must specifically identify the securities to be
changed by CUSIP, name of security, new price or rate
to be applied, and, if applicable, the time period for
which the new price(s) is/are effective.
<PAGE>
4. Changes in Accounting Procedures
Any resolution passed by the Board of Directors of
the Company that affects accounting practices and
procedures under this Agreement shall be effective upon
written receipt and acceptance by the Firstar.
5. Changes in Equipment, Systems, Service, Etc.
Firstar reserves the right to make changes from
time to time, as it deems advisable, relating to its
services, systems, programs, rules, operating schedules
and equipment, so long as such changes do not adversely
affect the service provided to the Company under this
Agreement.
6. Compensation
Firstar shall be compensated for providing the
services set forth in this Agreement in accordance with
the Fee Schedule attached hereto as Exhibit A and as
mutually agreed upon and amended from time to time.
The Company agrees to pay all fees and reimbursable
expenses within ten (10) business days following the
receipt of the billing notice.
7. Performance of Service; Limitation of Liability
A. Firstar shall exercise reasonable care
in the performance of its duties under this
Agreement. Firstar shall not be liable for any
error of judgment or mistake of law or for any
loss suffered by the Company in connection with
matters to which this Agreement relates, including
losses resulting from mechanical breakdowns or the
failure of communication or power supplies beyond
Firstar's control, except a loss resulting from
Firstar's refusal or failure to comply with the
terms of this Agreement or from bad faith,
negligence, or willful misconduct on its part in
the performance of its duties under this
Agreement. Notwithstanding any other provision of
this Agreement, the Company shall indemnify and
hold harmless Firstar from and against any and all
claims, demands, losses, expenses, and liabilities
(whether with or without basis in fact or law) of
any and every nature (including reasonable
attorneys' fees) which Firstar may sustain or
incur or which may be asserted against Firstar by
any person arising out of any action taken or
omitted to be taken by it in performing the
services hereunder (i) in accordance with the
foregoing standards, or (ii) in reliance upon any
written or oral instruction provided to Firstar by
any duly authorized officer of the Company, such
duly authorized officer to be included in a list
of authorized officers furnished to Firstar and as
amended from time to time in writing by resolution
of the Board of Directors of the Company.
Firstar shall indemnify and hold the Company
harmless from and against any and all claims,
demands, losses, expenses, and liabilities
(whether with or without basis in fact or law) of
any and every nature (including reasonable
attorneys' fees) which the Company may sustain or
incur or which may be asserted against the Company
by any person arising out of any action taken or
omitted to be taken by Firstar as a result of
<PAGE>
Firstar's refusal or failure to comply with the
terms of this Agreement, its bad faith,
negligence, or willful misconduct.
In the event of a mechanical breakdown or
failure of communication or power supplies beyond
its control, Firstar shall take all reasonable
steps to minimize service interruptions for any
period that such interruption continues beyond
Firstar's control. Firstar will make every
reasonable effort to restore any lost or damaged
data and correct any errors resulting from such a
breakdown at the expense of Firstar. Firstar
agrees that it shall, at all times, have
reasonable contingency plans with appropriate
parties, making reasonable provision for emergency
use of electrical data processing equipment to the
extent appropriate equipment is available.
Representatives of the Company shall be entitled
to inspect Firstar's premises and operating
capabilities at any time during regular business
hours of Firstar, upon reasonable notice to
Firstar.
Regardless of the above, Firstar reserves the
right to reprocess and correct administrative
errors at its own expense.
B. In order that the indemnification
provisions contained in this section shall apply,
it is understood that if in any case the
indemnitor may be asked to indemnify or hold the
indemnitee harmless, the indemnitor shall be fully
and promptly advised of all pertinent facts
concerning the situation in question, and it is
further understood that the indemnitee will use
all reasonable care to notify the indemnitor
promptly concerning any situation which presents
or appears likely to present the probability of a
claim for indemnification. The indemnitor shall
have the option to defend the indemnitee against
any claim which may be the subject of this
indemnification. In the event that the indemnitor
so elects, it will so notify the indemnitee and
thereupon the indemnitor shall take over complete
defense of the claim, and the indemnitee shall in
such situation initiate no further legal or other
expenses for which it shall seek indemnification
under this section. Indemnitee shall in no case
confess any claim or make any compromise in any
case in which the indemnitor will be asked to
indemnify the indemnitee except with the
indemnitor's prior written consent.
8. No Agency Relationship
Nothing herein contained shall be deemed to
authorize or empower Firstar to act as agent for the
other party to this Agreement, or to conduct business
in the name of, or for the account of the other party
to this Agreement.
9. Records
Firstar shall keep records relating to the
services to be performed hereunder, in the form and
manner, and for such period as it may deem advisable
and is agreeable to the Company but not inconsistent
with the rules and regulations of appropriate
government authorities, in particular, Section 31 of
the 1940 Act, and the rules thereunder. Firstar agrees
that all such records prepared or maintained by Firstar
relating to the services to be performed by Firstar
<PAGE>
hereunder are the property of the Company and will be
preserved, maintained, and made available in accordance
with such section and rules of the 1940 Act and will be
promptly surrendered to the Company on and in
accordance with its request.
10. Data Necessary to Perform Services
The Company or its agent, which may be Firstar,
shall furnish to Firstar the data necessary to perform
the services described herein at such times and in such
form as mutually agreed upon. If Firstar is also
acting as the transfer agent for the Company, nothing
herein shall be deemed to relieve Firstar of any of its
obligations under the Transfer Agent Servicing
Agreement.
11. Notification of Error
The Company will notify Firstar of any balancing
or control error caused by Firstar within three (3)
business days after receipt of any reports rendered by
Firstar to the Company, or within three (3) business
days after discovery of any error or omission not
covered in the balancing or control procedure, or
within three (3) business days of receiving notice from
any shareholder.
12. Proprietary and Confidential Information
Firstar agrees on behalf of itself and its
directors, officers, and employees to treat
confidentially and as proprietary information of the
Company all records and other information relative to
the Company and prior, present, or potential
shareholders of the Company (and clients of said
shareholders), and not to use such records and
information for any purpose other than the performance
of its responsibilities and duties hereunder, except
after prior notification to and approval in writing by
the Company, which approval shall not be unreasonably
withheld and may not be withheld where Firstar may be
exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such
information by duly constituted authorities, or when so
requested by the Company.
13. Term of Agreement
This Agreement shall become effective as of the
date hereof and, unless sooner terminated as provided
herein, shall continue automatically in effect for
successive annual periods. This Agreement may be
terminated by either party upon giving ninety (90) days
prior written notice to the other party or such shorter
period as is mutually agreed upon by the parties.
However, this Agreement may be replaced or modified by
a subsequent agreement between the parties.
If the Company elects to terminate this Agreement
prior to the one year anniversary date of this
Agreement, for reasons other than unacceptable service
levels, the Company agrees to reimburse Firstar for the
difference between the termination date and the
anniversary date in annual fees based on the current
annual fees of the Company.
<PAGE>
14. Notices
Notices of any kind to be given by either party to
the other party shall be in writing and shall be duly
given if mailed or delivered as follows: Notice to
Firstar shall be sent to:
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
and notice to the Company shall be sent to:
Grand Prix Funds, Inc.
Wilton Executive Campus
15 River Road, Suite 220
Wilton, CT 06897
Attn: Corporate Secretary
15. Duties in the Event of Termination
In the event that in connection with termination,
a successor to any of Firstar's duties or
responsibilities hereunder is designated by the Company
by written notice to Firstar, Firstar will promptly,
upon such termination and at the expense of the Company
transfer to such successor all relevant books, records,
correspondence and other data established or maintained
by Firstar under this Agreement in a form reasonably
acceptable to the Company (if such form differs from
the form in which Firstar has maintained the same, the
Company shall pay any expenses associated with
transferring the same to such form), and will cooperate
in the transfer of such duties and responsibilities,
including provision for assistance from Firstar's
personnel in the establishment of books, records and
other data by such successor.
16. Governing Law
This Agreement shall be construed in accordance
with the laws of the State of Wisconsin. However,
nothing herein shall be construed in a manner
inconsistent with the 1940 Act or any rule or
regulation promulgated by the SEC thereunder.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by a duly authorized
officer in one or more counterparts as of the day and
year first written above.
GRAND PRIX FUNDS, INC. FIRSTAR MUTUAL FUND
SERVICES, LLC
By: /s/ Robert Zuccaro By: /s/ Paul Rock
-------------------- ------------------
Its: President Its: Senior Vice President
-------------------- -------------------------
<PAGE>
Fund Accounting Services
Annual Fee Schedule
Exhibit A
Separate Series of Grand Prix Funds, Inc.
Name of Series Date Added
Grand Prix Fund August 2, 1999
Class A
Class C
Domestic Equity Funds
$22,000 for the first $40 million
1 basis point on the next $200 million
1/2 basis point on the balance
Each class is an additional 25% of the charge
of the initial class.
Fees and out-of-pocket expenses are billed to the Fund monthly.
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the
captions "Financial Highlights", "Independent
Auditors" and "Financial Statements" and to the
incorporation by reference of our report dated November
30, 1998 in the Registration Statement (Form N-1A) and
related Prospectus of Grand Prix Funds, Inc. filed with
the Securities and Exchange Commission in this Post-
Effective Amendment No. 6 to the Registration Statement
under the Securities Act of 1933 (File No. 333-39133)
and in this Amendment No. 8 to the Registration
Statement under the Investment Company Act of 1940
(File No. 811-8461).
/s/ Ernst & Young LLP
Milwaukee, Wisconsin
July 28, 1999
GRAND PRIX FUNDS, INC.
GRAND PRIX FUND
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN, AS AMENDED
ON JULY 13, 1999
CLASS A SHARES
The following Distribution and Shareholder
Servicing Plan, as amended (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"), a series of the Corporation. 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 considering whether the Corporation should
amend the Plan, the Board of Directors evaluated such
information as it deemed necessary and determined that
there was a reasonable likelihood that the amendment of
the Plan would 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 Corporation, on behalf of the Fund,
will pay T.O. Richardson Securities, Inc. (the
"Distributor"), as principal underwriter of the
Fund's shares, a distribution and shareholder
servicing fee which will not exceed 0.25% of the
average daily net assets of the Fund in connection
with the promotion and distribution of Fund shares
and the provision of personal services to
shareholders. The Distributor 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. Payment of these fees shall
be made promptly following the close of the
quarter for which the fee is payable, upon the
Distributor or its agent 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 Distributor 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 Distributor to the
Corporation's Board of Directors as required under
Section 2 of this Plan.
<PAGE>
(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 a
majority 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 Fund's
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 Distributor or its agent 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, without
<PAGE>
the payment of any penalty, by a
majority vote of the Fund's 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 Corporation on behalf of the Fund
without the approval by a majority vote of the
Fund's shareholders.
6. CLASS A SHARES
Effective August 2, 1999, the Fund will offer
Class A and Class C shares. This Plan shall apply
solely to the Class A shares as of August 2, 1999.
7. RECORDKEEPING
The Corporation shall preserve copies of the
Plan, any Rule 12b-1 Related Agreement and all
reports made pursuant to Section 2 for a period of
not less than six years from the date of this
Plan, the first two years in an easily accessible
place.
APPENDIX A
Rule 12b-1 Related Agreement, as Amended
-------------, 1999
[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, as amended, (the "Plan") adopted by Grand Prix
Funds, Inc. (the "Company"), with respect to the Class
A shares 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 Company, including a majority of the Board of
Directors who are not "interested persons" of the
Company, 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 there was a reasonable
likelihood that the Plan would benefit the Fund and the
Class A shareholders of the Fund.
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's Class A shares (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 Company
or its agent, designate your firm as the customer's
dealer or service provider of record. We reserve
<PAGE>
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 of the Class A shares, which determination shall
be made in the manner specified in the current
Prospectus relating to such shares, and pay to you, on
the basis of such determination, the fee specified
above, to the extent permitted under the Plan. Payment
of such fee shall be made promptly after the close of
each month for which such fees are payable. No such
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 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.
2. You shall furnish us with such information as
shall reasonably be requested by the Board of Directors
of the Company, 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 (i) by the vote of a majority of the
Disinterested Directors or by the vote of a majority of
the outstanding Class A shares of the Fund, on sixty
(60) days' written notice, without payment of any
penalty or (ii) by any act which terminates the Plan.
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 Company 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 to you at the address specified by you below.
<PAGE>
T.O. RICHARDSON SECURITIES, INC.
on behalf of the Grand Prix Fund
Class A Shares
By:_________________________________
(Name and Title)
Accepted:
_______________________________________
(Dealer or Service Provider Name)
_______________________________________
(Street Address)
_______________________________________
(City) (State) (ZIP)
________________________________________
(Telephone No.)
________________________________________
(Facsimile No.)
By:_________________________________
(Name and Title)
GRAND PRIX FUNDS, INC.
GRAND PRIX FUND
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN
CLASS C SHARES
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, by Grand Prix Funds, Inc. (the "Company"),
a Maryland corporation, on behalf of the Class C shares
of the Grand Prix Fund (the "Fund"). The Plan has been
approved by a majority of the Company's Board of
Directors, including a majority of the directors who
are not interested persons of the Company 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 considering whether the Company should adopt
the Plan, the Board of Directors of the Company
evaluated such information as it deemed necessary and
determined that there was a reasonable likelihood that
the adoption of the Plan would benefit the Company and
the Class C shareholders of each Fund.
The provisions of the Plan are as follows:
1. PAYMENTS BY THE COMPANY TO PROMOTE THE SALE OF,
AND TO SERVICE, THE CLASS C SHARES
(a) The Company, on behalf of the Class C
shares of the Fund, will pay T.O. Richardson
Securities, Inc. (the "Distributor"), as principal
underwriter of the Fund's shares, a distribution
fee of up to 0.75% per annum of the average daily
net assets of the Class C shares and a service fee
of up to 0.25% per annum of the average daily net
assets of the Class C shares. Such fees shall be
paid for services rendered in connection with the
promotion and distribution of the Fund's Class C
shares and the provision of personal services to
holders of such shares, including, but not
necessarily limited to, advertising, compensation
to underwriters, dealers and seller personnel, the
printing and mailing of prospectuses to other than
current Class C shareholders of the Fund, and the
printing and mailing of sales literature. The
Distributor may pay all or a portion of the
distribution and/or service fee to any securities
dealer, financial institution or any other person
(the "Recipient") who renders assistance in
distributing or promoting the sale of the Class C
shares or who provides certain shareholder
services to Class C shareholders pursuant to a
written agreement (the "Rule 12b-1 Related
Agreement"), a form of which is attached hereto as
Appendix A. Payment of the distribution and
service fee shall be made promptly following the
end of each month, provided that the aggregate
payments by the Company on behalf of the Fund's
Class C shares shall not exceed 1.00% per annum of
the average net assets of the Class C shares.
<PAGE>
(b) No Rule 12b-1 Related Agreement shall be
entered into with respect to the Fund, 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 Board of Directors of the Company, and of a
majority 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 the Rule 12b-1 Related Agreement attached
hereto as Appendix A has been approved by the
Company'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 with respect to the Fund at any time,
without the payment of any penalty, by vote of a
majority of the Disinterested Directors or by vote
of a majority of the outstanding voting securities
of the Class C shares of the Fund 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 of the Company, 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 Distributor or its agent shall provide to
the Board of Directors, and the Board of 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 as of August
2, 1999, assuming prior 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 with respect to a
<PAGE>
Fund at any time, without the payment of any penalty,
by the vote of (a) a majority of the Disinterested
Directors or (b) a majority of the outstanding
voting securities of the Class C shares.
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
Company 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 of the Company,
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
spent by the Company, on behalf of the Class C
shares, without approval by a majority of the
outstanding voting securities of the Class C
shares.
6. RECORDKEEPING
The Company shall preserve copies of the
Plan, any Rule 12b-1 Related Agreement and all
reports made pursuant to Section 2 for a period of
not less than six years from the date of this
Plan, the first two years in an easily accessible
place.
APPENDIX A
Rule 12b-1 Related Agreement
____________, 199__
[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 servicing plan (the
"Plan") adopted by Grand Prix Funds, Inc. (the
"Company") pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "Act"), with
respect to the Class C shares of the Grand Prix Fund
(the "Fund"), a series of the Company. 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 Company, including a majority
of the Board of Directors who are not "interested
persons" of the Company, 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 of the Company that there was
a reasonable likelihood that the Plan would benefit the
Company and the Class C shareholders of the Fund.
1(a). To compensate you for distribution and
marketing services in the promotion of the Fund's Class
C shares, we shall pay you a distribution fee of up to
0.75% per annum of the average daily net assets of the
Fund's Class C shares 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 Company or its agent, designate your
firm as the customer's dealer of record. We reserve
the right to increase, decrease or discontinue the
distribution fee at any time in our sole discretion
upon written notice to you.
(b). To compensate you for providing personal
services to holders of the Fund's Class C shares,
including furnishing services and assistance to your
customers who invest in and own such class of shares,
answering routine inquiries regarding the Fund and the
Class C shares and
<PAGE>
assisting in changing account
designations and addresses, we shall pay to you a
service fee of up to 0.25% per annum of the average
daily net assets of the Fund's Class C shares 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 Company or its
agent, designate your firm as the customer's dealer of
record. We reserve the right to increase, decrease or
discontinue the service fee at any time in our sole
discretion upon written notice to you.
(c). We shall make the determination of the net
asset value of the Class C shares, which determination
shall be made in the manner specified in the current
Prospectus relating to such shares, and pay to you, on
the basis of such determination, the fees specified
above, to the extent permitted under the Plan. Payment
of such fees shall be made promptly after the close of
each month for which such fees are payable. No such
fees 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 fees will be paid to you with
respect to any of your customers if the amount of such
fees based upon the value of such customer's Class C
shares will be less than $25.00.
2. You shall furnish us with such information as
shall reasonably be requested by the Board of Directors
of the Company 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 and the purposes
for which such expenditures were made.
4. This Rule 12b-1 Related Agreement may be
terminated (i) by the vote of a majority of the
Disinterested Directors or by the vote of a majority of
the outstanding Class C shares of the Fund on sixty
(60) days' written notice, without payment of any
penalty or (ii) by any act which terminates the Plan.
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 Company and of the
Disinterested Directors, cast in person at a meeting
called for the purpose of voting thereon. All communi
cations to us should be sent to the above address. Any
notice to you shall be duly given if mailed to you at
the address specified by you below.
<PAGE>
T.O. RICHARDSON SECURITIES, INC.
on behalf of the Grand Prix Fund
Class C shares
By: ______________________
(Name and Title)
Accepted:
_______________________________
(Dealer or Service Provider Name)
______________________________
(Street Address)
________________________________________
(City) (State) (ZIP)
_________________________
(Telephone No.)
_________________________
(Facsimile No.)
By:______________________
(Name and Title)
GRAND PRIX FUNDS, INC.
RULE 18f-3
MULTIPLE CLASS PLAN
Grand Prix Funds, Inc. (the "Company"), a
registered investment company currently consisting of
the Grand Prix Fund (the "Fund"), has elected to rely
on Rule 18f-3 under the Investment Company Act of 1940,
as amended (the "1940 Act"), in offering multiple
classes of shares of the Fund. A majority of the Board
of Directors of the Company, including a majority of
the directors who are not interested persons of the
Company, has determined in accordance with Rule 18f-
3(d) that the following plan (the "Plan") is in the
best interests of each class individually and the
Company as a whole:
1. Class Designation. Fund shares will be designated
either Class A or Class C.
2. Class Characteristics. Each class of shares will
represent interests in the same portfolio of
investments and will be identical in all respects to
the other class, except as set forth below:
Class A: Class A shares will be offered for
sale at net asset value per share
plus a maximum initial sales charge
of 5.25%. Class A shares are
subject to a distribution plan
adopted pursuant to Rule 12b-1
under the 1940 Act which provides
for an annual distribution fee of
up to 0.25% of the average daily
net assets of the Fund attributable
to Class A shares, computed on an
annual basis. The distribution
plan fees for the Class A shares
will be used to pay the Fund's
distributor or others who render
assistance in distributing or
promoting Class A shares, a
distribution and shareholder
servicing fee of up to 0.25%.
Class C: Class C shares will be offered for
sale at net asset value per share
plus a maximum initial sales charge
of 1.00%. Class C shares will be
subject to a distribution plan
adopted pursuant to Rule 12b-1
under the 1940 Act which provides
for an annual distribution fee of
1.00% of the average daily net
assets of the Fund attributable to
Class C shares, computed on an
annual basis. The distribution
plan fees for the Class C shares
will be used to compensate the
distributor, selling broker-dealers
or others who render assistance in
distributing or promoting Class C
shares or for providing shareholder
services.
3. Expense Allocations. The following expenses will
be allocated on a class-by-class basis, to the extent
practicable: (i) fees under the distribution plan
adopted pursuant to Rule
<PAGE>
12b-1 under the 1940 Act; (ii)
accounting, auditor, litigation or other legal expenses
relating solely to a particular class; and (iii)
expenses incurred in connection with shareholder
meetings as a result of issues relating to a particular
class. Income, realized and unrealized capital gains
and losses, and expenses of the Fund not allocated to a
particular class will be allocated on the basis of the
net asset value of each class in relation to the net
asset value of the Fund. Notwithstanding the
foregoing, a service provider for the Fund may waive or
reimburse the expenses of a specific class or classes
to the extent permitted under Rule 18f-3 of the 1940
Act.
4. Exchanges and Conversions. There are no
conversion features associated with the Class A or
Class C shares.
5. General. Each class will have exclusive voting
rights with respect to any matter related solely to
such class's Rule 18f-3 arrangements. Each class will
have separate voting rights with respect to any matter
submitted to shareholders in which the interests of one
class differ from the interests of the other class.
Each class will have in all other respects the same
rights and obligations as each other class. On an
ongoing basis, the Board of Directors will monitor the
Plan for any material conflicts between the interests
of the classes of shares. The Board of Directors will
take such action as is reasonably necessary to
eliminate any conflict that develops. The Fund's
investment adviser and distributor will be responsible
for alerting the Board of Directors to any material
conflicts that may arise. Any material amendment to
this Plan must be approved by a majority of the Board
of Directors, including a majority of the directors who
are not interested persons of the Company, as defined
in the 1940 Act. This Plan is qualified by and subject
to the then current prospectus for the applicable
class, which contains additional information about that
class.
