As filed with the Securities and Exchange Commission on October 23, 1998
1940 Act Registration No. 811-08819
1933 Act Registration No. 333-56771
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. 1 [X]
---
Post-Effective Amendment No. ___ [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 1 [X]
GOLF ASSOCIATED FUND
(Exact name of registrant as specified in charter)
2801 Ocean Drive, Suite 204
Vero Beach, Florida 32963
(Address of principal executive offices)
Registrant's telephone number, including area code: 561-231-5800
Michael T. Williams
2801 Ocean Drive, Suite 204
Vero Beach, Florida 32963
(Name and address of agent for service)
Copies to:
Robert J. Zutz, Esq.
Francine J. Rosenberger, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W., 2nd Floor
Washington, D.C. 20036-1800
Telephone: (202) 778-9000
Approximate Date of Proposed Public Offering: As soon as practicable after
the effective date of this Registration Statement.
Title of Securities Being Registered: Shares of Beneficial Interest.
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
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GOLF ASSOCIATED FUND
CONTENTS OF REGISTRATION STATEMENT
This registration document is comprised of the following:
Cover Sheet
Contents of Registration Statement
Prospectus
Statement of Additional Information
Part C of Form N-1A
Signature Page
Exhibits
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SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED ___________, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
GOLF ASSOCIATED FUND
(LOGO)
PROSPECTUS
2801 Ocean Drive, Suite 204
Vero Beach, Florida 32963
toll free (877) 745-GOLF or -4653
The Golf Associated Fund (the "Fund") is an open-end management investment
company, or mutual fund. The Fund's objective is to seek long-term growth of
capital. Income is an incidental consideration. The Fund will strive to achieve
its objective by investing primarily in equity securities of companies that are
involved in or associated with the golf industry ("Golf Investments") and that
offer the potential for capital appreciation. Golf Investments companies may not
be involved in the golf industry other than as sponsors, advertisers, marketers
and media. These companies also may only spend a small portion of their overall
budgets on such activities.
The Fund offers Class A shares (sold subject to a 5.75% maximum front-end
sales charge) and Class B shares (sold subject to a maximum 5.0% contingent
deferred sales charge, declining over a six-year period). The Fund requires a
minimum initial investment of $1,000, except for certain investment plans for
which lower limits may apply.
Golf Investment Management, Inc. serves as the investment adviser
("Adviser") to the Fund. Wallington Asset Management, Inc. serves as
investment subadviser ("Subadviser") to the Fund.
You should read this Prospectus and retain it for future reference. This
Prospectus is designed to set forth concisely the information about the Fund you
should consider before investing. A Statement of Additional Information (`SAI"),
dated _______ __, 1998, containing additional information about the Fund, has
been filed with the Securities and Exchange Commission ("SEC") and is
incorporated herein by reference. You may request a copy of the SAI, without
charge, by contacting the Fund at the address or telephone number above.
The SEC maintains an Internet Website (http://www.sec.gov) that contains
the SAI, material incorporated by reference and other information regarding the
Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PROSPECTUS DATED _____________ __, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
OVERVIEW OF THE FUND.........................................................3
FEES AND EXPENSES OF THE FUND................................................3
ABOUT THE GOLF ASSOCIATED FUND...............................................5
PORTFOLIO TRANSACTIONS AND BROKERAGE.........................................7
BEFORE INVESTING: ALTERNATIVE PURCHASE PLANS.................................7
HOW TO INVEST IN THE FUND....................................................8
WHAT CLASS A SHARES WILL COST...............................................10
WHAT CLASS B SHARES WILL COST...............................................11
HOW TO SELL SHARES..........................................................12
DETERMINATION OF NET ASSET VALUE............................................14
PERFORMANCE INFORMATION.....................................................15
MANAGEMENT AND ADMINISTRATION OF THE FUND...................................16
DISTRIBUTION PLANS..........................................................17
DIVIDENDS AND OTHER DISTRIBUTIONS...........................................17
TAXES.......................................................................18
GENERAL INFORMATION ABOUT THE FUND..........................................19
APPENDIX A - INVESTMENT TECHNIQUES..........................................21
2
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OVERVIEW OF THE FUND
WHAT IS THE GOLF ASSOCIATED FUND'S INVESTMENT OBJECTIVE?
The Fund seeks to provide long-term growth of capital. Income is an
incidental consideration. To achieve its objective, the Fund invests primarily
in equity securities of companies that are involved in or associated with the
golf industry and that offer the potential for capital appreciation. The Adviser
believes that Golf Investments offer a wide range of potential investments that
fit the Fund's objective of long-term growth of capital and allow an investor to
support those companies which support or are involved in the golf industry.
There can be no assurance that the Fund will be able to achieve its investment
objective. For a further discussion of the Fund's investment objective and
policies and the risks associated with investing in the Fund, see "Investment
Objective and Policies" below.
WHAT ARE SOME OF THE RISKS OF INVESTING IN THE FUND?
The price of Fund shares will fluctuate as the daily price of the
securities in which the Fund invests fluctuate. As a result, your shares may be
worth more or less than your original investment. Golf Investments may involve
significantly greater risks and therefore the Fund may experience greater
volatility than a mutual fund that does not concentrate its investments. The
Fund's performance will be closely tied to and affected by the golf industry, to
the extent that the Fund invests in such companies. By itself, the Fund does not
constitute a balanced investment program.
HOW DO I INVEST IN THE FUND?
You may purchase Fund shares through your broker-dealer or directly from
the Fund by completing and signing the account application found in this
Prospectus. The minimum initial investment is $1,000 or $250 for retirement
accounts. The Fund offers investors an option of purchasing Class A shares or
Class B shares. Class A shares are offered at net asset value per share plus a
maximum initial sales charge of 5.75% of the offering price. Class B shares are
offered at net asset value per share, but are charged a 5% maximum contingent
deferred sales charge ("CDSC") on amounts redeemed within six years of purchase.
See "How to Invest in the Fund," "What Class A Shares Will Cost" and "What Class
B Shares Will Cost."
HOW DO I SELL MY SHARES OF THE FUND?
Fund shares may be sold back to the Fund at the net asset value, less the
applicable CDSC on Class B shares, next determined after receipt of your sales
request by the Fund's transfer agent, PFPC Inc. ("Transfer Agent") in good
order. You may sell your shares by contacting your broker-dealer, by telephone
or by written request. See "How to Sell Shares."
WHO IS THE FUND'S INVESTMENT ADVISER?
Golf Investment Management, Inc. serves as the investment adviser to
the Fund. Wallington Asset Management, Inc. serves as the investment
subadviser to the Fund.
FEES AND EXPENSES OF THE FUND
The following tables are intended to assist you in understanding the
expenses associated with investing in each class of shares of the Fund. Because
the Fund's shares were not offered for sale prior to the date of this
Prospectus, "Other Expenses" are based on estimated expenses.
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SHAREHOLDER TRANSACTION EXPENSES:
CLASS A CLASS B
Maximum Sales Charge Imposed on Purchases
(as a % of offering price) 5.75% None
Maximum Contingent Deferred Sales Charge
(as a % of original purchase price or None 5%*
redemption proceeds, whichever is
lower)
Wire Redemption Fee (per transaction) $12.00 $12.00
----------
* Declining over a six-year period as follows: 5% during the first year,
4% during the second year, 3% during the third and fourth years, 2%
during the fifth year, 1% during the sixth year and 0% thereafter.
Class B shares will convert to Class A shares eight years after
purchase. See "What Class B Shares Will Cost" below for a further
discussion.
ANNUAL FUND OPERATING EXPENSES:
CLASS A CLASS B
Management Fees 1.00% 1.00%
12b-1 Fees 0.25% 1.00%
Other Expenses (after reimbursement) 0.45% 0.45%
----- -----
Total Fund Operating Expenses
(after fee waiver and reimbursement) 1.70% 2.45%
===== =====
The Adviser voluntarily has agreed to waive all or a portion of its fees
and to reimburse certain expenses to the extent that Class A and Class B annual
operating expenses exceed 1.70% and 2.45%, respectively, of that class' average
daily net assets for the fiscal year ending October 31, 1999. Any reduction in
the Adviser's fee is subject to reimbursement by the Fund within the following
three years, to the extent that such reimbursement would not cause total
operating expenses to exceed 1.70% for Class A shares and 2.45% for Class B
shares. In subsequent years, overall expenses for the Fund may not fall below
the percentage limitations until the Adviser has been fully reimbursed for fees
foregone or expenses it paid under the investment advisory agreement.
EXAMPLE OF THE EFFECT OF FUND EXPENSES:
The impact of Fund operating expenses on earnings is illustrated in the
example below assuming a hypothetical investment of $1,000 in the Fund and a 5%
annual return. An investor in the Fund would pay transaction and operating
expenses at the end of each period as follows:
1 YEAR 3 YEARS
Class A Shares ........................... $74 $108
Class B Shares (assuming sale of all shares
at end of period) ..................... $75 $106
Class B Shares (assuming no sale of shares) $25 $76
This is an illustration only and should not be considered a representation
of future expenses. ACTUAL EXPENSES AND PERFORMANCE MAY BE GREATER OR LESS THAN
THAT SHOWN ABOVE. The purpose of the above tables is to assist investors in
understanding the various costs and expenses that will be borne directly or
indirectly by shareholders. Due to the imposition of Rule 12b-1 fees, it is
possible that long-term shareholders of the Fund may pay more in total sales
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charges than the economic equivalent of the maximum front-end sales charge
permitted by the rules of the National Association of Securities Dealers, Inc.
For a further discussion of these costs and expenses, see "Distribution Plans."
ABOUT THE GOLF ASSOCIATED FUND
INVESTMENT OBJECTIVE. The investment objective of the Fund is to
achieve long-term growth of capital. Income is an incidental consideration.
INVESTMENT STRATEGIES AND POLICIES. The Fund will strive to achieve its
objective by investing primarily in equity securities of companies that are
involved in or associated with the golf industry ("Golf Investments") and that
offer the potential for capital appreciation. Golf Investments include
investments in companies that (1) manufacture, distribute, wholesale or retail
golf equipment, golf apparel, chemicals and fertilizers used on golf courses,
(2) provide services to golf facilities and events, (3) host or sponsor golf
events; (4) serve as licensees or marketing partners of golf tours; (5) manage
or own golf facilities, (6) design or develop golf courses, or (7) provide
programming or produce magazines regarding golf events. The companies who are
sponsors, advertisers, marketers and media otherwise may not be involved in the
Golf industry other than as sponsors, advertisers and marketers. In addition,
they may spend only a small portion of their overall budgets on such activities.
The Adviser believes that Golf Investments offer a wide range of potential
investments for the Fund that fit the Fund's objective of long-term growth of
capital and allow an investor to support those companies that support or are
involved in the Golf industry.
The investment philosophy of the Fund is to accumulate a diversified
portfolio of Golf Investments. The Fund may diversify its holdings among many
different companies and industries that meet the Adviser's definition of Golf
Investments. The Fund will seek to invest primarily in the equity securities of
companies that the Subadviser believes will offer the potential for superior
long-term growth. The Subadviser will purchase securities when it believes the
market is underestimating the future potential of the company and sell those
securities when it believes the market is overestimating the future potential of
the company. The Subadviser will focus on applying a disciplined and
valuation-oriented approach. This approach is based on valuation factors such
as, but not limited to, price-to-earnings ratio, price-to-book ratio and
price-to-cash flow ratio. Additional fundamental factors incorporated in the
analysis of specific equity positions include quality of management, projected
earnings growth and quality of those earnings. Balance sheet items also are
evaluated to determine the inherent financial condition of each company.
Under normal market conditions, the Fund will invest at least 65% of its
total assets in equity securities of Golf Investments. Equity securities include
common stocks, preferred stocks and securities that are convertible into common
stocks such as rights and warrants. The Fund may invest up to 35% of its total
assets in equity securities that are not related to or associated with the Golf
industry and in investment-grade debt securities, U.S. government securities,
repurchase agreements or other short-term money market instruments. Until the
Fund has sufficient assets under management, the Fund may not be able to meet
these investment limitations.
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The Fund may invest up to 15% of its total assets in foreign securities
and American Depository Receipts ("ADRs"). The Fund also may invest up to 15% of
its net assets in illiquid securities, including restricted securities. The Fund
may invest in shares of other investment companies to the extent permitted by
the Investment Company Act of 1940, as amended (the "1940 Act"). In addition,
for temporary defensive purposes, the Fund may hold up to 100% of its assets in
cash and high quality short-term fixed income securities. The investment grade
securities in which the Fund can invest include convertible securities and debt
securities that are rated BBB by Standard & Poor's ("S&P") or Baa by Moody's
Investor Services, Inc. ("Moody's"), or deemed to be of comparable quality as
determined by the Subadviser at the time of purchase. The Fund may retain a
security that has been downgraded below investment grade if, in the opinion of
the Subadviser, it is in the Fund's best interest. For a discussion of the
instruments the Fund may use, see Appendix A - Investment Techniques.
The Fund's investment objective and certain investment restrictions are
fundamental policies and may not be changed without the affirmative vote of at
least the majority of the outstanding shares of the Fund, as defined in the 1940
Act. All other investment policies of the Fund not specified as fundamental may
be changed by the Board of Trustees of the Fund ("Trustees" or the "Board")
without shareholder approval. There can be no assurance that the Fund will
achieve its objective.
OTHER INVESTMENT PRACTICES. The Fund may borrow money as a temporary
measure for extraordinary or emergency purposes and to meet redemption requests
without immediately selling portfolio securities. In addition, the Fund may lend
securities to broker-dealers and financial institutions, provided that the
borrower at all times maintains cash collateral in an amount equal to at least
100% of the market value of the securities loaned. Such loans will not be made
if, as a result, the aggregate amount of all outstanding loans by any Fund would
exceed 33 1/3% of its total assets. For a more detailed discussion of these
practices, see the SAI.
RISKS OF INVESTING IN THE FUND. All investment securities are subject to
inherent market risks and fluctuations in value due to earnings, economic and
political conditions and other factors. Thus, the Fund cannot give any assurance
that its investment objective will be achieved. Because the Fund invests
primarily in equity securities, the value of your investment will fluctuate.
GOLF INVESTMENTS. Some of the companies in which the Fund invests may
involve significantly greater risks and, therefore, the Fund's net asset value
may experience greater volatility than a mutual fund that does not concentrate
its investments. The Fund's performance will be tied closely to and affected by
the Golf industry, to the extent that the Fund invests in such companies. The
long-term growth potential for the Golf industry is encouraging due to two
factors: (1) the demographic shifts in the U.S. population and (2) increased
spending on entertainment. Nevertheless, Golf industry securities tend to be
somewhat seasonal, corresponding with interest in golfing activities beginning
in late winter until autumn. By investing in securities of companies that are
ASSOCIATED with the Golf industry in addition to securities of companies
INVOLVED in the Golf industry, the Fund seeks to diversify its holdings in an
attempt to provide steady growth. However, the Fund by itself does not
constitute a balanced investment program.
GENERAL MARKET RISK. The Fund invests primarily in common stocks. The
market risks associated with stocks include the possibility that the entire
market for common stocks could suffer a decline in price over short or extended
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time periods. This could affect the net asset value of your Fund shares. The
U.S. stock market tends to be cyclical, with periods when stock prices generally
rise and periods when stock prices generally decline. In addition, certain
sectors of the market can be more volatile than the general market, creating
greater opportunities, but also greater risks. Thus, while stock markets in
general might rise, the particular market sectors in which the Fund invests
might decline. Thus, the Fund generally will be a suitable investment only for
that portion of your assets that is available for longer-term investment.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Subadviser will place orders to execute securities transactions that
are designed to implement the Fund's investment objective and policies. In
placing such orders, the Subadviser will seek the most favorable price and
efficient execution available. In order to obtain brokerage and research
services, however, a higher commission sometimes may be paid. Brokerage
commissions normally are paid on exchange-traded securities transactions.
When selecting a broker or dealer to execute portfolio transactions, the
Subadviser considers many factors, including the rate of commission or the size
of the broker-dealer's "spread," the size and difficulty of the order, the
nature of the market for the security, operational capabilities of the
broker-dealer and the research, statistical and economic data furnished by the
broker-dealer to the Subadviser.
The Fund normally will not invest for short-term trading purposes.
However, the Fund may sell securities without regard to the length of time they
have been held. In general, the Fund's annual portfolio turnover rate is not
expected to exceed 100%; however, financial market conditions may warrant an
increase above this level.
BEFORE INVESTING: ALTERNATIVE PURCHASE PLANS
Before you invest in the Fund, you must decide which class of shares is
best for you, Class A shares or Class B shares. The Fund offers two classes of
shares, Class A shares and Class B shares, which represent interests in the same
portfolio of securities. Class B shares currently are not available for purchase
from the Fund. The primary difference between these classes lies in their sales
charge structures and ongoing expenses.
o CLASS A SHARES may be purchased at a price equal to their net asset value
per share next determined after receipt of an order, plus a maximum sales
charge of 5.75% imposed at the time of purchase. Ongoing Rule 12b-1 fees
for Class A shares are lower than the ongoing Rule 12b-1 fees for Class B
shares. No CDSC is charged for Class A shares.
o CLASS B SHARES may be purchased at net asset value with no initial sales
charge. As a result, the entire amount of your purchase is invested
immediately. Class B shares are subject to a higher ongoing Rule 12b-1
fees than Class A shares. A maximum CDSC of 5% may be imposed on
redemptions of Class B shares made within six years of purchase. After
eight years, Class B shares convert to Class A shares, which have lower
ongoing Rule 12b-1 fees and no CDSC.
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<PAGE>
FACTORS IN CHOOSING A CLASS OF SHARES. You can invest in the class
of shares that you believe will be most beneficial given the amount you wish to
invest, the length of time you plan to keep the investment and class expenses.
You should consider whether, during the anticipated length of your
intended investment in the Fund, the accumulated ongoing Rule 12b-1 fees plus
the CDSC on Class B shares would exceed the initial sales charge plus
accumulated ongoing Rule 12b-1 fees on Class A shares purchased at the same
time. For short-term investments, Class A shares are subject to higher costs
than Class B shares because of the initial sales charge. For longer investments,
Class A shares are more suitable than Class B shares because Class A shares are
subject to lower ongoing Rule 12b-1 fees. Depending on the number of years you
hold Class A shares, the continuing Rule 12b-1 fees on Class B shares eventually
would exceed the initial sales charge plus the ongoing Rule 12b-1 fees on Class
A shares during the life of your investment.
You might determine that it would be more advantageous to purchase Class B
shares in order to invest all of your purchase payment initially. However, your
investment would remain subject to higher ongoing Rule 12b-1 fees and subject to
a CDSC if you redeem Class B shares during the first six years after purchase.
Another factor to consider is whether the potentially higher yield of Class A
shares due to lower ongoing charges will offset the initial sales charge paid on
such shares.
HOW TO INVEST IN THE FUND
Fund shares are offered at the daily public offering price, which is the
net asset value per share next computed after receipt of the investor's order.
SEE "Determination of Net Asset Value." Class B shares currently are not offered
for sale by the Fund.
MINIMUM INVESTMENT. You may open a Fund account with as little as $1,000.
You may open a Fund account with $250 for individual retirement accounts
("IRAs") or, at the Fund's discretion, a lesser amount for Simplified Employee
Pension Plans ("SEPs"), salary reduction SEPs ("SARSEPs"), SIMPLE IRAs and
qualified or other retirement plans. Automatic investment plans allow you to
open an account with as little as $50, provided you invest at least $600 a year.
PURCHASE PROCEDURES. You may invest in the Fund through your
broker-dealer, by mail or by bank wire transfer. When placing an order to buy
shares, you should specify whether the order is for Class A shares or Class B
shares. All purchase orders that fail to specify a class automatically will be
invested in Class A shares, which include a front-end sales charge. The Fund and
its distributor, Rafferty Capital Markets, Inc. ("Distributor"), reserve the
right to reject any purchase order and to suspend the offering of Fund shares
for a period of time.
THROUGH BROKER-DEALERS. Shares of the Fund may be purchased through
brokers, investment advisers and other financial intermediaries that have
selling agreements with the Distributor. You may be charged a transaction fee or
other fee for their services at the time of purchase.
All purchase orders received by the Transfer Agent prior to the close of
regular trading on the New York Stock Exchange ("NYSE") - generally 4:00 p.m.,
Eastern time - will be executed at that day's offering price. Purchase orders
received by your broker-dealer prior to the close of regular trading on the NYSE
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and transmitted to the Transfer Agent before 5:00 p.m. Eastern time, on that day
also will receive that day's offering price. Otherwise, all purchase orders
accepted after the offering price is determined will be executed at the offering
price determined as of the close of regular trading on the NYSE on the next
trading day.
BY MAIL. You may purchase shares of a Fund directly by completing and
signing the Account Application included with the Prospectus and making out a
check payable to "The Golf Fund". Third party checks will not by accepted by
the Fund. All purchases must be in U.S. Dollars.
Mail the check, along with the completed Account Application, to Golf
Associated Fund, c/o PFPC Inc., P.O. Box 8941, Wilmington, Delaware
19899-9752.
Completed Account Applications and checks also may be sent by overnight or
express mail. To ensure proper delivery, please use the following address: Golf
Associated Fund, c/o PFPC Inc., 400 Bellevue Parkway, Suite 108, Wilmington,
Delaware 19809.
BY BANK WIRE TRANSFER. To establish a new account by wire transfer, please
call the Transfer Agent toll free at (877) 745-GOLF or -4653 to obtain a Fund
account number. You must send a completed Account Application to the Fund at the
above address immediately following the investment. Payment for Fund shares
should be wired through the Federal Reserve System as follows:
PFPC Inc.
c/o PNC Bank
Philadelphia, Pennsylvania
ABA number 031-0000-53
For credit to Purchase Account
Account Number 8601956282
For further credit to Golf Associated Fund
Class of Shares:
Shareholder name:
Shareholder account number:
Your bank may charge a fee for such services. If the purchase is canceled
because your wire transfer is not received, you may be liable for any the loss
the Transfer Agent may incur.
SYSTEMATIC INVESTMENT PROGRAMS. A variety of systematic investment options
are available for the purchase of Fund shares. These options provide for
systematic monthly investments of $50 or more through systematic investing,
payroll or government direct deposit. You may change the amount to be invested
automatically or may discontinue this service at any time without penalty. If
you discontinue this service before reaching the required account minimum, the
account must be brought up to the minimum in order to remain open. You will
receive a periodic confirmation of all activity for your account. For additional
information on these options, see the Account Application or contact the Fund
toll free at (877) 745-GOLF or -4653.
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RETIREMENT PLANS. Fund shares may be purchased as an investment in an IRA
plan. In addition, shares may be purchased as an investment for self-directed
IRAs, Section 403(b) annuity plans, defined contribution plans, self-employed
individual retirement plans ("Keogh Plans"), Simplified Employee Pension Plans
("SEPs"), Savings Incentive Match Plans for Employees ("SIMPLEs") and other
retirement plans. For more detailed information on retirement plans, contact the
Fund toll free at (877) 745-GOLF or -4653.
REDEMPTION OF LOW BALANCE ACCOUNTS. Due to the high cost of maintaining
accounts with low balances, the Fund will redeem shares in any account if the
account balance falls below the required minimum value of $500, except for
retirement accounts. You will be given 30 days' notice to bring your account
balance to the minimum required or the Fund may redeem shares in the account and
pay you the proceeds. The Fund does not apply this minimum account balance
requirement to accounts that fall below the minimum due to market fluctuation.
Accounts established under a Systematic Investment Plan that have been
discontinued prior to meeting the $1,000 minimum are subject to this policy.
SUBSEQUENT INVESTMENTS. Once an account has been opened, subsequent
purchases may be made through your broker-dealer, by mail, by bank wire, by
automatic investing or direct deposit. The minimum for additional investments is
$50 for all accounts.
WHAT CLASS A SHARES WILL COST
The public offering price for Class A shares is the next determined net
asset value per share plus a sales charge determined in accordance with the
following schedule:
<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF
Net Amount Dealer Concession
Offering Invested as Percentage of
AMOUNT OF PURCHASE PRICE (NET ASSET VALUE) OFFERING PRICE(1)
------------------ ----- ---------------- -----------------
<S> <C> <C> <C>
Less than $50,000 ................. 5.75% 6.10% 5.50%
$50,000 but less than $100,000 .... 4.75% 4.99% 4.50%
$100,000 but less than $250,000 ... 3.75% 3.90% 3.50%
$250,000 but less than $500,000 ... 2.75% 2.83% 2.50%
$500,000 but less than $1,000,000 . 2.00% 2.04% 1.75%
$1,000,000 and over ............... 0.00% 0.00% 0.00% (2)
</TABLE>
------------------------------------------------
(1)During certain periods, the Distributor may pay 100% of the sales charge
to participating dealers. Otherwise, it will pay the dealer concession
shown above. The dealer's concession may be changed from time to time.
(2)There is no initial sales charge on purchases of Class A shares for
$1,000,000 or more. However, a 1% contingent deferred sales charge will be
imposed on redemptions of such shares made within 12 months of purchase.
In addition, Class A shares are subject to a Rule 12b-1 fee of 0.25% of
their average daily net assets.
CUMULATIVE PURCHASE PRIVILEGE AND LETTERS OF INTENT. You may purchase
Class A shares at a reduced sales charge through the Cumulative Purchase
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Privilege or by executing a Letter of Intent. For more information, see the SAI,
call your broker-dealer or call the Fund toll free at (877) 745-GOLF or -4653.
WAIVERS OF CLASS A SALES CHARGES. Fund shares may be sold at net asset
value without any sales charge to the: Adviser; Subadviser; officers and
Trustees of the Fund; directors, officers and full-time employees of the Adviser
and the Subadviser and their affiliates; registered representatives and
employees of broker-dealers that are parties to dealer agreements with the
Distributor (or financial institutions that have arrangements with such
broker-dealers); directors, officers and full-time employees of banks that are
party to agency agreements with the Distributor; and all such persons' immediate
relatives and their beneficial accounts. The dealer concession also will be
adjusted in a like manner. Fund shares also may be purchased without sales
charges by investors who participate in certain broker-dealer wrap fee
investment programs.
WHAT CLASS B SHARES WILL COST
Class B shares may be purchased at net asset value without a front-end
sales charge, but are subject to a CDSC on redemptions of Class B shares sold
within six years of purchase. The CDSC is a maximum of 5%, declining over six
years. In addition, Class B shares are subject to a Rule 12b-1 fee of 1.00% of
its average daily net assets. Class B shares are offered for sale only for
purchases of less than $250,000.
The CDSC is based on the original purchase price cost or the current
market value of the shares being sold, whichever is less. The CDSC imposed
depends on the amount of time you have held Class B shares. The longer the time
between the purchase and sale of shares, the lower the rate of the CDSC. If you
own Class B shares for more than six years, you do not have to pay a sales
charge when redeeming those shares.
REDEMPTION DURING: CDSL ON SHARES BEING SOLD
1st year since purchase ............... 5%
2nd year since purchase ............... 4%
3rd year since purchase ............... 3%
4th year since purchase ............... 3%
5th year since purchase ............... 2%
6th year since purchase ............... 1%
Thereafter ............................ 0%
CDSC calculations are based on the number of shares involved, not on the value
of your account. The CDSC will not be imposed on the redemption of Class B
shares acquired as dividends or other distributions, or on any increase in the
net asset value of the redeemed Class B shares above the original purchase
price.
MINIMIZING THE CDSC. When you redeem Class B shares, the Fund
automatically will minimize the CDSC by assuming you are selling:
o First, Class B shares owned through reinvested dividends, upon which
no CDSC is imposed; and
o Second, Class B shares held in the customer's account the longest.
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WAIVER OF THE CONTINGENT DEFERRED SALES CHARGE. Under certain
circumstances, the CDSC for Class B shares will be waived. The CDSC for Class B
shares currently is waived for in the following cases: (1) to make certain
distributions from a retirement plan; (2) because of shareholder death or
disability; or (3) any partial or complete redemption in connection with a
distribution without penalty under Section 72(t) of the Internal Revenue Code of
1986, as amended (the "Code"), from a qualified retirement plan, including a
Keogh Plan or IRA upon attaining age 70 1/2.
The Distributor may require documentation prior to waiver of the CDSC
described above, including distribution letters, certification by plan
administrators, applicable tax forms or death or physicians certificates.
CLASS B SHARE CONVERSION. Class B shares will convert to Class A shares
eight years after the end of the calendar month in which the shareholder's order
to purchase was accepted. The conversion will be effected at the net asset value
per share. Dividends and other distributions paid to shareholders by the Fund in
the form of additional Class B shares also will convert to Class A shares on a
pro rata basis. A conversion from Class B shares to Class A shares will benefit
you because Class A shares have lower ongoing Rule 12b-1 fees than Class B
shares. Such conversion will not be treated as a taxable event.
HOW TO SELL SHARES
GENERAL. You may sell all or any part of your investment by redeeming Fund
shares at the next determined net asset value per share, less any applicable
CDSC, after receipt of your request. The amount you receive will depend on the
market value of the investments in the Fund's portfolio at the time of
determination of net asset value. Shares of the Fund may be redeemed through
your broker-dealer, by written request or by telephone to the Transfer Agent
subject to the procedures described below. When you redeem shares over the
telephone, those redemption proceeds will be sent only to your address of record
or to a bank account specified in your Account Application. In addition,
redemption proceeds may be sent by wire transfer to a bank account specified in
your Account Application. You will be charged $12.00 for wire redemptions to
cover transaction costs.
BY MAIL. You may redeem Fund shares by sending a written request for
redemption to Golf Associated Fund, c/o PFPC Inc., P.O. Box 8941, Wilmington,
Delaware 19899-9752. Any such requests sent overnight or express mail should be
directed to the Golf Associated Fund, c/o PFPC Inc., 400 Bellevue Parkway, Suite
108, Wilmington, Delaware 19809.
If you request payment of sales proceeds to a third party or to a location
other than your address of record or a bank account specified in the Account
Application, your request must be in writing.
In requesting a redemption, you should provide your account name, account
number, the class of shares to be redeemed, the number of or percentage of
shares or the dollar value of shares to be redeemed. In addition, any written
request must be signed by a shareholder and all co-owners of the account with
exactly the same name or names used in establishing the account. Signature
guarantees on any written redemption request and on any certificates of shares
(or an accompanying stock power) will be required on the following types of
requests: redemptions from any account that has had an address change in the
past 30 days, redemptions of greater than $10,000 and redemptions that are sent
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to an address other than the address of record. A signature guarantee may be
obtained from a national bank, a state bank that is insured by the Federal
Deposit Insurance Corporation, a trust company, or by any member firm of the New
York, American, Boston, Chicago, Pacific or Philadelphia Stock Exchanges.
A redemption request will not be deemed properly received until the
Transfer Agent receives all required information and documents in proper form.
The redemption price will be the net asset value per share next determined after
receipt by the Transfer Agent of all required documents in proper form.
Questions with respect to the proper form for redemption requests should be
directed to the Transfer Agent toll free at (877) 745-GOLF or -4653.
BY TELEPHONE. If you have selected telephone redemption privileges on the
Application or have subsequently arranged for such privilege, you may redeem
Fund shares by calling the Transfer Agent toll free at (877) 745-GOLF or -4653
prior to the close of regular trading on the NYSE, generally 4:00 p.m., Eastern
time.
By establishing such telephone services, you authorize the Fund or its
agents to act upon verbal instructions to redeem Fund shares for any account for
which such service has been authorized. In an effort to prevent unauthorized or
fraudulent telephone transaction requests, the Transfer Agent will employ
reasonable procedures specified by the Fund to confirm that such instructions
are genuine. For instance, the Transfer Agent will require some form of personal
identification prior to acting upon telephone instructions, provide written
confirmation after such transactions, and record telephone instructions. When
acting on instructions believed to be genuine, the Fund, Adviser, Transfer Agent
and its trustees, directors, officers and employees are not liable for any loss
resulting from a fraudulent telephone transaction request and the investor will
bear the risk of loss. To the extent that the Fund, Adviser, Transfer Agent and
their trustees, directors, officers and employees do not employ such procedures,
some or all of them may be liable for losses due to unauthorized or fraudulent
transactions.
You also should be aware that telephone redemption or exchanges may be
difficult to implement in a timely manner during periods of drastic economic or
markets changes. If such conditions occur, redemption orders can be made by
mail.
SYSTEMATIC WITHDRAWAL PLAN. Withdrawal plans are available that provide
for regular periodic withdrawals of $50 or more on a monthly, quarterly,
semiannual or annual basis. Under these plans, sufficient Fund shares are
redeemed to provide the amount of the periodic withdrawal payment. The purchase
of Fund shares while participating in the Systematic Withdrawal Plan ordinarily
will be disadvantageous to you because you will be paying a sales charge on the
purchase of those shares at the same time that you are redeeming Fund shares
upon which you may already have paid a sales charge. Therefore, the Fund will
not knowingly permit the purchase of Fund shares through the Systematic
Investment Plan if you are at the same time making systematic withdrawals. If
you maintain an initial account of $50,000 or more, the CDSC imposed on your
withdrawal may be waived under certain circumstances. Please contact the
Transfer Agent for more information. The Fund reserves the right to cancel
systematic withdrawals if insufficient shares are available for two or more
consecutive months.
REINSTATEMENT PRIVILEGE. If you redeem any or all of your Fund shares, you
may reinvest all or any portion of the redemption proceeds in Fund shares at net
asset value without any sales charge, provided that such reinvestment is made
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within 90 calendar days after the redemption date. A reinstatement pursuant to
this privilege will not cancel the redemption transaction; therefore, (1) any
gain realized on the transaction will be recognized for Federal income tax
purposes, while (2) any loss realized will not be recognized to the extent the
proceeds are reinvested in Fund shares. The reinstatement privilege may be
utilized by a shareholder only once, irrespective of the number of shares
redeemed, except that the privilege may be utilized without limitation in
connection with transactions whose sole purpose is to transfer a shareholder's
interest in the Fund to his defined contribution plan, IRA, SEP or SIMPLE. You
must notify the Fund if you intend to exercise the reinstatement privilege.
Contact the Fund for further information.
RECEIVING PAYMENT. Payment of redemption proceeds normally will be made in
cash within seven days following the Fund's receipt of your request for
redemption in proper form. For investments that have been made by check, payment
on redemption requests may be delayed until the Transfer Agent is reasonably
satisfied that the purchase payment has been collected by the Fund, which may
take up to 15 days. To avoid redemption delays, purchases may be made by
cashiers or certified check or by direct wire transfers. The proceeds of a
redemption may be more or less than the original cost of Fund shares.
The Fund has the right to suspend redemption or postpone payment at times
when the NYSE is closed (other than customary weekend or holiday closings) or
during periods of emergency or other periods as permitted by the SEC. In the
case of any such suspension, you may either withdraw your request for redemption
or receive payment based upon the net asset value next determined, less any
applicable CDSC, after the suspension is lifted. If a redemption check remains
outstanding after six months, the Fund reserves the right to redeposit those
funds into your account. For more information on receiving payment, see
"Redeeming Shares" in the SAI.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Fund is determined as of the close of
normal trading on the NYSE (currently 4:00 p.m., Eastern time) each day the NYSE
is open for business. The Fund's net asset value serves as the basis for the
purchase and redemption price of its shares, less any applicable sales charges.
The net asset value per share of the Fund is calculated by dividing the market
value of the Fund's securities plus the value of its other assets, less all
liabilities, by the total number of Fund shares outstanding. The per share net
asset value of each class of shares may differ as a result of the different
daily expense accruals applicable to that class.
The Fund's equity securities and other assets are valued at their market
value based on the last sales price as reported by the principal securities
exchange or The Nasdaq Stock Market on which the securities are traded, or,
lacking any sales on a particular day, on the basis of the last current bid
price prior to the close of trading the NYSE. The Fund's debt securities are
valued at their mean between the bid and the ask price. Trading in foreign
markets usually is completed each day prior to the close of the NYSE. However,
events may occur that affect the values of such securities and the exchange
rates between the time of valuation and the close of the NYSE. Should events
materially affect the value of such securities during this period, the
securities are priced at fair value, as determined in good faith and pursuant to
procedures approved by the Board.
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Over-the-counter securities are valued on the basis of the last bid price on
that date prior to the close of trading. Debt securities (other than short-term
securities) normally will be valued on the basis of prices provided by a pricing
service and may take into account appropriate factors such as institution-size
trading in similar groups of securities, yield, quality, coupon rate, maturity,
type of issue, trading characteristics and other market data. In some cases, the
prices of debt securities may be determined using quotes obtained from brokers.
Securities for which market quotations are not readily available are valued at
fair value, as determined in good faith and pursuant to procedures approved by
the Board. Assets and liabilities denominated in foreign currencies are
translated into U.S. dollar equivalents based on prevailing market rates.
PERFORMANCE INFORMATION
From time to time the Fund may advertise or include in other written
materials its average annual total return and cumulative total return of each
class and compare its performance to that of other mutual funds with similar
investment objectives and to relevant indices. Performance information is
computed separately for each class in accordance with the methods described
below.
When the Fund advertises the total return of its shares, it will be
calculated for the one-, five-, and ten-year periods or, if such periods have
not yet elapsed, the period since the Fund commenced operations through the most
recent calendar quarter. Total return is measured by comparing the value of an
investment in the Fund at the beginning of the relevant period to the redemption
value of the investment at the end of the period (assuming reinvestment of any
dividends capital gain distributions at net asset value). The total return
represents the average annual compounded rate of return on an investment of
$1,000 at the public offering price (in the case of Class A shares, giving
effect to the maximum initial sales charge of 5.75% and, in the case of Class B
shares, giving effect to the deduction of any CDSC that would be payable).
In addition, the Fund may advertise its total return in the same manner,
but without taking into account the initial sales charge or the CDSC. The Fund
also may advertise total return calculated without annualizing the return, and
total return may be presented for other periods. By not annualizing the returns,
the total return calculated in this manner simply will reflect the increase in
net asset value per Class A share and Class B shares over a period of time,
adjusted for dividends and other distributions. Class A Share and Class B Share
performance may be compared with various indices.
All data is based on the Fund's past investment results and does not
predict future performance. Investment performance, which will vary, is based on
many factors, including market conditions, the composition of the Fund's
investment portfolio and operating expenses. Investment performance also often
reflects the risks associated with the Fund's investment objective and policies.
These factors should be considered when comparing the Fund's investment results
to those of other mutual funds and other investment vehicles. For more
information on investment performance, see the SAI.
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MANAGEMENT AND ADMINISTRATION OF THE FUND
BOARD OF TRUSTEES. The Fund's business and affairs are managed under the
direction of its Board of Trustees. The Trustees are responsible for the general
supervision of the Fund's business affairs and for exercising all the Fund's'
powers except those reserved to the shareholders. The Fund's day-to-day
operations are the responsibility of the Fund's officers.
INVESTMENT ADVISER. Golf Investment Management, Inc., 2801 Ocean Drive,
Suite 204, Vero Beach, Florida 32963, provides investment advice to the Fund.
The Adviser is a newly created investment adviser and has had no previous
experience advising investment companies. The Adviser was organized as a Florida
corporation in June 1998. Michael T. Williams, CFP,CFS, owns a controlling
interest in the Adviser and controls Wilshire Financial Group, Inc., a
registered investment adviser since 1991.
The Adviser manages the investment of Fund assets, in accordance with its
investment objective, policies and limitations, subject to the general
supervision and control of the Trustees and the officers of the Fund. The
Adviser bears all costs associated with providing these advisory services and
the expenses of the Trustees who are affiliated persons of the Adviser. The
Adviser, from its own resources, also may make payments to broker-dealers and
other financial institutions for their expenses in connection with the
distribution of Fund shares, and otherwise currently pays all distribution costs
for Fund shares.
Under an investment agreement between the Fund and the Adviser, dated
October __, 1998, the Fund pays the Adviser a fee at an annualized rate, based
on a percentage of its daily net assets of 1.00%.
SUBADVISER. The Adviser has entered into an agreement with Wallington
Asset Management, Inc., 8900 Keystone Crossing, Suite 1015, Indianapolis,
Indiana 46240, to provide investment advice and portfolio management services,
including placement of brokerage orders, on behalf of the Fund. The Subadviser,
founded in 1988, is a registered investment adviser. The Subadviser provides
financial services to retail and institutional clients, with over $100 million
in assets under management as of October 31, 1998. For investment advisory
services to the Fund, the Adviser pays the Subadviser a monthly fee at an annual
rate equal to 0.40% of the Fund's average daily net assets.
PORTFOLIO MANAGEMENT. Investment decisions are made by a Committee of the
Subadviser organized for that purpose, and no single person is primarily
responsible for making recommendations to the Committee. The Committee is
subject to the oversight of the Adviser and Subadviser.
ADMINISTRATOR, FUND ACCOUNTANT AND TRANSFER AGENT. PFPC Inc., Bellevue
Corporate Center, 400 Bellevue Parkway, Wilmington, Delaware 19809, provides
administrative, accounting and transfer agency services to the Fund. As
compensation for administrative and accounting services, the Fund pays PFPC Inc.
an annual fee equal to: 0.10% of the Fund's first $250 million of average daily
net assets; .075% of the next $250 million; .05% of the next $250; and .03% on
average daily net assets in excess of $750 million, subject to a monthly minimum
fee of $8,333. From time to time, PFPC Inc. may waive a portion of its fee.
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DISTRIBUTOR. Rafferty Capital Markets, Inc., 550 Mamaroneck Avenue,
Harrison, New York 10528, serves as the distributor of the Fund's shares. The
Distributor has entered into dealer agreements with participating dealers who
will distribute shares of the Fund.
CUSTODIAN. PNC Bank, N.A., Airport Business Center, 200 Stevens Drive,
Lester, Pennsylvania 19113, serves as the custodian of the Fund's portfolio
securities.
INDEPENDENT ACCOUTANTS. PricewaterhouseCoopers LLP, 30 S Seventeenth
Street, Philadelphia, Pennsylvania 19103, are the auditors of and the
independent public accountants for the Fund.
DISTRIBUTION PLANS
Pursuant to a distribution plan pertaining to Class A and Class B shares
(the "Plan"), the Fund is authorized to compensate the Distributor for services
rendered and expenses borne in connection with the distribution of Fund shares
and in connection with the servicing or maintenance of existing Fund shareholder
accounts. Pursuant to the Plan, distribution fees are paid for activities
relating to the distribution of Fund shares, including costs of printing and
dissemination of sales material or literature, prospectuses and reports used in
connection with the sale of Fund shares. Service fees are paid for the ongoing
maintenance and servicing of existing shareholder accounts, including payments
to broker-dealers who provide shareholder liaison services to their customers
who are holders of the Fund, provided they meet certain criteria.
With respect to Class A and Class B shares, the Plan authorizes the Fund
to pay the Distributor a distribution and service fee of up to 1.00% of the
average daily net assets attributable to such class. However, the Board of
Trustees has authorized the Fund to pay only 0.25% for Class A shares. These
fees are computed daily and paid monthly. Payments made to the Distributor under
the Plan represent compensation for distribution and service activities, not
reimbursement for specific expenses incurred. The Fund is not obligated under
the Plan to pay any distribution or service fees in excess of the amounts set
forth above. All expenses of distribution and marketing in excess of the maximum
amounts permitted by the Plan will be borne by the Adviser. If the Plan is
terminated with respect to a particular class, the Fund's obligation to make
payments to the Distributor pursuant to the Plan will cease and the Fund will
not be required to make any payment past the date the Plan terminates.
DIVIDENDS AND OTHER DISTRIBUTIONS
Dividends and other distributions paid on each class of Fund shares are
calculated at the same time and in the same manner. Dividends from the net
investment income of the Fund normally are declared annually. The Fund also
distributes to its shareholders substantially all of its net realized capital
gains on portfolio securities and net realized gains from foreign currency
transactions after the end of the year in which the gains are realized.
Unless you elect otherwise on the Account Application, all dividends and
other distributions on the Class A or Class B shares automatically will be
declared and paid in additional shares of the Fund. However, you may choose to
have distributions of net capital gain paid in shares and dividends paid in cash
or to have all such distributions and dividends paid in cash. An election may be
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changed at any time by delivering written notice that is received by the
transfer agent at least 10 days prior to the payment date for a dividend or
other distribution.
TAXES
The Fund intends to qualify for treatment as a regulated investment
company ("RIC") under Subchapter M of the Code. By doing so, the Fund (but not
its shareholders) will be relieved of Federal income tax on the part of its
investment company taxable income and net capital gain it distributes to its
shareholders for that year. If the Fund fails to qualify as a RIC for any
taxable year, its taxable income, including net capital gain, will be taxed at
corporate income tax rates (up to 35%) and it will not receive a deduction for
distributions to its shareholders.
Dividends from the Fund's investment company taxable income are taxable to
its shareholders as ordinary income, to the extent of the Fund's earnings and
profits, whether received in cash or in additional Fund shares. Distributions of
the Fund's net capital gain, when designated as such, are taxable to its
shareholders as long-term capital gains, whether received in cash or in
additional Fund shares and regardless of the length of time the shares have been
held. Under the current tax laws, the maximum tax rate application to a
non-corporate taxpayer's net capital gain recognition on capital assets held for
more than one year is 20% (10% for taxpayers in the 15% marginal tax bracket).
In the case of the Fund, the relevant holding period is determined by how the
Fund has held the portfolio security on which the gain was realized, not by how
long you have held your Fund shares. The portion of the dividends (but not the
capital gain distributions) paid by the Fund that does not exceed the aggregate
dividends received by the Fund from U.S. corporations will be eligible for the
dividends-received deduction allowed to corporations; however, dividends
received by a corporate shareholder and deducted by it pursuant to the
dividends-received deduction are subject indirectly to the Federal alternative
minimum tax.
Dividends and other distributions declared by the Fund in October,
November or December of any year and payable to shareholders of record on a date
in that month will be deemed to have been paid by the Fund and received by its
shareholders on December 31 if they are paid by the Fund during the following
January.
Shareholders receive Federal income tax information regarding dividends
and other distributions after the end of each year.
The Fund is required to withhold 31% of all dividends, capital gain
distributions and redemption proceeds payable to individuals and certain other
non-corporate shareholders who do not provide the Fund with a correct taxpayer
identification number. Withholding at that rate also is required from dividends
and capital gain distributions payable to such shareholders who otherwise are
subject to backup withholding. When you sell Fund shares, it generally is
considered a taxable event to you.
The foregoing is only a summary of some of the important Federal income
tax considerations generally affecting the Fund and its shareholders. See the
SAI for a further discussion. There may be other Federal, state or local tax
considerations applicable to a particular investor. You are therefore urged to
consult your tax adviser.
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GENERAL INFORMATION ABOUT THE FUND
ORGANIZATION OF THE FUND AND VOTING RIGHTS. The Fund was organized as a
Massachusetts business trust on June 11, 1998 and registered with the SEC as an
open-end management investment company under the 1940 Act. The Fund may issue
unlimited shares of beneficial interest, no par value, in such separate and
distinct series and classes of shares as the Trustees shall from time to time
establish. The shares of beneficial interest of the Fund presently are offered
through two classes of shares.
Class A and Class B shares have equal voting rights, except that in
matters affecting only a particular class, only shares of that class are
entitled to vote. Share voting rights are not cumulative, and shares have no
preemptive or conversion rights. Fund shares are nontransferable.
As a Massachusetts business trust, the Fund is not obligated to conduct
annual shareholder meetings. However, the Fund will hold special shareholder
meetings whenever required to do so under the Federal securities laws or the
Fund's Declaration of Trust or its By-Laws. Shareholders may remove Trustees
from office by votes cast at a special meeting of shareholders. If requested by
the shareholders of at least 10% of the outstanding shares of the Fund, the
Trustees will call a special meeting of shareholders to vote on the removal of a
Trustee and will assist in communications with other shareholders.
FUND EXPENSES. The Fund pays all of its own expenses. These expenses
include organizational costs, expenses for legal, accounting and auditing
services, preparing (including typesetting and printing) reports, prospectuses,
supplements thereto and notices to its existing shareholders, advisory and
management fees, fees and expenses of the custodian and transfer and dividend
disbursing agents, the distribution fee, the expense of issuing and redeeming
shares, the cost of registering shares under the Federal and state laws,
shareholder meeting and related proxy solicitation expenses, the fees and
out-of-pocket expenses of Trustees who are not affiliated with the Adviser,
insurance, brokerage costs, litigation, and other expenses properly payable by
the Fund.
MASTER/FEEDER OPTION. The Fund may in the future seek to achieve its
investment objective by investing all of its net assets in another investment
company ("Master Fund") having the same investment objective and substantially
the same investment policies and restrictions as those of the Fund. It is
expected that any such investment company would be managed by the Adviser in
substantially the same manner as the Fund. If permitted by applicable laws and
policies then in effect, any such investment may be made the sole discretion of
the Trustees without further approval of shareholders of the Fund. However, the
Fund's shareholders will be given 30 days' prior notice of any such investment.
Such investment would be made only if the Trustees determine it would be in the
best interests of the Fund and its shareholders. In making that determination,
the Trustees will consider, among other things, the benefits to shareholders
and/or the opportunity to reduce costs and achieve operational efficiencies. No
assurance can be given that costs will be materially reduced if this option is
implemented.
YEAR 2000. The Fund could be affected adversely if the computer systems
used by the Adviser, the Fund and their service providers, or companies in which
the Fund investment do not properly process and calculate information that
relates to dates beginning on January 1, 2000 and beyond. The Adviser has taken
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steps that it believes are reasonably designed to address the potential failure
of computer systems used by the Adviser and the Fund's service providers to
address the Year 2000 issue. There can be no assurance that these steps will be
sufficient to avoid any adverse impact.
SHAREHOLDER INQUIRIES. Shareholder inquiries can be made by telephone
to the Fund toll free at (877) 745-GOLF or -4653.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, OR IN THE SAI INCORPORATED
HEREIN BY REFERENCE, IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR PRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFERING BY THE FUND IN ANY JURISDICTION IN WHICH SUCH AN OFFERING MAY NOT
LAWFULLY BE MADE
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APPENDIX A
INVESTMENT TECHNIQUES
DEBT SECURITIES. Debt securities are likely to decline in value in times
of rising market interest rates and to rise in value in times of falling
interest rates ("interest rate risk"). In general, the longer the maturity of a
debt security, the more pronounced is the effect of a change in interest rates
on the value of the security. Debt securities are subject to the risk of an
issuer's inability to meet principal and interest payments on its obligations
("credit risk") and are subject to price volatility due to such factors as
interest rate sensitivity, market perception of the creditworthiness of the
issuer and market liquidity ("market risk").
AMERICAN DEPOSITORY RECEIPTS. ADRs are dollar denominated receipts
representing interests in the securities of a foreign issuer, which securities
may not necessarily be denominated in the same currency as the securities into
which they may be converted. ADRs are receipts typically issued by United States
banks and trust companies that evidence ownership of underlying securities
issued by a foreign corporation. Generally, ADRs in registered form are designed
for use in domestic securities markets and are traded on exchanges or in
over-the-counter ("OTC") markets in the United States.
CONVERTIBLE SECURITIES. A convertible security is a bond, debenture, note,
preferred stock or other security that may be converted into or exchanged for a
prescribed amount of common stock of the same or a different issue within a
particular period of time at a specified price or formula. A convertible
security entitles the holder to receive interest paid or accrued on debt or
dividends paid on preferred stock until the convertible stock matures or is
redeemed, converted or exchanged. Convertible securities have unique investment
characteristics in that they generally have higher yields than common stocks,
but lower yields than comparable nonconvertible securities, are less subject to
fluctuation in value than the underlying stock because they have fixed-income
characteristics and provide the potential for capital appreciation if the market
price of the underlying common stock increases.
FOREIGN SECURITIES. Investments in securities of foreign issuers, or
securities principally traded overseas, may involve certain special risks due to
foreign economic, political and legal development, including favorable or
unfavorable changes in currency exchange rates, exchange control regulations,
expropriation of assets or nationalization, imposition of withholding taxes on
dividend or interest payments, and possible difficulty in obtaining and
enforcing judgments against foreign entities. Furthermore, foreign issuers are
subject to different, often less comprehensive, accounting, reporting and
disclosure requirements than domestic issuers. The securities of some foreign
companies and foreign securities markets are less liquid and at times more
volatile than securities of comparable U.S. companies and U.S. securities
markets. Foreign brokerage commissions and other fees generally are higher than
in the United States. Foreign settlement procedures and trade regulation may
involve certain risks (such as delay in payment or delivery of securities or in
the recovery of assets held abroad) and expenses not present in the settlement
of domestic investments. There also are special tax considerations that apply to
foreign currency denominated securities.
REPURCHASE AGREEMENTS. A repurchase agreement is a transaction in which
the Fund purchases securities and commits to resell the securities to the
original seller (a member bank of the Federal Reserve System or securities
dealers who are members of a national securities exchange or are market makers
in U.S. Government securities) at an agreed upon date and price reflecting a
market rate of interest unrelated to the coupon rate or maturity of the
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purchased securities. Repurchase agreements carry certain risks not associated
with direct investment in securities, including possible declines in the market
value of the underlying securities and delays and costs to the Fund if the other
party becomes bankrupt.
RESTRICTED SECURITIES AND ILLIQUID INVESTMENTS. The Fund may purchase and
hold illiquid investments, including securities that are not readily marketable
and securities that are not registered ("restricted securities") under the
Securities Act of 1933, as amended ("1933 Act"), but which can be offered and
sold to "qualified institutional buyers" pursuant to Rule 144A under the 1933
Act. The Fund will not invest more than 15% of its net assets in illiquid
investments. The term "illiquid investments" for this purpose means investments
that cannot be disposed of within seven days in the ordinary course of business
at approximately the amount at which a Fund has valued the investments. Under
the current SEC staff guidelines, illiquid investments also include repurchase
agreements not terminable in seven days and restricted securities not determined
to be liquid pursuant to guidelines established by the Board.
TEMPORARY DEFENSIVE PURPOSES. For temporary defensive purposes during
anticipated periods of general market decline, the Fund may invest up to 100% of
its net assets in money market instruments, including securities issued by the
U.S. Government, its agencies or instrumentalities and repurchase agreements
secured thereby, as well as bank certificates of deposit and banker's
acceptances issued by banks having net assets of at least $1 billion as of the
end of their most recent fiscal year, high-grade commercial paper, and other
long- and short-term debt instruments that are rated A or higher by S&P or
Moody's or deemed to be of equal quality by the Subadviser. For a description of
S&P or Moody's commercial paper and corporate debt ratings, see the Appendix to
the SAI.
U.S. GOVERNMENT SECURITIES. U.S. Government Securities are
high-quality instruments issued or guaranteed as to principal or interest by
the U.S. Treasury or by an agency or instrumentality of the U.S. Government.
U.S. Government Securities include direct obligations of the U.S. Treasury
(such as Treasury bills, Treasury notes and Treasury bonds). Not all U.S.
Government Securities are backed by the full faith and credit of the United
States. Some are backed by the right of the issuer to borrow from the U.S.
Treasury; others are backed by discretionary authority of the U.S. Government
to purchase the agencies' obligations; while others are supported only by the
credit of the instrumentality. In the case of securities not backed by the
full faith and credit of the United States, the investor must look
principally to the agency issuing or guaranteeing the obligation for ultimate
repayment.
22
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SUBJECT TO COMPLETION
PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION DATED _______ __, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION SHALL NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE
OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD
BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
GOLF ASSOCIATED FUND
2801 OCEAN DRIVE, SUITE 204
VERO BEACH, FLORIDA 32963
TOLL FREE
(877) 745-GOLF OR -4653
Statement Of Additional Information Dated ______________, 1998
This is a Statement of Additional Information ("SAI") for the Golf
Associated Fund (the "Fund"), an open-end diversified management investment
company. The Fund offers Class A shares and Class B shares. This SAI is not a
prospectus and should be read in conjunction with the Fund's Prospectus dated
___________, 1998. A copy of the Fund's Prospectus is available, without charge,
upon request to the Fund at the telephone number or address above.
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION..........................................................1
INVESTMENT INFORMATION.......................................................1
INVESTMENT LIMITATIONS.......................................................6
NET ASSET VALUE..............................................................8
PERFORMANCE INFORMATION......................................................8
INVESTING IN THE FUND........................................................9
Class A Share Cumulative Purchase Privilege (Right of
Accumulation)....................................................9
Class A Share Letter of Intent........................................10
REDEEMING SHARES............................................................10
Systematic Withdrawal Plan............................................10
Telephone Transactions................................................11
Redemptions in Kind...................................................11
Receiving Payment.....................................................11
CONVERSION OF CLASS B SHARES................................................12
TAXES ......................................................................12
FUND INFORMATION............................................................14
Management of the Fund................................................14
Investment Adviser and Administrator; Subadviser......................16
Brokerage Practices...................................................17
Distribution of Shares................................................18
Administration of the Fund............................................19
Potential Liability...................................................19
APPENDIX...................................................................A-1
CONSENT OF INDEPENDENT ACCOUNTANTS.........................................B-1
FINANCIAL STATEMENTS.......................................................B-2
<PAGE>
GENERAL INFORMATION
The Golf Associated Fund (the "Fund") was established as a Massachusetts
business trust under a Declaration of Trust dated June 11, 1998. The Fund
currently offers two classes of shares, Class A shares sold subject to a 5.75%
maximum front-end sales charge ("Class A shares") and Class B shares sold
subject to a maximum 5% contingent deferred sales charge ("CDSC"), declining
over a six-year period ("Class B shares").
INVESTMENT INFORMATION
The following information supplements the discussion in the Prospectus of
the investment objective, policies and limitations of the Fund. Please refer to
the sections in the Prospectus entitled "About the Golf Associated Fund" and
Appendix A - Investment Techniques for a discussion of the investment objective,
policies and techniques of the Fund. Golf Investment Management, Inc. (the
"Adviser") serves as the Fund's investment adviser. Wallington Asset Management,
Inc. serves as the Fund's investment subadviser (the "Subadviser"). Capitalized
terms not otherwise defined herein shall have the same meaning as assigned in
the Prospectus.
The Fund may engage in the investment strategies discussed below. There is
no assurance that any of these strategies or any other strategies and methods of
investment available to the Fund will result in the achievement of the Fund's
objective.
AMERICAN DEPOSITORY RECEIPTS ("ADRS"). ADRs include ordinary shares and
New York shares. ADRs may be purchased through "sponsored" or "unsponsored"
facilities. A sponsored facility is established jointly by the issuer of the
underlying security and a depository, whereas a depository may establish an
unsponsored facility without participation by the issuer of the depository
security. Holders of unsponsored depository receipts generally bear all the
costs of such facilities and the depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts of the deposited securities. ADRs are not
necessarily denominated in the same currency as the underlying securities to
which they may be connected. Generally, ADRs in registered form are designed for
use in the U.S. securities market and ADRs in bearer form are designed for use
outside the United States.
BANKER'S ACCEPTANCES. The Fund may invest in banker's acceptances. A
banker's acceptance is a short-term credit instrument used to finance commercial
transactions. Generally, an acceptance is a time draft drawn on a bank by an
exporter or an importer to obtain a stated amount of funds to pay for specific
merchandise. The draft is then "accepted" by a bank that, in effect,
unconditionally guarantees to pay the face value of the instrument on its
maturity date. The acceptance may then be held by the accepting bank as an
asset, or it may be sold in the secondary market at the going rate of interest
for a specified maturity. Although maturities for acceptances can be as long as
270 days, most acceptances have maturities of six months or less.
BORROWING. The Fund may borrow money to facilitate management of the
Fund's portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio instruments would be inconvenient or disadvantageous.
Such borrowing is not for investment purposes and will be repaid by the Fund
promptly.
As required by the Investment Company Act of 1940, as amended ("1940
Act"), the Fund must maintain continuous asset coverage (total assets, including
<PAGE>
assets acquired with borrowed funds, less liabilities exclusive of borrowings)
of 300% of all amounts borrowed. If at any time the value of the required asset
coverage declines as a result of market fluctuations or other reasons, the Fund
may be required to sell some of its portfolio investments within three days to
reduce the amount of its borrowings and restore the 300% asset coverage, even
though it may be disadvantageous from an investment standpoint to sell portfolio
instruments at that time.
The Fund may borrow money from a bank as a temporary measure for
extraordinary or emergency purposes in amounts not in excess of 5% of the value
of its total assets. This borrowing is not subject to the foregoing 300% asset
coverage requirement. The Fund may pledge portfolio securities as the Subadviser
deems appropriate in connection with any borrowings.
CERTIFICATES OF DEPOSIT. The Fund may invest in bank certificates of
deposit ("CDs") issued by domestic institutions with assets in excess of $1
billion. The Federal Deposit Insurance Corporation is an agency of the U.S.
Government that insures the deposits of certain banks and savings and loan
associations up to $100,000 per deposit. The interest on such deposits may not
be insured if this limit is exceeded. Current federal regulations also permit
such institutions to issue insured negotiable CDs in amounts of $100,000 or
more, without regard to the interest rate ceilings on other deposits. To remain
fully insured, these investments currently must be limited to $100,000 per
insured bank or savings and loan association.
COMMERCIAL PAPER. The Fund may invest in commercial paper that is limited
to obligations rated Prime-1 or Prime-2 by Moody's Investors Service, Inc.
("Moody's") or A-1 or A-2 by Standard & Poor's ("S&P"). Commercial paper
includes notes, drafts or similar instruments payable on demand or having a
maturity at the time of issuance not exceeding nine months, exclusive of days of
grace or any renewal thereof. See the Appendix for a description of commercial
paper ratings.
COMMON STOCK. Common stock is defined as shares of a corporation that
entitle the holder to a pro rata share of the profits of the corporation, if
any, without a preference over any other shareholder or class of shareholders,
including holders of the corporation's preferred stock and other senior equity.
Common stock usually carries with it the right to vote, and frequently, an
exclusive right to do so. Holders of common stock also have the right to
participate in the remaining assets of the corporation after all other claims,
including those of debt securities and preferred stock, are paid.
CONVERTIBLE SECURITIES. The Fund may invest in convertible securities as
described in the Prospectus. While no securities investment is without some
risk, investments in convertible securities generally entail less risk than the
issuer's common stock, although the extent to which such risk is reduced depends
in large measure upon the degree to which the convertible security sells above
its value as a fixed income security. The Subadviser, on behalf of the Fund,
will decide to invest based upon a fundamental analysis of the long-term
attractiveness of the issuer and the underlying common stock, an evaluation of
the relative attractiveness of the current price of the underlying common stock,
and a judgment of the value of the convertible security relative to the common
stock at current prices. Convertible securities in which the Fund may invest
include corporate bonds, notes and preferred stock that can be converted into
(exchanged for) common stock. Convertible securities combine the fixed-income
characteristics of bonds and capital appreciation potential of preferred stock.
The market value of convertible securities tends to decline as interest rates
increase and, conversely, to increase as interest rates decline. While
convertible securities generally offer lower interest or dividend yields than
nonconvertible debt securities of similar quality, they do enable the investor
to benefit from increases in the market price of the underlying common stock.
FOREIGN SECURITIES. The Fund may invest in foreign securities. It is
anticipated that, in most cases, the best available market for foreign
2
<PAGE>
securities will be on exchanges or in over-the-counter markets located outside
the United States. Foreign stock markets, while growing in volume and
sophistication, generally are not as developed as those in the United States. In
general, there is less overall governmental supervision and regulation of
securities exchanges, brokers and listed companies than in the United States.
Investments in foreign securities also involve the risk of possible adverse
changes in investment or exchange control regulations, expropriation or
confiscatory taxation, limitation on or delays in the removal of funds or other
assets of the Fund, political or financial instability or diplomatic and other
developments that could affect such investments. Further, the economies of some
countries may differ favorably or unfavorably from the economy of the United
States.
It is the Fund's policy not to invest in foreign securities when there are
currency or trading restrictions in force or when, in the judgment of the
Subadviser, such restrictions are likely to be imposed. However, certain
currencies may become blocked (I.E., not freely available for transfer from a
foreign country), resulting in the possible inability of the Fund to convert
proceeds realized upon sale of portfolio securities of the affected foreign
companies into U.S. currency.
Because investments in foreign companies usually will involve currencies
of foreign countries and because the Fund may temporarily hold funds in bank
deposits in foreign currencies during the completion of investment programs, the
value of any of the assets of the Fund as measured in U.S. dollars may be
affected favorably or unfavorably by changes in foreign currency exchange rates
and exchange control regulations, and the Fund may incur costs in connection
with conversions between various currencies. The Fund will conduct its foreign
currency exchange transactions on a spot (I.E., cash) basis at the spot rate
prevailing in the foreign currency exchange market.
ILLIQUID INVESTMENTS AND RESTRICTED SECURITIES. The Fund will not purchase
or otherwise acquire any security if, as a result, more than 15% of its net
assets (taken at current value) would be invested in investments that are
illiquid by virtue of the absence of a readily available market or legal or
contractual restrictions on resale. This policy does not include restricted
securities eligible for resale pursuant to Rule 144A under the Securities Act of
1933, as amended ("1933 Act") that the Board or the Subadviser has determined,
under Board-approved guidelines, are liquid.
The term "illiquid investments" for this purpose means investments that
cannot be disposed of within seven days in the ordinary course of business at
approximately the amount at which the Fund has valued the investments.
Investments currently considered to be illiquid include: (1) repurchase
agreements not terminable within seven days, (2) securities for which market
quotations are not readily available, (3) OTC options and their underlying
collateral, (4) bank deposits, unless they are payable at principal amount plus
accrued interest on demand or within seven days after demand and (5) restricted
securities not determined to be liquid pursuant to guidelines established by the
Board.
The Fund may not be able to sell illiquid investments when the Subadviser
considers it desirable to do so or may have to sell such investments at a price
that is lower than the price that could be obtained if the investments were
liquid. In addition, the sale of illiquid investments may require more time and
result in higher dealer discounts and other selling expenses than does the sale
of investments that are not illiquid. Illiquid investments also may be more
difficult to value due to the unavailability of reliable market quotations for
such investments, and investment in illiquid investments may have an adverse
impact on net asset value.
Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for restricted securities
3
<PAGE>
that have developed as a result of Rule 144A provide both readily ascertainable
values for certain restricted securities and the ability to liquidate an
investment to satisfy share redemption orders. An insufficient number of
qualified institutional buyers interested in purchasing Rule 144A-eligible
securities held by the Fund, however, could affect adversely the marketability
of such portfolio securities and the Fund may be unable to dispose of such
securities promptly or at reasonable prices.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. The Fund may invest in the
securities of other investment companies to the extent that such an investment
would be consistent with the requirements of the 1940 Act. Investments in the
securities of other investment companies may involve duplication of advisory
fees and certain other expenses. By investing in another investment company, the
Fund becomes a shareholder of that investment company. As a result, Fund
shareholders indirectly will bear the Fund's proportionate share of the fees and
expenses paid by shareholders of the other investment company, in addition to
the fees and expenses Fund shareholders directly bear in connection with the
Fund's own operations.
LENDING PORTFOLIO SECURITIES. The Fund may lend portfolio securities with
a value not exceeding 33 1/3% of its total assets to brokers, dealers, and
financial institutions. Borrowers are required continuously to secure their
obligations to return securities on loan from the Fund by depositing any
combination of short-term government securities and cash as collateral with the
Fund. The collateral must be equal to at least 100% of the market value of the
loaned securities, which will be marked to market daily. While the Fund's
portfolio securities are on loan, the Fund continues to receive interest on the
securities loaned and simultaneously earns either interest on the investment of
the collateral or fee income if the loan is otherwise collateralized. The Fund
may invest the interest received and the collateral, thereby earning additional
income. Loans would be subject to termination by the Fund on four business days'
notice or by the borrower on one day's notice. Borrowed securities must be
returned when the loan is terminated. Any gain or loss in the market price of
the borrowed securities that occurs during the term of the loan inures to the
Fund. The Fund may pay reasonable finders, borrowers, administrative and
custodial fees in connection with a loan. The Fund currently has no intention of
lending its portfolio securities.
PORTFOLIO TURNOVER. Although the Fund generally will not invest for
short-term trading purposes, portfolio securities may be sold from time to time
without regard to the length of time they have been held when, in the opinion of
the Subadviser, investment considerations warrant such action. Portfolio
turnover rate is calculated by dividing (1) the lesser of purchases or sales of
portfolio securities for the fiscal year by (2) the monthly average of the value
of portfolio securities owned during the fiscal year. A 100% turnover rate would
occur if all the securities in the Fund's portfolio, with the exception of
securities whose maturities at the time of acquisition were one year or less,
were sold and either repurchased or replaced within one year. A high rate of
portfolio turnover generally leads to transactions costs and may result in a
greater number of taxable transactions.
PREFERRED STOCK. The Fund may invest in preferred stock. A preferred stock
is a blend of the characteristics of a bond and common stock. It can offer the
higher yield of a bond and has priority over common stock in equity ownership,
but does not have the seniority of a bond and its participation in the issuer's
growth may be limited. Preferred stock has preference over common stock in the
receipt of dividends and in any residual assets after payment to creditors
should the issuer be dissolved. Although the dividend is set at a fixed annual
rate, in some circumstances it can be changed or omitted by the issuer.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
banks that are members of the Federal Reserve System or securities dealers who
4
<PAGE>
are members of a national securities exchange or are primary dealers in U.S.
Government Securities. Repurchase agreements generally are for a short period of
time, usually less than a week. Repurchase agreements with a maturity of more
than seven days are considered to be illiquid investments. The Fund may not
enter into such a repurchase agreement if, as a result, more than 15% of the
value of its net assets would then be invested in such repurchase agreements and
other illiquid investments. See "Illiquid Investments and Restricted Securities"
above.
The Fund follows certain procedures and guidelines adopted by the Trustees
designed to minimize the risks inherent in such transactions. These procedures
include effecting repurchase transactions only with large, well-capitalized and
well-established institutions whose financial condition will be monitored by the
Subadviser. In addition, the Fund will always receive, as collateral, securities
whose market value, including accrued interest, at all times will be equal to at
least 100% of the dollar amount invested by the Fund in each repurchase
agreement. If the seller defaults, the Fund might incur a loss if the value of
the collateral securing the repurchase agreement declines and might incur
disposition costs in connection with liquidating the collateral. In addition, if
bankruptcy or similar proceedings are commenced with respect to the seller of
the security, realization upon the collateral by the Fund may be delayed or
limited.
U.S. GOVERNMENT SECURITIES. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities ("U.S. Government Securities")
include Treasury Bills (which mature within one year of the date they are
issued), Treasury Notes (which have maturities of one to ten years) and Treasury
Bonds (which generally have maturities of more than 10 years). All such Treasury
securities are backed by the full faith and credit of the United States.
U.S. Government agencies and instrumentalities that issue or guarantee
securities include, but are not limited to, the Federal Housing Administration,
Fannie Mae (or, the Federal National Mortgage Association), the Farmers Home
Administration, the Export-Import Bank of the United States, the Small Business
Administration, the Government National Mortgage Association ("Ginnie Mae"), the
General Services Administration, the Central Bank for Cooperatives, the Federal
Home Loan Banks, the Federal Home Loan Mortgage Corporation ("Freddie Mac"), the
Farm Credit Banks, the Maritime Administration, the Tennessee Valley Authority,
the Resolution Funding Corporation and the Student Loan Marketing Association.
Securities issued or guaranteed by U.S. Government agencies and
instrumentalities are not always supported by the full faith and credit of the
United States. Some, such as securities issued by the Federal Home Loan Banks,
are backed by the right of the agency or instrumentality to borrow from the
Treasury. Others, such as securities issued by Fannie Mae, are supported only by
the credit of the instrumentality and by a pool of mortgage assets. If the
securities are not backed by the full faith and credit of the United States, the
owner of the securities must look principally to the agency issuing the
obligation for repayment and may not be able to assert a claim against the
United States in the event that the agency or instrumentality does not meet its
commitment.
WARRANTS AND RIGHTS. The Fund may purchase rights and warrants, which are
instruments that permit the Fund to acquire, by subscription, the capital stock
of a corporation at a set price, regardless of the market price for such stock.
The Fund currently does not intend to invest more than 5% of its net assets in
warrants. However, the Fund also may invest in warrants or rights acquired by
the Fund as part of a unit or attached to securities at the time of purchase
without limitation. Warrants may be either perpetual or of limited duration.
There is a greater risk that warrants might drop in value at a faster rate than
the underlying stock.
5
<PAGE>
WHEN-ISSUED SECURITIES. The Fund may invest up to 5% of its net assets in
securities issued on a when-issued or delayed delivery basis at the time the
purchase is made. The Fund generally would not pay for such securities or start
earning interest on them until they are issued or received. However, when the
Fund purchases debt obligations on a when-issued basis, it assumes the risks of
ownership, including the risk of price fluctuation, at the time of purchase, not
at the time of receipt. Failure of the issuer to deliver a security purchased by
the Fund on a when-issued basis may result in the Fund's incurring a loss or
missing an opportunity to make an alternative investment. When the Fund enters
into a commitment to purchase securities on a when-issued basis, it establishes
a separate account on its books and records or with its custodian consisting of
cash or liquid high-grade debt securities equal to the amount of the Fund's
commitment, which are valued at their fair market value. If on any day the
market value of this segregated account falls below the value of the Fund's
commitment, the Fund will be required to deposit additional cash or qualified
securities into the account until equal to the value of the Fund's commitment.
When the securities to be purchased are issued, the Fund will pay for the
securities from available cash, the sale of securities in the segregated
account, sales of other securities and, if necessary, from sale of the
when-issued securities themselves although this is not ordinarily expected.
Securities purchased on a when-issued basis are subject to the risk that yields
available in the market, when delivery takes place, may be higher than the rate
to be received on the securities the Fund is committed to purchase. Sale of
securities in the segregated account or sale of the when-issued securities may
cause the realization of a capital gain or loss.
INVESTMENT LIMITATIONS
In addition to the investment policies and limitations described above and
described in the Prospectus, the Fund has adopted the following investment
limitations, which are fundamental policies and may not be changed without the
vote of a majority of the outstanding voting securities of the Fund. Under the
1940 Act, a "vote of the majority of the outstanding voting securities" of the
Fund means the affirmative vote of the lesser of: (1) more than 50% of the
outstanding shares of the Fund or (2) 67% or more of the shares of the Fund
present at a shareholders meeting if more than 50% of the outstanding shares are
represented at the meeting in person or by proxy.
For purposes of the following limitations, all percentage limitations
apply immediately after a purchase or initial investment. Except with respect to
borrowing money, if a percentage limitation is adhered to at the time of the
investment, a later increase or decrease in the percentage resulting from any
change in value or net assets will not result in a violation of such
restrictions. If at any time the Fund's borrowings exceed its limitations due to
a decline in net assets, such borrowings will be reduced promptly to the extent
necessary to comply with the limitation.
The Fund shall not:
1. LOANS. Lend any security or make any other loan if, as a result, more
than 33 1/3% of the value of the Fund's total assets would be lent to
other parties, except (1) through the purchase of a portion of an issue
of debt securities in accordance with the Fund's investment objective,
policies and limitations, or (2) by engaging in repurchase agreements
with respect to portfolio securities.
2. UNDERWRITING. Underwrite securities of any other issuer.
3. INVESTING REAL ESTATE OR MINERALS. Purchase, hold, or deal in real
estate (but this restriction shall not prevent the Fund from investing
6
<PAGE>
directly or indirectly in portfolio instruments secured by real estate
or interests therein or acquiring securities of real estate investment
trusts or other issuers that deal in real estate) or oil and gas
interests.
4. SENIOR SECURITIES. Issue any senior security (as such term is defined
in Section 18(f) of the 1940 Act) (including the amount of senior
securities issued by excluding liabilities and indebtedness not
constituting senior securities), except (1) that the Fund may issue
senior securities in connection with transactions in options, futures,
options on futures, forward contracts, and other similar investments,
(2) as otherwise permitted herein and in Investment Limitations Nos. 5,
7, and 8.
5. PLEDGING, MORTGAGING, OR HYPOTHECATING ASSETS. Pledge, mortgage, or
hypothecate the Fund's assets, except (1) to the extent necessary to
secure permitted borrowings, (2) in connection with the purchase of
securities on a forward-commitment or delayed-delivery basis or the
sale of securities on a delayed-delivery basis, and (3) in connection
with options, futures contracts, options on futures contracts, forward
contracts and other financial instruments.
6. INVESTING IN COMMODITIES. Invest in physical commodities, except that
the Fund may purchase and sell foreign currency, options, futures
contracts, options on futures contracts, forward contracts, securities
on a forward-commitment or delayed-delivery basis, and other financial
instruments.
7. BORROWING MONEY. Borrow money, except (1) as a temporary measure for
extraordinary or emergency purposes and then only in amounts not to
exceed 5% of the value of the Fund's total assets, (2) in an amount up
to 33 1/3% of the value of the Fund's total assets, including the
amount borrowed, in order to meet redemption requests without
immediately selling portfolio securities, (3) to enter into reverse
repurchase agreements, and (4) to lend portfolio securities. For
purposes of this investment limitation, the purchase or sale of
options, futures contracts, options on futures contracts, forward
contracts and other financial instruments shall not constitute
borrowing.
8. SHORT SALES. Make short sales of portfolio securities or purchase any
portfolio securities on margin but may obtain such short-term credits
as are necessary for the clearance of transactions, and make margin
payments in connection with options, futures contracts, options on
futures contracts, forward contracts and other financial instruments.
9. INDUSTRY CONCENTRATION. Invest more than 25% of the value of its total
assets in the securities of issuers in any single industry, provided
that there shall be no limitation on the purchase of obligations issued
or guaranteed by the U.S. Government, its agencies or
instrumentalities.
10.DIVERSIFICATION. With respect to 75% of the Fund's total assets, the
Fund may not invest more than 5% of its assets (valued at market value)
in securities of any one issuer other than the U.S. Government or its
agencies and instrumentalities, or purchase more than 10% of the voting
securities of any one issuer.
7
<PAGE>
NET ASSET VALUE
The net asset value per share of Class A shares and Class B shares is
determined separately daily as of the close of regular trading on the New York
Stock Exchange (the "NYSE") each day the NYSE is open for business. The Fund is
open for business on days on which the NYSE is open ("Business Days"). The NYSE
currently observes the following holidays: New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day.
The Board of Trustees may suspend the right of redemption or postpone
payment for more than seven days at times (1) during which the NYSE is closed
other than for the customary weekend and holiday closings, (2) during which
trading on the NYSE is restricted as determined by the Securities and Exchange
Commission ("SEC"), (3) during which an emergency exists as a result of which
disposal by the Fund of securities owned by it is not reasonably practicable or
it is not reasonably practical for the Fund fairly to determine the value of its
net assets, or (4) for such other periods as the SEC may by order permit for the
protection of the holders of Fund shares.
PERFORMANCE INFORMATION
The Fund's performance data quoted in advertising and other promotional
materials represents past performance and is not intended to indicate future
performance. The investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost. Average annual total return quotes for each class used
in the Fund's advertising and promotional materials are calculated according to
the following formula:
P(1+T)n (Superscript) = ERV
where: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 period at the end of that period
In calculating the ending redeemable value for Class A shares, the Fund's
current maximum sales charge of 5.75% is deducted from the initial $1,000
payment and, for Class B shares, the CDSC imposed on a redemption of Class B
shares held for the period is deducted. All dividends and other distributions by
the Fund are assumed to have been reinvested at net asset value on the
reinvestment dates during the period. Based on this formula, the total return,
or "T" in the formula above, is computed by finding the average annual
compounded rates of return over the period that would equate the initial amount
invested to the ending redeemable value.
In connection with communicating its total return to current or
prospective shareholders, the Fund also may compare these figures to the
performance of other mutual funds tracked by mutual fund rating services or to
other unmanaged indexes that may assume reinvestment of dividends but generally
do not reflect deductions for administrative and management costs. In addition,
the Fund may from time to time include in advertising and promotional materials
total return figures that are not calculated according to the formula set forth
above for each class of shares. For example, in comparing the Fund's aggregate
total return with data published by Lipper Analytical Services, Inc., CDA
Investment Technologies, Inc., or with such market indices as the Dow Jones
Industrial Average, and the S&P 500 Index, the Fund calculates its cumulative
8
<PAGE>
total return for each class for the specified periods of time by assuming an
investment of $10,000 in that class of shares and assuming the reinvestment of
each dividend or other distribution at net asset value on the reinvestment date.
Percentage increases are determined by subtracting the initial value of the
investment from the ending value and by dividing the remainder by the beginning
value. The Fund does not, for these purposes, deduct from the initial value
invested any amount representing front-end sales charges charged on Class A
shares or CDSC charged on Class B shares. By not annualizing the performance and
excluding the effect of the front-end sales charge on Class A shares and the
CDSC on Class B shares, the total return calculated in this manner simply will
reflect the increase in net asset value per share over a period of time,
adjusted for dividends and other distributions. Calculating total return without
taking into account the sales charge or CDSC results in a higher rate of return
than calculating total return net of the front-end sales charge.
INVESTING IN THE FUND
Class A shares and Class B shares are sold at their next determined net
asset value on Business Days. The procedures for purchasing shares of the Fund
are explained in the Prospectus under "Purchase Procedures."
CLASS A SHARE CUMULATIVE PURCHASE PRIVILEGE (RIGHT OF ACCUMULATION)
Certain investors may qualify for the Class A sales charge reductions
indicated in the sales charge schedule in the Prospectus by combining purchases
of Class A shares into a single "purchase," if the resulting purchase totals at
least $50,000. The term "purchase" refers to a single purchase by an individual,
or to concurrent purchases that, in the aggregate, are at least equal to the
prescribed amounts, by an individual, his spouse and their children under the
age of 21 years purchasing Class A shares for his or their own account; a single
purchase by a trustee or other fiduciary purchasing Class A shares for a single
trust, estate or single fiduciary account although more than one beneficiary is
involved; or a single purchase for the employee benefit plans of a single
employer. The term "purchase" also includes purchases by a "company," as the
term is defined in the 1940 Act, but does not include purchases by any such
company that has not been in existence for at least six months or that has no
purpose other than the purchase of Class A shares or shares of other registered
investment companies at a discount; provided, however, that it shall not include
purchases by any group of individuals whose sole organizational nexus is that
the participants therein are credit card holders of a company, policy holders of
an insurance company, customers of either a bank or broker-dealer, or clients of
an investment adviser.
The applicable Class A shares initial sales charge will be based on the
total of:
(1) the investor's current purchase;
(2) the net asset value (at the close of business on the previous
day) of (a) all Class A shares of the Fund held by the investor; and
(3) the net asset value of all Class A shares described in
paragraph (2) owned by another shareholder eligible to combine his purchase
with that of the investor into a single "purchase."
To qualify for the Cumulative Purchase Privilege on a purchase through a
selected dealer, the investor or selected dealer must provide the Fund's
distributor ("Distributor") with sufficient information to verify that each
purchase qualifies for the privilege or discount.
9
<PAGE>
CLASS A SHARE LETTER OF INTENT
Investors also may obtain the reduced sales charges shown in the
Prospectus by means of a written Letter of Intent, which expresses the
investor's intention to invest not less than $50,000 within a period of 13
months in Class A shares of the Fund. Each purchase of Class A shares under a
Letter of Intent will be made at the public offering price or prices applicable
at the time of such purchase to a single transaction of the dollar amount
indicated in the Letter.
The Letter of Intent is not a binding obligation upon the investor to
purchase the full amount indicated. The minimum initial investment under a
Letter of Intent is 5% of such amount. Class A shares purchased with the first
5% of such amount will be held in escrow (while remaining registered in the name
of the investor) to secure payment of the higher sales charge applicable to the
shares actually purchased if the full amount indicated is not purchased, and
such escrowed Class A shares will be redeemed involuntarily to pay the
additional sales charge, if necessary. When the full amount indicated has been
purchased, the escrow will be released. To the extent an investor purchases more
than the dollar amount indicated on the Letter of Intent and qualifies for a
further reduced sales charge, the sales charge will be adjusted for the entire
amount purchased at the end of the 13-month period. The difference in sales
charge will be used to purchase additional Class A shares of the Fund subject to
the rate of sales charge applicable to the actual amount of the aggregate
purchases. An investor may amend his/her Letter of Intent to increase the
indicated dollar amount and begin a new 13-month period. In that case, all
investments subsequent to the amendment will be made at the sales charge in
effect for the higher amount. The escrow procedures discussed above will apply.
REDEEMING SHARES
The methods of redemption are described in the section of the
Prospectus entitled "How to Sell Shares."
SYSTEMATIC WITHDRAWAL PLAN
Shareholders may elect to make systematic withdrawals from the Fund
account of a minimum of $50 on a periodic basis. The amounts paid each period
are obtained by redeeming sufficient shares from an account to provide the
withdrawal amount specified. The Systematic Withdrawal Plan currently is not
available for shares held in an individual retirement account, Section 403(b)
annuity plan, defined contribution plan, simplified employee pension plan, or
other retirement plans, unless the shareholder establishes to the Adviser's
satisfaction that withdrawals from such an account may be made without
imposition of a penalty. Shareholders may change the amount to be paid without
charge not more than once a year by written notice to the Distributor or the
Adviser.
Redemptions will be made at net asset value determined as of the close of
regular trading on the NYSE on a day of each month chosen by the shareholders or
a day of the last month of each period chosen by the shareholder, whichever is
applicable. Systematic withdrawals of Class B shares, if made within six years
of purchase, will be charged the applicable CDSC as set forth in the Prospectus.
Under certain circumstances, the CCSC imposed on systematic withdrawals may be
waived. If the NYSE is not open for business on that day, the shares will be
redeemed at net asset value determined as of the close of regular trading on the
NYSE on the preceding Business Day, minus any applicable CDSC for Class B
shares. If a shareholder elects to participate in the Systematic Withdrawal
Plan, dividends and other distributions on all shares in the account must be
reinvested automatically in Fund shares. A shareholder may terminate the
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<PAGE>
Systematic Withdrawal Plan at any time without charge or penalty by giving
written notice to the Adviser or the Distributor. The Fund, Transfer Agent and
Distributor also reserve the right to modify or terminate the Systematic
Withdrawal Plan at any time.
Withdrawal payments are treated as a sale of shares rather than as a
dividend or a capital gain distribution. These payments are taxable to the
extent that the total amount of the payments exceeds the tax basis of the shares
sold. If the periodic withdrawals exceed reinvested dividends and other
distributions, the amount of the original investment may be correspondingly
reduced.
Ordinarily, a shareholder should not purchase additional Class A shares of
the Fund if maintaining a Systematic Withdrawal Plan of Class A shares because
the shareholder may incur tax liabilities in connection with such purchases and
withdrawals. The Fund will not knowingly accept purchase orders from
shareholders for additional Class A shares if they maintain a Systematic
Withdrawal Plan unless the purchase is equal to at least one year's scheduled
withdrawals. In addition, a shareholder who maintains such a Plan may not make
periodic investments under the Fund's Systematic Investment Plan.
TELEPHONE TRANSACTIONS
Shareholders may redeem shares by placing a telephone request to the Fund.
The Fund, the Adviser, the Subadviser, the Distributor and their Trustees,
directors, officers and employees are not liable for any loss arising out of
telephone instructions they reasonably believe are authentic. In acting upon
telephone instructions, these parties use procedures that are reasonably
designed to ensure that such instructions are genuine, such as (1) obtaining
some or all of the following information: account number, name(s) and social
security number registered to the account, and personal identification; (2)
recording all telephone transactions; and (3) sending written confirmation of
each transaction to the registered owner. If the Fund, the Adviser, the
Subadviser, the Distributor and their Trustees, directors, officers and
employees do not follow reasonable procedures, some or all of them may be liable
for any such losses.
REDEMPTIONS IN KIND
The Fund is obligated to redeem shares for any shareholder for cash during
any 90-day period up to $250,000 or 1% of the Fund's net asset value, whichever
is less. Any redemption beyond this amount also will be in cash unless the Board
of Trustees determine that further cash payments will have a material adverse
effect on remaining shareholders. In such a case, the Fund will pay all or a
portion of the remainder of the redemption in portfolio instruments, valued in
the same way as the Fund determines net asset value. The portfolio instruments
will be selected in a manner that the Board of Trustees deems fair and
equitable. A redemption in kind is not as liquid as a cash redemption. If a
redemption is made in kind, a shareholder receiving portfolio instruments could
receive less than the redemption value thereof and could incur certain
transaction costs.
RECEIVING PAYMENT
If shares of the Fund are redeemed by a shareholder through the
Distributor or a participating dealer, the redemption is settled with the
shareholder as an ordinary transaction. If a request for redemption is received
before the close of regular trading on the NYSE, shares will be redeemed at the
net asset value per share determined on that day, minus any applicable CDSC for
Class B shares. Requests for redemption received after the close of regular
trading on the NYSE will be executed on the next trading day. Payment for shares
redeemed normally will be made by the Fund to the Distributor or a participating
dealer by the third business day after the day the redemption request was made,
provided that certificates for shares have been delivered in proper form for
transfer to the Fund, or if no certificates have been issued, a written request
11
<PAGE>
signed by the shareholder has been provided to the Distributor or a
participating dealer prior to settlement date.
Other supporting legal documents may be required from corporations or
other organizations, fiduciaries or persons other than the shareholder of record
making the request for redemption. Questions concerning the redemption of Fund
shares can be directed to registered representatives of the Distributor or a
participating dealer, or to the Adviser.
CONVERSION OF CLASS B SHARES
Class B shares of the Fund automatically will convert to Class A shares,
based on the relative net asset values per share of the two classes, eight years
after the end of the calendar month in which the shareholder's order to purchase
was accepted. For the purpose of calculating the holding period required for
conversion of Class B shares, the date of initial issuance shall mean the date
on which such Class B shares were issued. For purposes of conversion to Class A
shares, Class B shares will be held in a separate sub-account. Each time any
Class B shares in the shareholder's regular account (other than those in the
sub-account) convert to Class A shares, a pro rata portion of the Class B shares
in the sub-account also will convert to Class A shares. The portion will be
determined by the ratio that the shareholder's Class B shares converting to
Class A shares bears to the shareholder's total Class B shares not acquired
through dividends and other distributions.
The availability of the conversion feature is subject to the continuing
availability of an opinion of counsel to the effect that the dividends and other
distributions paid on Class A shares and Class B shares will not result in
"preferential dividends" under the Code and the conversion of shares does not
constitute a taxable event. If the conversion feature ceased to be available,
the Class B shares would not be converted and would continue to be subject to
the higher ongoing expenses of the Class B shares beyond eight years from the
date of purchase. The Adviser has no reason to believe that this condition for
the availability of the conversion feature will not be met.
TAXES
GENERAL. In order to qualify for the favorable tax treatment as a
regulated investment company ("RIC") under the Code, the Fund must distribute
annually to its shareholders at least 90% of its investment company taxable
income (generally consisting of net investment income, net short-term capital
gain and net gains from certain foreign currency transactions) ("Distribution
Requirement") and must meet several additional requirements. With respect to the
Fund, these requirements include the following: (1) the Fund must derive at
least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans and gains from the sale or other
disposition of securities or foreign currencies, or other income (including
gains from options, futures or forward currency contracts) derived with respect
to its business of investing in securities or those currencies ("Income
Requirement"); (2) at the close of each quarter of the Fund's taxable year, at
least 50% of the value of its total assets must be represented by cash and cash
items, U.S. Government securities, securities of other RICs and other
securities, with those other securities limited, in respect of any one issuer,
to an amount that does not exceed 5% of the value of the Fund's total assets and
that does not represent more than 10% of the issuer's outstanding voting
securities; and (3) at the close of each quarter of the Fund's taxable year, not
more than 25% of the value of its total assets may be invested in securities
(other than U.S. Government securities or the securities of other RICs) of any
one issuer.
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<PAGE>
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax")
to the extent it fails to distribute by the end of any calendar year
substantially all of its ordinary income for that year and its capital gain net
income for the one-year period ending on October 31 of that year, plus certain
other amounts.
A redemption of Fund shares will result in a taxable gain or loss to the
redeeming shareholder, depending on whether the redemption proceeds are more or
less than the shareholder's adjusted basis for the redeemed shares (which
normally includes any sales charge paid on Class A shares). However, special
rules apply when a shareholder disposes of Class A shares of the Fund through a
redemption within 90 days after purchase thereof and subsequently reacquires
Class A shares of the Fund without paying a sales charge due to the 90-day
reinstatement. In these cases, any gain on the disposition of the original Class
A shares will be increased, or loss decreased, by the amount of the sales charge
paid when those shares were acquired, and that amount will increase the adjusted
basis of the shares subsequently acquired. In addition, if shares of the Fund
are purchased (whether pursuant to the reinstatement privilege or otherwise)
within 30 days before or after redeeming other shares of the Fund (regardless of
class) at a loss, all or a portion of that loss will not be deductible and will
increase the basis of the newly purchased shares.
If shares of the Fund are sold at a loss after being held for six months
or less, the loss will be treated as long-term, instead of short-term, capital
loss to the extent of any capital gain distributions received on those shares.
Investors also should be aware that if shares are purchased shortly before the
record date for a dividend or other distribution, the shareholder will pay full
price for the shares and receive some portion of the price back as a taxable
distribution.
INCOME FROM FOREIGN SECURITIES. Dividends and interest received by the
Fund may be subject to income, withholding or other taxes imposed by foreign
countries and U.S. possessions ("foreign taxes") that would reduce the yield on
its securities. Tax conventions between certain countries and the United States
may reduce or eliminate these foreign taxes, however, and many foreign countries
do not impose taxes on capital gains in respect of investments by foreign
investors.
The Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation - other than a "controlled foreign
corporation" (I.E., a foreign corporation in which, on any day during its
taxable year, more than 50% of the total voting power of all voting stock
therein or the total value of all stock therein is owned, directly, indirectly,
or constructively, by "U.S. shareholders," defined as U.S. persons that
individually own, directly, indirectly, or constructively, at least 10% of that
voting power) as to which the Fund is a U.S. shareholder -- that, in general,
meets either of the following tests: (1) at least 75% of its gross income is
passive or (2) an average of at least 50% of its assets produce, or are held for
the production of, passive income. Under certain circumstances, the Fund will be
subject to Federal income tax on a portion of any "excess distribution" received
on the stock of a PFIC or of any gain on disposition of the stock (collectively
"PFIC income"), plus interest thereon, even if the Fund distributes the PFIC
income as a taxable dividend to its shareholders. The balance of the PFIC income
will be included in the Fund's investment company taxable income and,
accordingly, will not be taxable to it to the extent that income is distributed
to its shareholders.
If the Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund will be required to include in income each year its pro
rata share of the QEF's annual ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed by the Fund to satisfy the Distribution
Requirement and avoid imposition of the Excise Tax -- even if those earnings and
gain were not distributed to the Fund by the QEF. In most instances it will be
very difficult, if not impossible, to make this election because of certain
requirements thereof.
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<PAGE>
The Fund may elect to "mark-to-market" its stock in any PFIC.
"Marking-to-market," in this context, means including in ordinary income each
taxable year the excess, if any, of the fair market value of a PFIC's stock over
the Fund's adjusted basis therein as of the end of that year. Pursuant to the
election, the Fund also would be allowed to deduct (as an ordinary, not capital,
loss) the excess, if any, of its adjusted basis in PFIC stock over the fair
market value thereof as of the taxable year-end, but only to the extent of any
net mark-to-market gains with respect to that stock included by the Fund for
prior taxable years. The Fund's adjusted basis in each PFIC's stock with respect
to which it makes this election will be adjusted to reflect the amounts of
income included and deductions taken under the election. Regulations proposed in
1992 would provide a similar election with respect to the stock of certain
PFICs.
Gains or losses (1) from the disposition of foreign currencies, (2) from
the disposition of debt securities denominated in foreign currency that are
attributable to fluctuations in the value of the foreign currency between the
dates of acquisition and disposition of the securities and (3) that are
attributable to fluctuations in exchange rates that occur between the time the
Fund accrues dividends, interest or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time the Fund
actually collects the receivables or pays the liabilities, generally will be
treated as ordinary income or loss. These gains or losses, referred to under the
Code as "section 988" gains or losses, may increase or decrease the amount of
the Fund's investment company taxable income to be distributed to its
shareholders.
Investors are advised to consult their own tax advisers regarding the
status of an investment in the Fund under state and local tax laws.
FUND INFORMATION
MANAGEMENT OF THE FUND
TRUSTEES AND OFFICERS. The Fund's Trustees and Officers are listed below
with their addresses, principal occupations and present positions, including any
affiliation with Golf Investment Management, Inc.
Position with Principal Occupation
NAME THE FUND DURING PAST FIVE YEARS
- ---- ------------- ----------------------
Michael T. Williams, (44)
CFP, CFS * President and President, Golf Investment
2801 Ocean Drive, Suite 204 Trustee Management, Inc. (since 1998);
Vero Beach, FL 32963 President, Wilshire Financial
Group (since 1991); Principal,
Williams Financial Group (since
1991); Registered Principal,
Securities Service Network,
Inc. (since 1993).
John C. Bahl * (55) Trustee Proprietary Investor.
3055 Par Drive
Vero Beach, FL 32960
J. Kenneth Perry (38) Trustee PGA Tour Player, PGA Tour
418 Quail Ridge Road (since 1986).
Franklin, KY 42134
14
<PAGE>
Position with Principal Occupation
NAME THE FUND DURING PAST FIVE YEARS
- ---- ------------- ----------------------
Scott M. Perry (40) Trustee Independent Contractor Salesman
11221-6 St. Johns (Territory Manager) for Cross
Industrial Pkwy So. Creek Apparel (since 1989),
Jacksonville, FL 32246 Texace Corporation (since
1991), PGA Tour Apparel (since
1996) and Lynx Golf Company
(1992-1997); President, Fore
Head Threads, Inc. (embroidery
company) (since 1998).
Eric M. Snelz (44) Trustee Partner, Intraform of Arizona
5727 N. 7th Street, # 307 (print distributorship) (since
Phoenix, AZ 85014 1997); Regional Vice President,
Moore Business Communications
Services (1996-1997); Sales
Manager, Moore Business Forms
and Systems (1993-1996).
John Kinney (61) Vice Vice President, Golf Investment
2801 Ocean Drive, Suite 204 President Management, Inc. (since 1998);
Vero Beach, FL 32963 Owner, Combs Insurance (since
1991); Registered
Representative, Dean Witter
(1989-1991); Registered
Representative, E.F. Hutton
(1987-1989).
Jeffrey P. Meyer (40) Treasurer Registered Representative,
2801 Ocean Drive, Suite 204 Securities Service Network,
Vero Beach, FL 32963 Inc. (since 1998); Vice
President, Citrus Bank NA
(1995-1998); Vice President,
Wilshire Financial Group
(1993-1995).
Robert J. Zutz (45) Secretary Partner, Kirkpatrick & Lockhart
1800 Massachusetts Avenue, N.W. LLP.
Washington, D.C. 20036
* Messrs. Williams and Bahl are "interested persons" of the Fund as
defined in section 2(a)(19) of the 1940 Act.
The Fund's Declaration of Trust provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of their office.
The Fund currently pays Trustees who are not "interested persons" of the
Fund $ 1,000 per meeting of the Board of Trustees. Each Trustee is reimbursed
for any expenses incurred in attending meetings. Because the Adviser performs
substantially all of the services necessary for the operation of the Fund, the
Fund requires no employees. No officer, director or employee of the Adviser
receives any compensation from the Fund for acting as a director or officer. The
following table provides an estimate of each Trustee's compensation for the
current fiscal year:
15
<PAGE>
ESTIMATED COMPENSATION TABLE
Total Compensation From
Name of Person, Aggregate Compensation the Fund and the Fund
POSITION FROM THE FUND Complex of Funds
-------- ------------- EXPECTED TO BE PAID TO
TRUSTEES(1)
-----------
Michael T. Williams, CFP, CFS None None
Trustee
John C. Bahl, None None
Trustee
J. Kenneth Perry, $ 4,000 $ 4,000
Trustee
Scott M. Perry, $ 4,000 $ 4,000
Trustee
Eric M. Snelz, $ 4,000 $ 4,000
Trustee
No Trustee will receive any benefits upon retirement. Thus, no pension or
retirement benefits have accrued as part of the Fund's expenses.
- --------------
(1) This amount represents the estimated aggregate amount of compensation paid
to each Trustee for service on the Board of Trustees for the fiscal year
ending October 31, 1999.
INVESTMENT ADVISER AND ADMINISTRATOR; SUBADVISER
As noted above, the investment adviser and administrator for the Fund is
Golf Investment Management, Inc. The Adviser was organized as a Florida
corporation in 1998.
The Adviser is responsible for overseeing the Fund's investment and
noninvestment affairs, subject to the control and direction of the Fund's Board.
The Fund entered into an Investment Advisory and Administration Agreement with
the Adviser dated October 7, 1998. The Investment Advisory and Administration
Agreement requires that the Adviser review and establish investment policies for
the Fund and administer the Fund's noninvestment affairs.
Under a separate Subadvisory Agreement, the Subadviser, subject to the
direction and control of the Fund's Board of Trustees, provides investment
advice and portfolio management services to the Fund for a fee payable by the
Adviser.
The Adviser also is obligated to furnish the Fund with office space,
administrative, and certain other services as well as executive and other
personnel necessary for the operation of the Fund. The Adviser and its
affiliates also pay all the compensation of Trustees of the Fund who are
employees of the Adviser and its affiliates. The Fund pays all its other
expenses that are not assumed by the Adviser. The Fund also is liable for such
nonrecurring expenses as may arise, including litigation to which the Fund may
16
<PAGE>
be a party. The Fund also may have an obligation to indemnify its Trustees and
officers with respect to any such litigation.
The Advisory Agreement and the Subadvisory Agreement each were approved by
the Board of Trustees (including all of the Trustees who are not "interested
persons" of the Adviser or the Subadviser, as defined under the 1940 Act) and by
the sole shareholder of the Fund in compliance with the 1940 Act. Each Agreement
provides that it will be in force for an initial two-year period and it must be
approved each year thereafter by (1) a vote, cast in person at a meeting called
for that purpose, of a majority of those Trustees who are not "interested
persons" of the Adviser, the Subadviser or the Fund, and by (2) the majority
vote of either the full Board of Trustees or the vote of a majority of the
outstanding shares of the Fund. The Advisory and Subadvisory Agreement each
automatically terminates on assignment, and each is terminable on not more than
60 days' written notice by the Fund to either party. In addition, the Advisory
Agreement may be terminated on not less than 60 days' written notice by the
Adviser and the Subadvisory Agreement may be terminated on not less than 60
days' written notice by the Adviser, or 90 days' written notice by the
Subadviser. Under the terms of the Advisory Agreement, the Adviser automatically
becomes responsible for the obligations of the Subadviser upon termination of
the Subadvisory Agreement. In the event the Adviser ceases to be the investment
adviser of the Fund or the Distributor ceases to be principal distributor of
shares of the Fund, the right of the Fund to use the identifying name of the
Adviser may be withdrawn.
The Adviser and the Subadviser shall not be liable to the Fund or any
shareholder for anything done or omitted by them, except acts or omissions
involving willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties imposed upon them by their agreements with the Fund or
the Adviser, as applicable, or for any losses that may be sustained in the
purchase, holding or sale of any security.
The Adviser has entered into agreement with the Subadviser to provide
investment advice and portfolio management services to the Fund for an annual
fee to be paid by the Adviser to the Subadviser of 0.40% of the Fund's average
daily net assets.
CLASS-SPECIFIC EXPENSES. The Fund may determine to allocate certain of its
expenses (in addition to distribution fees) to the specific class of the Fund's
shares to which those expenses are attributable.
BROKERAGE PRACTICES
The Subadviser is responsible for the execution of the Fund's portfolio
transactions and must seek the most favorable price and execution for such
transactions. Best execution, however, does not mean that the Fund necessarily
will be paying the lowest commission or spread available. Rather, the Fund also
will take into account such factors as size of the order, difficulty of
execution, efficiency of the executing broker's facilities, and any risk assumed
by the executing broker.
It is a common practice in the investment advisory business for advisers
of investment companies and other institutional investors to receive research,
statistical and quotation services from broker-dealers who execute portfolio
transactions for the clients of such advisers. Consistent with the policy of
most favorable price and execution, the Subadviser may give consideration to
research, statistical and other services furnished by brokers or dealers. In
addition, the Subadviser may place orders with brokers who provide supplemental
investment and market research and securities and economic analysis and may pay
these brokers a higher brokerage commission or spread than may be charged by
other brokers, provided that the Subadviser determines in good faith that such
commission is reasonable in relation to the value of brokerage and research
services provided. Such research and analysis may be useful to the Subadviser in
connection with services to clients other than the Fund.
17
<PAGE>
The Fund may use the Distributor, its affiliates, or certain affiliates of
the Adviser as a broker for agency transactions in listed and over-the-counter
securities at commission rates and under circumstances consistent with the
policy of best execution. Commissions paid to the Distributor, its affiliates or
certain affiliates of the Adviser will not exceed "usual and customary brokerage
commissions." Rule l7e-1 under the 1940 Act defines "usual and customary"
commissions to include amounts that are "reasonable and fair compared to the
commission, fee or other remuneration received or to be received by other
brokers in connection with comparable transactions involving similar securities
being purchased or sold on a securities exchange during a comparable period of
time."
The Subadviser also may select other brokers to execute portfolio
transactions. In the over-the-counter market, the Fund generally deals with
primary market makers unless a more favorable execution can otherwise be
obtained.
The Fund may not buy securities from, or sell securities to, the
Distributor as principal. However, the Board of Trustees has adopted procedures
in conformity with Rule 10f-3 under the 1940 Act whereby the Fund may purchase
securities that are offered in underwritings in which the Distributor is a
participant. The Board of Trustees will consider the possibilities of seeking to
recapture for the benefit of expenses to the Fund of certain portfolio
transactions, such as underwriting commissions and tender offer solicitation
fees, by conducting such portfolio transactions through affiliated entities,
including the Distributor, but only to the extent such recapture would be
permissible under applicable regulations, including the rules of the National
Association of Securities Dealers, Inc. and other self-regulatory organizations.
Pursuant to Section 11(a) of the Securities Exchange Act of 1934, as
amended, the Fund has expressly consented to the Distributor executing
transactions on an exchange on its behalf.
DISTRIBUTION OF SHARES
The Distributor and broker-dealers with whom the Distributor has entered
into dealer agreements offer shares of the Fund as agents on a best efforts
basis and are not obligated to sell any specific amount of shares. In this
connection, the Distributor makes distribution and servicing payments to
participating dealers in connection with the sale of shares of the Fund.
Rule 12b-1 under the 1940 Act provides that an investment company may bear
expenses of distributing its shares only pursuant to a plan adopted in
accordance with the Rule. The Fund has adopted a Distribution Plan with respect
to each class of shares (the "Plan"). The Plan permits the Fund to pay the
Distributor the monthly distribution and service fee out of the Fund's net
assets to finance activity that is intended to result in the sale and retention
of Class A and Class B shares.
The Plan was approved by the Board of Trustees, including a majority of
the Trustees who are not interested persons of the Fund (as defined in the 1940
Act) and who have no direct or indirect financial interest in the operation of
the Plan or the Distribution Agreement ("Independent Trustees"). In approving
the Plan, the Board determined that there is a reasonable likelihood that the
Fund and its shareholders will benefit from the Plan.
The Plan may be terminated by vote of the Independent Trustees, or by vote
of a majority of the outstanding voting securities of a class of the Fund. The
Board reviews quarterly and annually a written report of Plan costs and the
purposes for which such costs have been incurred. The Plan may be amended by
vote of the Board, including a majority of the Independent Trustees, cast in
18
<PAGE>
person at a meeting called for such purpose. Any change in the Plan that would
increase materially the distribution cost to a class requires shareholder
approval of that class.
The Distribution Agreement may be terminated at any time on 60 days'
written notice without payment of any penalty by either party. The Fund may
effect such termination by vote of a majority of the outstanding voting
securities of the Fund or by vote of a majority of the Independent Trustees. For
so long as the Plan is in effect, selection and nomination of the Independent
Trustees shall be committed to the discretion of such disinterested persons.
The Distribution Agreement and the Plan will continue in effect for
successive one-year periods, provided that each such continuance is specifically
approved (1) by the vote of a majority of the Independent Trustees and (2) by
the vote of a majority of the entire Board of Trustees cast in person at a
meeting called for that purpose.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE, FUND ACCOUNTING AND TRANSFER AGENT SERVICES. PFPC Inc.
provides administrative, fund accounting, transfer agent and custodian
services to the Fund.
Pursuant to an Administration and Accounting Services Agreement
("Administration Agreement") between the Fund and PFPC Inc. ("Administrator"),
the Administrator provides the Fund with administrative and accounting services
(other than investment advisory services), including portfolio accounting
services, tax accounting services and furnishing financial reports. As
compensation for these services, the Fund pays the Administrator an annual fee
equal to: 0.10% of the Fund's first $250 million of average daily net assets;
.075% of the next $250 million; .05% of the next $250; and .03% on average daily
net assets in excess of $750 million, subject to a monthly minimum fee of
$8,333. The Administrator also is entitled to reimbursement for certain
out-of-pocket expenses, including pricing expenses.
Pursuant to a Custodian Agreement, PNC Bank N.A. ("Custodian") serves as
the Custodian of the Fund's assets. Under the terms of the Custodian Agreement,
the Custodian holds and administers the assets in the Fund's portfolio.
LEGAL COUNSEL. Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., 2nd Floor, Washington, D.C. 20036, serves as counsel to the Fund.
INDEPENDENT ACCOUNTANTS. PricewaterhouseCoopers LLP, 30 S. Seventeenth
Street, Philadelphia, PA 19103-4094, is the independent accountant for the
Fund.
POTENTIAL LIABILITY
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Fund. To protect its
shareholders, the Fund has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Fund. These documents require notice of this disclaimer to be given in each
agreement, obligation or instrument that the Fund or its Trustees enter into or
sign. In the unlikely event a shareholder is held personally liable for the
Fund's obligations, the Fund is required to use its property to protect or
compensate the shareholder. On request, the Fund will defend any claim made and
pay any judgment against a shareholder for any act or obligation of the Fund.
Therefore, financial loss resulting from liability as a shareholder will occur
19
<PAGE>
only if the Fund itself cannot meet its obligations to indemnify shareholders
and pay judgments against them.
20
<PAGE>
APPENDIX
COMMERCIAL PAPER RATINGS
The rating services' descriptions of commercial paper ratings in which the
Fund may invest are:
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC. COMMERCIAL PAPER DEBT
RATINGS
PRIME-1. Issuers (or supporting institutions) rated PRIME-1 (P-1) have a
superior ability for repayment of senior short-term debt obligations. P-1
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; broad margins in earnings
coverage of fixed financial charges and high internal cash generation;
well-established access to a range of financial markets and assured sources of
alternate liquidity.
PRIME-2. Issuers (or supporting institutions) rated PRIME-2 (P-2) have a
strong ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
DESCRIPTION OF STANDARD & POOR'S COMMERCIAL PAPER RATINGS
A-1. This designation indicates that the degree of safety regarding timely
payment is very strong. Those issues determined to possess extremely strong
characteristics are denoted with a plus sign (+) designation.
A-2. Capacity for timely payment of issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".
CORPORATE DEBT RATINGS
The rating services' descriptions of corporate debt ratings in which the
Fund may invest are:
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC. CORPORATE DEBT RATINGS
Aaa - Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present that
make the long-term risks appear somewhat larger than the Aaa securities.
A-1
<PAGE>
A - Bonds that are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present that suggest a susceptibility to impairment sometime in the future.
Baa - Bonds that are rated Baa are considered medium grade obligations,
I.E., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba - Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B - Bonds that are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa - Bonds that are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca - Bonds that are rated Ca represent obligations that are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C - Bonds that are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the company ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking and the modifier 3
indicates that the company ranks in the lower end of its generic rating
category.
DESCRIPTION OF STANDARD & POOR'S CORPORATE DEBT RATINGS
AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than for debt in higher rated categories.
A-2
<PAGE>
BB, B, CCC, CC, C - Debt rated "BB," "B," "CCC," "CC," and "C" is
regarded, on balance, as predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of the obligation.
"BB" indicates the lowest degree of speculation and "C" the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
BB - Debt rated "BB" has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions that could lead
to inadequate capacity to meet timely interest and principal payments. The "BB"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB-" rating.
B - Debt rated "B" has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"BB" or "BB-" rating.
CCC - Debt rated "CCC" has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial, or economic conditions, it is not likely
to have the capacity to pay interest and repay principal. The "CCC" rating
category is also used for debt subordinated to senior debt that is assigned an
actual or implied "B" or "B-" rating.
CC - The rating "CC" is typically applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.
C - The rating "C" is typically applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC-" debt rating. The "C" rating
may be used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.
CI - The rating "CI" is reserved for income bonds on which no interest is
being paid.
D - Debt rated "D" is in payment default. The "D" rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The "D" rating also will be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
PLUS (+) OR MINUS (-) - The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
categories.
NR - Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
A-3
<PAGE>
GOLF ASSOCIATED FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 16, 1998
Assets:
Cash $100,000
Deferred offering expenses 53,500
Receivable from the Adviser 31,000
-------
Total Assets 184,500
-------
Liabilities:
Offering costs payable 53,500
Organization costs payable 31,000
-------
Total Liabilities 84,500
Net Assets
Paid in capital (Applicable to 9,990 Class A shares of
beneficial interest issued and outstanding, 10 Class B
shares of beneficial interest issued and outstanding;
unlimited shares of each class authorized) $100,000
--------
Calculation of Maximum offering price:
Class A shares
Net asset value and redemption price per share $10.00
($99,900/9,990 shares issued and outstanding)
Sales charge - 5.75% of public offering price .61
-----
Maximum offering price $10.61
======
Class B shares
Net asset value and offering price per share ($100/10 shares $10.00
======
issued and Outstanding)
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS
FOR THE PERIOD JUNE 11, 1998 TO OCTOBER 16, 1998
Expenses $31,000
Expense reduction (31,000)
--------
Net Loss $ 0
========
See Notes to Financial Statements
2
<PAGE>
GOLF ASSOCIATED FUND
NOTES TO FINANCIAL STATEMENTS
1. Organization
The Golf Associated Fund (the "Fund") is an open-end management investment
company. The Fund was established as a Massachusetts business trust under a
Declaration of Trust dated June 11, 1998. The Fund currently offers two classes
of shares, Class A shares sold subject to a 5.75% maximum front-end sales charge
("Class A shares") and Class B shares sold subject to a maximum 5% contingent
deferred sales charge, declining over a six-year period ("Class B shares").
Costs incurred and to be incurred in connection with the organization of the
Fund, estimated at $31,000, will be borne by the Fund, subject to the expense
limitation agreement described in Note 2 below. Certain costs incurred and to be
incurred in connection with the initial offering of shares of the Fund,
estimated at $53,500, will be paid initially by the Fund's Adviser, Golf
Investment Management, Inc. ("GIM"). The Fund will reimburse GIM for such costs,
which will be deferred and amortized by the Fund over the period of benefit, not
to exceed 12 months from the date the Fund commences operations. The Fund has no
operations to date, other than the sale to GIM 99,990 Class A shares and 10
Class B shares, in each case on October 16, 1998.
2. Agreements
Pursuant to an advisory agreement between the Fund and GIM, GIM will manage the
fund's business and investment affairs. As compensation under the Advisory
Agreement, GIM will receive from the Fund an advisory fee, which is computed
daily and paid monthly, equal to 1.00% of the Fund's average daily net assets.
The adviser has voluntarily agreed to reduce its advisory fee to the extent
necessary to limit the Fund's operating expenses to a certain percentage of its
average net assets.
GIM has agreed to waive its fees and, if necessary, reimburse expenses for the
period June 11, 1998 to October 31, 1999 exceeding the annual rate of 1.70% of
average daily net assets for Class A shares and 2.45% of average daily net
assets for Class B shares, respectively. Any waivers or reimbursements made by
the Adviser during this period are subject to repayment by the Fund by October
31, 2001, provided that repayment does not result in the Fund's aggregate
expenses exceeding the foregoing expense limitations. GIM has agreed to
permanently waive repayment of expenses prior to the commencement of operations.
The Fund recorded its initial organization costs of $31,000 as an expense during
the period ended October 16, 1998 and recognized an offsetting expense reduction
as a result of the Adviser's commitment to reimburse these costs. The Fund may
be obliged to repay some or all of these costs to GIM if the Agreement's
conditions are met.
Pursuant to an Administrative and Accounting Service agreement, the Fund retains
PFPC, Inc. ("PFPC") an indirect wholly-owned subsidiary of PNC Bank N.A. as
3
<PAGE>
Administrator and Accounting Service Agent. In addition, PNC Bank N.A. serves as
the Fund's custodian and PFPC serves as transfer and dividend disbursing agent.
3. Service Plan
Under the Service Plan relating to Class A shares and Class B shares, the Fund
bears the costs and expenses in connection with distribution of the Fund's
shares and pays the fees of Financial Institutions, securities dealers and other
service agents. For these service activities the Fund may make payments at a
rate up to .25% per annum of the average daily net assets of the Class A shares
and 1.00% per annum of the average daily net assets of the Class B shares.
4
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholder and Board
of Trustees
Golf Associated Fund
In our opinion, the accompanying statement of assets and liabilities and the
statement of operations present fairly, in all material respects, the financial
position and results of operations of Golf Associated Fund (the "Fund") at
October 16, 1998 and for period June 11, 1998 to October 16, 1998, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluation the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, PA
October 22, 1998
5
<PAGE>
GOLF ASSOCIATED FUND
PART C OTHER INFORMATION
Item 23. EXHIBITS
--------
(a)(i) Declaration of Trust*
(ii) Amended and Restated Declaration of Trust (filed
herewith)
(b)(i) By-Laws*
(ii) Amended By-Laws (filed herewith)
(c) Voting trust agreement - None
(d)(i) Form of Investment Advisory Agreement between Golf
Associated Fund and Golf Investment Management, Inc.
(filed herewith)
(ii) Form of Subadvisory Agreement between Golf Investment
Management, Inc. and Wallington Asset Management, Inc.
(filed herewith)
(iii) Form of Administration and Accounting Services
Agreement between Golf Associated Fund and PFPC Inc.
(filed herewith)
(e) Form of Distribution Agreement between Golf Associated
Fund and Rafferty Capital Markets, Inc.
(filed herewith)
(f) Bonus, profit sharing contracts - None
(g) Form of Custodian Agreement between Golf Associated
Fund and PNC Bank N.A. (filed herewith)
(h) Form of Transfer Agency and Service Agreement between
Golf Associated Fund and PFPC Inc. (filed herewith)
(i) Opinion and consent of counsel (filed herewith)
(j) Consent of Independent Auditors (filed herewith)
(k) Financial statements omitted from prospectus - None
(l) Letter of investment intent (filed herewith)
(m) Form of Distribution Plan pursuant to Rule 12b-1
(filed herewith)
(n) Financial Data Schedule - Not required
(o) Plan pursuant to Rule 18f-3 (filed herewith)
Other Exhibits:
Power of Attorney (filed herewith)
<PAGE>
-------------
* As filed in the Registrant's Initial Registration Statement on Form
N-1A filed with the Securities and Exchange Commission on June 12,
1998.
Item 24 PERSONS CONTROLLED BY OR UNDER
COMMON CONTROL WITH REGISTRANT
------------------------------
None.
Item 25. INDEMNIFICATION
---------------
Article XI, Section 2 of the Trust's Declaration of Trust provides that:
(a) Subject to the exceptions and limitations contained in paragraph (b)
below:
(i) every person who is, or has been, a Trustee or officer of the Trust
(hereinafter referred to as a "Covered Person") shall be indemnified by the
Trust and/or by the appropriate Series to the fullest extent permitted by law
against liability and against all expenses reasonably incurred or paid by him or
her in connection with any claim, action, suit or proceeding in which he or she
becomes involved as a party or otherwise by virtue of his or her being or having
been a Covered Person and against amounts paid or incurred by him or her in the
settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall apply
to all claims, actions, suits or proceedings (civil, criminal or other,
including appeals), actual or threatened while a Covered Person is in office or
thereafter, and the words "liability" and "expenses" shall include, without
limitation, attorneys' fees, costs, judgments, amounts paid in settlement,
fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before which the
proceeding was brought (A) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office or (B) not to have
acted in good faith in the reasonable belief that his or her action was in the
best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Covered Person did not engage in willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office, (A) by the court or other body approving the
settlement; (B) by at least a majority of those Trustees who are neither
Interested Persons of the Trust nor parties to the matter based upon a review of
readily available facts (as opposed to a full trial-type inquiry or full
investigation); or (C) by written opinion of independent legal counsel based
upon a review of readily available facts (as opposed to a full trial-type
inquiry); provided, however, that any Shareholder may, by appropriate legal
proceedings, challenge any such determination by the Trustees, or by independent
legal counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now or
hereafter be entitled, shall continue as to a person who has ceased to be such
Trustee or officer and shall inure to the benefit of the heirs, executors and
administrators of such a person. Nothing contained herein shall affect any
C-2
<PAGE>
rights to indemnification to which Trust personnel, other than Trustees and
officers, and other persons may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
paragraph (a) of this Section 2 may be paid by the Trust from time to time prior
to final disposition thereof upon receipt of an undertaking by or on behalf of
such Covered Person that such amount will be paid over by him or her to the
Trust if it is ultimately determined that he or she is not entitled to
indemnification under this Section 2; provided, however, that:
(i) such Covered Person shall have provided appropriate security for
such undertaking,
(ii) the Trust is insured against losses arising out of any such
advance payments, or
(iii) either a majority of the Trustees who are neither interested
persons of the Trust nor parties to the matter, or independent legal counsel in
a written opinion, shall have determined, based upon a review of readily
available facts (as opposed to a trial-type inquiry or full investigation), that
there is reason to believe that such Covered Person will be found entitled to
indemnification under this Section 2.
According to Article XII, Section 1 of the Declaration of Trust, the Trust
is a trust and not a partnership. Trustees are not liable personally to any
person extending credit to, contracting with or having any claim against the
Trust, a particular Series or the Trustees. A Trustee, however, is not protected
from liability due to willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
Article XII, Section 2 provides that, subject to the provisions of Section
1 of Article XII and to Article XI, the Trustees are not liable for errors of
judgment or mistakes of fact or law, or for any act or omission in accordance
with advice of counsel or other experts or for failing to follow such advice.
Item 26. I. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
----------------------------------------------------
Golf Investment Management, Inc. (the "Adviser") is a Florida
corporation that offers investment advisory services. The Adviser's offices
are located at 2801 Ocean Drive, Vero Beach, Florida 32963. Michael T.
Williams owns a controlling interest in the Adviser. Information as to the
officers and directors of the Adviser is included in its current Form ADV
filed with the SEC (File No. 801-55919) and is incorporated by reference
herein.
II. BUSINESS AND OTHER CONNECTIONS OF SUBADVISER
--------------------------------------------
Wallington Asset Management, Inc. (the "Subadviser"), an Indiana
corporation, is a registered investment adviser. The Subadviser's offices
are located at 8900 Keystone Crossing, Suite 1015, Indianapolis, IN 46240.
Information as to the officers and directors of the Subadviser is included in
its current Form ADV filed with the SEC (File No. 801-31797) and is
incorporated by reference herein.
Item 27. PRINCIPAL UNDERWRITER
---------------------
(a) Rafferty Capital Markets, Inc., 550 Mamaroneck Avenue, Harrison,
New York 10528 is the principal underwriter for each of the following
investment companies: Potomac Funds, Badgley Funds, Homestate Group and
Texas Capital Value Funds.
C-3
<PAGE>
(b) The directors and officers of the Registrant's principal underwriter
are:
- --------------------------------------------------------------------------------
Name and Principal Positions & Offices with Position with
Business Address Underwriter Registrant
- --------------------------------------------------------------------------------
Lawrence C. Rafferty Director None
Thomas A. Mulrooney President None
Stephen P. Sprague FINOP/CFO None
Derek B. Park Senior Vice President, Equity None
- --------------------------------------------------------------------------------
The business address of each of the above directors and officers is 550
Mamaroneck Avenue, Harrison, New York 10528.
Item 28. LOCATION OF ACCOUNTS AND RECORDS
--------------------------------
The books and other documents required by Rule 31a-1 under the Investment
Company Act of 1940 are maintained in the physical possession of the Trust's
investment adviser (Golf Investment Management, Inc.), its subadviser
(Wallington Asset Management, Inc.), its administrator (PFPC Inc.)
and its custodian (PNC Bank, N.A.).
Item 29. MANAGEMENT SERVICES
-------------------
Not applicable.
Item 30. UNDERTAKING
-----------
Registrant hereby undertakes to furnish each person to whom a prospectus
is delivered a copy of its latest annual report to Shareholders, upon request
and without charge.
Registrant hereby undertakes to carry out all indemnification provisions
of its Declaration of Trust in accordance with Investment Company Act Release
No. 11330 (September 4, 1980) and successor releases. Insofar as indemnification
for liability arising under the Securities Act of 1933, as amended ("1933 Act"),
may be permitted to trustees, officers and controlling persons of the Registrant
pursuant to the provisions under Item 25 herein, or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the 1933 Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a trustee, officer
or controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such trustee, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the 1933 Act
and will be governed by the final adjudication.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant has duly
caused this Pre-Effective Amendment No. 1 to its Registration Statement on Form
N-1A to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Vero Beach and the State of Florida on October 23, 1998.
GOLF ASSOCIATED FUND
By: /s/ Michael T. Williams
-----------------------
Michael T. Williams
President
Attest:
/s/ Jeffrey P. Meyer
- ---------------------------------
Jeffrey P. Meyer
Treasurer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Pre-Effective Amendment No. 1 to the Registrant's Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated.
SIGNATURE TITLE DATE
/s/Michael T. Williams
- ----------------------- President and Trustee October 23, 1998
Michael T. Williams
John C. Bahl* Trustee October 23, 1998
- ----------------------
John C. Bahl
J. Kenneth Perry* Trustee October 23, 1998
- ----------------------
J. Kenneth Perry
Scott M. Perry* Trustee October 23, 1998
- ----------------------
Scott M. Perry
Eric M. Snelz* Trustee October 23, 1998
- ----------------------
Eric M. Snelz
*By /s/ Michael t. Williams
-----------------------
Michael T. Williams, Attorney-In-Fact
<PAGE>
POWER OF ATTORNEY
Each of the undersigned trustees of the Golf Associated Fund (the
"Fund") hereby severally constitutes and appoints Michael T. Williams and Robert
J. Zutz, and each of them singly, our true and lawful attorneys, with full power
to sign for each of us our names and in the capacities indicated below, any and
all instruments and filings of the Fund, and all instruments necessary or
desirable in connection therewith, filed with the Securities and Exchange
Commission, hereby ratifying and confirming our signatures as they may be signed
by said attorneys to any and all said instruments.
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this instrument has been signed below by the
following persons in the capacities and dates indicated:
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ John C. Bahl Trustee October 7, 1998
- -------------------------
John C. Bahl
/s/ J. Kenneth Perry Trustee October 7, 1998
- --------------------------
J. Kenneth Perry
/s/ Scott M. Perry Trustee October 7, 1998
- --------------------------
Scott M. Perry
/s/ Eric M. Snelz Trustee October 7, 1998
- --------------------------
Eric M. Snelz
<PAGE>
INDEX TO EXHIBITS
Exhibit
NUMBER DESCRIPTION PAGE
- ------ ----------- ----
(a) (i) Declaration of Trust*
(ii) Amended and Restated Declaration of Trust (filed herewith)
(b) (i) By-Laws*
(ii) Amended By-Laws (filed herewith)
(c) Voting trust agreement - None
(d) (i) Form of Investment Advisory Agreement between Golf Associated
Fund and Golf Investment Management, Inc. (filed herewith)
(ii) Form of Subadvisory Agreement between Golf Investment Management,
Inc. and Wallington Asset Management, Inc. (filed herewith)
(iii) Form of Administration and Accounting Services Agreement
between Golf Associated Fund and PFPC Inc. (filed herewith)
(e) Form of Distribution Agreement between Golf Associated Fund and
Rafferty Capital Markets, Inc. (filed herewith)
(f) Bonus, profit sharing contracts - None
(g) Form of Custodian Agreement between Golf Associated Fund and PNC
Bank N.A. (filed herewith)
(h) Form of Transfer Agency and Service Agreement between Golf
Associated Fund and PFPC, Inc. (filed herewith)
(i) Opinion and consent of counsel (filed herewith)
(j) Consent of Independent Auditors (filed herewith)
(k) Financial statements omitted from prospectus - None
(l) Letter of investment intent (filed herewith)
(m) From of Distribution Plan pursuant to Rule 12b-1 (filed herewith)
(n) Financial Data Schedule - Not required
(o) Plan pursuant to Rule 18f-3 (filed herewith)
Other Exhibits:
Power of Attorney
- -----------------
* As filed in the Registrant's Initial Registration Statement on Form N-1A
filed with the Securities and Exchange Commission on June 12, 1998.
Exhibit 99.B(1)(b)
GOLF ASSOCIATED FUND
A MASSACHUSETTS BUSINESS TRUST
AMENDED AND RESTATED
DECLARATION OF TRUST
SEPTEMBER 30, 1998
<PAGE>
GOLF ASSOCIATED FUND
DECLARATION OF TRUST
TABLE OF CONTENTS
PAGE
ARTICLE I -NAME, PRINCIPAL PLACE OF BUSINESS AND DEFINITIONS...................1
Section 1: Name............................................................1
Section 2: Principal Place of Business.....................................1
Section 3: Resident Agent..................................................2
Section 4: Definitions......................................................2
ARTICLE II - PURPOSE OF TRUST..................................................3
ARTICLE III - BENEFICIAL INTEREST..............................................3
Section 1: Shares of Beneficial Interest...................................3
Section 2: Ownership of Shares.............................................3
Section 3: Investment in the Trust.........................................3
Section 4: Assets and Liabilities of the Trust.............................4
Section 5: No Preemptive Rights............................................4
Section 6: Limitation on Personal Liability................................4
ARTICLE IV -THE TRUSTEES.......................................................5
Section 1: Management of the Trust.........................................5
Section 2: Election of Trustees............................................5
Section 3: Term of Office of Trustees......................................5
Section 4: Resignation and Appointment of Trustees.........................5
Section 5: Temporary Absence of Trustee....................................6
Section 6: Number of Trustees..............................................6
Section 7: Effect of Death, Resignation, Etc. of a Trustee.................6
Section 8: Ownership of Trust Assets.......................................6
ARTICLE V - POWERS OF THE TRUSTEES.............................................6
Section 1: Powers..........................................................6
Section 2: Trustees and Officers as Shareholders...........................9
Section 3: Action by the Trustees..........................................9
Section 4: Chairman of the Trustees.......................................10
ARTICLE VI -- EXPENSES OF THE TRUST...........................................10
ARTICLE VII - INVESTMENT ADVISER, PRINCIPAL UNDERWRITER AND TRANSFER AGENT....10
Section 1: Investment Advisers and Subadvisers............................10
Section 2: Principal Underwriter..........................................11
Section 3: Transfer Agent.................................................11
Section 4: Parties to Contract............................................11
ARTICLE VIII - SHAREHOLDERS' VOTING POWERS AND MEETINGS.......................12
Section 1: Voting Powers..................................................12
Section 2: Meetings.......................................................12
Section 3: Quorum and Required Vote.......................................13
<PAGE>
ARTICLE IX - CUSTODIAN........................................................13
Section 1: Appointment and Duties.........................................13
Section 2: Employment of Sub-Custodians...................................14
Section 3: Central Depository System......................................14
ARTICLE X - DISTRIBUTIONS AND REDEMPTIONS.....................................14
Section 1: Distributions..................................................14
Section 2: Redemptions....................................................15
Section 3: Determination of Net Asset Value and Valuation of Portfolio
Assets.........................................................15
Section 4: Suspension of the Right of Redemption..........................16
ARTICLE XI - LIMITATION OF LIABILITY AND INDEMNIFICATION......................16
Section 1: Limitation of Liability........................................16
Section 2: Indemnification................................................16
Section 3: Shareholders...................................................18
ARTICLE XII - MISCELLANEOUS...................................................18
Section 1: Trust Not A Partnership........................................18
Section 2: Trustees' Good Faith Action, Expert Advice, No Bond or Surety..18
Section 3: Establishment of Record Dates..................................19
Section 4: Termination of Trust...........................................19
Section 5: Filing of Copies, References, Headings.........................20
Section 6: Applicable Law.................................................20
Section 7: Amendments.....................................................21
Section 8: Fiscal Year....................................................21
Section 9: Notice to Other Parties........................................21
ii
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GOLF ASSOCIATED FUND
AMENDED AND RESTATED
DECLARATION OF TRUST
This AMENDED AND RESTATED DECLARATION OF TRUST is made on September 30,
1998, by the undersigned Trustee and by the holders of Shares of beneficial
interest to be issued hereunder as hereinafter provided.
WITNESSETH that
WHEREAS, this Trust was formed to carry on the business of an
investment company pursuant to a Declaration of Trust dated June 11, 1998; and
WHEREAS, the Trustee agrees to manage all property coming into his
hands as a trustee of a Massachusetts voluntary association with transferable
Shares in accordance with the provisions hereinafter set forth; and
WHEREAS, the Trustee hereby desires to establish a trust fund for the
investment and reinvestment of funds contributed thereto;
NOW, THEREFORE, the Trustee hereby declares that he will hold all cash,
securities and other assets, which he may from time to time acquire in any
manner as Trustee hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the pro rata benefit of the holders from time
to time of Shares in this Trust as hereinafter set forth.
ARTICLE I
NAME, PRINCIPAL PLACE OF BUSINESS AND DEFINITIONS
NAME
SECTION 1. This Trust (formerly called "The Golf Fund") shall be known
as the "Golf Associated Fund" and the Trustees shall conduct the business of the
Trust under that name or any other name as they may from time to time determine.
PRINCIPAL PLACE OF BUSINESS
SECTION 2. The principal place of business of the Trust shall be 2801
Ocean Drive, Vero Beach, Florida 32963.
<PAGE>
RESIDENT AGENT
SECTION 3. The resident agent for the Trust in Massachusetts shall be
CT Corporation System, 2 Oliver Street, Boston, Massachusetts, or such other
person as the Trustee may from time to time designate.
DEFINITIONS
SECTION 4. Wherever used herein, unless otherwise required by the
context or specifically provided:
(a) The "1940 Act" refers to the Investment Company Act of
1940, as amended from time to time;
(b) The terms "Affiliated Person," "Assignment," "Commission,"
"Interested Person," "Majority Shareholder Vote" (the 67% or 50%
requirement of the third sentence of Section 2(a)(42) of the 1940 Act,
whichever may be applicable) and "Principal Underwriter" shall have
the meanings given them in the 1940 Act, as amended from time to time;
(c) "By-Laws" shall mean the By-Laws of the Trust, as amended
from time to time;
(d) "Class" refers to the class of Shares of a Series of the
Trust established in accordance with the provisions of Article III;
(e) "Declaration of Trust" shall mean this Declaration of
Trust, as amended or restated from time to time;
(f) "Net Asset Value" means the net asset value of each Trust
series as determined in the manner provided in Article X, Section 3;
(g) "Series" refers to series of Shares of the Trust
established in accordance with the provisions of Article III;
(h) "Shareholder" means a record owner of Shares of the Trust;
(i) "Shares" means the equal proportionate transferable units
of interest into which the beneficial interest of each of the Trust
series or any class thereof shall be divided from time to time, and
includes fractions of shares as well as whole shares (all of the
transferable units of a series or of a single class may be referred to
as "Shares" as the context may require) consistent with the
requirements of federal and/or other securities laws;
(j) The "Trust" refers to the Golf Associated Fund; and
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(k) The "Trustees" refers to the individual trustees in their
capacity as trustees duly elected or appointed, qualified hereunder
and serving as trustees of the Trust and their successor or successors
for the time being in office as such trustee or trustees.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to provide investors, through one or more
Series or Classes thereof as designated by the Trustees, with a continuous
source of managed investments in securities.
ARTICLE III
BENEFICIAL INTEREST
SHARES OF BENEFICIAL INTEREST
SECTION 1. The Shares of the Trust shall be issued in one or more
Series and/or Classes as the Trustees may, without Shareholder approval,
authorize. Each Series shall be preferred over all other Series in respect of
the assets allocated to that Series. The beneficial interest in each Series
shall at all times be divided into Shares, with or without par value as the
Trustees may specify, each of which shall represent an equal proportionate
interest in the Series with each other Share of the same Series, none having
priority or preference over another. Each Series shall be represented by one or
more Classes of Shares, with each Class possessing such rights (including,
notwithstanding any contrary provision herein, voting rights) as the Trustees
may, without Shareholder approval, authorize. Shares of each Series, when
issued, shall be fully paid and non-assessable. The number of Shares authorized
shall be unlimited, and the Shares so authorized may be represented in part by
fractional Shares. The Trustees may from time to time and without Shareholder
approval divide or combine the Shares of any Series or Class into a greater or
lesser number without thereby changing the proportionate beneficial interests in
the Series or Class.
OWNERSHIP OF SHARES
SECTION 2. The ownership of Shares shall be recorded in the books of
the Trust. The Trustees may make such rules as they consider appropriate for the
transfer of Shares and similar matters. The record books of the Trust shall be
conclusive as to who are the holders of Shares and as to the number of Shares
held from time to time by each Shareholder.
INVESTMENT IN THE TRUST
SECTION 3. The Trustees shall accept investments in the Trust from such
persons and on such terms as they may from time to time authorize. As determined
by guidelines established by the Trustees, such investments may be in the form
of cash or securities in which the Trust (or each designated Series) is
authorized to invest, valued as provided in Article X, Section 3. Investments in
3
<PAGE>
the Trust shall be credited to each Shareholder's account in the form of full or
fractional Shares at the Net Asset Value per Share next determined after the
investment is received; provided, however, that the Trustees may, in their sole
discretion: (a) impose a sales charge upon investments in the Trust or Series or
any Classes thereof and (b) issue fractional Shares. The Trustees shall have, in
their sole discretion, the right to refuse to accept investments in the Trust at
any time.
ASSETS AND LIABILITIES OF THE TRUST
SECTION 4. All consideration received by the Trust for the issue or
sale of Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall be
referred to as "assets belonging to" that Series and shall be held by the
Trustees in Trust for the benefit of the Shareholders of that Series. The assets
belonging to each particular Series shall be charged with the liabilities of
that Series and all expenses, costs, charges and reserves attributable to that
Series, except that liabilities and expenses allocated solely to a particular
Class shall be borne by that Class. In addition, any assets, income, earnings,
profits, and proceeds thereof, funds, or payments or any general liabilities,
expenses, costs, charges or reserves of the Trust that are not readily
identifiable as belonging to or chargeable to any particular Series or Class
shall be allocated by the Trustees between and among one or more of the Series
or Classes in such manner as they, in their sole discretion, deem fair and
equitable. Each such allocation shall be conclusive and binding upon the
Shareholders of all Series or Classes for all purposes, and shall be referred to
as assets belonging to that Series or Class. Any creditor of any Series may look
only to the assets of that Series to satisfy such creditor's debt.
NO PREEMPTIVE RIGHTS
SECTION 5. Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the Trust.
LIMITATION ON PERSONAL LIABILITY
SECTION 6. The Trustees shall have no power to bind any Shareholder
personally or to call upon any Shareholder for the payment of any sum of money
or assessment whatsoever other than such as the Shareholder may at any time
personally agree to pay by way of subscription for any Shares or otherwise.
Every note, bond, contract or other undertaking issued by or on behalf of the
Trust or the Trustees relating to the Trust shall include a recitation limiting
the obligation represented thereby to the Trust and its assets (but the omission
of such a recitation shall not operate to bind any Shareholder).
4
<PAGE>
ARTICLE IV
THE TRUSTEES
MANAGEMENT OF THE TRUST
SECTION 1. The business and affairs of the Trust shall be managed by
the Trustees, and they shall have all powers necessary and desirable to carry
out that responsibility.
ELECTION OF TRUSTEES
SECTION 2. On a date fixed by the Trustees, the Shareholders shall
elect not less than three (3) Trustees. A Trustee shall not be required to be a
Shareholder of the Trust. Until such election, the Trustee shall be Michael T.
Williams and such other individuals as the Board of Trustees shall appoint
pursuant to Section 4 of Article IV.
TERM OF OFFICE OF TRUSTEES
SECTION 3. The Trustees shall hold office during the lifetime of the
Trust, and until its termination as hereinafter provided, except that: (a) any
Trustee may resign his or her trust by written instrument signed by him or her
and delivered to the Trust's President or the other Trustees, which resignation
shall take effect upon such delivery or upon such later date as is specified
therein; (b) any Trustee may be removed at any time by written instrument,
signed by at least two-thirds of the number of Trustees prior to such removal,
specifying the date when such removal shall become effective; and (c) a Trustee
may be removed at any special meeting of Shareholders of the Trust by a vote of
two-thirds of the outstanding Shares. Upon the resignation or removal of a
Trustee, or his or her otherwise ceasing to be a Trustee, he or she shall
execute and deliver such documents as the remaining Trustees shall require for
the purpose of conveying to the Trust or the remaining Trustees any Trust
property held in the name of the resigning or removed Trustee. Upon the
incapacity or death of any Trustee, his legal representative shall execute and
deliver on his or her behalf such documents as the remaining Trustees shall
require as provided in the preceding sentence.
RESIGNATION AND APPOINTMENT OF TRUSTEES
SECTION 4. Any vacancy on the Board of Trustees that results from an
increase in the number of Trustees may be filled by a majority of the entire
Board of Trustees, provided that a quorum is present, and any other vacancy that
shall exist for any reason, including, but not limited to, declination to assume
office, death, resignation, or removal, the remaining Trustees shall fill such
vacancy by appointing such other person as they in their discretion shall see
fit, consistent with the limitations under the 1940 Act. Such appointment shall
be evidenced by a written instrument signed by a majority of the Trustees then
in office or by recording in the records of the Trust, whereupon the appointment
shall take effect. An appointment of a Trustee may be made by the Trustees then
in office in anticipation of a vacancy to occur by reason of retirement,
resignation or increase in number of Trustees effective at a later date,
provided that said appointment shall become effective only at or after the
effective date of said retirement, resignation or increase in number of
Trustees. As soon as any Trustee so appointed shall have accepted this trust,
5
<PAGE>
the trust estate shall vest in the new Trustee or Trustees, together with the
continuing Trustees, without any further act or conveyance, and he or she shall
be deemed a Trustee hereunder. The power of appointment of Trustees is subject
to the provisions of Section 16(a) of the 1940 Act.
TEMPORARY ABSENCE OF TRUSTEE
SECTION 5. Any Trustee may, by power of attorney, delegate his or her
power for a period not exceeding six months at any one time to any other Trustee
or Trustees, provided that in no case shall less than two Trustees personally
exercise the other powers hereunder, except as herein otherwise expressly
provided.
NUMBER OF TRUSTEES
SECTION 6. Except as provided in Section 2, Article IV hereof, the
number of Trustees serving hereunder at any time shall be determined by the
Trustees themselves and shall not be less than three (3) nor more than twelve
(12). Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled, or while any Trustee is physically or mentally incapacitated
by reason of disease or otherwise, the other Trustees shall have all the powers
hereunder and the certificate of the other Trustees of such vacancy, absence or
incapacity, shall be conclusive.
EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE
SECTION 7. The death, declination, resignation to assume office,
retirement, removal, incapacity or inability of the Trustees, or any one of
them, shall not operate to annul the Trust or to revoke any existing agency
created pursuant to the terms of this Declaration of Trust.
OWNERSHIP OF TRUST ASSETS
SECTION 8. The assets of the Trust shall be held separate and apart
from any assets now or hereafter held in any capacity other than as Trustee
hereunder by the Trustees or any successor Trustees. All of the assets of the
Trust shall at all times be considered as vested in the Trustees. No Shareholder
shall be deemed to have a severable ownership in any individual asset of the
Trust or any right of partition or possession thereof, but each Shareholder
shall have a proportionate undivided beneficial interest in the Trust.
ARTICLE V
POWERS OF THE TRUSTEES
POWERS
SECTION 1. The Trustees in all instances shall act as principals, and
are and shall be free from the control of the Shareholders. The Trustees shall
have full power and authority to do any and all acts and to make and execute any
6
<PAGE>
and all contracts and instruments that they may consider necessary or
appropriate in connection with the management of the Trust. The Trustees shall
not in any way be bound or limited by present or future laws or customs in
regard to trust investments, but shall have full authority and power to make any
and all investments that they, in their sole discretion, shall deem proper to
accomplish the purpose of this Trust. Without limiting the foregoing, but
subject to any applicable limitation in this Declaration of Trust or the By-Laws
of the Trust, the Trustees shall have power and authority:
(a) To invest and reinvest cash and other property, and to
hold cash or other property uninvested, without in any event being
bound or limited by any present or future law or custom in regard to
investments by Trustees, and to sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the assets of the
Trust; to purchase and sell options on securities, currencies, indices,
futures contracts and other financial instruments and enter into
closing transactions in connection therewith; to enter into all types
of commodities contracts, including without limitation the purchase and
sale of futures contracts and forward contracts on securities, indices,
currencies, and other financial instruments; to engage in forward
commitment, "when issued" and delayed delivery transactions; to enter
into repurchase agreements and reverse repurchase agreements; and to
employ all types of hedging techniques and investment management
strategies.
(b) To adopt By-Laws not inconsistent with this Declaration of
Trust providing for the conduct of the business of the Trust and to
amend and repeal them to the extent that the rights of amendment and
repeal are not reserved to Shareholders.
(c) To elect and remove such officers and appoint and
terminate such agents as they consider appropriate.
(d) To employ a bank, trust company or other entity permitted
by the Commission to serve as custodian ("Custodian") of any assets of
the Trust subject to any conditions set forth in this Declaration of
Trust or in the By-Laws, if any.
(e) To retain a transfer agent and shareholder servicing
agent, or both.
(f) To provide for the distribution of Shares either through a
principal underwriter in the manner hereinafter provided for or by the
Trust itself, or both.
(g) To set record dates in the manner hereinafter provided.
(h) To delegate such authority as they consider desirable to
any officers of the Trust and to any agent, independent contractor,
Custodian or underwriter.
(i) To sell or exchange any or all of the assets of the Trust,
subject to the provisions of Article XII, Section 4(b) hereof.
7
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(j) To vote or give assent, or exercise any rights of
ownership with respect to stock or other securities or property; and to
execute and deliver powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such
power and discretion with relation to securities or property as the
Trustees shall deem proper.
(k) To exercise powers and rights of subscription or otherwise
that in any manner arise out of ownership of securities.
(l) To hold any security or property in a form not indicating
any trust, whether in bearer, unregistered or other negotiable form; or
in its own name or in the name of a Custodian or a nominee or nominees,
subject in whichever case to proper safeguards according to the usual
practice of Massachusetts trust companies or investment companies.
(m) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or concern,
any security of which is held in the Trust; to consent to any contract,
lease, mortgage, purchase, or sale of property by such corporation or
concern; and to pay calls or subscriptions with respect to any security
held in the Trust.
(n) To compromise, arbitrate, or otherwise adjust claims in
favor of or against the Trust or any matter in controversy including,
but not limited to, claims for taxes.
(o) To make distributions of income and of capital gains to
Shareholders in the manner hereinafter provided.
(p) To borrow money.
(q) To establish, from time to time, a minimum total
investment for Shareholders, and to require redemption of the Shares of
any Shareholders whose investment is less than such minimum upon giving
notice to such Shareholder. No one dealing with the Trustees shall be
under any obligation to make any inquiry concerning the authority of
the Trustees, or to see to the application of any payments made or
property transferred to the Trustees or upon their order.
(r) To retain an administrator, manager, investment advisers
and/or investment subadvisers.
(s) To establish separate and distinct Series with separately
defined investment objectives, policies and purposes, and to allocate
assets, liabilities and expenses of the Trust to a particular series of
Shares or to apportion the same among two or more Series, provided that
any liability or expense incurred by a particular Series of Shares
shall be payable solely out of the assets of that Series.
(t) To establish separate and distinct Classes for one or more
Series, with each Class having such rights and differences as
8
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determined by the Trustees and to allocate assets, liabilities and
expenses of a particular Class or to apportion the same among or
between two or more Classes, provided that any liabilities or expenses
incurred by a particular Class shall be payable solely out of the
assets belonging to that Class.
(u) To purchase and pay for entirely out of Trust property
such insurance as they may deem necessary or appropriate for the
conduct of the business, including, without limitation, insurance
policies insuring the assets of the Trust and payment of distributions
and principal on its portfolio investments, and insurance policies
insuring the Shareholders, Trustees, officers, employees, agents,
investment advisers or managers, principal underwriters, or independent
contractors of the Trust individually against all claims and
liabilities of every nature arising by reason of holding, being or
having held any such office or position, or by reason of any action
alleged to have been taken or omitted by any such person as
Shareholder, Trustee, officer, employee, agent, investment adviser or
manager, principal underwriter, or independent contractor, including
any action taken or omitted that may be determined to constitute
negligence, whether or not the Trust would have the power to indemnify
such person against such liability.
TRUSTEES AND OFFICERS AS SHAREHOLDERS
SECTION 2. Subject only to the general limitations herein contained as
to the sale and purchase of Trust Shares and any restrictions that may be
contained in the By-Laws:
(a) Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of Shares to the same extent as if he or she
were not a Trustee, officer or agent;
(b) The Trustees may issue and sell or cause to be issued and
sold Shares to (and buy such Shares from) any Interested Person.
ACTION BY THE TRUSTEES
SECTION 3. The Trustees shall act by majority vote at a meeting duly
called or by unanimous written consent without a meeting or by telephone consent
provided a quorum of Trustees participate in any such telephonic meeting, unless
the 1940 Act requires that a particular action be taken only at an in-person
meeting of the Trustees. At any meeting of the Trustees, a majority of the
Trustees shall constitute a quorum. Meetings of the Trustees may be called
orally or in writing by the Chairman of the Trustees or by any two other
Trustees. Notice of the time, date and place of all meetings of the Trustees
shall be given to each Trustee as provided in the By-Laws.
Notice need not be given to any Trustee who attends the meeting without
objecting to the lack of notice or who executes a written waiver of notice with
respect to the meeting. Subject to the requirements of the 1940 Act, the
Trustees by majority vote may delegate to any one of their number the authority
to approve particular matters or take particular actions on behalf of the Trust.
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CHAIRMAN OF THE TRUSTEES
SECTION 4. The Trustees may appoint one of their number to be Chairman
of the Board of Trustees and to perform such duties as the Trustees may
designate.
ARTICLE VI
EXPENSES OF THE TRUST
Subject to the provisions of Article III, Section 4, the Trustees are
authorized to have paid from the Trust property or the assets belonging to the
Trust, as they deem fair and appropriate, expenses and disbursements of the
Trust, including, without limitation, fees and expenses of Trustees who are not
Interested Persons of the Trust, interest expenses, taxes, fees and commissions
of every kind, expenses of pricing Trust portfolio securities, expenses of
issue, repurchase and redemption of Shares including expenses attributable to a
program of periodic repurchases or redemptions, expenses of registering and
qualifying the Trust and its Shares under federal and state laws and
regulations, charges of investment advisers, managers, administrators,
Custodians, transfer agents, and registrars, expenses of preparing and
typesetting Prospectuses and Statements of Additional Information, expenses of
printing and distributing such documents sent to existing Shareholders, auditing
and legal expenses, reports to Shareholders, expenses of meetings of
Shareholders and proxy solicitations therefor, insurance expenses, association
membership dues and for such non-recurring items as may arise, including
litigation to which the Trust is a party, and for all losses and liabilities by
them incurred in administering the Trust, and for the payment of such expenses,
disbursements, losses and liabilities the Trustees shall have a lien on the
assets belonging to the Trust prior to any rights or interests of the
Shareholders thereto. This section shall not preclude the Trust from directly
paying any of the aforementioned fees and expenses.
ARTICLE VII
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER AND TRANSFER AGENT
INVESTMENT ADVISERS AND SUBADVISERS
SECTION 1. Subject to a Majority Shareholder Vote when required by the
1940 Act, the Trustees in their discretion from time to time may enter into one
or more investment advisory or similar agreements on behalf of the Trust or any
Series thereof whereby the other parties to such agreements shall undertake to
furnish the Trust and any Series thereof such investment advisory, statistical
and research facilities and services and such other facilities and services, if
any, and all upon such terms and conditions as the Trustees may in their
discretion determine. Notwithstanding any provisions of this Declaration of
Trust, the Trustees may authorize the investment advisers (subject to such
general or specific instructions as the Trustees may from time to time adopt) to
effect purchases, sales or exchanges of portfolio securities and other
investment instruments of the Trust on behalf of the Trustees or may authorize
any officer, agent, or Trustee to effect such purchases, sales or exchanges
pursuant to recommendations of the investment advisers (and all without further
action by the Trustees). Any such purchases, sales and exchanges shall be deemed
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to have been authorized by all of the Trustees. Subject to a Majority Vote when
required by the 1940 Act, the Trustees in their discretion from time to time may
authorize the investment advisers to employ one or more subadvisers to perform
such of the acts and services of the investment adviser, and upon such terms and
conditions, as may be agreed upon between the investment adviser and subadviser.
PRINCIPAL UNDERWRITER
SECTION 2. The Trustees in their discretion from time to time may enter
into an agreement(s) on behalf of the Trust or any Series or Class thereof
providing for the sale of the Shares, whereby the Trust may either agree to sell
the Shares to the other party to the agreement or appoint such other party its
sales agent for such Shares. In either case, the agreement shall be on such
terms and conditions as may be prescribed in the By-Laws, if any, and such
further terms and conditions as the Trustees may in their discretion determine
to be not inconsistent with the provisions of this Article VII, or of the
By-Laws, if any; and such agreement may also provide for the repurchase or sale
of Shares by such other party as principal or as agent of the Trust.
Alternatively, or in addition thereto, the Trust can directly distribute its
Shares and, if necessary in connection with such distribution, register as a
broker-dealer in appropriate jurisdictions. The Trustees may in their discretion
adopt a plan or plans of distribution and enter into any related agreements
whereby the Trust finances directly or indirectly any activity that is primarily
intended to result in sales of Shares.
TRANSFER AGENT
SECTION 3. The Trustees in their discretion from time to time may enter
into a transfer agency and shareholder service agreement whereby the other party
shall undertake to furnish the Trust or any Series or Class with transfer agency
and shareholder services. The agreement shall be on such terms and conditions as
the Trustees may in their discretion determine are not inconsistent with the
provisions of this Declaration of Trust or of the By-Laws, if any. Such services
may be provided by one or more entities including one or more agents of such
parties.
PARTIES TO CONTRACT
SECTION 4. Any agreement of the character described in Sections 1, 2
and 3 of this Article VII or in Article IX hereof may be entered into with any
corporation, firm, partnership, trust or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, trustee,
shareholder or member of such other party to the agreement, and no such
agreement shall be invalidated or rendered voidable by reason of the existence
of any relationship, nor shall any person holding such relationship be liable
merely by reason of such relationship for any loss or expense to the Trust under
or by reason of said agreement or accountable for any profit realized directly
or indirectly therefrom, provided that the agreement when entered into was
reasonable and fair and not inconsistent with the provisions of this Article VII
or the By-Laws, if any. The same person (including a firm, corporation,
partnership, trust, or association) may be the other party to agreements entered
into pursuant to Sections 1, 2 and 3 above or Article IX, and any individual may
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be financially interested or otherwise affiliated with persons who are parties
to any or all of the agreements mentioned in this Section 4.
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
SECTION 1. The Shareholders shall have power to vote: (i) for the
election of Trustees as provided in Article IV, Section 2, (ii) for the removal
of Trustees as provided in Article IV, Section 3(c), (iii) with respect to any
investment advisory agreement as provided in Article VII, Section 1, (iv) with
respect to the amendment of this Declaration of Trust as provided in Article
XII, Section 7, (v) to the same extent as the shareholders of a Massachusetts
business corporation, as to whether or not a court action, proceeding or claim
should be brought or maintained derivatively or as a class action on behalf of
the Trust or the Shareholders, provided, however, that a Shareholder of a
particular Series or Class shall not be entitled to bring any derivative or
class action on behalf of any other Series or Class of the Trust, and (vi) with
respect to such additional matters relating to the Trust as may be required or
authorized by law, by this Declaration of Trust, or the By-Laws of the Trust, if
any, or any registration statement of the Trust with the Commission or any
State, as the Trustees may consider desirable. On any matter submitted to a vote
of Shareholders, all Shares shall be voted in the aggregate and not by
individual Series or Class; except (i) when required by the 1940 Act or (ii)
when the Trustees have determined that the matter affects only the interests of
one or more Series or Classes, then only the Shareholders of such Series or
Classes shall be entitled to vote thereon. Each whole Share shall be entitled to
one vote as to any matter on which it is entitled to vote, and each fractional
Share shall be entitled to a proportionate fractional vote. There shall be no
cumulative voting in the election of Trustees. Shares may be voted in person or
by proxy. Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required or permitted by law, this
Declaration of Trust or any By-Laws of the Trust to be taken by Shareholders.
MEETINGS
SECTION 2. Special meetings of the Shareholders may be called by the
Trustees and may be held at the principal office of the Trust or such other
place as the Trustees may designate. Special meetings also shall be called by
the Trustees for the purpose of removing one or more Trustees upon the written
request for such a meeting by Shareholders owning at least 10% of the
outstanding Shares entitled to vote. Whenever ten or more Shareholders meeting
the qualifications set forth in Section 16(c) of the 1940 Act, as the same may
be amended from time to time, seek the opportunity of furnishing materials to
the other Shareholders with a view to obtaining signatures on such a request for
a meeting, the Trustees shall comply with the provisions of said Section 16(c)
with respect to providing such Shareholders access to the list of the
Shareholders of record of the Trust or the mailing of such materials to such
Shareholders of record. Shareholders shall be entitled to at least 15 days'
notice of any meeting.
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QUORUM AND REQUIRED VOTE
SECTION 3. A majority of Shares entitled to vote in person or by proxy
shall be a quorum for the transaction of business at a Shareholders' meeting,
except that where any provision of law or of this Declaration of Trust permits
or requires that holders of any Series or Class shall vote as a Series or Class,
then a majority of the aggregate number of Shares of that Series or Class
entitled to vote shall be necessary to constitute a quorum for the transaction
of business by that Series or Class. Any lesser number shall be sufficient for
adjournments. Any adjourned session or sessions may be held, within a reasonable
time after the date set for the original meeting, without the necessity of
further notice. Except when a larger vote is required by any provision of this
Declaration of Trust, the By-Laws or applicable law, a majority of the Shares
voted in person or by proxy shall decide any questions and a plurality shall
elect a Trustee, provided that where any provision of law or of this Declaration
of Trust permits or requires that the holders of any Series or Class shall vote
as a Series or Class, then a majority of the Shares of that Series or Class
voted on the matter shall decide that matter insofar as that Series or Class is
concerned.
ARTICLE IX
CUSTODIAN
APPOINTMENT AND DUTIES
SECTION 1. The Trustees shall at all times employ a bank or trust
company having capital, surplus and undivided profits of at least two million
dollars ($2,000,000) as Custodian on such basis of compensation as may be agreed
upon between the Trustees and the Custodian. The Custodian shall have authority
as agent for the Trust, but subject to such restrictions, limitations and other
requirements, if any, as may be contained in the By-Laws of the Trust:
(a) to hold the securities owned by the Trust and any Series or Class
thereof and deliver the same upon written order;
(b) to receive and take receipt for any moneys due to the Trust and
deposit the same in its own banking department or elsewhere as the
Trustees may direct;
(c) to disburse such funds upon orders or vouchers;
(d) to keep the books and accounts of the Trust and furnish clerical
and accounting services; and
(e) to compute, if authorized to do so by the Trustees, the Trust's Net
Asset Value in accordance with the provisions hereof.
If so directed by a Majority Shareholder Vote, the Custodian shall
deliver and pay over all property of the Trust held by it as specified in such
vote.
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EMPLOYMENT OF SUB-CUSTODIANS
SECTION 2. The Trustees also may authorize the Custodian to employ one
or more sub-Custodians from time to time to perform such of the acts and
services of the Custodian, and upon such terms and conditions, as may be agreed
upon between the Custodian and such sub-Custodian and approved by the Trustees,
provided that in every case such sub-Custodian shall be (a) a bank or trust
company organized under the laws of the United States or one of the states
thereof and having capital, surplus and undivided profits of at least two
million dollars ($2,000,000) or such other person as may be permitted by the
Commission, or otherwise in accordance with the 1940 Act as from time to time
amended, or (b) an eligible foreign custodian in accordance with Rule 17f-5
under the 1940 Act or any such applicable successor regulation.
CENTRAL DEPOSITORY SYSTEM
SECTION 3. Subject to such rules, regulations and orders as the
Commission may adopt, the Trustees may direct the Custodian to deposit all or
any part of the securities owned by the Trust in a system for the central
handling of securities established by a national securities exchange or a
national securities association registered with the Commission under the
Securities Exchange Act of 1934, as amended, or such other person as may be
permitted by the Commission, or otherwise in accordance with the 1940 Act as
from time to time amended, pursuant to which system all securities of any
particular class of any issuer deposited within the system are treated as
fungible and may be transferred or pledged by bookkeeping entry without physical
delivery of such securities, provided that all such deposits shall be subject to
withdrawal only upon the order of the Trust.
ARTICLE X
DISTRIBUTIONS AND REDEMPTIONS
DISTRIBUTIONS
SECTION 1.
(a) The Trustees may from time to time declare and pay
dividends and other distributions. The amount of such dividends and the
payment of them shall be wholly in the discretion of the Trustees.
(b) The Trustees shall have power, to the fullest extent
permitted by the laws of Massachusetts, at any time to declare and
cause to be paid dividends on Shares from assets of a particular
Series, which dividends and other distributions, at the election of the
Trustees, may be paid daily or otherwise pursuant to a standing
resolution or resolutions adopted only once or with such frequency as
the Trustees may determine, and may be payable in Shares, in cash or
otherwise, at the election of each Shareholder. All dividends and other
distributions on Shares of a particular Series shall be distributed pro
rata to the holders of that Series in proportion to the number of
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Shares of that Series held by such holders at the date and time of
record established for the payment of such dividends or distributions,
except that such dividends and other distributions shall appropriately
reflect expenses allocated to a particular Class of such Series.
(c) Anything in this Declaration of Trust to the contrary
notwithstanding, the Trustees may at any time declare and distribute
pro rata among the Shareholders of a particular Series of a Class
thereof a "share dividend."
REDEMPTIONS
SECTION 2. In case any Shareholder of record desires to dispose of his
or her Shares, the Shareholder may deposit at the office of the transfer agent
or other authorized agent of the Trust a written request or such other form of
request as the Trustees may from time to time authorize, requesting that the
Trust purchase the Shares in accordance with this Section 2; and the Shareholder
so requesting shall be entitled to require the Trust to purchase, and the Trust
or the Principal Underwriter of the Trust shall purchase, said Shares, but only
at the Net Asset Value thereof (as described in Section 3 hereof) less such
charges as are determined by the Trustees and described in the Trust's
Registration Statement under the Securities Act of 1933, as amended, or any
Prospectus or Statement of Additional Information contained therein, as
supplemented. The Trust shall make payment for any such Shares to be redeemed,
as aforesaid, in cash to the extent required by federal law, and securities from
Trust assets, and payment for such Shares shall be made by the Trust or the
Principal Underwriter to the Shareholder of record within seven (7) days after
the date upon which the request is effective. Provided, however, that if Shares
being redeemed have been purchased by check, the Series may postpone payment
until the Trust has assurance that good payment has been collected for the
purchase of the Shares. The Trust may require Shareholders to pay a sales charge
to the Trust, the Principal Underwriter or any other person designated by the
Trustees upon redemption or repurchase of Shares of any Series or Class in such
amount as shall be determined from time to time by the Trustees. The amount of
such sales charge may, but need not, vary depending on numerous factors,
including without limitation the holding period of the redeemed or repurchased
Shares. The Trustees also may charge a redemption or repurchase fee in such
amount as may be determined from time to time by the Trustees.
DETERMINATION OF NET ASSET VALUE AND VALUATION OF PORTFOLIO ASSETS
SECTION 3. The term "Net Asset Value" of any Series or Class shall mean
that amount by which the assets of any Series or any Class thereof exceed its
liabilities, all as determined by or under the direction of the Trustees. Such
value shall be determined separately for each Series or Class of Shares, as
applicable, and shall be determined on such days and at such times as the
Trustees may determine. The determination shall be made with respect to
securities for which market quotations are readily available, at the market
value of such securities; and with respect to other securities and assets, at
the fair value as determined in good faith by the Trustees, provided, however,
that the Trustees, without Shareholder approval, may alter the method of
appraising portfolio securities insofar as permitted under the 1940 Act and the
rules, regulations and interpretations thereof promulgated or issued by the
Commission or insofar as permitted by any order of the Commission. The Trustees
may delegate any powers and duties under this Section 3 with respect to
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appraisal of assets and liabilities. At any time the Trustees may cause the net
asset value per Share last determined to be determined again in similar manner
and may fix the time when such redetermined value shall become effective.
SUSPENSION OF THE RIGHT OF REDEMPTION
SECTION 4. The Trustees may declare a suspension of the right of
redemption or postpone the date of payment to the extent permitted under the
1940 Act. Such suspension shall take effect at such time as the Trustees shall
specify but not later than the close of business on the business day next
following the declaration of suspension, and thereafter there shall be no right
of redemption or payment until the Trustees shall declare the suspension at an
end. In the case of a suspension of the right of redemption, a Shareholder may
either withdraw his or her request for redemption or receive payment based on
the Net Asset Value per Share existing after the termination of the suspension.
ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION
LIMITATION OF LIABILITY
SECTION 1. Provided they have exercised reasonable care and have acted
under the reasonable belief that their actions are in the best interest of the
Trust, the Trustees shall not be responsible for or liable in any event for
neglect or wrongdoing committed by them or any officer, agent, employee or
investment adviser of the Trust, but nothing contained herein shall protect any
Trustee against any liability to which he or she would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office.
INDEMNIFICATION
SECTION 2.
(a) Subject to the exceptions and limitations contained in
paragraph (b) below:
(i) every person who is, or has been, a Trustee or
officer of the Trust (hereinafter referred to as a "Covered
Person") shall be indemnified by the Trust and/or by the
appropriate Series to the fullest extent permitted by law
against liability and against all expenses reasonably incurred
or paid by him or her in connection with any claim, action,
suit or proceeding in which he or she becomes involved as a
party or otherwise by virtue of his or her being or having
been a Covered Person and against amounts paid or incurred by
him or her in the settlement thereof;
(ii) the words "claim," "action," "suit," or
"proceeding" shall apply to all claims, actions, suits or
proceedings (civil, criminal or other, including appeals),
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actual or threatened while a Covered Person is in office or
thereafter, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs,
judgments, amounts paid in settlement, fines, penalties and
other liabilities.
(b) No indemnification shall be provided hereunder to a
Covered Person:
(i) who shall have been adjudicated by a court or
body before which the proceeding was brought (A) to be liable
to the Trust or its Shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office or
(B) not to have acted in good faith in the reasonable belief
that his or her action was in the best interest of the Trust;
or
(ii) in the event of a settlement, unless
there has been a determination that such Covered Person did
not engage in willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of
his or her office, (A) by the court or other body approving
the settlement; (B) by at least a majority of those Trustees
who are neither Interested Persons of the Trust nor parties to
the matter based upon a review of readily available facts (as
opposed to a full trial-type inquiry or full investigation);
or (C) by written opinion of independent legal counsel based
upon a review of readily available facts (as opposed to a full
trial-type inquiry); provided, however, that any Shareholder
may, by appropriate legal proceedings, challenge any such
determination by the Trustees, or by independent legal
counsel.
(c) The rights of indemnification herein provided may be
insured against by policies maintained by the Trust, shall be
severable, shall not be exclusive of or affect any other rights to
which any Covered Person may now or hereafter be entitled, shall
continue as to a person who has ceased to be such Trustee or officer
and shall inure to the benefit of the heirs, executors and
administrators of such a person. Nothing contained herein shall affect
any rights to indemnification to which Trust personnel, other than
Trustees and officers, and other persons may be entitled by contract or
otherwise under law.
(d) Expenses in connection with the preparation and
presentation of a defense to any claim, action, suit or proceeding of
the character described in paragraph (a) of this Section 2 may be paid
by the Trust from time to time prior to final disposition thereof upon
receipt of an undertaking by or on behalf of such Covered Person that
such amount will be paid over by him or her to the Trust if it is
ultimately determined that he or she is not entitled to indemnification
under this Section 2; provided, however, that:
(i) such Covered Person shall have provided
appropriate security for such undertaking,
(ii) the Trust is insured against losses arising out
of any such advance payments, or
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(iii) either a majority of the Trustees who are
neither interested persons of the Trust nor parties to the
matter, or independent legal counsel in a written opinion,
shall have determined, based upon a review of readily
available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such
Covered Person will be found entitled to indemnification under
this Section 2.
SHAREHOLDERS
SECTION 3. In case any Shareholder or former Shareholder of any Series
of the Trust shall be held to be personally liable solely by reason of his or
her being or having been a Shareholder and not because of his acts or omissions
or for some other reason, the Shareholder or former Shareholder (or his heirs,
executors, administrators or other legal representatives or, in the case of a
corporation or other entity, its corporate or other general successor) shall be
entitled out of the assets belonging to the applicable Series to be held
harmless from and indemnified against all loss and expense arising from such
liability. The Series shall, upon request by the Shareholder, assume the defense
of any claim made against the Shareholder for any act or obligation of the Trust
and satisfy any judgment thereon.
ARTICLE XII
MISCELLANEOUS
TRUST NOT A PARTNERSHIP
SECTION 1. It is hereby expressly declared that a trust and not a
partnership is created hereby. No Trustee hereunder shall have any power to bind
personally either the Trust's officers or any Shareholder. All persons extending
credit to, contracting with or having any claim against the Trust or a
particular Series or the Trustees shall look only to the assets of the Trust or
of such Series, as the case may be, for payment under such credit, contract or
claim; and neither the Shareholders nor the Trustees, nor any of their agents,
whether past, present or future, shall be personally liable therefor. Nothing in
this Declaration of Trust shall protect a Trustee against any liability to which
the Trustee would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee hereunder.
TRUSTEES' GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
SECTION 2. The exercise by the Trustees of their powers and discretion
hereunder in good faith and with reasonable care under the circumstances then
prevailing, shall be binding upon everyone interested. Subject to the provisions
of Section 1 of this Article XII and to Article XI, the Trustees shall not be
liable for errors of judgment or mistakes of fact or law. The Trustees may take
advice of counsel or other experts with respect to the meaning and operation of
this Declaration of Trust, and subject to the provisions of Section 1 of this
Article XII and to Article XI, shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice.
The Trustees shall not be required to give any bond as such, nor any surety if a
bond is obtained.
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ESTABLISHMENT OF RECORD DATES
SECTION 3. The Trustees may close the stock transfer books of the Trust
for a period not exceeding 60 days preceding the date of any meeting of
Shareholders, or the date for the payment of any dividends, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
Shares shall go into effect; or in lieu of closing the stock transfer books as
aforesaid, the Trustees may fix in advance a date, not exceeding 60 days
preceding the date of any meeting of Shareholders, or the date for payment of
any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of Shares shall go into effect, as a record
date for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting, or entitled to receive payment of any such dividend,
or to any such allotment of rights, or to exercise the rights in respect of any
such change, conversion or exchange of Shares, and in such case such
Shareholders and only such Shareholders as shall be Shareholders of record on
the date so fixed shall be entitled to such notice of, and to vote at, such
meeting, or to receive payment of such dividend, or to receive such allotment or
rights, or to exercise such rights, as the case may be, notwithstanding any
transfer of any Shares on the books of the Trust after any such record date
fixed as aforesaid. The Trustees need not set a new record date when a
Shareholder meeting is adjourned to achieve a quorum and reconvened more than 60
days after the record date for that meeting.
TERMINATION OF TRUST
SECTION 4.
(a) This Trust shall continue without limitation of time but
subject to the provisions of paragraph (b) of this Section 4.
(b) Subject to a Majority Shareholder Vote of each Series
affected by the matter or, if applicable, by a Majority Shareholder
vote of the Trust, the Trustees may:
(i) sell and convey the assets of the Trust or any
affected Series to another Series or to another trust,
partnership, association or corporation organized under the
laws of any state which is an open-end management investment
company as defined in the 1940 Act, for adequate consideration
which may include the assumption of all outstanding
obligations, taxes and other liabilities; accrued or
contingent, of the Trust and which may include shares of
beneficial interest or stock of such trust, partnership,
association or corporation; or
(ii) at any time sell and convert into money all or
substantially all of the assets of the Trust or any affected
Series.
Upon making provision for the payment of all such liabilities
in either (i) or (ii) above, by such assumption or otherwise, the
Trustees shall distribute the remaining proceeds or assets (as the case
may be) ratably among the holders of the Shares of the Trust or any
affected Series then outstanding; however, the payment to any
particular Class within such Series may be reduced by any fees,
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expenses or charges allocated to that Class. Nothing in this
Declaration of Trust shall preclude the Trustees from distributing such
remaining proceeds or assets so that holders of the Shares of a
particular Class of the Trust or any affected Series receive as their
ratable distribution Shares solely of an analogous class, as determined
by the Trustees, of such Series, trust, partnership, association or
corporation. The Trustees may take any of the actions specified in
clauses (i) and (ii) above without obtaining a Majority Shareholder
Vote of any Series or Class or of the Trust if a majority of the
Trustees makes a determination that the continuation of a Series or
Class or the Trust is not in the best interests of such Series or
Class, or the Trust or their respective Shareholders as a result of
factors or events adversely affecting the ability of such Series or
Class or the Trust to conduct its business and operations in an
economically viable manner. Such factors and events may include: the
inability of a Series or Class, or the Trust to maintain its assets at
an appropriate size, changes in laws or regulations governing the
Series or Class, or the Trust or affecting assets of the type in which
such Series or Class, or the Trust invests or economic developments or
trends having a significant adverse impact on the business or
operations of such Series or Class, or the Trust.
(c) Upon completion of the distribution of the remaining
assets as provided in paragraph (b), the Trust or any affected Series
shall terminate and the Trustees shall be discharged of any and all
further liabilities and duties hereunder and the right, title and
interest of all parties shall be canceled and discharged.
FILING OF COPIES, REFERENCES, HEADINGS
SECTION 5. The original or a copy of this instrument and of each
amendment hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. A copy of this instrument and of each amendment
hereto shall be filed by the Trustees with the Secretary of the Commonwealth of
Massachusetts and any other governmental office where such filing may from time
to time be required. Anyone dealing with the Trust may rely on a certificate by
an officer or Trustee of the Trust as to whether or not any such amendments to
this Declaration of Trust have been made and as to any matters in connection
with the Trust hereunder, and with the same effect as if it were the original,
may rely on a copy certified by an officer or Trustee of the Trust to be a copy
of this instrument or of any such amendments. In this instrument or in any such
amendments, references to this instrument, and the expressions "herein,"
"hereof" and "hereunder," shall be deemed to refer to this instrument as amended
from time to time. Headings are placed herein for convenience of reference only
and in case of any conflict, the text of this instrument, rather than the
headings, shall control. This instrument may be executed in any number of
counterparts each of which shall be deemed an original.
APPLICABLE LAW
SECTION 6. The trust set forth in this instrument is made in the
Commonwealth of Massachusetts, and it is created under and is to be governed by
and construed and administered according to the laws of said Commonwealth. The
Trust shall be of the type commonly called a Massachusetts business trust, and
without limiting the provisions hereof, the Trust may exercise all powers which
are ordinarily exercised by such a trust.
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AMENDMENTS
SECTION 7. This instrument can be amended, supplemented or restated by
a majority vote of the Trustees. Amendments, supplements or restatements having
the purpose of materially decreasing the rights of Shareholders in regard to
liability and indemnification, as set forth in Article III, Section 6 and
Article XI, Section 3, respectively, shall require a Majority Shareholder Vote.
Copies of the amended, supplemented or restated Declaration of Trust shall be
filed as specified in Section 5 of this Article XII.
FISCAL YEAR
SECTION 8. The fiscal year of the Trust or of each Series thereof shall
end on a specified date as determined by the Trustees; provided, however, that
the Trustees may, without Shareholder approval, change the fiscal year of the
Trust.
NOTICE TO OTHER PARTIES
SECTION 9. Every note, bond, contract, instrument, certificate or
undertaking made or issued by the Trustees or by any officer or officers shall
give notice that this Declaration of Trust is on file with the Secretary of the
Commonwealth of Massachusetts and shall recite that the same was executed or
made by or on behalf of the Trust or by them as Trustee or Trustees or as
officer or officers and not individually, and that the obligations of such
instrument are not binding upon any of them or the Shareholders individually but
are binding only upon the assets and property of the Trust, and may contain such
further recital as he and she or they may deem appropriate, but the omission
thereof shall not operate to bind any Trustee or Trustees or officer or officers
or Shareholder or Shareholders.
IN WITNESS WHEREOF, the undersigned, being the initial Trustee of the
Golf Associated Fund, has executed this instrument.
9/30/98 /s/ Michael T. Williams
- ----------------- ----------------------------------
Date Michael T. Williams
Trustee
2801 Ocean Drive
Vero Beach, Florida 32963
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GOLF ASSOCIATED FUND
A MASSACHUSETTS BUSINESS TRUST
AMENDED BY-LAWS
SEPTEMBER 30, 1998
<PAGE>
GOLF ASSOCIATED FUND
AMENDED BY-LAWS
TABLE OF CONTENTS
Page
----
ARTICLE I - OFFICERS AND THEIR ELECTION........................................1
Section 1.: Officers.......................................................1
Section 2.: Election of Officers...........................................1
Section 3.: Resignations and Removals......................................1
Section 4.: Vacancies and Newly Created Offices............................1
ARTICLE II - POWERS AND DUTIES OF OFFICERS AND TRUSTEES........................2
Section 1: Management of the Trust -General...............................2
Section 2: Right to Engage in Business....................................2
Section 3: Executive and Other Committees.................................2
Section 4: Chairman of the Trustees.......................................2
Section 5: President......................................................2
Section 6: Treasurer......................................................2
Section 7: Secretary......................................................3
Section 8: Vice President.................................................4
Section 9: Assistant Treasurer............................................4
Section 10: Assistant Secretary............................................4
Section 11: Other Officers.................................................4
ARTICLE III - SHAREHOLDERS' MEETINGS...........................................4
Section 1: Special Meetings...............................................4
Section 2: Notice.........................................................4
Section 3: Place of Meeting...............................................5
Section 4: Ballots........................................................5
Section 5: Proxies........................................................5
Section 6: Action Without a Meeting.......................................5
ARTICLE IV - TRUSTEES' MEETINGS................................................5
Section 1: Special Meetings...............................................5
Section 2: Regular Meetings...............................................6
Section 3: Quorum.........................................................6
Section 4: Notice.........................................................6
Section 5: Special Action.................................................6
Section 6: Action By Consent..............................................6
ARTICLE V - SHARES OF BENEFICIAL INTEREST......................................7
Section 1: Beneficial Interest............................................7
Section 2: Transfer of Shares.............................................7
Section 3: Equitable Interest Not Recognized..............................7
ARTICLE VI - INSPECTION OF BOOKS...............................................7
ARTICLE VII - FISCAL YEAR......................................................7
ARTICLE VIII - AMENDMENTS......................................................7
ARTICLE IX - PRINCIPAL OFFICE OF THE TRUST.....................................8
<PAGE>
AMENDED BY-LAWS OF GOLF ASSOCIATED FUND
These Amended By-Laws of Golf Associated Fund (formerly, the "The Golf
Fund") (the "Trust"), a Massachusetts business trust, are subject to the Trust's
Declaration of Trust as from time to time amended.
ARTICLE I
OFFICERS AND THEIR ELECTION
OFFICERS
SECTION 1. The officers of the Trust shall be a President, a Treasurer,
a Secretary, and such other officers as the Trustees may from time to time
elect. It shall not be necessary for any Trustee or officer to be a holder of
shares in the Trust.
ELECTION OF OFFICERS
SECTION 2. The President, Treasurer and Secretary shall be chosen
annually by the Trustees. Two or more offices may be held by a single person
except the offices of President and Secretary. The officers shall hold office
until their successors are chosen and qualified.
RESIGNATIONS AND REMOVALS
SECTION 3. Any officer of the Trust may resign by filing a written
resignation with the President, the Trustees or the Secretary, which resignation
shall take effect on being so filed or at such time as may be therein specified.
The Trustees may at any meeting remove any officer by a majority vote of the
voting Trustees.
VACANCIES AND NEWLY CREATED OFFICES
SECTION 4. If any vacancy shall occur in any office or if any new
office shall be created, such vacancies or newly created offices may be filled
by the Trustees at any regular or special meeting of the Trustees.
ARTICLE II
POWERS AND DUTIES OF OFFICERS AND TRUSTEES
MANAGEMENT OF THE TRUST - GENERAL
SECTION 1. The business and affairs of the Trust shall be managed by
the Trustees, and they shall have all powers necessary and desirable to carry
out their responsibilities, so far as such powers are not inconsistent with the
laws of the Commonwealth of Massachusetts, the Declaration of Trust, or these
By-Laws.
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RIGHT TO ENGAGE IN BUSINESS
SECTION 2. Any officer or Trustee of the Trust, the investment adviser,
the manager, the administrator and any officers or directors of the investment
adviser, manager or administrator may have personal business interests and may
engage in personal business activities.
EXECUTIVE AND OTHER COMMITTEES
SECTION 3. The Trustees may elect from their own number an executive
committee which shall have the power and duty to conduct the current and
ordinary business of the Trust, including the purchase and sale of securities,
while the Trustees are not in session, and such other powers and duties as the
Trustees may from time to time delegate to such committee. The Trustees also may
elect from their own number other committees from time to time. The number
composing such committees and the powers conferred upon the same are to be
determined by vote of the Trustees.
CHAIRMAN OF THE TRUSTEES
SECTION 4. The Trustees may, but need not, appoint from among their
number a Chairman. He or she shall perform such duties as the Trustees may from
time to time designate.
PRESIDENT
SECTION 5. The President shall be the chief executive officer of the
Trust and, subject to the supervision of the Trustees, shall have general
supervision over the business and policies of the Trust. When present, he or she
shall preside at all meetings of the Shareholders and the Trustees, and he or
she may, subject to the approval of the Trustees, appoint a Trustee to preside
at such meetings in his or her absence. The President shall perform such duties
additional to all of the foregoing as the Trustees may from time to time
designate.
TREASURER
SECTION 6. The Treasurer shall be the principal financial and
accounting officer of the Trust. He or she shall deliver all funds and
securities of the Trust that may come into his or her hands to such bank or
trust company as the Trustees shall employ as Custodian. He or she shall have
the custody of the seal of the Trust. He or she shall make annual reports
regarding the business and condition of the Trust, which reports shall be
preserved in Trust records, and he or she shall furnish such other reports
regarding the business and condition of the Trust as the Trustees may from time
to time require. The Treasurer shall perform such additional duties as the
Trustees may from time to time designate.
SECRETARY
SECTION 7. The Secretary shall record in books kept for the purpose all
votes and proceedings of the Trustees and the Shareholders at their respective
meetings. The Secretary shall perform such additional duties as the Trustees may
from time to time designate.
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VICE PRESIDENT
SECTION 8. Any Vice President of the Trust shall perform such duties as
the Trustees may from time to time designate.
ASSISTANT TREASURER
SECTION 9. Any Assistant Treasurer of the Trust shall perform such
duties as the Trustees may from time to time designate.
ASSISTANT SECRETARY
SECTION 10. Any Assistant Secretary of the Trust shall perform such
duties as the Trustees may from time to time designate.
OTHER OFFICERS
SECTION 11. The Trustees from time to time may appoint such other
officers or agents as they may deem advisable, each of whom shall have such
title, hold office for such period, have such authority and perform such duties
as the Trustees may determine. The Trustees from time to time may delegate to
one or more officers or agents the power to appoint any such subordinate
officers or agents and to prescribe their respective rights, terms of office,
authorities and duties.
ARTICLE III
SHAREHOLDERS' MEETINGS
SPECIAL MEETINGS
SECTION 1. A special meeting of the Shareholders shall be called by the
Secretary whenever (a) ordered by the Trustees or (b) requested, for the purpose
of removing a Trustee from office, in writing by the holder or holders of at
least 10% of the outstanding Shares entitled to vote. If the Secretary, when so
ordered or requested, refuses or neglects for more than 30 days to call such
special meeting, the Trustees or the Shareholders so requesting may, in the name
of the Secretary, call the meeting by giving notice thereof in the manner
required when notice is given by the Secretary. If the meeting is a meeting of
the Shareholders of one or more series or classes of Shares, but not a meeting
of all Shareholders of the Trust, then only the Shareholders of such one or more
series shall be entitled to notice of and to vote at such meeting.
NOTICE
SECTION 2. Except as provided above, notices of the place, date and
hour, and purpose(s) for which any special meeting of the Shareholders is called
shall be given by the Secretary by delivering or mailing, postage prepaid, to
each Shareholder entitled to vote at such meeting, a written or printed
notification of such meeting, at least 15 days before the meeting, to such
address as may be registered with the Trust by the Shareholder.
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<PAGE>
PLACE OF MEETING
SECTION 3. All special meetings of the Shareholders shall be held at
the principal place of business of the Trust or at such other place in the
United States as the Trustees may designate.
BALLOTS
SECTION 4. The vote upon any question shall be by ballot whenever
requested by any person entitled to vote, but, unless such a request is made,
voting may be conducted in any way approved by the meeting.
PROXIES
SECTION 5. Shareholders entitled to vote may vote either in person or
by proxy, provided that an instrument authorizing such proxy to act is executed
by the Shareholder in writing and dated not more than eleven months before the
meeting, unless the instrument specifically provides for a longer period.
Shareholders may have their votes recorded by telephone, at which time
Shareholders may authorize proxies to vote their Shares in accordance with their
instructions. Shareholders will not execute telephone proxies in writing, but
will receive a confirmation of their instructions by mail and be provided an
opportunity to correct any incorrect instructions. Proxies shall be delivered to
the Secretary of the Trust or other person responsible for recording the
proceedings before being voted. A proxy with respect to Shares held in the name
of two or more persons shall be valid if executed by one of them unless at or
prior to exercise of such proxy the Trust receives a specific written notice to
the contrary from any one of them. Unless otherwise specifically limited by
their terms, proxies shall entitle the holder thereof to vote at any adjournment
of a meeting. A proxy purporting to be exercised by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its exercise
and the burden of providing invalidity shall rest on the challenger. At all
meetings of the Shareholders, unless the voting is conducted by inspectors, all
questions relating to the qualifications of voters, the validity of proxies, and
the acceptance or rejection of votes shall be decided by the chairman of the
meeting.
ACTION WITHOUT A MEETING
SECTION 6. Any action to be taken by Shareholders may be taken without
a meeting if all Shareholders entitled to vote on the matter consent to the
action in writing and the written consents are filed with the records of
meetings of Shareholders of the Trust. Such consent shall be treated for all
purposes as a vote at a meeting.
ARTICLE IV
TRUSTEES' MEETINGS
SPECIAL MEETINGS
SECTION 1. Special meetings of the Trustees shall be called by the
Secretary at the written request of the President, the Treasurer, or any two
Trustees, and if the Secretary, when so requested, refuses or fails for more
than 24 hours to call such meeting, the President, the Treasurer, or such two
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Trustees may, in the name of the Secretary, call such meeting by giving due
notice in the manner required when notice is to be given by the Secretary. All
special meetings of the Trustees shall be held at the principal place of
business of the Trust or such other place in the United States as the person or
persons requesting such meeting to be called may designate, but any meeting may
adjourn to any other place.
REGULAR MEETINGS
SECTION 2. Regular meetings of the Trustees may be held without call or
notice at such places and at such times as the Trustees may from time to time
determine, provided that any Trustee who is absent when such determination is
made shall be given notice of the determination.
QUORUM
SECTION 3. A majority of the Trustees shall constitute a quorum for the
transaction of business.
NOTICE
SECTION 4. Except as otherwise provided, notice of any special meeting
of the Trustees shall be given by the Secretary to each Trustee orally, by mail,
hand delivery or telegram. A notice may be mailed, postage prepaid, addressed to
him or her at his or her address as registered on the books of the Trust or, if
not so registered, at his or her last known address at least three days before
the meeting or delivered to him or her at least two days before the meeting,
provided orally by telephone at least 24 hours before the meeting or sent to him
or her at least 24 hours before the meeting by prepaid telegram addressed to him
or her at said registered address, if any, or if he has no such registered
address, at his last known address.
SPECIAL ACTION
SECTION 5. When all the Trustees shall be present at any meeting,
however called or wherever held, or shall assent to the holding of the meeting
without notice, or after the meeting shall sign a written assent thereto on the
record of such meeting, the acts of such meeting shall be valid as if such
meeting had been regularly held.
ACTION BY CONSENT
SECTION 6. Any action by the Trustees may be taken without a meeting if
a written consent thereto is signed by all the Trustees and filed with the
records of the Trustees' meeting or by telephone consent provided a quorum of
Trustees participate in any such telephone meeting. Such consent shall be
treated as a vote of the Trustees for all purposes.
ARTICLE V
SHARES OF BENEFICIAL INTEREST
BENEFICIAL INTEREST
SECTION 1. The beneficial interest in the Trust shall at all times be
divided into an unlimited number of transferable Shares without par value, each
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<PAGE>
of which shall represent an equal proportionate interest in the series or class
thereof with each other Share of any outstanding series or class thereof. No
Share shall have priority or preference over another Share.
TRANSFER OF SHARES
SECTION 2. The Shares of the Trust shall be transferable, so as to
affect the rights of the Trust, only by transfer recorded on the books of the
Trust, in person or by attorney.
EQUITABLE INTEREST NOT RECOGNIZED
SECTION 3. The Trust shall be entitled to treat the holder of record of
any Share or Shares of beneficial interest as the holder in fact thereof and
shall not be bound to recognize any equitable or other claim or interest in such
Share or Shares on the part of any other person except as may be otherwise
expressly provided by law.
ARTICLE VI
INSPECTION OF BOOKS
The Trustees shall from time to time determine whether and to what
extent, and at what times and places, and under what conditions and regulations
the accounts and books of the Trust or any of them shall be open to the
inspection of the Shareholders; and no Shareholder shall have any right to
inspect any account or book or document of the Trust except as conferred by law
or otherwise by the Trustees or by resolution of the Shareholders.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Trust shall end on such date as the Trustees
shall from time to time determine.
ARTICLE VIII
AMENDMENTS
These By-Laws may be amended at any meeting of the Trustees of the
Trust by a vote of the majority of all the Trustees.
ARTICLE IX
PRINCIPAL OFFICE OF THE TRUST
The principal place of business of the Trust shall be located at 2801
Ocean Drive, Vero Beach, Florida 32963, or any other place within or without the
Commonwealth of Massachusetts as the Trustees may determine or as they may
authorize.
6
FORM OF
GOLF ASSOCIATED FUND
INVESTMENT ADVISORY AGREEMENT
This Investment Advisory Agreement is made as of ________ __, 1998,
between the Golf Associated Fund (the "Fund"), a business trust organized under
the laws of the Commonwealth of Massachusetts with its principal place of
business at 2801 Ocean View Drive, Vero Beach, Florida, 32963, and Golf
Investment Management, Inc., a Florida corporation (the "Adviser").
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company;
WHEREAS, the Adviser provides investment advice and is registered with
the Securities and Exchange Commission (the "SEC") as an investment adviser
under the Investment Advisers Act of 1940, as amended; and
WHEREAS, The Fund desires to retain the Adviser to perform investment
advisory services for it and the Adviser is willing to perform such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Fund hereby appoints the Adviser, subject to the
direction and control of the Fund's Board of Trustees (the "Board"), to manage
the investment and reinvestment of Fund assets for the period and on the terms
set forth in this Agreement. The Adviser accepts such appointment and agrees to
render the services herein set forth for the compensation as set forth on
Schedule A. In the performance of its duties, the Adviser will act in the best
interests of the Fund and will comply with (a) applicable laws and regulations,
including, but not limited to, the 1940 Act, (b) the terms of this Agreement,
(c) the Fund's Declaration of Trust, By-Laws and currently effective
registration statement under the Securities Act of 1933, as amended, and the
1940 Act, and any amendments thereto, (d) the stated investment objective,
policies and restrictions of the Fund, and (e) such other guidelines as the
Board reasonably may establish.
2. DUTIES AS INVESTMENT ADVISER.
(a) Subject to the supervision of the Board, the Adviser will provide a
continuous investment program for the Fund, including investment research and
management with respect to all securities, investments and cash equivalents. The
Adviser will determine from time to time what securities and other investments
will be purchased, retained or sold by the Fund. To carry out such decisions,
the Adviser hereby is authorized, as agent and attorney-in-fact for the Fund,
for the account of, at the risk of and in the name of the Fund, to place orders
and issue instructions with respect to those transactions of the Fund. The
Adviser will exercise full discretion and act for the Fund in the same manner
and with the same force and effect as such Fund itself might or could do with
respect to purchases, sales, or other transactions, as well as with respect to
<PAGE>
all other things necessary or incidental to the furtherance or conduct of such
purchases, sales or other transactions.
(b) The Adviser will place orders pursuant to its investment
determinations for the Fund either directly with the issuer or through other
brokers. In the selection of brokers and the placement of orders for the
purchase and sale of portfolio investments for the Fund, the Adviser shall use
its best efforts to obtain for the Fund the most favorable price and execution
available, except to the extent it may be permitted to pay higher brokerage
commissions for brokerage and research services as described below. In using its
best efforts to obtain the most favorable price and execution available, the
Adviser, bearing in mind the Fund's best interests at all times, shall consider
all factors it deems relevant, including by way of illustration, price, the size
of the transaction, the nature of the market for the security, the amount of the
commission, the timing of the transaction taking into account market prices and
trends, the reputation, experience and financial stability of the broker
involved and the quality of service rendered by the broker in other
transactions. Subject to such policies as the Board may determine, the Adviser
shall not be deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of its having caused the
Fund to pay a broker that provides brokerage and research services to the
Adviser an amount of commission for effecting a portfolio investment transaction
in excess of the amount of commission another broker would have charged for
effecting that transaction if the Adviser determines in good faith that such
amount of commission was reasonable in relation to the value of the brokerage
and research services provided by such broker, viewed in terms of either that
particular transaction or the Adviser's overall responsibilities with respect to
the Fund and to other clients of the Adviser as to which the Adviser exercises
investment discretion. In no instance will the Fund's portfolio securities be
purchased from or sold to the Adviser or any affiliated person of the Adviser.
The Fund agrees that any entity or person associated with the Adviser that is a
member of a national securities exchange is authorized to effect any transaction
on such exchange for the account of the Fund which is permitted by Section 11(a)
of the Securities Exchange Act of 1934, as amended, and the rules thereunder,
and the Fund has consented to the retention of compensation for such
transactions.
(c) The Adviser will report to the Board periodically all changes in
the Fund since the prior report, and also will keep the Board informed of
important developments affecting the Fund and the Adviser, and on its own
initiative, will provide the Board from time to time such information as the
Adviser may believe appropriate for this purpose, whether concerning the
individual companies whose securities are included in the Fund's holdings, the
industries in which they engage, or the economic, social or political conditions
prevailing in each country in which the Fund maintains investments. The Adviser
also will make available to the Board upon request any economic, statistical and
investment services normally available to institutional or other customers of
the Adviser.
(d) The Adviser may from time to time hire employees or independent
contractors to assist in the performance of the Adviser's duties hereunder, the
cost of hiring such employees and independent contractors to be borne and paid
by the Adviser. No obligation may be incurred on the Fund's behalf in any such
respect.
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(e) Any of the foregoing functions with respect to the Fund may be
delegated by the Adviser, at the Adviser's expense, to one or more appropriate
parties, including an affiliated party ("Subadvisers"), subject to such approval
by the Board and shareholders of the Fund as may be required by the 1940 Act. In
connection with any such delegation, the Adviser shall:
(i) oversee the performance of delegated functions by
any Subadviser and furnish the Fund with quarterly evaluations
and analyses concerning the performance of delegated
responsibilities by those parties;
(ii) if appropriate, allocate the portion of the
Fund's assets to be managed by a Subadviser and coordinate the
investment activities of the Subadvisers;
(iii) if appropriate, recommend changes in
Subadvisers or the addition of Subadvisers, subject to the
necessary approvals under the 1940 Act; and
(iv) be responsible for compensating the Subadvisers
in the manner specified in its advisory agreements with the
Subadvisers.
3. SERVICES NOT EXCLUSIVE. The services furnished by the Adviser
hereunder are not to be deemed exclusive and the Adviser shall be free to
furnish similar services to others so long as its services under this Agreement
are not impaired thereby.
4. BOOKS AND RECORDS.
(a) The Adviser shall maintain records for the Fund relating
to portfolio transactions and the placing and allocation of brokerage orders as
are required to be maintained by the Fund under Rule 31a-1 of the 1940 Act. The
Adviser shall prepare and maintain, or cause to be prepared and maintained, in
such form and in such locations as may be required by applicable law, all
documents and records relating to the services provided by the Adviser pursuant
to this Agreement required to be prepared and maintained by the Fund pursuant to
the rules and regulations of any national, state or local government entity with
jurisdiction over the Fund, including the Internal Revenue Service.
(b) In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Adviser hereby agrees that all records that it maintains for
the Fund are the property of the Fund and further agrees to surrender promptly
to the Fund any of such records upon the Fund's request. The Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records required to be maintained by Rule 3la-1 under the 1940 Act.
5. EXPENSES. During the term of this Agreement, the Adviser will pay
all expenses incurred by it in connection with its activities under this
Agreement. The Fund will bear all expenses not specifically assumed by the
Adviser incurred in its operations and the offering of its shares. Expenses
borne by the Fund will include the following: (a) brokerage commissions relating
to securities purchased or sold by the Fund or any losses incurred in connection
therewith; (b) fees payable to and expenses incurred on behalf of the Fund by
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the Adviser; (c) expenses of organizing the Fund; (d) filing fees and expenses
relating to the registration and qualification of the Fund's shares under
federal or state securities laws and maintaining such registrations and
qualifications; (e) distribution fees; (f) fees and salaries payable to the
members of the Board and officers who are not officers or employees of the
Adviser or interested persons (as defined in the 1940 Act) of any investment
adviser or distributor of the Fund; (g) taxes (including any income or franchise
taxes) and governmental fees; (h) costs of any liability, uncollectible items of
deposit and other insurance or fidelity bonds; (i) any costs, expenses or losses
arising out of any liability of or claim for damage or other relief asserted
against the Fund for violation of any law; (j) legal, accounting and auditing
expenses, including legal fees of special counsel for the independent trustees;
(k) charges of custodians, transfer agents and other agents; (l) costs of
preparing share certificates; (m) expenses of setting in type and printing
prospectuses and supplements thereto for existing shareholders, reports and
statements to shareholders and proxy material; (n) any extraordinary expenses
(including fees and disbursements of counsel) incurred by the Fund; and (o) fees
and other expenses incurred in connection with membership in investment company
organizations.
The Fund may pay directly any expense incurred by it in its normal
operations and, if any such payment is consented to by the Adviser and
acknowledged as otherwise payable by the Adviser pursuant to this Agreement, the
Fund may reduce the fee payable to the Adviser pursuant to paragraph 7 hereof by
such amount. To the extent that such deductions exceed the fee payable to the
Adviser on any monthly payment date, such excess shall be carried forward and
deducted in the same manner from the fee payable on succeeding monthly payment
dates.
In addition, if the expenses borne by the Fund in any fiscal year
exceed the expense limitations voluntarily imposed by the Adviser, the Adviser
will reimburse the Fund for any excess up to the amount of the fee payable to it
during that fiscal year pursuant to paragraph 7 hereof.
6. LIMITATION OF LIABILITY OF THE ADVISER. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with the matters to which this Agreement relates except a
loss resulting from the willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or from reckless disregard by it of
its obligations and duties under this Agreement. Any person, even though also an
officer, partner, employee, or agent of the Adviser, who may be or become an
officer, trustee, employee or agent of the Fund shall be deemed, when rendering
services to the Fund or acting in any business of the Fund, to be rendering such
services to or acting solely for the Fund and not as an officer, partner,
employee, or agent or one under the control or direction of the Adviser even
though paid by it.
7. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, the Fund will pay the Adviser, effective from the
date of this Agreement, a fee that is computed daily and paid monthly from the
Fund's assets at the annual rates as percentages of its average daily net assets
as set forth in the attached Schedule A, which Schedule can be modified from
time to time to reflect changes in annual rates, subject to appropriate
approvals required by the 1940 Act. If this Agreement becomes effective or
terminates before the end of any month, the fee for the period from the
effective date to the end of the month or from the beginning of such month to
the date of termination, as the case may be, shall be prorated according to the
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proportion that such period bears to the full month in which such effectiveness
or termination occurs.
8. DURATION AND TERMINATION. This Agreement shall become effective upon
its execution; provided, that this Agreement shall not take effect unless it
first has been approved (i) by a vote of the majority of those trustees of the
Fund who are not parties to this Agreement or interested persons of such party,
cast in person at a meeting called for the purpose of voting on such approval,
and (ii) by vote of a majority of the Fund's outstanding voting securities. This
Agreement shall remain in full force and effect continuously thereafter until
terminated without the payment of any penalty as follows:
(a) By vote of a majority of its trustees, or by the
affirmative vote of a majority of the outstanding shares of the Fund, the Fund
may at any time terminate this Agreement by providing not more than 60 days'
written notice delivered or mailed by registered mail, postage prepaid, to the
Adviser at its principal offices; or
(b) This Agreement shall be approved for an initial period of
two years and at least annually thereafter by (i) the Trustees or the
shareholders of the Fund by the affirmative vote of a majority of its
outstanding shares, and (ii) a majority of the Trustees who are not interested
persons of the Fund or of the Adviser or of any subadviser, by vote cast in
person at a meeting called for the purpose of voting on such approval. If the
continuance of this Agreement is not approved at least annually after the
initial two-year period, then this Agreement shall automatically terminate at
the close of business on the second anniversary of its execution, or upon the
expiration of one year from the effective date of the last such continuance,
whichever is later; provided, however, that if the continuance of this Agreement
is submitted to Fund shareholders for their approval and such shareholders fail
to approve such continuance of this Agreement as provided herein, the Adviser
may continue to serve hereunder in a manner consistent with the 1940 Act and the
rules and regulations thereunder; or
(c) The Adviser may at any time terminate this Agreement by
not less than 60 days' written notice delivered or mailed by registered mail,
postage prepaid, to the Fund; or
(d) This Agreement automatically and immediately will
terminate in the event of its assignment.
9. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, except by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No material amendment of this Agreement
shall be effective except, if required by law, by vote of the holders of a
majority of the Fund's outstanding voting securities.
10. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the Commonwealth of Massachusetts, without giving effect to the
conflicts of laws principles thereof, and in accordance with the 1940 Act. To
the extent that the applicable laws of the Commonwealth of Massachusetts
conflict with the applicable provisions of the 1940 Act, the latter shall
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control. The parties hereto submit to the non-exclusive jurisdiction of the
State of Florida.
11. DEFINITIONS. As used in this Agreement, the terms "majority of the
outstanding voting securities," ""interested person," and "assignment" shall
have the same meanings as such terms have in the 1940 Act.
12. SEVERABILITY. 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.
13. DECLARATION OF TRUST. The Adviser is hereby expressly put on notice
of the limitation of shareholder liability as set forth in the Fund's
Declaration of Trust and agrees that the obligations assumed by the Fund
pursuant to this Agreement shall be limited in all cases to the Fund and its
assets, and the Adviser shall not seek satisfaction of any such obligation from
the shareholders or any shareholder of the Fund. In addition, the Adviser shall
not seek satisfaction of any such obligations from the Trustees or any
individual Trustee.
14. 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.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
Attest: GOLF ASSOCIATED FUND
By _____________________________ By: _____________________________
Attest: GOLF INVESTMENT MANAGEMENT, INC.
By _____________________________ By: _____________________________
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Schedule A
to the
Investment Advisory Agreement
between
Golf Associated Fund
and
Golf Investment Management, Inc.
Pursuant to section 1 of the Investment Advisory Agreement between the
Golf Associated Fund (the "Fund") and Golf Investment Management, Inc. (the
"Adviser"), the Fund hereby appoints the Adviser to manage the investment and
reinvestment of the Fund listed below. As compensation for such, the Fund shall
pay to the Adviser pursuant to section 7 of the Investment Advisory Agreement a
fee, computed daily and paid monthly, at the following annual rates as
percentages of the Fund's average daily net assets:
Advisory Fee as a % of
Average Daily Net
Assets Under Management
1.00%
Dated: ________________, 1998
FORM OF
GOLF ASSOCIATED FUND
SUBADVISORY AGREEMENT
This Subadvisory Agreement is made as of ______________, 1998, between
Golf Investment Management, Inc., a Florida corporation (the "Adviser"), and
Wallington Asset Management Inc., an Indiana corporation (the "Subadviser").
WHEREAS, the Adviser has by separate contract agreed to serve as the
investment adviser to the Golf Associated Fund ("Fund"), a Massachusetts
business trust registered under the Investment Company Act of 1940, as amended
("1940 Act"), as an open-end diversified management investment company
consisting of one or more investment series of shares, each having its own
assets and investment policies;
WHEREAS, the Adviser's contract with the Fund allows it to delegate
certain investment advisory services to other parties; and
WHEREAS, the Adviser desires to retain the Subadviser to perform
certain sub-investment advisory services for the Fund, and the Subadviser is
willing to perform such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE FUND.
(a) INVESTMENT PROGRAM. Subject to the control and supervision
of the Board of Trustees of the Fund (the "Board") and the Adviser, the
Subadviser shall, at its expense, continuously furnish to the Fund an
investment program for such portion, if any, of Trust assets that is
allocated to it by the Adviser from time to time. With respect to such
assets, the Subadviser will make investment decisions and will place
all orders for the purchase and sale of portfolio securities. In the
performance of its duties, the Subadviser will act in the best
interests of the Fund and will comply with (i) applicable laws and
regulations, including, but not limited to, the 1940 Act, (ii) the
terms of this Agreement, (iii) the stated investment objective,
policies and restrictions of the Fund, as stated in the then-current
Registration Statement of the Fund, and (iv) such other guidelines as
the Board or Adviser may establish. The Adviser shall be responsible
for providing the Subadviser with the Fund's Declaration of Trust, as
filed with the Secretary of State of Massachusetts on June 11, 1998,
and all amendments thereto or restatements thereof, the Fund's By-Laws
and amendments thereto, resolutions of the Board authorizing the
appointment of Subadviser and approving this Agreement and current
copies of the materials specified in Subsections (a)(iii) and (iv) of
this Section 1. At such times as may be reasonably requested by the
Board or the Adviser, the Subadviser will provide them with economic
and investment analysis and reports, and make available to the Board
any economical, statistical, or investment services normally available
to similar investment company clients of the Subadviser.
<PAGE>
(b) AVAILABILITY OF PERSONNEL. The Subadviser, at its expense,
will make available to the Board and the Adviser at reasonable times
its portfolio manager(s) and other appropriate personnel in order to
review investment policies of the Fund and to consult with the Board
and the Adviser regarding the investment affairs of the Fund, including
economic, statistical and investment matters relevant to the
Subadviser's duties hereunder, and will provide periodic reports to the
Adviser relating to the portfolio strategies it employs.
(c) SALARIES AND FACILITIES. The Subadviser, at its expense,
will pay for all salaries of personnel and facilities required for it
to execute its duties under this Agreement.
(d) COMPLIANCE REPORTS. The Subadviser, at its expense, will
provide the Adviser with such compliance reports relating to its duties
under this Agreement as may be agreed upon by such parties from time to
time.
(e) VALUATION. The Subadviser, at its expense, will provide
the Fund's custodian with market price information relating to the
assets of the Fund at such times as the parties hereto may agree upon
from time to time.
(f) EXECUTING PORTFOLIO TRANSACTIONS. The Subadviser will
place all orders pursuant to its investment determinations for the Fund
either directly with the issuer or through broker-dealers selected by
Subadviser. In the selection of broker-dealers and the placement of
orders for the purchase and sale of portfolio investments for the Fund,
the Subadviser shall use its best efforts to obtain for the Fund the
most favorable price and execution available, except to the extent it
may be permitted to pay higher brokerage commissions for brokerage and
research services as described below. In using its best efforts to
obtain the most favorable price and execution available, the
Subadviser, bearing in mind the Fund's best interests at all times,
shall consider all factors it deems relevant, including by way of
illustration, price, the size of the transaction, the nature of the
market for the security, the amount of the commission and dealer's
spread or mark-up, the timing of the transaction taking into account
market prices and trends, the reputation, experience and financial
stability of the broker-dealer involved, the general execution and
operational facilities of the broker-dealer and the quality of service
rendered by the broker-dealer in other transactions. Subject to such
policies as the Board may determine, the Subadviser shall not be deemed
to have acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of its having caused the Fund
to pay a broker-dealer that provides brokerage and research services to
the Subadviser an amount of commission for effecting a portfolio
investment transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction if the
Subadviser determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker-dealer, viewed in terms of either that
particular transaction or the Subadviser's overall responsibilities
with respect to the Fund and to other clients of the Subadviser as to
which the Subadviser exercises investment discretion. In no instance
will portfolio securities of the Fund be purchased from or sold to the
Subadviser or any affiliated person of the Subadviser. The Fund agrees
that any entity or person associated with the Adviser or the Subadviser
that is a member of a national securities exchange is authorized to
effect any transaction on such exchange for the account of the Fund
that is permitted by Section 11(a) of the Securities Exchange Act of
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1934, as amended, and the Fund consents to the retention of
compensation for such transactions.
(g) EXPENSES. The Subadviser shall not be obligated to pay any
expenses of or for the Fund not expressly assumed by the Subadviser
pursuant to this Agreement.
2. BOOKS AND RECORDS. Pursuant to Rule 31a-3 under the 1940 Act, the
Subadviser agrees that: (a) all records it maintains for the Fund are the
property of the Fund; (b) it will surrender promptly to the Fund or the Adviser
any such records upon the Fund's or Adviser's request; (c) it will maintain for
the Fund the records that the Fund is required to maintain pursuant to Rule
31a-1 insofar as such records relate to the Fund's investment affairs; and (d)
it will preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the
records it maintains for the Fund.
3. OTHER AGREEMENTS. The Adviser understands that Subadviser now acts,
or may in the future act, as an investment adviser to fiduciary and other
managed accounts, and as investment adviser or subadviser to other investment
companies. Adviser has no objection to Subadviser acting in such capacities,
provided that whenever the Fund and one or more other investment advisory
clients of Subadviser have available funds for investment, investments suitable
and appropriate for each will be allocated in a manner believed by Subadviser to
be equitable to each, but Subadviser cannot assure, and assumes no
responsibility for equality among all accounts and customers. Subadviser shall
be permitted to bunch or aggregate orders for the Fund with orders for other
funds and accounts in a manner deemed equitable to all. Adviser recognizes that
in some cases this procedure may adversely affect the size of the position or
price that the Fund may obtain in a particular security. In addition, Adviser
understands that the persons employed by Subadviser to assist in Subadviser's
duties under this Agreement will not devote their full time to such service and
nothing contained in this Agreement will be deemed to limit or restrict the
right of Subadviser or any of its affiliates to engage in and devote time and
attention to other businesses or to render services of whatever kind or nature.
By reason of the Subadviser's investment advisory activities and the
investment banking and other activities of its affiliates, the Subadviser may
acquire confidential information or be restricted from initiating transactions
in certain securities. The Adviser acknowledges and agrees that the Subadviser
will not be free to divulge to the Adviser, or to act upon, any such
confidential information with respect to the Subadviser's performance of this
Agreement and that, due to such a restriction, the Subadviser may not initiate a
transaction the Subadviser otherwise might have initiated.
4. COMPENSATION. The Adviser will pay to the Subadviser as compensation
for the Subadviser's services rendered pursuant to this Agreement a subadvisory
fee equal to 0.40% of the Fund's average daily net assets under management
without regard to any reduction in the fees paid to the Adviser as a result of
any statutory or regulatory limitation on investment company expenses. Such fees
shall be paid by the Adviser (and not by the Fund). Such fees shall be payable
for each month within 15 business days after the end of such month. If the
Subadviser shall serve for less than the whole of a month, the compensation as
specified shall be prorated.
5. AMENDMENT OF AGREEMENT. This Agreement shall not be materially
amended unless such amendment is approved by the affirmative vote of a majority
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of the outstanding shares of the Fund, and by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of the
members of the Board who are not interested persons of the Fund, the Adviser or
the Subadviser (the "Independent Trustees"). The Subadviser agrees to notify the
Adviser of any anticipated change in control of the Subadviser as soon as such
change is anticipated and, in any event, prior to such change.
6. DURATION AND TERMINATION OF THE AGREEMENT. This Agreement shall
become effective upon its execution; provided, however, that this Agreement
shall not become effective unless it has first been approved (a) by a vote of
the Independent Trustees, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by an affirmative vote of a majority of the
outstanding voting shares of the Fund. This Agreement shall remain in full force
and effect continuously thereafter, except as follows:
(a) By vote of a majority of the (i) Independent Trustees, or
(ii) outstanding voting shares of the Fund, the Fund may at any time
terminate this Agreement, without the payment of any penalty, by
providing not more than 60 days' written notice delivered or mailed by
registered mail, postage prepaid, to the Adviser and the Subadviser.
(b) This Agreement will terminate automatically, without the
payment of any penalty, unless within two years after its initial
effectiveness and at least annually thereafter, the continuance of the
Agreement is specifically approved by (i) the Board or the shareholders
of the Fund by the affirmative vote of a majority of the outstanding
shares of the Fund, and (ii) a majority of the Independent Trustees, by
vote cast in person at a meeting called for the purpose of voting on
such approval. If the continuance of this Agreement is submitted to the
shareholders of the Fund for their approval and such shareholders fail
to approve such continuance as provided herein, the Subadviser may
continue to serve hereunder in a manner consistent with the 1940 Act
and the rules and regulations thereunder.
(c) The Adviser may at any time terminate this Agreement,
without the payment of any penalty, by not less than 60 days' written
notice delivered or mailed by registered mail, postage prepaid, to the
Subadviser, and the Subadviser may at any time, without the payment of
any penalty, terminate this Agreement by not less than 90 days' written
notice delivered or mailed by registered mail, postage prepaid, to the
Adviser.
(d) This Agreement automatically and immediately shall
terminate, without the payment of any penalty, in the event of its
assignment or if the Investment Advisory Agreement between the Adviser
and the Fund shall terminate for any reason.
(e) Any notice of termination served on the Subadviser by the
Adviser shall be without prejudice to the obligation of the Subadviser
to complete transactions already initiated or acted upon with respect
to the Fund. Upon termination without reasonable notice by the Adviser,
the Subadviser will be paid certain previously agreed upon expenses the
Subadviser necessarily incurs in terminating the Agreement.
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<PAGE>
Upon termination of this Agreement, the duties of the Adviser delegated
to the Subadviser under this Agreement automatically shall revert to the
Adviser.
7. NOTIFICATION OF THE ADVISER. The Subadviser promptly shall notify
the Adviser in writing of the occurrence of any of the following events:
(a) the Subadviser shall fail to be registered as an
investment adviser under the Investment Advisers Act of 1940, as
amended, and under the laws of any jurisdiction in which the Subadviser
is required to be registered as an investment adviser in order to
perform its obligations under this Agreement;
(b) the Subadviser shall have been served or otherwise have
notice of any action, suit, proceeding, inquiry or investigation, at
law or in equity, before or by any court, public board or body,
involving the affairs of the Fund; or
(c) any other occurrence that might affect the ability of the
Subadviser to provide the services provided for under this Agreement.
8. DEFINITIONS. For the purposes of this Agreement, the terms "vote of
a majority of the outstanding shares," "affiliated person," "control,"
"interested person" and "assignment" shall have their respective meanings as
defined in the 1940 Act and the rules and regulations thereunder subject,
however, to such exemptions as may be granted by the Securities and Exchange
Commission under said Act; and references to annual approvals by the Board shall
be construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder.
9. LIABILITY OF THE SUBADVISER. In the absence of its bad faith, gross
negligence or reckless disregard of its obligations and duties hereunder, the
Subadviser shall not be subject to any liability to the Adviser, the Fund or
their directors, Trustees, officers or shareholders, for any act or omission in
the course of, or connected with, rendering services hereunder. However, the
Subadviser shall indemnify and hold harmless such parties from any and all
claims, losses, expenses, obligations and liabilities (including reasonable
attorneys fees) which arise or result from the Subadviser's bad faith,
negligence or disregard of its duties hereunder.
10. LIABILITY OF TRUSTEES AND SHAREHOLDERS. Any obligations of the Fund
under this Agreement are not binding upon the Trustees or the Shareholders
individually but are binding only upon the assets and property of the Fund.
11. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Florida, without giving effect to the conflicts of laws
principles thereof, and in accordance with the 1940 Act. To the extent that the
applicable laws of the State of Florida conflict with the applicable provisions
of the 1940 Act, the latter shall control.
12. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
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<PAGE>
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.
13. 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. Where the
effect of a requirement of the 1940 Act reflected in any provision of this
Agreement is made less restrictive by a rule, regulation or order of the
Securities and Exchange Commission, whether of special or general application,
such provision shall be deemed to incorporate the effect of such rule,
regulation or order.
IN WITNESS WHEREOF, Golf Investment Management, Inc. and Wallington
Asset Management Inc. have each caused this instrument to be signed in duplicate
on its behalf by its duly authorized representative, all as of the day and year
first above written.
Attest: GOLF INVESTMENT MANAGEMENT, INC.
By:________________________ By: _______________________________
Attest: WALLINGTON ASSET MANAGEMENT INC.
By:________________________ By:________________________________
6
FORM OF
ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made as of , 1998 by and between GOLF ASSOCIATED
FUND, a Massachusetts business trust (the "Fund"), and PFPC INC., a Delaware
corporation ("PFPC"), which is an indirect wholly owned subsidiary of PNC Bank
Corp.
W I T N E S S E T H :
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to retain PFPC to provide administration and
accounting services to its investment portfolios listed on Exhibit A attached
hereto and made a part hereof, as such Exhibit A may be amended from time to
time (each a "Portfolio"), and PFPC wishes to furnish such services.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and intending to be legally bound hereby the parties
hereto agree as follows:
1. DEFINITIONS. AS USED IN THIS AGREEMENT:
(a) "1933 Act" means the Securities Act of 1933, as amended.
(b) "1934 Act" means the Securities Exchange Act of 1934, as amended.
(c) "Authorized Person" means any officer of the Fund and any other
person duly authorized by the Fund's Board of Trustees to give
Oral Instructions and Written Instructions on behalf of the Fund
and listed on the Authorized Persons Appendix attached hereto and
made a part hereof or any amendment thereto as may be received by
PFPC. An Authorized Person's scope of authority may be limited by
the Fund by setting forth such limitation in the Authorized
Persons Appendix.
<PAGE>
(d) "CEA" means the Commodities Exchange Act, as amended.
(e) "Change of Control" means a change in ownership or control (not
including transactions between wholly-owned direct or indirect
subsidiaries of a common parent) of 25% or more of the beneficial
ownership of the shares of common stock or shares of beneficial
interest of an entity or its parent(s).
(f) "Oral Instructions" mean oral instructions received by PFPC from
an Authorized Person or from a person reasonably believed by PFPC
to be an Authorized Person.
(g) "SEC" means the Securities and Exchange Commission.
(h) "Securities Laws" means the 1933 Act, the 1934 Act, the 1940 Act
and the CEA.
(i) "Shares" means the shares of beneficial interest of any series or
class of the Fund.
(j) "Written Instructions" mean written instructions signed by an
Authorized Person and received by PFPC. The instructions may be
delivered by hand, mail, tested telegram, cable, telex or
facsimile sending device.
2. APPOINTMENT. The Fund hereby appoints PFPC to provide administration
and accounting services to the each of the Portfolios, in accordance
with the terms set forth in this Agreement. PFPC accepts such
appointment and agrees to furnish such services.
3. DELIVERY OF DOCUMENTS. The Fund has provided or, where applicable, will
provide PFPC with the following:
(a) certified or authenticated copies of the resolutions of the
Fund's Board of Trustees, approving the appointment of PFPC or
its affiliates to provide services to each Portfolio and
approving this Agreement;
(b) a copy of Fund's most recent effective registration statement;
(c) a copy of each Portfolio's advisory agreement or agreements;
(d) a copy of the distribution agreement with respect to each class
of Shares representing an interest in a Portfolio;
(e) a copy of any additional administration agreement with respect to
a Portfolio;
(f) a copy of any shareholder servicing agreement made in respect of
the Fund or a Portfolio; and
(g) copies (certified or authenticated, where applicable) of any and
all amendments or supplements to the foregoing.
4. COMPLIANCE WITH RULES AND REGULATIONS.
PFPC undertakes to comply with all applicable requirements of the
Securities Laws, and any laws, rules and regulations of governmental
authorities having jurisdiction with respect to the duties to be
performed by PFPC hereunder. Except as specifically set forth herein,
PFPC assumes no responsibility for such compliance by the Fund or any
Portfolio.
5. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PFPC shall act only
upon Oral Instructions and Written Instructions.
(b) PFPC shall be entitled to rely upon any Oral Instructions and
Written Instructions it receives from an Authorized Person (or
from a person reasonably believed by PFPC to be an Authorized
Person) pursuant to this Agreement. PFPC may assume that any Oral
Instruction or Written Instruction received hereunder is not in
any way inconsistent with the provisions of organizational
documents or this Agreement or of any vote, resolution or
proceeding of the Fund's Board of Trustees or of the Fund's
shareholders, unless and until PFPC receives Written Instructions
to the contrary.
(c) The Fund agrees to forward to PFPC Written Instructions
confirming Oral Instructions (except where such Oral Instructions
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<PAGE>
are given by PFPC or its affiliates) so that PFPC receives the
Written Instructions by the close of business on the same day
that such Oral Instructions are received. The fact that such
confirming Written Instructions are not received by PFPC shall in
no way invalidate the transactions or enforceability of the
transactions authorized by the Oral Instructions. Where Oral
Instructions or Written Instructions reasonably appear to have
been received from an Authorized Person, PFPC shall incur no
liability to the Fund in acting upon such Oral Instructions or
Written Instructions provided that PFPC's actions comply with the
other provisions of this Agreement.
6. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE FUND. If PFPC is in doubt as to any action it
should or should not take, PFPC may request directions or advice,
including Oral Instructions or Written Instructions, from the
Fund.
(b) ADVICE OF COUNSEL. If PFPC shall be in doubt as to any question
of law pertaining to any action it should or should not take,
PFPC may request advice at its own cost from such counsel of its
own reasonable choosing (who may be counsel for the Fund, the
Fund's investment adviser or PFPC, at the option of PFPC).
(c) CONFLICTING ADVICE. In the event of a conflict between
directions, advice or Oral Instructions or Written Instructions
PFPC receives from the Fund and the advice PFPC receives from
counsel, PFPC may rely upon and follow the advice of counsel. In
the event PFPC so relies on the advice of counsel, PFPC remains
liable for any action or omission on the part of PFPC which
constitutes willful misfeasance, bad faith, gross negligence or
reckless disregard by PFPC of any duties, obligations or
responsibilities set forth in this Agreement.
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<PAGE>
(d) PROTECTION OF PFPC. PFPC shall be protected in any action it
takes or does not take in reliance upon directions, advice or
Oral Instructions or Written Instructions it receives from the
Fund or from counsel and which PFPC believes, in good faith, to
be consistent with those directions, advice and Oral Instructions
or Written Instructions. Nothing in this section shall be
construed so as to impose an obligation upon PFPC (i) to seek
such directions, advice or Oral Instructions or Written
Instructions, or (ii) to act in accordance with such directions,
advice or Oral Instructions or Written Instructions unless, under
the terms of other provisions of this Agreement, the same is a
condition of PFPC's properly taking or not taking such action.
Nothing in this subsection shall excuse PFPC when an action or
omission on the part of PFPC constitutes willful misfeasance, bad
faith, gross negligence or reckless disregard by PFPC of any
duties, obligations or responsibilities set forth in this
Agreement.
7. RECORDS; VISITS.
(a) The books and records pertaining to the Fund and the Portfolios
which are in the possession or under the control of PFPC shall be
the property of the Fund. Such books and records shall be
prepared and maintained as required by the 1940 Act and other
applicable securities laws, rules and regulations. The Fund and
Authorized Persons shall have access to such books and records at
all times during PFPC's normal business hours. Upon the
reasonable request of the Fund, copies of any such books and
records shall be provided by PFPC to the Fund or to an Authorized
Person, at the Fund's expense.
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<PAGE>
(b) PFPC shall keep the following records:
(i) all books and records with respect to each Portfolio's books
of account;
(ii) records of each Portfolio's securities transactions; and
(iii) all other books and records as PFPC is required to maintain
pursuant to Rule 31a-1 of the 1940 Act in connection with
the services provided hereunder.
8. CONFIDENTIALITY. PFPC agrees to keep confidential all records of the
Fund and information relating to the Fund and its shareholders, unless
the release of such records or information is otherwise consented to,
in writing, by the Fund. The Fund agrees that such consent shall not be
unreasonably withheld and may not be withheld where PFPC may be exposed
to civil or criminal contempt proceedings or when required to divulge
such information or records to duly constituted authorities.
9. LIAISON WITH ACCOUNTANTS. PFPC shall act as liaison with the Fund's
independent public accountants and shall provide account analyses,
fiscal year summaries, and other audit-related schedules with respect
to each Portfolio. PFPC shall take all reasonable action in the
performance of its duties under this Agreement to assure that the
necessary information is made available to such accountants for the
expression of their opinion, as required by the Fund.
10. DISASTER RECOVERY. PFPC shall enter into and shall maintain in effect
with appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment to
the extent appropriate equipment is available. In the event of
equipment failures, PFPC shall, at no additional expense to the Fund,
take reasonable steps to minimize service interruptions. PFPC shall
6
<PAGE>
have no liability with respect to the loss of data or service
interruptions caused by equipment failure, provided such loss or
interruption is not caused by PFPC's own willful misfeasance, bad
faith, gross negligence or reckless disregard of its duties or
obligations under this Agreement.
11. YEAR 2000 REPRESENTATION.
(a) The Fund and PFPC acknowledge that the ability of each party to
perform its obligations hereunder may depend upon the ability of
certain of such party's computer system/applications to recognize
and perform properly date-sensitive functions involving dates
prior to and after December 31, 1999, including leap year
calculations (the "Year 2000 Change"). Each party represents to
the others that (i) each is reviewing those operations within
such party's organization involved in the Services described
herein and which could be adversely affected by the Year 2000
Change and is developing or has developed a program to remediate
or replace affected applications/systems on a timely basis, and
to test such remediation or replacement on a timely basis and
(ii) that based upon the foregoing, to the best of each party's
knowledge and belief, the Year 2000 Change will not have a
material adverse affect on the ability of such party to perform
hereunder.
(b) The Fund and PFPC agree to contact any third-party vendors
involved in their respective performance under this Agreement to
determine such vendors' strategies and time-lines regarding the
Year 2000 Change and to communicate such information to the other
parties to this Agreement.
12. COMPENSATION. As compensation for services rendered by PFPC during the
term of this Agreement, the Fund, on behalf of each Portfolio, will pay
to PFPC a fee or fees as may be agreed to in writing by the Fund and
PFPC.
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<PAGE>
13. INDEMNIFICATION.
(a) The Fund, on behalf of each Portfolio, agrees to indemnify and
hold harmless PFPC and its affiliates from all taxes, charges,
expenses, assessments, claims and liabilities (including, without
limitation, liabilities arising under the Securities Laws and any
state or foreign securities and blue sky laws, and amendments
thereto), and expenses, including (without limitation) attorneys'
fees and disbursements arising directly or indirectly from any
action or omission to act which PFPC takes (i) at the request or
on the direction of or in reliance on the advice of the Fund or
(ii) upon Oral Instructions or Written Instructions. Neither
PFPC, nor any of its affiliates', shall be indemnified against
any liability (or any expenses incident to such liability)
arising out of PFPC's or its affiliates' own willful misfeasance,
bad faith, gross negligence or reckless disregard of its duties
and obligations under this Agreement. Any amounts payable by the
Fund hereunder shall be satisfied only against the relevant
Portfolio's assets and not against the assets of any other
investment portfolio of the Fund.
(b) In order that the indemnification provisions contained in this
section shall apply, it is understood that in any case in which
the Fund may be asked to indemnify or hold PFPC harmless, the
Fund shall be timely advised of material facts concerning the
situation in question, and it is further understood that PFPC
will use reasonable care to notify the Fund on a timely basis of
a claim for indemnification against the Fund. Failure by PFPC to
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<PAGE>
furnish the information provided for in the preceding sentence
will not impair PFPC's right to indemnification hereunder unless
such failure materially impairs the Fund's ability to defend the
claim. The Fund shall have the option, which will be undertaken
at the expense of the Fund, to defend PFPC against any claim
which may be the subject of this indemnification, which option
must be exercised within a time period that will not materially
adversely affect PFPC. In the event that the Fund so elects, it
will so notify PFPC and thereupon the Fund shall take over
complete defense of the claim, and PFPC shall in such situation
initiate no further legal or other expenses for which it shall
seek indemnification under this section. Such defense shall be
conducted by counsel reasonably acceptable to PFPC. PFPC shall in
no case confess any claim or make any compromise in any case in
which the Fund will be asked to indemnify PFPC except, with the
Fund's prior written consent. The Fund will not settle or make
any compromise of any claim, demand, expense or liability without
PFPC's prior consent.
14. RESPONSIBILITY OF PFPC.
(a) PFPC shall be under no duty to take any action on behalf of the
Fund or any Portfolio except as specifically set forth herein or
as may be specifically agreed to by PFPC in writing. PFPC shall
be obligated to exercise reasonable care and diligence in the
performance of its duties hereunder and to act in good faith and
to use its best efforts, within reasonable limits, in performing
services provided for under this Agreement. PFPC shall be liable
for any taxes, charges, expenses, assessments, claims and
liabilities of the Fund arising out of PFPC's failure to perform
its duties under this Agreement to the extent such damages arise
out of PFPC's willful misfeasance, bad faith, gross negligence or
reckless disregard of such duties.
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<PAGE>
(b) Without limiting the generality of the foregoing or of any other
provision of this Agreement, (i) PFPC shall not be liable for
losses beyond its control, provided that PFPC has acted in
accordance with the standard of care set forth above; and (ii)
PFPC shall not be liable for (A) the validity or invalidity or
authority or lack thereof of any Oral Instruction or Written
Instruction, notice or other instrument which conforms to the
applicable requirements of this Agreement, and which PFPC
reasonably believes to be genuine; or (B) subject to Section 10,
delays or errors or loss of data occurring by reason of
circumstances beyond PFPC's control, including acts of civil or
military authority, national emergencies, labor difficulties,
fire, flood, catastrophe, acts of God, insurrection, war, riots
or failure of the mails, transportation, communication or power
supply.
(c) Notwithstanding anything in this Agreement to the contrary,
neither PFPC nor its affiliates shall be liable to the Fund or to
any Portfolio for any consequential, special or indirect losses
or damages which the Fund or any Portfolio may incur or suffer by
or as a consequence of PFPC's or any affiliates' performance of
the services provided hereunder, whether or not the likelihood of
such losses or damages was known by PFPC or its affiliates.
15. DESCRIPTION OF ACCOUNTING SERVICES ON A CONTINUOUS BASIS.
PFPC will perform the following accounting services with respect to
each Portfolio:
(i) Journalize investment, capital share and income and expense
activities;
(ii) Verify investment buy/sell trade tickets when received from the
investment adviser for a Portfolio (the "Adviser") and transmit
trades to the Fund's custodian (the "Custodian") for proper
settlement;
(iii) Maintain individual ledgers for investment securities;
10
<PAGE>
(iv) Maintain historical tax lots for each security;
(v) Reconcile cash and investment balances of the Fund with the
Custodian, and provide the Adviser with the beginning cash
balance available for investment purposes;
(vi) Update the cash availability throughout the day as required by
the Adviser;
(vii) Post to and prepare the Statement of Assets and Liabilities and
the Statement of Operations;
(viii) Calculate various contractual expenses (e.g., advisory and
custody fees);
(ix) Monitor the expense accruals and notify an officer of the Fund
of any proposed adjustments;
(x) Control all disbursements and authorize such disbursements upon
Written Instructions;
(xi) Calculate capital gains and losses;
(xii) Determine net income;
(xiii) Obtain security market quotes from independent pricing services
approved by the Adviser, or if such quotes are unavailable, then
obtain such prices from the Adviser, and in either case
calculate the market value of each Portfolio's Investments;
(xiv) Transmit or mail a copy of the daily portfolio valuation to the
Adviser;
(xv) Compute net asset value;
(xvi) As appropriate, compute yields, total return, expense ratios,
portfolio turnover rate, and, if required, portfolio average
dollar-weighted maturity; and
(xvii) Prepare a monthly financial statement, which will include the
following items:
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Cash Statement
Schedule of Capital Gains and Losses.
11
<PAGE>
16. DESCRIPTION OF ADMINISTRATION SERVICES ON A CONTINUOUS BASIS.
PFPC will perform the following administration services with respect to
each Portfolio:
(i) Prepare quarterly broker security transactions summaries;
(ii) Prepare monthly security transaction listings;
(iii) Supply various normal and customary Portfolio and Fund
statistical data as requested on an ongoing basis;
(iv) Prepare for execution and file the Fund's Federal and state tax
returns;
(v) Prepare and file the Fund's Semi-Annual Reports with the SEC on
Form N-SAR;
(vi) Prepare and file with the SEC the Fund's annual, semi-annual,
and quarterly shareholder reports;
(vii) Coordinate the preparation of and file the Fund's Form 24F-2;
(viii) Assist in the preparation of registration statements and other
filings relating to the registration of Shares;
(ix) Monitor each Portfolio's status as a regulated investment
company under Sub-chapter M of the Internal Revenue Code of
1986, as amended;
(x) Provide the Fund's Board of Trustees periodic reports and
information as requested;
(xi) Coordinate contractual relationships and communications between
the Fund and its contractual service providers; and
(xii) Monitor the Fund's compliance with the amounts and conditions of
each state qualification and maintain registrations in each
state.
17. DURATION AND TERMINATION. This Agreement shall continue until
terminated by the Fund or by PFPC on (sixty) 60 days= prior written
notice to the other party.
18. DUTIES IN THE EVENT OF TERMINATION. In the event that, in connection
with termination, a successor to any of PFPC's duties or
responsibilities hereunder is designated by the Fund by written notice
12
<PAGE>
to PFPC, PFPC will promptly, upon such termination and at the expense
of the Fund, transfer to such successor all relevant books, records,
correspondence, and other data established or maintained by PFPC under
this Agreement in a form reasonably acceptable to the Fund (if such
form differs from the form in which PFPC has maintained such records,
the Fund shall pay any expenses associated with transferring the data
to such form), and will cooperate in the transfer of such duties and
responsibilities.
19. CHANGE OF CONTROL. Notwithstanding any other provision of this
Agreement, in the event of an agreement to enter into a transaction
that would result in a Change of Control of the Fund's adviser or
sponsor, the Fund's ability to terminate the Agreement will be
suspended from the time of such agreement until two years after the
Change of Control, provided that notwithstanding the foregoing
provisions of this sentence the Fund may terminate this Agreement if
the following have occurred: (i) the Fund gives PFPC notice that for
the preceding thirty (30) days PFPC has been in material breach of the
Agreement (and PFPC has in fact been in such material breach) and that
PFPC has sixty (60) days from receipt of such notice to cure such
material breach; (ii) PFPC fails to cure such material breach within
such sixty (60) day period; and (iii) at the conclusion of such sixty
(60) day period the Fund gives PFPC notice that it is terminating the
Agreement.
20. NOTICES. All notices and other communications, including Written
Instructions, shall be in writing or by confirming telegram, cable,
telex or facsimile sending device. If notice is sent by confirming
telegram, cable, telex or facsimile sending device, it shall be deemed
to have been given immediately. If notice is sent by first-class mail,
it shall be deemed to have been given three days after it has been
13
<PAGE>
mailed. If notice is sent by messenger, it shall be deemed to have been
given on the day it is delivered. Notices shall be addressed (a) if to
PFPC, at 400 Bellevue Parkway, Wilmington, Delaware 19809; (b) if to
the Fund, at 2801 Ocean Drive, Suite 204, Vero Beach, Florida, 32963,
Attn.: Michael T. Williams; or (c) if to neither of the foregoing, at
such other address as shall have been provided by like notice to the
sender of any such notice or other communication by the other party.
21. AMENDMENTS. This Agreement, or any term thereof, may be changed or
waived only by written amendment, signed by the party against whom
enforcement of such change or waiver is sought.
22. DELEGATION; ASSIGNMENT. Except as provided below, neither this
Agreement nor any rights or obligations hereunder may be assigned by
either party without the written consent of the other party. PFPC may
assign its rights and delegate its duties hereunder to any affiliate
(as defined in the 1940 Act) or any majority-owned direct or indirect
subsidiary of PFPC or PNC Bank Corp., provided that (i) PFPC gives the
Fund thirty (30) days' prior written notice of such assignment or
delegation, (ii) the assignee or delegate agrees to comply with the
relevant provisions of the 1940 Act, and (iii) PFPC and such assignee
or delegate promptly provide such information as the Fund may
reasonably request, and respond to such questions as the Fund may
reasonably ask, relative to the assignment or delegation (including,
without limitation, the capabilities of the assignee or delegate.
23. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
24. FURTHER ACTIONS. Each party agrees to perform such further acts and
14
<PAGE>
execute such further documents as are necessary to effectuate the
purposes hereof.
25. LIMITATIONS OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS. A copy of
the Declaration of Trust of the Fund is on file with the Secretary of
The Commonwealth of Massachusetts, and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Trust as
Trustees and not individually and that the obligations of this
instrument are not binding upon any of the Trustees or Shareholders
individually but are binding only upon the assets and property of the
Fund.
26. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding between the parties and supersedes all prior
agreements and understandings relating to the subject matter
hereof, provided that the parties may embody in one or more
separate documents their agreement, if any, with respect to
delegated duties and Oral Instructions.
(b) CAPTIONS. 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.
(c) GOVERNING LAW. This Agreement shall be deemed to be a contract
made in Delaware and governed by Delaware law, without regard
to principles of conflicts of law.
(d) PARTIAL INVALIDITY. 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.
15
<PAGE>
(e) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
(f) FACSIMILE SIGNATURES. The facsimile signature of any party to
this Agreement shall constitute the valid and binding
execution hereof by such party.
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC INC.
By:
----------------------------------------
Title:
-------------------------------------
GOLF ASSOCIATED FUND
By:
----------------------------------------
Title:
-------------------------------------
17
<PAGE>
EXHIBIT A
THIS EXHIBIT A, dated as of ______________, 1998, is Exhibit A to
that certain Administration and Accounting Services Agreement dated as of _____,
1998 between PFPC Inc. and GOLF ASSOCIATED FUND.
PORTFOLIOS
----------
[List all Portfolios here]
18
<PAGE>
AUTHORIZED PERSONS APPENDIX
NAME (TYPE) SIGNATURE
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
19
FORM OF
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of October __, 1998, between Golf Associated
Fund ("Fund"), a business trust organized and existing under the laws of the
Commonwealth of Massachusetts, and Rafferty Capital Markets, Inc. ("RCM"), a
corporation organized and existing under the laws of the State of New York.
WHEREAS the Fund is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end management investment company, and has
registered one or more distinct series of shares of beneficial interest
("Shares") for sale to the public under the Securities Act of 1933, as amended
("1933 Act"), and has qualified its shares for sale to the public under various
state securities laws; and
WHEREAS the Fund desires to retain RCM as principal underwriter 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
WHEREAS this Agreement has been approved by a vote of the Fund's board of
trustees or directors ("Board") and its disinterested trustees/directors in
conformity with Section 15(c) under the 1940 Act; and
WHEREAS RCM is willing to act as principal underwriter 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 RCM as its agent to be the
principal underwriter so as to hold itself out as available to receive and
accept orders for the purchase and redemption of the Shares and redemption of
Shares on behalf of the Fund, subject to the terms and for the period set forth
in this Agreement. RCM 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, if not exclusively, by employees
of the Fund's sponsor who shall become registered representatives of RCM.
2. SERVICES AND DUTIES OF RCM.
(a) RCM agrees to sell 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) RCM will hold itself available to receive purchase and
redemption orders satisfactory to RCM 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) RCM, 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) RCM shall provide to investors and potential investors only such
information regarding the Fund as the Fund or its investment adviser ("Adviser")
shall provide or approve. RCM shall review and file all proposed advertisements
and sales literature with appropriate regulators and consult with the Fund
regarding any comments provided by regulators with respect to such materials. No
employee of RCM, other than a registered representative who is an employee of
the Adviser, shall make any oral statement or representation regarding the Fund.
(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 RCM a statement of each computation of net
asset value and the details of entering into such computation.
(f) RCM at its sole discretion may repurchase Shares offered for
sale by the shareholders. Repurchase of Shares by RCM 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, RCM shall notify, by any
appropriate means, the Fund and its transfer agent of the orders for repurchase
of Shares received by RCM 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 RCM. RCM 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) RCM shall not be obligated to sell any certain number of Shares.
(h) RCM 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) RCM shall provide the services as contemplated by Schedule B to
this Agreement.
3. DUTIES OF THE FUND.
(a) The Fund shall keep RCM fully informed of its affairs and shall
provide to RCM from time to time copies of all information, financial
statements, and other papers that RCM 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 RCM may request, and the Fund shall fully cooperate in the
efforts of RCM to sell and arrange for the sale of Shares.
-2-
<PAGE>
(b) The Fund shall maintain a currently effective Registration
Statement on Form N-1A with the Securities and Exchange Commission (the "SEC"),
maintain qualification with applicable states and file such reports and other
documents as may be required under applicable federal and state laws. The Fund
shall notify RCM in writing of the states in which the Shares may be sold and
shall notify RCM 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 RCM for its review and approval,
and (ii) 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
RCM and the services it provides that are based upon written information
furnished by RCM 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 RCM, pursuant to
Section 3(a) hereof, shall be true and correct in all material respects.
4. OTHER BROKER-DEALERS. RCM in its discretion may 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, RCM shall act
only as principal and not as agent for the Fund. The form of any such dealer
agreement shall be mutually agreed upon and approved by the Fund and RCM.
5. WITHDRAWAL OF OFFERING. The Fund reserves the right at any time to
withdraw all offerings of any or all Shares by written notice to RCM at its
principal office. No Shares shall be offered by either RCM or the Fund under any
provisions of this Agreement and no orders for the purchase or sale 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.
6. SERVICES NOT EXCLUSIVE. The services furnished by RCM hereunder are not
to be deemed exclusive and RCM shall be free to furnish similar services to
others so long as its services under this Agreement are not impaired thereby.
7. 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
-3-
<PAGE>
for sale under the securities laws of such jurisdictions as shall be selected by
the Fund pursuant to Paragraph 3(b) hereof, and the costs and expenses payable
to each such jurisdiction for continuing qualification therein. In addition, the
Fund shall bear all costs of preparing, printing, mailing and filing any
advertisements and sales literature. RCM does not assume responsibility for any
expenses not assumed hereunder.
8. COMPENSATION. As compensation for the services performed and the
expenses assumed by RCM under this Agreement including, but not limited to, any
commissions paid for sales of Shares, the Fund shall pay RCM, as promptly as
possible after the last day of each month, a fee as set forth in Schedule B to
this Agreement.
9. SHARE CERTIFICATES. The Fund shall not issue certificates representing
Shares unless requested to do so by a shareholder. If such request is
transmitted through RCM, the Fund will cause certificates evidencing the Shares
owned to be issued in such names and denominations as RCM shall from time to
time direct.
10. STATUS OF RCM. RCM is an independent contractor and shall be agent of
the Fund only with respect to the sale and redemption of Shares.
11. INDEMNIFICATION.
(a) The Fund agrees to indemnify, defend, and hold RCM, its officers
and directors, and any person who controls RCM 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 such
claims, demands, or liabilities and any counsel fees incurred in connection
therewith) that RCM, its officers, 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 either thereof 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 RCM against any
liability to the Fund or its shareholders to which RCM 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 RCM under this Agreement with
respect to any claim made against RCM or any person indemnified unless RCM 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 RCM or such
other person (or after RCM or the 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 RCM 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
-4-
<PAGE>
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 to indemnified defendants in the suit whose approval
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 RCM
of the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of any of its
Shares.
(d) RCM 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 or officers, or
any such controlling person may incur under the 1933 Act, or under common law or
otherwise arising out of or based upon (i) any alleged untrue statement of a
material fact contained in information furnished in writing by RCM to the Fund
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 either thereof or necessary to make such
information not misleading; or (ii) the failure by RCM to comply with the terms
of the Agreement.
(e) RCM 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 RCM elects to assume the defense, the defense shall be
conducted by counsel chosen by RCM and satisfactory to the indemnified
defendants whose approval shall not be unreasonably withheld. In the event that
RCM 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 RCM 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. RCM agrees to promptly notify the Fund
of the commencement of any litigation or proceeding against it or any of its
officers or directors.
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, unless sooner
terminated as provided herein, will continue in effect for 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/directors") or RCM, 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/directors, or by vote
of a majority of the outstanding voting securities of the Fund on sixty days'
written notice to RCM or by RCM at any time, without the payment of any penalty,
-5-
<PAGE>
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. If the Fund is a
Massachusetts business trust, this Agreement is not binding upon any trustees,
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.
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 New York and the 1940 Act (without regard, however, to
the conflicts of law principles). To the extent that the applicable laws of the
State of New York 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.
ATTEST: ____________________ GOLF ASSOCIATED FUND
By:________________________________
ATTEST: ____________________ RAFFERTY CAPITAL MARKETS, INC.
By:________________________________
-6-
<PAGE>
SCHEDULE A
to the
DISTRIBUTION AGREEMENT
between
GOLF ASSOCIATED FUND
and
RAFFERTY CAPITAL MARKETS, INC.
Pursuant to section 1 of the Distribution Agreement between the Golf
Associated Fund ("Fund") and Rafferty Capital Markets, Inc. ("RCM"), the Fund
hereby appoints RCM as its agent to be the principal underwriter of Fund with
respect to its following series:
Dated October __, 1998
<PAGE>
SCHEDULE B
to the
DISTRIBUTION AGREEMENT
between
GOLF ASSOCIATED FUND
and
RAFFERTY CAPITAL MARKETS, INC.
A. As compensation pursuant to section 8 of the Distribution Agreement between
Golf Associated Fund (the "Fund") and Rafferty Capital Markets, Inc.
("RCM"), the Fund agrees to pay to RCM the sum of:
1. an annual fee of $15,000 for the first series of the Fund and $3,000
for each series thereafter or .01% of the average daily net assets of
each series, computed daily and paid monthly, whichever is greater;
2. the ongoing licensing fees and incidental costs of those
employees of the Fund's investment adviser ("Adviser") who are
designated by the Adviser to become registered representatives of
RCM;
3. the compensation paid by RCM to such registered representatives
in accordance with compensation schedules, as agreed upon by RCM and
the Adviser from time to time;
4. the reasonable fees associated with listing and maintaining shares on
the National Securities Clearing Corporation's Fund/SERV System, as
agreed upon by RCM and the Adviser; and
5. incidental expenses associated with printing and distributing
advertising and sales literature, such as filings with the National
Association of Securities Dealers, Inc.
B. RCM shall receive the entire amount of any sales charge (except to the extent
that sales are made at net asset value) or contingent deferred sales charge
applicable in connection with the sale of Fund Shares; however, RCM shall
reallow all or any portion of such charges to broker-dealers with which RCM has
executed dealer agreements that sell Shares as set forth in the Fund's
then-current Prospectus or as otherwise agreed to by the Fund in writing.
C. RCM shall collect fees pursuant to any Distribution Plan adopted by the Fund
pursuant to Rule 12b-1 under the 1940 Act Investment Company Act of 1940 ("1940
Act") applicable to Shares in an amount equal to a percentage (annual rate) of
the assets of Fund accounts during the preceding month, as provided in the
Fund's then-current Prospectus. RCM shall pay such fees to broker-dealers with
which it has executed dealer agreements as compensation for distribution and
personal services rendered to shareholders of the Fund, including providing
shareholder liaison services such as responding to shareholder inquiries and
providing information to shareholders about their Fund accounts.
-8-
<PAGE>
Such amounts shall be paid by the Fund at the end of each calendar
month. The Fund's obligation to make payments described in this paragraph shall
be contingent upon the continuance of the applicable Distribution Plan, and in
that connection it is understood that:
(i) Such Plan shall remain in effect for one year from its
adoption date and may be continued from year to year thereafter only if the Plan
and any related agreements are approved at least annually by a majority vote of
the Trustees of the Plan, including a majority of the Trustees who are not
"interested persons" of the Plan and who have no direct or indirect financial
interest in the operation of the Plan or in any related agreement ("Independent
Trustee"), cast in person at a meeting called for the purpose of voting on such
Plan and agreements; and
(ii) the Plan may be terminated at any time by a majority
vote of the Independent Trustees or by vote of a majority of the outstanding
voting securities of the Series. In the event the Plan is not continued or is
terminated with respect to a Series, the provisions of this Agreement pursuant
to which fees are paid to RCM shall automatically terminate.
D. The Fund and RCM agree that any portion of any sales charge, contingent
deferred sales charge, distribution fee or service fee described in Paragraphs B
and C hereof that is not distributed to any broker-dealer and is retained by RCM
shall be an offset to reduce the amounts payable by the Fund to RCM pursuant to
Paragraph A hereof.
E. It is agreed and understood that in no event shall fees payable by the Fund
under this Schedule B exceed the permissible payments authorized under any
Distribution Plan adopted by the Fund pursuant to Rule 12b-1 under the 1940 Act.
Dated: October __, 1998
-9-
FORM OF
CUSTODIAN SERVICES AGREEMENT
THIS AGREEMENT is made as of ___________, 1998 by and between PNC BANK,
NATIONAL ASSOCIATION, a national banking association ("PNC Bank"), and GOLF
ASSOCIATED FUND, a Massachusetts business trust (the "Fund").
W I T N E S S E T H:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to retain PNC Bank to provide custodian services,
and PNC Bank wishes to furnish custodian services, either directly or through an
affiliate or affiliates, as more fully described herein.
NOW, THEREFORE, In consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. DEFINITIONS. AS USED IN THIS AGREEMENT:
(a) "1933 ACT" means the Securities Act of 1933, as amended.
(b) "1934 ACT" means the Securities Exchange Act of 1934, as amended.
(c) "AUTHORIZED PERSON" means any officer of the Fund and any other
person duly authorized by the Fund's Board of Trustees to give Oral
Instructions and Written Instructions on behalf of the Fund and
listed on the Authorized Persons Appendix attached hereto and made a
part hereof or any amendment thereto as may be received by PNC Bank.
An Authorized Person's scope of authority may be limited by the Fund
by setting forth such limitation in the Authorized Persons Appendix.
<PAGE>
(d) "BOOK-ENTRY SYSTEM" means Federal Reserve Treasury book-entry system
for United States and federal agency securities, its successor or
successors, and its nominee or nominees and any book-entry system
maintained by an exchange registered with the SEC under the 1934
Act.
(e) "CEA" means the Commodities Exchange Act, as amended.
(f) "CHANGE OF CONTROL" means a change in ownership or control (not
including transactions between wholly-owned direct or indirect
subsidiaries of a common parent) of 25% or more of the beneficial
ownership of the shares of common stock or shares of beneficial
interest of an entity or its parent(s).
(g) "ORAL INSTRUCTIONS" mean oral instructions received by PNC Bank from
an Authorized Person or from a person reasonably believed by PNC
Bank to be an Authorized Person.
(h) "PNC BANK" means PNC Bank, National Association or a subsidiary or
affiliate of PNC Bank, National Association.
(i) "SEC" means the Securities and Exchange Commission.
(j) "SECURITIES LAWS" mean the 1933 Act, the 1934 Act, the 1940 Act and
the CEA.
(k) "SHARES" mean the shares of beneficial interest of any series or
class of the Fund.
(l) "PROPERTY" means:
(i) any and all securities and other investment items which the
Fund may from time to time deposit, or cause to be deposited,
with PNC Bank or which PNC Bank may from time to time hold for
the Fund;
(ii) all income in respect of any of such securities or other
investment items;
(iii) all proceeds of the sale of any of such securities or
investment items; and
(iv) all proceeds of the sale of securities issued by the Fund,
which are received by PNC Bank from time to time, from or on
behalf of the Fund.
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(m) "WRITTEN INSTRUCTIONS" mean written instructions signed by two
Authorized Persons and received by PNC Bank. The instructions may be
delivered by hand, mail, tested telegram, cable, telex or facsimile
sending device.
2. APPOINTMENT. The Fund hereby appoints PNC Bank to provide custodian
services to the Fund, on behalf of each of its investment portfolios
(each, a "Portfolio"), and PNC Bank accepts such appointment and agrees to
furnish such services.
3. DELIVERY OF DOCUMENTS. The Fund has provided or, where applicable, will
provide PNC Bank with the following:
(a) certified or authenticated copies of the resolutions of the Fund's
Board of Trustees, approving the appointment of PNC Bank or its
affiliates to provide services;
(b) a copy of the Fund's most recent effective registration
statement;
(c) a copy of each Portfolio's advisory agreements;
(d) a copy of the distribution agreement with respect to each
class of Shares;
(e) a copy of each Portfolio's administration agreement if PNC Bank is
not providing the Portfolio with such services;
(f) copies of any shareholder servicing agreements made in respect of
the Fund or a Portfolio; and
(g) certified or authenticated copies of any and all amendments or
supplements to the foregoing.
4. COMPLIANCE WITH LAWS.
PNC Bank undertakes to comply with all applicable requirements of the
Securities Laws and any laws, rules and regulations of governmental
authorities having jurisdiction with respect to the duties to be performed
by PNC Bank hereunder. Except as specifically set forth herein, PNC Bank
assumes no responsibility for such compliance by the Fund or any
Portfolio.
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<PAGE>
5. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PNC Bank shall act only
upon Oral Instructions and Written Instructions.
(b) PNC Bank shall be entitled to rely upon any Oral Instructions and
Written Instructions it receives from an Authorized Person (or from
a person reasonably believed by PNC Bank to be an Authorized Person)
pursuant to this Agreement. PNC Bank may assume that any Oral
Instructions or Written Instructions received hereunder are not in
any way inconsistent with the provisions of organizational documents
of the Fund or of any vote, resolution or proceeding of the Fund's
Board of Trustees or of the Fund's shareholders, unless and until
PNC Bank receives Written Instructions to the contrary.
(c) The Fund agrees to forward to PNC Bank Written Instructions
confirming Oral Instructions (except where such Oral Instructions
are given by PNC Bank or its affiliates) so that PNC Bank receives
the Written Instructions by the close of business on the same day
that such Oral Instructions are received. The fact that such
confirming Written Instructions are not received by PNC Bank shall
in no way invalidate the transactions or enforceability of the
transactions authorized by the Oral Instructions. Where Oral
Instructions or Written Instructions reasonably appear to have been
received from an Authorized Person, PNC Bank shall incur no
liability to the Fund in acting upon such Oral Instructions or
Written Instructions provided that PNC Bank's actions comply with
the other provisions of this Agreement.
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<PAGE>
6. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE FUND. If PNC Bank is in doubt as to any action it
should or should not take, PNC Bank may request directions or
advice, including Oral Instructions or Written Instructions, from
the Fund.
(b) ADVICE OF COUNSEL. If PNC Bank shall be in doubt as to any question
of law pertaining to any action it should or should not take, PNC
Bank may request advice at its own cost from such counsel of its own
reasonable choosing (who may be counsel for the Fund, the Fund's
investment adviser or PNC Bank, at the option of PNC Bank).
(c) CONFLICTING ADVICE. In the event of a conflict between directions,
advice or Oral Instructions or Written Instructions PNC Bank
receives from the Fund, and the advice it receives from counsel, PNC
Bank shall be entitled to rely upon and follow the advice of
counsel. In the event PNC Bank so relies on the advice of counsel,
PNC Bank remains liable for any action or omission on the part of
PNC Bank which constitutes willful misfeasance, bad faith, gross
negligence or reckless disregard by PNC Bank of any duties,
obligations or responsibilities set forth in this Agreement.
(d) PROTECTION OF PNC BANK. PNC Bank shall be protected in any action it
takes or does not take in reliance upon directions, advice or Oral
Instructions or Written Instructions it receives from the Fund or
from counsel and which PNC Bank believes, in good faith, to be
consistent with those directions, advice or Oral Instructions or
Written Instructions. Nothing in this section shall be construed so
as to impose an obligation upon PNC Bank (i) to seek such
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<PAGE>
directions, advice or Oral Instructions or Written Instructions, or
(ii) to act in accordance with such directions, advice or Oral
Instructions or Written Instructions unless, under the terms of
other provisions of this Agreement, the same is a condition of PNC
Bank's properly taking or not taking such action. Nothing in this
subsection shall excuse PNC Bank when an action or omission on the
part of PNC Bank constitutes willful misfeasance, bad faith, gross
negligence or reckless disregard by PNC Bank of any duties,
obligations or responsibilities set forth in this Agreement.
7. RECORDS; VISITS. The books and records pertaining to the Fund and any
Portfolio, which are in the possession or under the control of PNC Bank,
shall be the property of the Fund. Such books and records shall be
prepared and maintained as required by the 1940 Act and other applicable
securities laws, rules and regulations. The Fund and Authorized Persons
shall have access to such books and records at all times during PNC Bank's
normal business hours. Upon the reasonable request of the Fund, copies of
any such books and records shall be provided by PNC Bank to the Fund or to
an authorized representative of the Fund, at the Fund's expense.
8. CONFIDENTIALITY. PNC Bank agrees to keep confidential all records of the
Fund and information relating to the Fund and its shareholders, unless the
release of such records or information is otherwise consented to, in
writing, by the Fund. The Fund agrees that such consent shall not be
unreasonably withheld and may not be withheld where PNC Bank may be
exposed to civil or criminal contempt proceedings or when required to
divulge such information or records to duly constituted authorities.
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<PAGE>
9. COOPERATION WITH ACCOUNTANTS. PNC Bank shall cooperate with the Fund's
independent public accountants and shall take all reasonable action in the
performance of its obligations under this Agreement to ensure that the
necessary information is made available to such accountants for the
expression of their opinion, as required by the Fund.
10. DISASTER RECOVERY. PNC Bank shall enter into and shall maintain in effect
with appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment to
the extent appropriate equipment is available. In the event of equipment
failures, PNC Bank shall, at no additional expense to the Fund, take
reasonable steps to minimize service interruptions. PNC Bank shall have no
liability with respect to the loss of data or service interruptions caused
by equipment failure provided such loss or interruption is not covered by
PNC Bank's own willful misfeasance, bad faith, gross negligence or
reckless disregard of its duties or obligations under this Agreement.
11. YEAR 2000 REPRESENTATION.
(a) The Fund and PFPC acknowledge that the ability of each party to
perform its obligations hereunder may depend upon the ability of
certain of such party's computer system/applications to recognize
and perform properly date-sensitive functions involving dates prior
to and after December 31, 1999, including leap year calculations
(the "Year 2000 Change"). Each party represents to the others that
(i) each is reviewing those operations within such party's
organization involved in the Services described herein and which
could be adversely affected by the Year 2000 Change and is
developing or has developed a program to remediate or replace
affected applications/systems on a timely basis, and to test such
remediation or replacement on a timely basis and (ii) that based
upon the foregoing, to the best of each party's knowledge and
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<PAGE>
belief, the Year 2000 Change will not have a material adverse affect
on the ability of such party to perform hereunder.
(b) The Fund and PFPC agree to contact any third-party vendors involved
in their respective performance under this Agreement to determine
such vendors' strategies and time-lines regarding the Year 2000
Change and to communicate such information to the other parties to
this Agreement.
12. COMPENSATION. As compensation for custody services rendered by PNC Bank
during the term of this Agreement, the Fund, on behalf of each of the
Portfolios, will pay to PNC Bank a fee or fees as may be agreed to in
writing from time to time by the Fund and PNC Bank.
13. INDEMNIFICATION
(a) The Fund, on behalf of each Portfolio, agrees to indemnify and hold
harmless PNC Bank and its affiliates from all taxes, charges,
expenses, assessments, claims and liabilities (including, without
limitation, liabilities arising under the Securities Laws and any
state and foreign securities and blue sky laws, and amendments
thereto, and expenses, including (without limitation) attorneys'
fees and disbursements, arising directly or indirectly from any
action or omission to act which PNC Bank takes (i) at the request or
on the direction of or in reliance on the advice of the Fund or (ii)
upon Oral Instructions or Written Instructions. Neither PNC Bank,
nor any of its affiliates, shall be indemnified against any
liability (or any expenses incident to such liability) arising out
of PNC Bank's or its affiliates' own willful misfeasance, bad faith,
gross negligence or reckless disregard of its duties under this
Agreement.
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<PAGE>
(b) In order that the indemnification provisions contained in this
section shall apply, it is understood that in any case in which the
Fund may be asked to indemnify or hold PNC Bank harmless, the Fund
shall be timely advised of material facts concerning the situation
in question, and it is further understood that PNC Bank will use
reasonable care to notify the Fund on a timely basis of a claim for
indemnification against the Fund. Failure by PNC Bank to furnish the
information provided for in the preceding sentence will not impair
PNC Bank's right to indemnification hereunder unless such failure
materially impairs the Fund's ability to defend the claim. The Fund
shall have the option, which will be undertaken at the expense of
the Fund, to defend PNC Bank against any claim which may be the
subject of this indemnification, which option must be exercised
within a time period that will not materially adversely affect PNC
Bank. In the event that the Fund so elects, it will so notify PNC
Bank and thereupon the Fund shall take over complete defense of the
claim, and PNC Bank shall in such situation initiate no further
legal or other expenses for which it shall seek indemnification
under this section. Such defense shall be conducted by counsel
reasonably acceptable to PNC Bank. PNC Bank shall in no case confess
any claim or make any compromise in any case in which the Fund will
be asked to indemnify PNC Bank except with the Fund's prior written
consent. The Fund will not settle or make any compromise of any
claim, demand, expense or liability without PNC Bank's prior
consent.
14. RESPONSIBILITY OF PNC BANK.
(a) PNC Bank shall be under no duty to take any action on behalf of the
Fund or any Portfolio except as specifically set forth herein or as
may be specifically agreed to by PNC Bank in writing. PNC Bank shall
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<PAGE>
be obligated to exercise reasonable care and diligence in the
performance of its duties hereunder, to act in good faith and to use
its best efforts, within reasonable limits, in performing services
provided for under this Agreement. PNC Bank shall be liable for any
taxes, charges, expenses, assessments, claims and liabilities of the
Fund arising out of PNC Bank's failure to perform its duties under
this agreement to the extent such damages arise out of PNC Bank's
willful misfeasance, bad faith, gross negligence or reckless
disregard of its duties under this Agreement.
(b) Without limiting the generality of the foregoing or of any other
provision of this Agreement, (i) PNC Bank shall not be under any
duty or obligation to inquire into and shall not be liable for (A)
the validity or invalidity or authority or lack thereof of any Oral
Instruction or Written Instruction, notice or other instrument which
conforms to the applicable requirements of this Agreement, and which
PNC Bank reasonably believes to be genuine; or (B) subject to
section 10, delays or errors or loss of data occurring by reason of
circumstances beyond PNC Bank's control, including acts of civil or
military authority, national emergencies, fire, flood, catastrophe,
acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply.
(c) Notwithstanding anything in this Agreement to the contrary, neither
PNC Bank nor its affiliates shall be liable to the Fund or to any
Portfolio for any consequential, special or indirect losses or
damages which the Fund may incur or suffer by or as a consequence of
PNC Bank's or its affiliates' performance of the services provided
hereunder, whether or not the likelihood of such losses or damages
was known by PNC Bank or its affiliates.
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<PAGE>
15. DESCRIPTION OF SERVICES.
(a) DELIVERY OF THE PROPERTY. The Fund will deliver or arrange for
delivery to PNC Bank, all the Property owned by the Portfolios,
including cash received as a result of the distribution of Shares,
during the period that is set forth in this Agreement. PNC Bank will
not be responsible for such property until actual receipt.
(b) RECEIPT AND DISBURSEMENT OF MONEY. PNC Bank, acting upon Written
Instructions, shall open and maintain separate accounts in the
Fund's name using all cash received from or for the account of the
Fund, subject to the terms of this Agreement. In addition, upon
Written Instructions, PNC Bank shall open separate custodial
accounts for each separate series or Portfolio of the Fund
(collectively, the "Accounts") and shall hold in the Accounts all
cash received from or for the Accounts of the Fund specifically
designated to each separate series or Portfolio. PNC Bank shall make
cash payments from or for the Accounts of a Portfolio only for:
(i) purchases of securities in the name of a Portfolio or PNC Bank
or PNC Bank's nominee as provided in sub-section (j) and for
which PNC Bank has received a copy of the broker's or dealer's
confirmation or payee's invoice, as appropriate;
(ii) purchase or redemption of Shares of the Fund delivered to PNC
Bank;
(iii) payment of, subject to Written Instructions, interest, taxes,
administration, accounting, distribution, advisory, management
fees or similar operating expenses which are to be borne by a
Portfolio;
(iv) payment to, subject to receipt of Written Instructions, the
Fund's transfer agent, as agent for the shareholders, an
amount equal to the amount of dividends and distributions
stated in the Written Instructions to be distributed in cash
by the transfer agent to shareholders, or, in lieu of paying
the Fund's transfer agent, PNC Bank may arrange for the direct
payment of cash dividends and distributions to shareholders in
accordance with procedures mutually agreed upon from time to
time by and among the Fund, PNC Bank and the Fund's transfer
agent.
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<PAGE>
(v) payments, upon receipt Written Instructions, in connection
with the conversion, exchange or surrender of securities owned
or subscribed to by the Fund and held by or delivered to PNC
Bank;
(vi) payments of the amounts of dividends received with respect to
securities sold short;
(vii) payments made to a sub-custodian pursuant to provisions in
sub-section (c) of this Section; and
(viii)payments, upon Written Instructions, made for other proper
Fund purposes.
PNC Bank is hereby authorized to endorse and collect all checks, drafts or
other orders for the payment of money received as custodian for the
Accounts.
(c) RECEIPT OF SECURITIES; SUBCUSTODIANS.
(i) PNC Bank shall hold all securities received by it for the
Accounts in a separate account that physically segregates such
securities from those of any other persons, firms or
corporations, except for securities held in a Book-Entry
System. All such securities shall be held or disposed of only
upon Written Instructions of the Fund pursuant to the terms of
this Agreement. PNC Bank shall have no power or authority to
assign, hypothecate, pledge or otherwise dispose of any such
securities or investment, except upon the express terms of
this Agreement and upon Written Instructions, accompanied by a
certified resolution of the Fund's Board of Trustees,
authorizing the transaction. In no case may any member of the
Fund's Board of Trustees, or any officer, employee or agent of
the Fund withdraw any securities.
(ii) At PNC Bank's own expense and for its own convenience, PNC
Bank may enter into sub-custodian agreements with other United
States banks or trust companies to perform duties described in
this sub-section (c). Such bank or trust company shall have an
aggregate capital, surplus and undivided profits, according to
its last published report, of at least one million dollars
($1,000,000), if it is a subsidiary or affiliate of PNC Bank,
or at least twenty million dollars ($20,000,000) if such bank
or trust company is not a subsidiary or affiliate of PNC Bank.
In addition, such bank or trust company must be qualified to
act as custodian and agree to comply with the relevant
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provisions of the 1940 Act and other applicable rules and
regulations. Any such arrangement will not be entered into
without prior written notice to the Fund.
PNC Bank shall remain responsible for the performance of all of its duties
as described in this Agreement and shall hold the Fund and each Portfolio
harmless from its own acts or omissions, under the standards of care
provided for herein, or the acts and omissions of any sub-custodian chosen
by PNC Bank under the terms of this sub-section (c).
(d) TRANSACTIONS REQUIRING INSTRUCTIONS. Upon receipt of Oral
Instructions or Written Instructions and not otherwise, PNC Bank,
directly or through the use of the Book-Entry System, shall:
(i) deliver any securities held for a Portfolio against the
receipt of payment for the sale of such securities;
(ii) execute and deliver to such persons as may be designated in
such Oral Instructions or Written Instructions, proxies,
consents, authorizations, and any other instruments whereby
the authority of a Portfolio as owner of any securities may be
exercised;
(iii) deliver any securities to the issuer thereof, or its agent,
when such securities are called, redeemed, retired or
otherwise become payable; provided that, in any such case, the
cash or other consideration is to be delivered to PNC Bank;
(iv) deliver any securities held for a Portfolio against receipt of
other securities or cash issued or paid in connection with the
liquidation, reorganization, refinancing, tender offer,
merger, consolidation or recapitalization of any corporation,
or the exercise of any conversion privilege;
(v) deliver any securities held for a Portfolio to any protective
committee, reorganization committee or other person in
connection with the reorganization, refinancing, merger,
consolidation, recapitalization or sale of assets of any
corporation, and receive and hold under the terms of this
Agreement such certificates of deposit, interim receipts or
other instruments or documents as may be issued to it to
evidence such delivery;
(vi) make such transfer or exchanges of the assets of the
Portfolios and take such other steps as shall be stated in
said Oral Instructions or Written Instructions to be for the
purpose of effectuating a duly authorized plan of liquidation,
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reorganization, merger, consolidation or recapitalization of
the Fund;
(vii) release securities belonging to a Portfolio to any bank or
trust company for the purpose of a pledge or hypothecation to
secure any loan incurred by the Fund on behalf of that
Portfolio; provided, however, that securities shall be
released only upon payment to PNC Bank of the monies borrowed,
except that in cases where additional collateral is required
to secure a borrowing already made subject to proper prior
authorization, further securities may be released for that
purpose; and repay such loan upon redelivery to it of the
securities pledged or hypothecated therefor and upon surrender
of the note or notes evidencing the loan;
(viii)release and deliver securities owned by a Portfolio in
connection with any repurchase agreement entered into on
behalf of the Fund, but only on receipt of payment therefor;
and pay out moneys of the Fund in connection with such
repurchase agreements, but only upon the delivery of the
securities;
(ix) release and deliver or exchange securities owned by the Fund
in connection with any conversion of such securities, pursuant
to their terms, into other securities;
(x) release and deliver securities owned by the Fund for the
purpose of redeeming in kind shares of the Fund upon delivery
thereof to PNC Bank; and
(xi) release and deliver or exchange securities owned by the Fund
for other corporate purposes.
PNC Bank must also receive a certified resolution describing
the nature of the corporate purpose and the name and address
of the person(s) to whom delivery shall be made when such
action is pursuant to sub-paragraph d.
(e) USE OF BOOK-ENTRY SYSTEM. The Fund shall deliver to PNC Bank
certified resolutions of the Fund's Board of Trustees approving,
authorizing and instructing PNC Bank on a continuous basis, to
deposit in the Book-Entry System all securities belonging to the
Portfolios eligible for deposit therein and to utilize the
Book-Entry System to the extent possible in connection with
settlements of purchases and sales of securities by the Portfolios,
and deliveries and returns of securities loaned, subject to
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<PAGE>
repurchase agreements or used as collateral in connection with
borrowings. PNC Bank shall continue to perform such duties until it
receives Written Instructions or Oral Instructions authorizing
contrary actions.
PNC Bank shall administer the Book-Entry System as follows:
(i) With respect to securities of each Portfolio which are
maintained in the Book-Entry System, the records of PNC Bank
shall identify by Book-Entry or otherwise those securities
belonging to each Portfolio. PNC Bank shall furnish to the
Fund a detailed statement of the Property held for each
Portfolio under this Agreement at least monthly and from time
to time and upon written request.
(ii) Securities and any cash of each Portfolio deposited in the
Book-Entry System will at all times be segregated from any
assets and cash controlled by PNC Bank in other than a
fiduciary or custodian capacity but may be commingled with
other assets held in such capacities. PNC Bank and its
sub-custodian, if any, will pay out money only upon receipt of
securities and will deliver securities only upon the receipt
of money.
(iii) All books and records maintained by PNC Bank which relate to
the Fund's participation in the Book-Entry System will at all
times during PNC Bank's regular business hours be open to the
inspection of Authorized Persons, and PNC Bank will furnish to
the Fund all information in respect of the services rendered
as it may require.
PNC Bank will also provide the Fund with such reports on its own
system of internal control as the Fund may reasonably request from
time to time.
(f) REGISTRATION OF SECURITIES. All Securities held for a Portfolio
which are issued or issuable only in bearer form, except such
securities held in the Book-Entry System, shall be held by PNC Bank
in bearer form; all other securities held for a Portfolio may be
registered in the name of the Fund on behalf of that Portfolio, PNC
Bank, the Book-Entry System, a sub-custodian, or any duly appointed
nominees of the Fund, PNC Bank, Book-Entry System or sub-custodian.
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The Fund reserves the right to instruct PNC Bank as to the method of
registration and safekeeping of the securities of the Fund. The Fund
agrees to furnish to PNC Bank appropriate instruments to enable PNC
Bank to hold or deliver in proper form for transfer, or to register
in the name of its nominee or in the name of the Book-Entry System,
any securities which it may hold for the Accounts and which may from
time to time be registered in the name of the Fund on behalf of a
Portfolio.
(g) VOTING AND OTHER ACTION. Neither PNC Bank nor its nominee shall vote
any of the securities held pursuant to this Agreement by or for the
account of a Portfolio, except in accordance with Written
Instructions. PNC Bank, directly or through the use of the
Book-Entry System, shall execute in blank and promptly deliver all
notices, proxies and proxy soliciting materials to the registered
holder of such securities. If the registered holder is not the Fund
on behalf of a Portfolio, then Written Instructions or Oral
Instructions must designate the person who owns such securities.
(h) TRANSACTIONS NOT REQUIRING INSTRUCTIONS. In the absence of contrary
Written Instructions, PNC Bank is authorized to take the following
actions:
(i) COLLECTION OF INCOME AND OTHER PAYMENTS.
(A) collect and receive for the account of each Portfolio,
all income, dividends, distributions, coupons, option
premiums, other payments and similar items, included or
to be included in the Property, and, in addition,
promptly advise each Portfolio of such receipt and
credit such income, as collected, to each Portfolio's
custodian account;
(B) endorse and deposit for collection, in the name of the
Fund, checks, drafts, or other orders for the payment of
money;
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(C) receive and hold for the account of each Portfolio all
securities received as a distribution on the Portfolio's
securities as a result of a stock dividend, share
split-up or reorganization, recapitalization,
readjustment or other rearrangement or distribution of
rights or similar securities issued with respect to any
securities belonging to a Portfolio and held by PNC Bank
hereunder;
(D) present for payment and collect the amount payable upon
all securities which may mature or be called, redeemed,
or retired, or otherwise become payable on the date such
securities become payable; and
(E) take any action which may be necessary and proper in
connection with the collection and receipt of such
income and other payments and the endorsement for
collection of checks, drafts, and other negotiable
instruments.
(ii) MISCELLANEOUS TRANSACTIONS.
(A) deliver or cause to be delivered Property against
payment or other consideration or written receipt
therefor in the following cases:
(1) for examination by a broker or dealer selling for
the account of a Portfolio in accordance with
street delivery custom;
(2) for the exchange of interim receipts or temporary
securities for definitive securities; and
(3) for transfer of securities into the name of the
Fund on behalf of a Portfolio or PNC Bank or
nominee of either, or for exchange of securities
for a different number of bonds, certificates, or
other evidence, representing the same aggregate
face amount or number of units bearing the same
interest rate, maturity date and call provisions,
if any; provided that, in any such case, the new
securities are to be delivered to PNC Bank.
(B) Unless and until PNC Bank receives Oral Instructions or
Written Instructions to the contrary, PNC Bank shall:
(1) pay all income items held by it which call for
payment upon presentation and hold the cash
received by it upon such payment for the account
of each Portfolio;
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(2) collect interest and cash dividends received, with
notice to the Fund, to the account of each
Portfolio;
(3) hold for the account of each Portfolio all stock
dividends, rights and similar securities issued
with respect to any securities held by PNC Bank;
and
(4) execute as agent on behalf of the Fund all
necessary ownership certificates required by the
Internal Revenue Code or the Income Tax
Regulations of the United States Treasury
Department or under the laws of any state now or
hereafter in effect, inserting the Fund's name, on
behalf of a Portfolio, on such certificate as the
owner of the securities covered thereby, to the
extent it may lawfully do so.
(i) SEGREGATED ACCOUNTS.
(i) PNC Bank shall upon receipt of Written Instructions or Oral
Instructions establish and maintain a segregated accounts on
its records for and on behalf of each Portfolio. Such accounts
may be used to transfer cash and securities, including
securities in the Book-Entry System:
(A) for the purposes of compliance by the Fund with the
procedures required by a securities or option exchange,
providing such procedures comply with the 1940 Act and
any releases of the SEC relating to the maintenance of
segregated accounts by registered investment companies;
and
(B) Upon receipt of Written Instructions, for other proper
corporate purposes.
(ii) PNC Bank shall arrange for the establishment of IRA custodian
accounts for such shareholders holding Shares through IRA
accounts, in accordance with the Fund's prospectuses, the
Internal Revenue Code of 1986, as amended (including
regulations promulgated thereunder), and with such other
procedures as are mutually agreed upon from time to time by
and among the Fund, PNC Bank and the Fund's transfer agent.
(j) PURCHASES OF SECURITIES. PNC Bank shall settle purchased securities
upon receipt of Oral Instructions or Written Instructions from the
Fund or its investment advisers that specify:
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(i) the name of the issuer and the title of the securities,
including CUSIP number if applicable;
(ii) the number of shares or the principal amount purchased and
accrued interest, if any;
(iii) the date of purchase and settlement;
(iv) the purchase price per unit;
(v) the total amount payable upon such purchase;
(vi) the Portfolio involved; and
(vii) the name of the person from whom or the broker through whom
the purchase was made. PNC Bank shall upon receipt of
securities purchased by or for a Portfolio pay out of the
moneys held for the account of the Portfolio the total amount
payable to the person from whom or the broker through whom the
purchase was made, provided that the same conforms to the
total amount payable as set forth in such Oral Instructions or
Written Instructions.
(k) SALES OF SECURITIES. PNC Bank shall settle sold securities upon
receipt of Oral Instructions or Written Instructions from the Fund
that specify:
(i) the name of the issuer and the title of the security,
including CUSIP number if applicable;
(ii) the number of shares or principal amount sold, and accrued
interest, if any;
(iii) the date of trade and settlement;
(iv) the sale price per unit;
(v) the total amount payable to the Fund upon such sale;
(vi) the name of the broker through whom or the person to whom the
sale was made; and
(vii) the location to which the security must be delivered and
delivery deadline, if any; and
(viii) the Portfolio involved.
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PNC Bank shall deliver the securities upon receipt of the total amount
payable to the Portfolio upon such sale, provided that the total amount
payable is the same as was set forth in the Oral Instructions or Written
Instructions. Subject to the foregoing, PNC Bank may accept payment in
such form as shall be satisfactory to it, and may deliver securities and
arrange for payment in accordance with the customs prevailing among
dealers in securities.
(l) REPORTS; PROXY MATERIALS.
(i) PNC Bank shall furnish to the Fund the following reports:
(A) such periodic and special reports as the Fund may
reasonably request;
(B) a monthly statement summarizing all transactions and
entries for the account of each Portfolio, listing each
Portfolio securities belonging to each Portfolio with
the adjusted average cost of each issue and the market
value at the end of such month and stating the cash
account of each Portfolio including disbursements;
(C) the reports required to be furnished to the Fund
pursuant to Rule 17f-4; and
(D) such other information as may be agreed upon from time
to time between the Fund and PNC Bank.
(iii) PNC Bank shall transmit promptly to the Fund any proxy
statement, proxy material, notice of a call or conversion or
similar communication received by it as custodian of the
Property. PNC Bank shall be under no other obligation to
inform the Fund as to such actions or events.
(m) COLLECTIONS. All collections of monies or other property in respect,
or which are to become part, of the Property (but not the
safekeeping thereof upon receipt by PNC Bank) shall be at the sole
risk of the Fund. If payment is not received by PNC Bank within a
reasonable time after proper demands have been made, PNC Bank shall
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notify the Fund in writing, including copies of all demand letters,
any written responses, memoranda of all oral responses and shall
await instructions from the Fund. PNC Bank shall not be obliged to
take legal action for collection unless and until reasonably
indemnified to its satisfaction. PNC Bank shall also notify the Fund
as soon as reasonably practicable whenever income due on securities
is not collected in due course and shall provide the Fund with
periodic status reports of such income collected after a reasonable
time.
16. DURATION AND TERMINATION.
(a) This Agreement shall continue until terminated by the Fund or by
PFPC on sixty (60) days' prior written notice to the other party;
(b) in the event this Agreement is terminated (pending appointment
of a successor to PNC Bank or vote of the shareholders of the Fund
to dissolve or to function without a custodian of its cash,
securities or other property), PNC Bank shall deliver to a successor
custodian for the Fund appointed by the Board of Trustees all cash,
securities and other property of the Fund duly endorsed and in the
form for transfer then held by it hereunder and shall transfer to an
account of the successor custodian all of the securities of the Fund
held in Book-Entry System. If this Agreement is terminated and no
such successor custodian shall be appointed, PFPC shall, in like
manner, as directed by vote of the holders of a majority of the
outstanding shares of the Fund or upon receipt of a certified copy
of a vote or resolution of the Board, deliver and transfer such
21
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Property and cash of the Fund then held by it hereunder as specified
and in accordance with such vote or resolution; (c) in the event
that no written order designating a successor custodian or certified
copy of a vote or resolution of the Board shall have been delivered
to PFPC on or before the date when termination of this Agreement
shall become effective, then PFPC shall have the right to deliver
all cash, securities and other property of the Fund to a bank or
trust company of PNC Bank's choice, having an aggregate capital,
surplus and undivided profits, as shown by its last published
report, of not less than twenty million dollars ($20,000,000), as a
custodian for the Fund to be held under terms similar to those of
this Agreement; and (d) upon termination of this Agreement, the Fund
shall pay to PFPC such compensation as may be due hereunder as of
the date of such termination and also shall reimburse PFPC for its
costs, expenses and disbursements as contemplated by this Agreement.
PNC Bank shall have a security interest in and shall have a right of
setoff against the Property as security for the payment of such
fees, compensation, costs and expenses.
17. CHANGE OF CONTROL. Notwithstanding any other provision of this Agreement,
in the event of an agreement to enter into a transaction that would result
in a Change of Control of the Fund's adviser or sponsor, the Fund's
ability to terminate the Agreement will be suspended from the time of such
agreement until two years after the Change of Control, provided that
notwithstanding the foregoing provisions of this sentence the Fund may
terminate this Agreement if the following have occurred: (i) the Fund
gives PNC Bank notice that for the preceding thirty (30) days PNC Bank has
been in material breach of the Agreement (and PNC Bank has in fact been in
such material breach) and that PNC Bank has sixty (60) days from receipt
of such notice to cure such material breach; (ii) PNC Bank fails to cure
such material breach within such sixty (60) day period; and (iii) at the
conclusion of such sixty (60) day period the Fund gives PNC Bank notice
that it is terminating the Agreement.
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<PAGE>
18. NOTICES. All notices and other communications, including Written
Instructions, shall be in writing or by confirming telegram, cable, telex
or facsimile sending device. Notice shall be addressed (a) if to PNC Bank
at Airport Business Center, International Court 2, 200 Stevens Drive,
Lester, Pennsylvania 19113, marked for the attention of the Custodian
Services Department (or its successor) (b) if to the Fund, at 2801 Ocean
Drive, Suite 204, Vero Beach, Florida, 32963, Attn.: Michael T. Williams
or (c) if to neither of the foregoing, at such other address as shall have
been given by like notice to the sender of any such notice or other
communication by the other party. If notice is sent by confirming
telegram, cable, telex or facsimile sending device, it shall be deemed to
have been given immediately. If notice is sent by first-class mail, it
shall be deemed to have been given five days after it has been mailed. If
notice is sent by messenger, it shall be deemed to have been given on the
day it is delivered.
19. AMENDMENTS. This Agreement, or any term hereof, may be changed or waived
only by a written amendment, signed by the party against whom enforcement
of such change or waiver is sought.
20. DELEGATION; ASSIGNMENT. Except as provided below, neither this Agreement
nor any rights or obligations hereunder may be assigned by either party
without the written consent of the other party. PNC Bank may assign its
rights and delegate its duties hereunder to any affiliate (as defined in
the 1940 Act) or any majority-owned direct or indirect subsidiary of PFPC
or PNC Bank Corp., provided that (i) PNC Bank gives the Fund thirty (30)
days' prior written notice of such assignment or delegation, (ii) the
assignee or delegate agrees to comply with the with relevant provision of
23
<PAGE>
the 1940 Act, and (iii) PNC Bank and such assignee or delegate promptly
provide such information as the Fund may reasonably request, and respond
to such questions as the Fund may reasonably ask, relative to the
assignment or delegation (including, without limitation, the capabilities
of the assignee or delegate.
21. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
22. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
23. LIMITATIONS OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS. A copy of the
Declaration of Trust of the Fund is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Trust as Trustees
and not individually and that the obligations of this instrument are not
binding upon any of the Trustees or Shareholders individually but are
binding only upon the assets and property of the Fund.
24. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior
agreements and understandings relating to the subject matter hereof,
provided that the parties may embody in one or more separate
documents their agreement, if any, with respect to delegated duties
and Oral Instructions.
(b) CAPTIONS. 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.
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<PAGE>
(c) GOVERNING LAW. This Agreement shall be deemed to be a contract made
in Pennsylvania and governed by Pennsylvania law, without regard to
principles of conflicts of law.
(d) PARTIAL INVALIDITY. 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.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
(f) FACSIMILE SIGNATURES. The facsimile signature of any party to this
Agreement shall constitute the valid and binding execution hereof by
such party.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written. PNC BANK, NATIONAL
ASSOCIATION
By:
---------------------------
Title:
------------------------
GOLF ASSOCIATED FUND
By:
--------------------------
Title:
------------------------
26
<PAGE>
AUTHORIZED PERSONS APPENDIX
NAME (TYPE) SIGNATURE
- ---------------------- -------------------
- ---------------------- -------------------
- ---------------------- -------------------
- ---------------------- -------------------
- ---------------------- -------------------
- ---------------------- -------------------
27
FORM OF
TRANSFER AGENCY SERVICES AGREEMENT
THIS AGREEMENT is made as of , 1998 by and between PFPC INC., a Delaware
corporation ("PFPC"), and GOLF ASSOCIATED FUND, a Massachusetts business trust
(the "Fund").
W I T N E S S E T H:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to retain PFPC to serve as transfer agent,
registrar, dividend disbursing agent and shareholder servicing agent to its
investment portfolios listed on Exhibit A attached hereto and made a part
hereof, as such Exhibit A may be amended from time to time (each a "Portfolio"),
and PFPC wishes to furnish such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. DEFINITIONS. AS USED IN THIS AGREEMENT:
(a) "1933 ACT" means the Securities Act of 1933, as amended.
(b) "1934 ACT" means the Securities Exchange Act of 1934, as amended.
(c) "AUTHORIZED PERSON" means any officer of the Fund and any other
person duly authorized by the Fund's Board of Trustees to give Oral
Instructions and Written Instructions on behalf of the Fund and
listed on the Authorized Persons Appendix attached hereto and made a
part hereof or any amendment thereto as may be received by PFPC. An
Authorized Person's scope of authority may be limited by the Fund by
setting forth such limitation in the Authorized Persons Appendix.
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<PAGE>
(d) "CEA" means the Commodities Exchange Act, as amended.
(e) "CHANGE OF CONTROL" means a change in ownership or control (not
including transactions between wholly-owned direct or indirect
subsidiaries of a common parent) of 25% or more of the beneficial
ownership of the shares of common stock or shares of beneficial
interest of an entity or its parent(s).
(f) "ORAL INSTRUCTIONS" mean oral instructions received by PFPC from an
Authorized Person or from a person reasonably believed by PFPC to be
an Authorized Person.
(g) "SEC" means the Securities and Exchange Commission.
(h) "SECURITIES LAWS" mean the 1933 Act, the 1934 Act, the 1940 Act and
the CEA.
(i) "SHARES" mean the shares of beneficial interest of any series or
class of the Fund.
(j) "WRITTEN INSTRUCTIONS" mean written instructions signed by an
Authorized Person and received by PFPC. The instructions may be
delivered by hand, mail, tested telegram, cable, telex or facsimile
sending device.
2. APPOINTMENT. The Fund hereby appoints PFPC to serve as transfer agent,
registrar, dividend disbursing agent and shareholder servicing agent to
the Fund in accordance with the terms set forth in this Agreement. PFPC
accepts such appointment and agrees to furnish such services.
3. DELIVERY OF DOCUMENTS. The Fund has provided or, where applicable, will
provide PFPC with the following:
(a) Certified or authenticated copies of the resolutions of the Fund's
Board of Trustees, approving the appointment of PFPC or its
affiliates to provide services to the Fund and approving this
Agreement;
(b) A copy of the Fund's most recent effective registration statement;
2
<PAGE>
(c) A copy of the advisory agreement with respect to each investment
Portfolio of the Fund (each, a Portfolio);
(d) A copy of the distribution agreement with respect to each class of
Shares of the Fund;
(e) A copy of each Portfolio's administration agreements if PFPC is not
providing the Portfolio with such services;
(f) Copies of any shareholder servicing agreements made in respect of
the Fund or a Portfolio; and
(g) Copies (certified or authenticated where applicable) of any and all
amendments or supplements to the foregoing.
4. COMPLIANCE WITH RULES AND REGULATIONS. PFPC undertakes to comply with all
applicable requirements of the Securities Laws and any laws, rules and
regulations of governmental authorities having jurisdiction with respect
to the duties to be performed by PFPC hereunder. Except as specifically
set forth herein, PFPC assumes no responsibility for such compliance by
the Fund or any of its investment portfolios.
5. REGISTRATION AS A TRANSFER AGENT. PFPC is registered with the appropriate
federal agency for the registration of transfer agents, and will remain so
registered during the term of this Agreement. PFPC shall notify the Fund
on a timely basis in the event of any material change in its status as a
registered transfer agent. Should PFPC fail to be registered with the
appropriate federal agency as a transfer agent at any time during this
Agreement, and such failure to be so registered does not permit PFPC to
lawfully conduct its activities, the Fund may terminate this Agreement
upon five days prior written notice to PFPC.
3
<PAGE>
6. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PFPC shall act only
upon Oral Instructions and Written Instructions.
(b) PFPC shall be entitled to rely upon any Oral Instructions and
Written Instructions it receives from an Authorized Person (or from
a person reasonably believed by PFPC to be an Authorized Person)
pursuant to this Agreement. PFPC may assume that any Oral
Instruction or Written Instruction received hereunder is not in any
way inconsistent with the provisions of organizational documents or
this Agreement or of any vote, resolution or proceeding of the
Fund's Board of Trustees or of the Fund's shareholders, unless and
until PFPC receives Written Instructions to the contrary.
(c) The Fund agrees to forward to PFPC Written Instructions confirming
Oral Instructions so that PFPC receives the Written Instructions by
the close of business on the same day that such Oral Instructions
are received. The fact that such confirming Written Instructions are
not received by PFPC shall in no way invalidate the transactions or
enforceability of the transactions authorized by the Oral
Instructions. Where Oral Instructions or Written Instructions
reasonably appear to have been received from an Authorized Person,
PFPC shall incur no liability to the Fund in acting upon such Oral
Instructions or Written Instructions provided that PFPC's actions
comply with the other provisions of this Agreement.
7. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE FUND. If PFPC is in doubt as to any action it should
or should not take, PFPC may request directions or advice, including
Oral Instructions or Written Instructions, from the Fund.
4
<PAGE>
(b) ADVICE OF COUNSEL. If PFPC shall be in doubt as to any question of
law pertaining to any action it should or should not take, PFPC may
request advice at its own cost from such counsel of its own
reasonable choosing (who may be counsel for the Fund, the Fund's
investment adviser or PFPC, at the option of PFPC).
(c) CONFLICTING ADVICE. In the event of a conflict between directions,
advice or Oral Instructions or Written Instructions PFPC receives
from the Fund, and the advice it receives from counsel, PFPC may
rely upon and follow the advice of counsel. In the event PFPC so
relies on the advice of counsel, PFPC remains liable for any action
or omission on the part of PFPC which constitutes willful
misfeasance, bad faith, gross negligence or reckless disregard by
PFPC of any duties, obligations or responsibilities set forth in
this Agreement.
(d) PROTECTION OF PFPC. PFPC shall be protected in any action it takes
or does not take in reliance upon directions, advice or Oral
Instructions or Written Instructions it receives from the Fund or
from counsel and which PFPC believes, in good faith, to be
consistent with those directions, advice or Oral Instructions or
Written Instructions. Nothing in this section shall be construed so
as to impose an obligation upon PFPC (i) to seek such directions,
advice or Oral Instructions or Written Instructions, or (ii) to act
in accordance with such directions, advice or Oral Instructions or
Written Instructions unless, under the terms of other provisions of
this Agreement, the same is a condition of PFPC's properly taking or
not taking such action. Nothing in this subsection shall excuse PFPC
when an action or omission on the part of PFPC constitutes willful
misfeasance, bad faith, gross negligence or reckless disregard by
PFPC of any duties, obligations or responsibilities set forth in
this Agreement.
5
<PAGE>
8. RECORDS; VISITS. The books and records pertaining to the Fund, which are
in the possession or under the control of PFPC, shall be the property of
the Fund. Such books and records shall be prepared and maintained as
required by the 1940 Act and other applicable securities laws, rules and
regulations. The Fund and Authorized Persons shall have access to such
books and records at all times during PFPC's normal business hours. Upon
the reasonable request of the Fund, copies of any such books and records
shall be provided by PFPC to the Fund or to an Authorized Person, at the
Fund's expense.
9. CONFIDENTIALITY. PFPC agrees to keep confidential all records of the Fund
and information relating to the Fund and its shareholders, unless the
release of such records or information is otherwise consented to, in
writing, by the Fund. The Fund agrees that such consent shall not be
unreasonably withheld and may not be withheld where PFPC may be exposed to
civil or criminal contempt proceedings or when required to divulge such
information or records to duly constituted authorities.
10. COOPERATION WITH ACCOUNTANTS. PFPC shall cooperate with the Fund's
independent public accountants and shall take all reasonable actions in
the performance of its obligations under this Agreement to ensure that the
necessary information is made available to such accountants for the
expression of their opinion, as required by the Fund.
11. DISASTER RECOVERY. PFPC shall enter into and shall maintain in effect with
appropriate parties one or more agreements making reasonable provisions
for emergency use of electronic data processing equipment to the extent
appropriate equipment is available. In the event of equipment failures,
PFPC shall, at no additional expense to the Fund, take reasonable steps to
minimize service interruptions. PFPC shall have no liability with respect
6
<PAGE>
to the loss of data or service interruptions caused by equipment failure,
provided such loss or interruption is not caused by PFPC's own willful
misfeasance, bad faith, gross negligence or reckless disregard of its
duties or obligations under this Agreement.
12. YEAR 2000 REPRESENTATION.
(a) The Fund and PFPC acknowledge that the ability of each party to
perform its obligations hereunder may depend upon the ability of
certain of such party's computer system/applications to recognize
and perform properly date-sensitive functions involving dates prior
to and after December 31, 1999, including leap year calculations
(the "Year 2000 Change"). Each party represents to the others that
(i) each is reviewing those operations within such party's
organization involved in the Services described herein and which
could be adversely affected by the Year 2000 Change and is
developing or has developed a program to remediate or replace
affected applications/systems on a timely basis, and to test such
remediation or replacement on a timely basis and (ii) that based
upon the foregoing, to the best of each party's knowledge and
belief, the Year 2000 Change will not have a material adverse affect
on the ability of such party to perform hereunder.
(b) The Fund and PFPC agree to contact any third-party vendors involved
in their respective performance under this Agreement to determine
such vendors' strategies and time-lines regarding the Year 2000
Change and to communicate such information to the other parties to
this Agreement.
13. COMPENSATION. As compensation for services rendered by PFPC during the
term of this Agreement, the Fund will pay to PFPC a fee or fees as may be
agreed to from time to time in writing by the Fund and PFPC.
7
<PAGE>
14. INDEMNIFICATION.
(a) The Fund agrees to indemnify and hold harmless PFPC and its
affiliates from all taxes, charges, expenses, assessments, claims
and liabilities (including, without limitation, liabilities arising
under the Securities Laws and any state and foreign securities and
blue sky laws, and amendments thereto), and expenses, including
(without limitation) attorneys' fees and disbursements, arising
directly or indirectly from (i) any action or omission to act which
PFPC takes (a) at the request or on the direction of or in reliance
on the advice of the Fund or (b) upon Oral Instructions or Written
Instructions or (ii) the acceptance, processing and/or negotiation
of checks or other methods utilized for the purchase of Shares.
Neither PFPC, nor any of its affiliates, shall be indemnified
against any liability (or any expenses incident to such liability)
arising out of PFPC's or its affiliates' own willful misfeasance,
bad faith, gross negligence or reckless disregard of its duties and
obligations under this Agreement, provided that in the absence of a
finding to the contrary the acceptance, processing and/or
negotiation of a fraudulent payment for the purchase of Shares shall
be presumed not to have been the result of PFPC's or its affiliates
own willful misfeasance, bad faith, gross negligence or reckless
disregard of such duties and obligations.
(b) In order that the indemnification provisions contained in this
section shall apply, it is understood that in any case in which the
Fund may be asked to indemnify or hold PFPC harmless, the Fund shall
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<PAGE>
be timely advised of material facts concerning the situation in
question, and it is further understood that PFPC will use reasonable
care to notify the Fund on a timely basis of a claim for
indemnification against the Fund. Failure by PFPC to furnish the
information provided for in the preceding sentence will not impair
PFPC's right to indemnification hereunder unless such failure
materially impairs the Fund's ability to defend the claim. The Fund
shall have the option, which will be undertaken at the expense of
the Fund, to defend PFPC against any claim which may be the subject
of this indemnification, which option must be exercised within a
time period that will not materially adversely affect PFPC. In the
event that the Fund so elects, it will so notify PFPC and thereupon
the Fund shall take over complete defense of the claim, and PFPC
shall in such situation initiate no further legal or other expenses
for which it shall seek indemnification under this section. Such
defense shall be conducted by counsel reasonably acceptable to PFPC.
PFPC shall in no case confess any claim or make any compromise in
any case in which the Fund will be asked to indemnify PFPC except
with the Fund's prior written consent. The Fund will not settle or
make any compromise of any claim, demand, expense or liability
without PFPC's prior consent.
15. RESPONSIBILITY OF PFPC.
(a) PFPC shall be under no duty to take any action on behalf of the Fund
except as specifically set forth herein or as may be specifically
agreed to by PFPC in writing. PFPC shall be obligated to exercise
reasonable care and diligence in the performance of its duties
hereunder and to act in good faith and to use its best efforts,
within reasonable limits, in performing services provided for under
this Agreement. PFPC shall be liable for any taxes, charges,
9
<PAGE>
expenses, assessments, claims and liabilities of the Fund arising
out of PFPC's failure to perform its duties under this Agreement to
the extent such damages arise out of PFPC's willful misfeasance, bad
faith, gross negligence or reckless disregard of such duties.
(b) Without limiting the generality of the foregoing or of any other
provision of this Agreement, (i) PFPC, shall not be liable for
losses beyond its control, provided that PFPC has acted in
accordance with the standard of care set forth above; and (ii) PFPC
shall not be under any duty or obligation to inquire into and shall
not be liable for (A) the validity or invalidity or authority or
lack thereof of any Oral Instruction or Written Instruction, notice
or other instrument which conforms to the applicable requirements of
this Agreement, and which PFPC reasonably believes to be genuine; or
(B) subject to Section 10, delays or errors or loss of data
occurring by reason of circumstances beyond PFPC's control,
including acts of civil or military authority, national emergencies,
labor difficulties, fire, flood, catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation,
communication or power supply.
(c) Notwithstanding anything in this Agreement to the contrary, neither
PFPC nor its affiliates shall be liable to the Fund for any
consequential, special or indirect losses or damages which the Fund
may incur or suffer by or as a consequence of PFPC's or its
affiliates' performance of the services provided hereunder, whether
or not the likelihood of such losses or damages was known by PFPC or
its affiliates.
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16. DESCRIPTION OF SERVICES.
(a) SERVICES PROVIDED ON AN ONGOING BASIS, IF Applicable.
(i) Calculate Rule 12b-1 payments;
(ii) Maintain proper shareholder registrations;
(iii) Review new applications and correspond with shareholders to
complete or correct information;
(iv) Direct payment processing of checks or wires;
(v) Prepare and certify stockholder lists in conjunction with
proxy solicitations;
(vi) Countersign share certificates;
(vii) Prepare and mail to shareholders confirmation of activity;
(viii)Provide toll-free lines for direct shareholder use, plus
customer liaison staff for on-line inquiry response;
(ix) Mail duplicate confirmations to broker-dealers of their
clients' activity, whether executed through the broker-dealer
or directly with PFPC;
(x) Provide periodic shareholder lists and statistics to the
clients;
(xi) Provide detailed data for underwriter/broker confirmations;
(xii) Prepare periodic mailing of year-end tax and statement
information;
(xiii)Notify on a timely basis the investment adviser, accounting
agent, and custodian of fund activity; and
(xiv) Perform other participating broker-dealer shareholder services
as may be agreed upon from time to time, and
(xv) Report abandoned property.
(b) SERVICES PROVIDED BY PFPC UNDER ORAL INSTRUCTIONS OR WRITTEN
INSTRUCTIONS.
(i) Accept and post daily Fund purchases and redemptions;
(ii) Accept, post and perform shareholder transfers and exchanges;
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<PAGE>
(iii) Prepare and pay dividends and other distributions;
(iv) Solicit and tabulate proxies; and
(v) Issue and cancel certificates (when requested in writing by
the shareholder).
(c) PURCHASE OF SHARES. PFPC shall issue and credit an account of an
investor, in the manner described in the Fund's prospectus, once it
receives:
(i) A purchase order;
(ii) Proper information to establish a shareholder account; and
(iii) Confirmation of receipt or crediting of funds for such order
to the Fund's custodian.
(d) REDEMPTION OF SHARES. PFPC shall redeem Shares only if that function
is properly authorized by the certificate of incorporation or
resolution of the Fund's Board of Trustees. Shares shall be redeemed
and payment therefor shall be made in accordance with the Fund's
prospectus, when the recordholder tenders Shares in proper form and
directs the method of redemption. If Shares are received in proper
form, Shares shall be redeemed before the funds are provided to PFPC
from the Fund's custodian (the "Custodian"). If the recordholder has
not directed that redemption proceeds be wired, when the Custodian
provides PFPC with funds, the redemption check shall be sent to and
made payable to the recordholder, unless:
(i) the surrendered certificate is drawn to the order of an
assignee or holder and transfer authorization is signed by the
recordholder; or
(ii) Transfer authorizations are signed by the recordholder when
Shares are held in book-entry form.
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<PAGE>
When a broker-dealer notifies PFPC of a redemption desired by a
customer, and the Custodian provides PFPC with funds, PFPC shall
prepare and send the redemption check to the broker-dealer and made
payable to the broker-dealer on behalf of its customer.
(e) DIVIDENDS AND DISTRIBUTIONS. Upon receipt of a resolution of the
Fund's Board of Trustees authorizing the declaration and payment of
dividends and distributions, PFPC shall issue dividends and
distributions declared by the Fund in Shares, or, upon shareholder
election, pay such dividends and distributions in cash, if provided
for in the Fund's prospectus. Such issuance or payment, as well as
payments upon redemption as described above, shall be made after
deduction and payment of the required amount of funds to be withheld
in accordance with any applicable tax laws or other laws, rules or
regulations. PFPC shall mail to the Fund's shareholders such tax
forms and other information, or permissible substitute notice,
relating to dividends and distributions paid by the Fund as are
required to be filed and mailed by applicable law, rule or
regulation. PFPC shall prepare, maintain and file with the IRS and
other appropriate taxing authorities reports relating to all
dividends above a stipulated amount (as provided for by applicable
laws or regulations) paid by the Fund to its shareholders as
required by tax or other law, rule or regulation.
(f) SHAREHOLDER ACCOUNT SERVICES.
(i) PFPC may arrange, in accordance with the prospectus, for
issuance of Shares obtained through:
- Any pre-authorized check plan; and
- Direct purchases through broker wire orders, checks and
applications.
13
<PAGE>
(ii) PFPC may arrange, in accordance with the prospectus, for a
shareholder's:
- Exchange of Shares for shares of another fund with which
the Fund has exchange privileges;
- Automatic redemption from an account where that
shareholder anticipates in a automatic redemption plan;
and/or
- Redemption of Shares from an account with a checkwriting
privilege.
(g) COMMUNICATIONS TO SHAREHOLDERS. Upon timely Written Instructions,
PFPC shall mail all communications by the Fund to its shareholders,
including:
(i) Reports to shareholders;
(ii) Confirmations of purchases and sales of Fund shares;
(iii) Monthly or quarterly statements;
(iv) Dividend and distribution notices;
(v) Proxy material; and
(vi) Tax form information.
In addition, PFPC will receive and tabulate the proxy cards for the
meetings of the Fund's shareholders.
(h) RECORDS. PFPC shall maintain records of the accounts for each
shareholder showing the following information:
(i) Name, address and United States Tax Identification or Social
Security number;
(ii) Number and class of Shares held and number and class of Shares
for which certificates, if any, have been issued, including
certificate numbers and denominations;
(iii) Historical information regarding the account of each
shareholder, including dividends and distributions paid and
the date and price for all transactions on a shareholder's
account;
14
<PAGE>
(iv) Any stop or restraining order placed against a shareholder's
account;
(v) Any correspondence relating to the current maintenance of a
shareholder's account;
(vi) Information with respect to withholdings; and
(vii) Any information required in order for the transfer agent to
perform any calculations contemplated or required by this
Agreement.
(i) LOST OR STOLEN CERTIFICATES. PFPC shall place a stop notice against
any certificate reported to be lost or stolen and comply with all
applicable federal regulatory requirements for reporting such loss
or alleged misappropriation. A new certificate shall be registered
and issued only upon:
(i) The shareholder's pledge of a lost instrument bond or such
other appropriate indemnity bond issued by a surety company
approved by PFPC; and
(ii) Completion of a release and indemnification agreement signed
by the shareholder to protect PFPC and its affiliates.
(j) SHAREHOLDER INSPECTION OF STOCK RECORDS. Upon a request from any
Fund shareholder to inspect stock records, PFPC will notify the Fund
and the Fund will issue instructions granting or denying each such
request. Unless PFPC has acted contrary to the Fund's instructions,
the Fund agrees and does hereby release PFPC from any liability for
refusal of permission for a particular shareholder to inspect the
Fund's stock records.
(k) WITHDRAWAL OF SHARES AND CANCELLATION OF CERTIFICATES. Upon receipt
of Written Instructions, PFPC shall cancel outstanding certificates
surrendered by the Fund to reduce the total amount of outstanding
shares by the number of shares surrendered by the Fund.
17. DURATION AND TERMINATION. This Agreement shall continue until terminated
by Fund or by PFPC on sixty (60) days' prior written notice to the other
party.
15
<PAGE>
18. DUTIES IN THE EVENT OF TERMINATION. In the event that, in connection with
termination, a successor to any of PFPC's duties or responsibilities
hereunder is designated by the Fund by written notice to PFPC, PFPC will
promptly, upon such termination and at the expense of the Fund, transfer
to such successor all relevant books, records, correspondence, and other
data established or maintained by PFPC under this Agreement in a form
reasonably acceptable to the Fund (if such form differs from the form in
which PFPC has maintained such records, the Fund shall pay any expenses
associated with transferring the data to such form), and will cooperate in
the transfer of such duties and responsibilities.
19. CHANGE OF CONTROL. Notwithstanding any other provision of this Agreement,
in the event of an agreement to enter into a transaction that would result
in a Change of Control of the Fund's adviser or sponsor, the Fund's
ability to terminate the Agreement will be suspended from the time of such
agreement until two years after the Change of Control, provided that
notwithstanding the forthcoming provisions of this sentence the Fund may
terminate this Agreement if the following have occurred: (i) the Fund
gives PFPC notice that for the preceding thirty (30) days PFPC has been in
material breach of the Agreement (and PFPC has in fact been in such
material breach) and that PFPC has sixty (60) days from receipt of such
notice to cure such material breach; (ii) PFPC fails to cure such material
breach within such sixty (60) day period; and (iii) at the conclusion of
such sixty (60) day period the Fund gives PFPC notice that it is
terminating the Agreement.
20. NOTICES. All notices and other communications, including Written
Instructions, shall be in writing or by confirming telegram, cable, telex
or facsimile sending device. Notices shall be addressed (a) if to PFPC, at
400 Bellevue Parkway, Wilmington, Delaware 19809; (b) if to the Fund, at
16
<PAGE>
2801 Ocean Drive, Suite 204, Vero Beach, Florida, 32963, Attn.: Michael T.
Williams or (c) if to neither of the foregoing, at such other address as
shall have been given by like notice to the sender of any such notice or
other communication by the other party. If notice is sent by confirming
telegram, cable, telex or facsimile sending device, it shall be deemed to
have been given immediately. If notice is sent by first-class mail, it
shall be deemed to have been given three days after it has been mailed. If
notice is sent by messenger, it shall be deemed to have been given on the
day it is delivered.
21. AMENDMENTS. This Agreement, or any term thereof, may be changed or waived
only by a written amendment, signed by the party against whom enforcement
of such change or waiver is sought.
22. DELEGATION; ASSIGNMENT. Except as provided below, neither this Agreement
nor any rights or obligations hereunder may be assigned by either party
without the written consent of the other party. PFPC may assign its rights
and delegate its duties hereunder to any affiliate (as defined in the 1940
Act) or any majority-owned direct or indirect subsidiary of PFPC or PNC
Bank Corp., provided that (i) PFPC gives the Fund thirty (30) days' prior
written notice of such assignment or delegation, (ii) the assignee or
delegate agrees to comply with the with relevant provisions of the 1940,
and (iii) PFPC and such assignee or delegate promptly provide such
information as the Fund may reasonably request, and respond to such
questions as the Fund may reasonably ask, relative to the assignment or
delegation (including, without limitation, the capabilities of the
assignee or delegate.
17
<PAGE>
23. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
24. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
25. LIMITATIONS OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS. A copy of the
Declaration of Trust of the Fund is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Trust as Trustees
and not individually and that the obligations of this instrument are not
binding upon any of the Trustees or Shareholders individually but are
binding only upon the assets and property of the Fund.
26. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior
agreements and understandings relating to the subject matter hereof,
provided that the parties may embody in one or more separate
documents their agreement, if any, with respect to delegated duties
and Oral Instructions.
(b) CAPTIONS. 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.
(c) GOVERNING LAW. This Agreement shall be deemed to be a contract made
in Delaware and governed by Delaware law, without regard to
principles of conflicts of law.
18
<PAGE>
(d) PARTIAL INVALIDITY. 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.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
(f) FACSIMILE SIGNATURES. The facsimile signature of any party to this
Agreement shall constitute the valid and binding execution hereof by
such party.
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC INC.
By:
-----------------------
Title:
--------------------
GOLF ASSOCIATED FUND
By:
-----------------------
Title:
--------------------
20
<PAGE>
EXHIBIT A
THIS EXHIBIT A, dated as of _______________, 1998, is Exhibit A to that
certain Transfer Agency Services Agreement dated as of _______________________,
1998 between PFPC Inc. and GOLF ASSOCIATED FUND.
PORTFOLIOS
[List all Portfolios here]
21
<PAGE>
AUTHORIZED PERSONS APPENDIX
NAME (TYPE) SIGNATURE
- ---------------------------------- ------------------------------
- ---------------------------------- ------------------------------
- ---------------------------------- ------------------------------
- ---------------------------------- ------------------------------
- ---------------------------------- ------------------------------
- ---------------------------------- ------------------------------
- ---------------------------------- ------------------------------
- ---------------------------------- ------------------------------
22
KIRPATRICK & LOCKHART LLP
1800 Massachusetts Avenue, N.W.
2nd Floor
Washington, D.C. 20036-1800
Telephone (202) 778-9000
Facsimile (202) 778-9100
www.kl.com
October 19, 1998
Golf Associated Fund
2801 Ocean Drive, Suite 204
Vero Beach, Florida 32963
Ladies and Gentlemen:
You have requested our opinion, as counsel to Golf Associated Fund (the
"Trust"), as to certain matters regarding the issuance of Shares of the Trust.
As used in this letter, the term "Shares" means the Class A and Class B shares
of beneficial interest of the Trust.
As such counsel, we have examined certified or other copies, believed by
us to be genuine, of the Trust's Declaration of Trust and by-laws and such
resolutions and minutes of meetings of the Trust's Board of Trustees as we have
deemed relevant to our opinion, as set forth herein. Our opinion is limited to
the laws and facts in existence on the date hereof, and it is further limited to
the laws (other than the conflict of law rules) in the Commonwealth of
Massachusetts that in our experience are normally applicable to the issuance of
shares by unincorporated voluntary associations and to the Securities Act of
1933 ("1933 Act"), the Investment Company Act of 1940 ("1940 Act") and the
regulations of the Securities and Exchange Commission ("SEC") thereunder.
Based on present laws and facts, we are of the opinion that the issuance
of the Shares has been duly authorized by the Trust and that, when sold in
accordance with the terms contemplated by the Post-Effective Amendment No. 1 to
the Trust's Registration Statement on Form N-1A ("PEA"), including receipt by
the Trust of full payment for the Shares and compliance with the 1933 Act and
the 1940 Act, the Shares will have been validly issued, fully paid and
non-assessable.
We note, however, that the Trust is an entity of the type commonly known
as a "Massachusetts business trust." Under Massachusetts law, shareholders
could, under certain circumstances, be held personally liable for the
obligations of the Trust. The Declaration of Trust states that all persons
extending credit to, contracting with or having any claim against the Trust or
the Trustees shall look only to the assets of the Trust for payment under such
credit, contract or claim; and neither the Shareholders nor the Trustees, nor
any of their agents, whether past, present or future, shall be personally liable
therefor. It also requires that every note, bond, contract or other undertaking
issued by or on behalf of the Trust or the Trustees relating to the Trust shall
include a recitation limiting the obligation represented thereby to the Trust
and its assets. The Declaration of Trust further provides: (1) for
indemnification from the assets of the Trust for all loss and expense of any
shareholder held personally liable for the obligations of the Trust by virtue of
ownership of shares of the Trust; and (2) for the Trust to assume the defense of
any claim against the shareholder for any act or obligation of the Trust. Thus,
the risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which the Trust or series would be
unable to meet its obligations.
<PAGE>
Golf Associated Fund
October 19, 1998
Page 2
We hereby consent to this opinion accompanying the PEA when it is filed
with the SEC and to the reference to our firm in the PEA.
Very truly yours,
KIRKPATRICK & LOCKHART LLP
By /s/ Robert J. Zutz
------------------
Robert J. Zutz
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the inclusion of our report dated October 22, 1998 on our
audit of the financial statements of Golf Associated Fund in the Statement of
Additional Information with respect to the Pre-Effective Amendment No. 1 to the
Registration Statement (No. 333-56771) on Form N-1A under the Securities Act of
1933 of Golf Associated Fund. We also consent to the reference to our firm under
the heading "Independent Accountants" in the Statement of Additional Information
and prospectus.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, PA
October 22, 1998
GOLF ASSOCIATED FUND
LETTER OF INVESTMENT INTENT
To the Board of Trustees of Golf Associated Fund:
The undersigned (the "Purchaser") hereby subscribes to purchase a
beneficial interest ("Interest") of Golf Associated Fund in consideration for
which the Purchaser agrees to transfer to you upon demand cash in the amount of
One Hundred Thousand Dollars ($100,000.00).
The Purchaser agrees that the Interest is being purchased for investment
with no present intention of reselling or redeeming said Interest.
Dated and effective this 16th day of October, 1998.
GOLF INVESTMENT MANAGEMENT, INC.
By: /s/Michael T. Williams
----------------------
Michael T. Williams
President
GOLF ASSOCIATED FUND
RULE 12B-1
DISTRIBUTION PLAN
WHEREAS, Golf Associated Fund (the "Fund") is engaged in business as an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund, on behalf of its one or more designated series
presently existing or hereafter established, desires to adopt a Multiple Class
Distribution Plan pursuant to Rule l2b-1 under the 1940 Act and the Board of
Trustees of the Fund has determined that there is a reasonable likelihood that
adoption of this Distribution Plan will benefit the Fund and the Class A and
Class B shareholders; and
WHEREAS, the Fund intends to employ a registered broker-dealer as
Distributor of the securities of which it is the issuer;
NOW, THEREFORE, the Fund, with respect to its Class A and Class B
shares, hereby adopts this Distribution Plan (the "Plan") in accordance with
Rule l2b-1 under the 1940 Act on the following terms and conditions:
1. PAYMENT OF FEES. The Fund is authorized to pay distribution and
service fees for the Class A shares and Class B shares of up to 1.00% of the
average daily net assets for the respective class of shares, on an annualized
basis, at such rates as shall be determined from time to time by the Board of
Trustees in the manner provided for approval of this Plan in Paragraph 4. Such
fees shall be calculated and accrued daily and paid monthly or at such other
intervals as shall be determined by the Board in the manner provided for
approval of this Plan in Paragraph 4. The distribution and service fees shall be
payable by the Fund on behalf of the Class A shares and Class B shares
regardless of whether those fees exceed or are less than the actual expenses,
described in Paragraph 2 below, incurred by the Distributor with respect to such
Class in a particular year.
2. DISTRIBUTION AND SERVICE EXPENSES. The fee authorized by Paragraph 1
of this Plan shall be paid pursuant to an appropriate Distribution Agreement in
payment for any activities or expenses intended to result in the sale and
retention of Fund shares, including, but not limited to, compensation paid to
registered representatives of the Distributor and to participating dealers which
have entered into sales agreements with the Distributor, advertising, salaries
and other expenses of the Distributor relating to selling or servicing efforts,
expenses of organizing and conducting sales seminars, printing of prospectuses,
statements of additional information and reports for other than existing
shareholders, preparation and distribution of advertising material and sales
literature and other sales promotion expenses, or for providing ongoing services
to Class A and Class B shareholders.
3. ADDITIONAL COMPENSATION. This Plan shall not be construed to
prohibit or limit additional compensation derived from sales charges or other
sources that may be paid to the Distributor pursuant to the aforementioned
Distribution Agreement.
<PAGE>
4. BOARD APPROVAL. This Plan shall not take effect with respect to any
Class until it has been approved, together with any related agreements, by vote
of a majority of both (a) the Board of Trustees and (b) those members of the
Board who are not "interested persons" of the Fund, as defined in the 1940 Act,
and have no direct or indirect financial interest in the operation of this Plan
or any agreements related to it (the "Independent Trustees"), cast in person at
a meeting or meetings called for the purpose of voting on this Plan and such
related agreements.
5. RENEWAL OF PLAN. This Plan shall continue in full force and effect
with respect to the Class A shares and Class B shares for successive periods of
one year from its initial effectiveness for so long as such continuance is
specifically approved at least annually in the manner provided for approval of
this Plan in Paragraph 4.
6. REPORTS. Any Distribution Agreement entered into pursuant to this
Plan shall provide that the Distributor shall provide to the Board of Trustees
and the Board shall review, at least quarterly, or at such other intervals as
reasonably requested by the Board, a written report of the amounts so expended
and the purposes for which such expenditures were made.
7. TERMINATION. This Plan may be terminated with respect to either
Class of shares at any time by vote of a majority of the Independent Trustees or
by a vote of a majority of the outstanding voting securities of such Class,
voting separately from any other Class of the Fund.
8. AMENDMENTS. Any change to the Plan that would materially increase
the distribution costs to either the Class A shares or the Class B shares may
not be instituted unless such amendment is approved in the manner provided for
board approval in Paragraph 4 hereof and approved by a vote of at least a
majority of such Class' outstanding voting securities, as defined in the 1940
Act, voting separately from any other Class of the Fund. Any other material
change to the Plan may not be instituted unless such change is approved in the
manner provided for initial approval in Paragraph 4 hereof.
9. NOMINATION OF TRUSTEES. While this Plan is in effect, the selection
and nomination of Independent Trustees of the Fund shall be committed to the
discretion of the Independent Trustees then in office.
10. RECORDS. The Fund shall preserve copies of this Plan and any
related agreements and all reports made pursuant to Paragraph 6 hereof for a
period of not less than six years from the date of execution of this Plan, or of
the agreements or of such reports, as the case may be, the first two years in an
easily accessible place.
Date: October 1998
Exhibit 99B.18
GOLF ASSOCIATED FUND
MULTIPLE CLASS PLAN PURSUANT TO RULE 18F-3
The Golf Associated Fund (the "Fund") hereby adopt this Multiple Class
Plan pursuant to Rule 18f-3 under the Investment Company Act of 1940, as amended
(the "1940 Act").
A. CLASSES OFFERED
1. CLASS A. Class A shares are offered to investors of the Fund subject to
an initial sales charge. The maximum sales charge varies between 0.00% and 5.75%
of the amount invested and may decline based on discounts for volume purchases.
The initial sales charge may be waived for certain eligible purchasers or under
certain circumstances.
If the initial sales charge is waived on a purchase of shares, a
contingent deferred sales charge ("CDSC") of up to 1.0% may be imposed on any
redemption of those sales within two (2) years of the purchase. Class A shares
also are subject to an annual service fee of up to 0.25% and a distribution fee
ranging of up to 0.75% of the average daily net assets of the Class A shares
paid pursuant to a plan of distribution adopted pursuant to Rule 12b-1. Class A
shares require an initial investment of $1,000, except for certain retirement
accounts and investment plans for which lower limits may apply.
2. CLASS B. Class B shares are offered to investors of the Fund subject to
a CDSC, but without imposition of an initial sales charge. The maximum CDSC for
Class B shares of the Fund is equal to 5% of the lower of: (1) the net asset
value of the shares at the time of purchase or (2) the net asset value of the
shares at the time of redemption. The CDSC will decline over a six-year period
after purchase to 0%. Eight years after purchase, Class B shares will convert
automatically to Class A shares at relative net asset value.
Class B shares are subject to an annual service fee of up to 0.25% of
average daily net assets and a distribution fee of up to 0.75% of average daily
net assets of the Class B shares of the Fund, each paid pursuant to a plan of
distribution adopted pursuant to Rule 12b-1 under the 1940 Act. Class B shares
require an initial investment of $1,000, except for certain retirement accounts
and investment plans for which lower limits may apply.
B. EXPENSE ALLOCATIONS OF EACH CLASS
Certain expenses may be attributable to a particular class of shares of
the Fund ("Class Expenses"). Class Expenses are charged directly to the net
assets of the particular class and, thus are borne on a pro rata basis by the
outstanding shares of that class.
Each class may pay a different amount of the following other expenses: (1)
distribution and service fees, (2) transfer agent fees identified as being
attributable to a specific class, (3) stationery, printing, postage, and
delivery expenses related to preparing and distributing materials such as
shareholder reports, prospectuses, and proxy statements to current shareholders
of a class, (4) Blue Sky registration fees incurred by a specific class of
shares, (5) Securities and Exchange Commission registration fees incurred by a
<PAGE>
specific class of shares, (6) expenses of administrative personnel and services
required to support the shareholders of a specific class, (7) trustees' fees or
expenses incurred as a result of issues relating to a specific class of shares,
(8) accounting expenses relating solely to a specific class of shares, (9)
auditors' fees, litigation expenses, and legal fees and expenses relating to a
specific class of shares, and (10) expenses incurred in connection with
shareholders meetings as a result of issues relating to a specific class of
shares.
C. ADDITIONAL INFORMATION
This Multiple Class Plan is qualified by and subject to the terms of the
then current prospectus for the applicable classes; provided, however, that none
of the terms set forth in any such prospectus shall be inconsistent with the
terms of the classes contained in this Plan. The Fund's prospectus contains
additional information about Class A and Class B shares and the Fund's multiple
class structure.
Dated: October 7, 1998
2
