As filed with the Securities and Exchange Commission on June 12, 1998
1940 Act Registration No. 811-08819
1933 Act Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ___
Post-Effective Amendment No. ___
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. ___
THE GOLF 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.
<PAGE>
THE GOLF 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
2
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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.
THE GOLF FUND
(LOGO)
PROSPECTUS
2801 Ocean Drive, Suite 204
Vero Beach, Florida 32963
(800) ___-____
The Golf Fund (the "Fund") is a management investment company, or mutual
fund. The Fund seeks long-term growth of capital and current income. The Fund
will strive to achieve its objective by investing primarily in equity securities
of companies that are involved in or related to the golf industry ("Golf
Investments") and that offer the potential for income.
The Fund offers Class A shares (sold subject to a 4.75% maximum
front-end sales charge), Class B shares (sold subject to a maximum contingent
deferred sales charge, declining over an six-year period) and Class C shares
(sold subject to a 1% contingent deferred sales charge). The Fund requires a
minimum initial investment of $1,000, except for certain investment plans for
which lower limits may apply.
Investors should read this Prospectus and retain it for future
reference. This Prospectus is designed to set forth concisely the information an
investor should know about the Fund 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. A copy of the SAI is available,
without charge, upon request to the Fund at the address or telephone number
above.
The SEC maintains a Web site (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................................................4
INVESTMENT OBJECTIVE AND POLICIES............................................5
INVESTMENT TECHNIQUES AND OTHER INVESTMENT POLICIES..........................7
PORTFOLIO TRANSACTIONS AND BROKERAGE.........................................9
ALTERNATIVE PURCHASE PLANS..................................................10
HOW TO INVEST IN THE FUND...................................................11
WHAT CLASS A SHARES WILL COST...............................................13
WHAT CLASS B SHARES WILL COST...............................................14
WHAT CLASS C SHARES WILL COST...............................................15
MINIMIZING THE CONTINGENT DEFERRED SALES CHARGE.............................16
WAIVER OF THE CONTINGENT DEFERRED SALES CHARGE..............................16
HOW TO REDEEM SHARES........................................................17
DETERMINATION OF NET ASSET VALUE............................................19
PERFORMANCE INFORMATION.....................................................20
MANAGEMENT AND ADMINISTRATION OF THE FUND...................................21
DISTRIBUTION PLANS..........................................................22
DIVIDENDS AND OTHER DISTRIBUTIONS...........................................23
TAXES.......................................................................23
GENERAL INFORMATION ABOUT THE FUND..........................................24
2
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OVERVIEW OF THE FUND
WHAT IS THE GOLF FUND'S INVESTMENT OBJECTIVE?
The Fund seeks to provide long-term growth of capital and current income. To
achieve its objective, the Fund invests primarily in equity securities of
companies that are involved in or related to the golf industry. 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"
and "Investment Techniques and Other Investment 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. In addition, because the Fund focuses its
investment in companies that are involved in or related to the golf industry,
the value of Fund shares could fluctuate more than other mutual funds that
invest in multiple industry sectors.
HOW DO I INVEST IN THE FUND?
The minimum initial investment is $1,000 or $250 for retirement accounts. You
may purchase Fund shares directly from the Fund's transfer agent or through
broker-dealers. The Fund offers investors an option of purchasing Class A
shares, Class B shares or Class C shares. Class A shares are offered at net
asset value per share plus a maximum initial sales charge of 4.75% 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. Class C shares also are offered at net
asset value per share, but are charged a CDSC of 1% of the on amounts redeemed
within one year of purchase. See "How to Invest in the Fund," "What Class A
Shares Will Cost," "What Class B Shares Will Cost" and "What Class C Shares Will
Cost."
HOW DO I SELL MY SHARES?
Fund shares may be redeemed at the net asset value next determined after receipt
of your redemption request by the transfer agent in good order. You may redeem
your shares by telephone, by wire or by written request. See "How to Redeem
Shares."
WHO IS THE INVESTMENT ADVISER?
_______________________ ("Adviser") serves as the investment adviser to each
Fund. The Adviser is a newly created investment adviser and has had no previous
experience advising investment companies. Michael T. Williams controls the
Adviser.
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FEES AND EXPENSES OF THE FUND
Shown below are all expenses expected to be incurred by the Fund during
its initial fiscal year. Because the Fund's shares were not offered for sale
prior to the date of this Prospectus, Other Expenses are based on estimated
expenses.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES:
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Maximum Sales charge Imposed on
Purchases of Class A Shares (as a % of 4.75% None None
offering price)
Maximum Contingent Deferred Sales charge on
Class C Shares (as a % of original None 5%* 1%**
purchase price or redemption proceeds,
whichever is lower)
Wire Redemption Fee (per transaction) $_.00 $_.00 $_.00
</TABLE>
----------
* 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.
** Declining to 1% after the first year. See "What Class C Shares Will
Cost."
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average daily net assets)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Management Fees 0.90% 0.90% 0.90%
12b-1 Fees 0.35% 1.00% 1.00%
Other Expenses (after reimbursement) 0.40% 0.40% 0.40%
------- ----- -----
Total Fund Operating Expenses
(after fee waiver and reimbursement) 1.75% 2.30% 2.30%
======= ===== =====
</TABLE>
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 annual operating
expenses exceed 1.75% of that class' average daily net assets and to the extent
that the Class B and Class C annual operating expenses each exceed 2.30% of that
classes' average daily net assets for the fiscal year ending August 31, 1999.
Absent such waiver, the Fund's other expenses are estimated to be _.__%, and its
total operating expenses are estimated to be _.__%.
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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, a 5%
annual return. An investor in the Fund would pay transaction and operating
expenses at the end of each period as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>
Class A Shares $___ $___
Class B Shares (assuming sale of all shares at end of
period)* $___ $___
Class B Shares (assuming no sale of shares) $___ $___
Class C Shares (assuming sale of all shares at end of
period) $___ $___
Class C Shares (assuming no sale of shares) $___ $___
</TABLE>
---------
* Ten-year figures assume conversion of Class B shares to Class A shares
at the end of the eighth year.
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
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."
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Golf Fund (the "Fund") is to achieve
long-term growth of capital and current income. The Fund will strive to achieve
its objective by investing primarily in equity securities of companies that are
involved in or related to the golf industry ("Golf Investments") and that offer
the potential for income. 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) manage or own golf
facilities, (5) design or develop golf courses, or (6) provide programming or
5
<PAGE>
produce magazines regarding golf events. The companies who are sponsors,
advertisers and marketers 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 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 Fund's subadviser, Wallington Asset Management, Inc.
("Subadviser" or "Wallington"), 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. The Fund also may invest in companies that are
experiencing rapid price momentum.
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 investment-grade debt securities, U.S. government securities,
repurchase agreements or other short-term money market instruments, as well as
in non-Golf Investments. 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. Such
securities have some speculative characteristics.
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 ensure 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.
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
6
<PAGE>
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. For a discussion of the instruments the Fund may use, SEE
"Investment Techniques and Other Investment Policies."
INVESTMENT TECHNIQUES AND
OTHER INVESTMENT POLICIES
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. By
itself, the Fund 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
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.
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.
7
<PAGE>
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
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
8
<PAGE>
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 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.
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.
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
9
<PAGE>
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 and on
options and futures 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 Subadviser may select one broker-dealer
over another based on whether the broker-dealer provides research services 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. The Fund's annual portfolio turnover rate is not expected to
exceed 100%.
ALTERNATIVE PURCHASE PLANS
The Fund offers three classes of shares, Class A shares, Class B shares
and Class C shares, which represent interests in the same portfolio of
securities. 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 4.75% 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 C 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 of 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.
o CLASS C 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 C shares are subject to higher ongoing Rule
12b-1 fees than Class A shares. A maximum CDSC of 1% may be imposed on
redemptions of Class C shares made within one year of purchase. Class C
shares do not convert to any other class of shares.
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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 of your
intended purchase, the length of time you expect to hold the shares and other
circumstances.
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 or Class C 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 and Class C shares because of the initial sales
charge. For longer investments, Class A shares are more suitable than Class B
shares and Class C 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 and Class C 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 and Class C 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 and Class C shares within one year 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." The Fund reserves the right to reject or
refuse, at its discretion, any order for the purchase of shares in part or
whole.
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 either (1) directly with
the Fund by mail or bank wire transfer to the Fund's transfer agent ("Transfer
Agent") as described below or (2) through securities broker-dealers who have the
responsibility to transmit orders promptly and who may charge a fee.
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When placing an order to buy shares, you should specify whether the
order is for Class A shares, Class B shares or Class C 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
("Distributor") reserve the right to reject any purchase order and to suspend
the offering of Fund shares for a period of time.
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". Mail the check, along with the completed
Account Application, to The Golf Fund, c/o ________________.
Completed Account Applications and checks also may be sent by overnight
or express mail. To ensure proper delivery, please use the following address:
The Golf Fund, c/o________________.
Third party checks will not by accepted by the Fund. All purchases must
be in U.S. Dollars. A $______ fee will be imposed by the Transfer Agent if any
check used for investment in an account does not clear due to insufficient
funds.
BY BANK WIRE TRANSFER. To establish a new account by wire transfer,
please call the Transfer Agent at (800) ___-____ to obtain a Golf 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:
---------------------
---------------------
ABA number _____-______
For credit to _______________
Account Number ____________
For further credit to The Golf Fund
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
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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 at
(800) ___-____.
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 at (800) ___-____.
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 by mail, bank wire, 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:
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<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF
Net Amount Dealer Concession
Invested as Percentage of
Amount of Purchase Offering Price (Net Asset Value) Offering Price(1)
------------------ -------------- ----------------- -----------------
<S> <C> <C> <C>
Less than $25,000....................4.75% 4.99% 4.25%
$25,000-$49,999......................4.25% 4.44% 3.75%
$50,000-$99,999......................3.75% 3.90% 3.25%
$l00,000-$249,999................... 3.25% 3.36% 2.75%
$250,000-$499,999....................2.50% 2.56% 2.00%
$500,000-$999,999....................1.50% 1.52% 1.25%
$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.
(2) There is no initial sales charge on purchases of Class A shares for
$1,000,000 or more. However, a 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 0.35% 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
Privilege or by executing a Letter of Intent. For more information, see the SAI,
call your Representative or call Shareholder Services at 800-___-____.
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 5% maximum CDSC on redemptions of Class B
shares sold within one year of purchase. In addition, Class B shares are subject
14
<PAGE>
to a Rule 12b-1 fee of 1.00% of their respective average daily net assets. Class
B shares are offered for sale only for purchases of less than $250,000.
The CDSC imposed on redemptions of Class B shares will be calculated by
multiplying the offering price (net asset value at the time of purchase) or the
net asset value of the shares at the time of redemption, whichever is less, by
the percentage shown on the following chart. 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. Thus, the CDSC will be imposed on the lower of net
asset value or purchase price.
CDSL as a Percentage
of the Lesser of Net Asset Value
at Redemption or the
Redemption During: Original Purchase Price
------------------ -----------------------
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%
The CDSC imposed depends on the amount of time you have held Class B
shares. For example, if you invest $10,000 in the Fund's Class B shares and
redeem those shares within one year of investment you will be charged a CDSC of
5% or $500. If you own Class B shares for more than six years, you do not have
to pay a sales charge when redeeming those shares.
Under certain circumstances, the CDSC will be waived. See "Waiver of the
Contingent Deferred Sales Charge" below.
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 to Class B shares will benefit the shareholder 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.
WHAT CLASS C SHARES WILL COST
A CDSC of 1% is imposed on Class C shares if, within one year from the
date of purchase, you redeem an amount that causes the current value of your
account to fall below the total dollar amount of Class C shares purchased
subject to the CDSC. The CDSC will not be imposed on the redemption of Class C
shares acquired as dividends or other distributions, or on any increase in the
15
<PAGE>
net asset value of the redeemed Class C shares above the original purchase
price. Thus, the CDSC will be imposed on the lower of net asset value or
purchase price. In addition, Class C shares are subject to a Rule 12b-1 fee of
1.00% of their respective average daily net assets.
Under certain circumstances, the CDSC will be waived. See "Waiver of the
Contingent Deferred Sales Charge" below.
MINIMIZING THE CONTINGENT DEFERRED SALES CHARGE
When you redeem Class B shares or Class C shares, the Fund automatically
will minimize the CDSC by assuming you are selling:
o First, Class B shares or Class C shares owned through reinvested
dividends, upon which no CDSC is imposed; and
o Second, Class B shares or Class C shares held in the customer's
account the longest.
WAIVER OF THE CONTINGENT DEFERRED SALES CHARGE
The CDSC for Class B shares and Class C shares currently is waived for:
(1) 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; (2) any redemption resulting from a tax-free return
of an excess contribution to a qualified employer retirement plan or an IRA; (3)
any partial or complete redemption following death or disability (as defined in
Section 72(m) (7) of the Code) of a shareholder (including one who owns the
shares as joint tenant with his spouse) from an account in which the deceased or
disabled is named, provided the redemption is requested within one year of the
death or initial determination of disability; (4) certain periodic redemptions
under the Systematic Withdrawal Plan from an account meeting certain minimum
balance requirements, in amounts representing certain maximums established from
time to time by the Distributor (currently a maximum of 12% annually of the
account balance at the beginning of the Systematic Withdrawal Plan); or (5)
involuntary redemptions by the Fund of Class B shares or Class C shares in
shareholder accounts that do not comply with the minimum balance requirements.
The Distributor may require documentation prior to waiver of the CDSC
described in sections (1) through (4) above, including distribution letters,
certification by plan administrators, applicable tax forms or death or
physicians certificates.
16
<PAGE>
HOW TO REDEEM 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 the order. The amount received 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 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.
The minimum amount of a wire transfer redemption is $_____. You will be charged
$__.00 for wire redemptions to cover transaction costs.
If you request payment of redemption 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 and your signature
guaranteed. In addition, if you request in writing redemption of $100,000 or
more, your signature must be guaranteed. A signature guarantee will be accepted
from a commercial bank, savings association, securities broker or dealer, or
credit union. A notary public cannot provide a signature guarantee.
BY MAIL. You may redeem Fund shares by sending a written request for
redemption to The Golf Fund, c/o __________________. Any such requests sent
overnight or express mail should be directed to The Golf Fund, c/o
______________.
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 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 $50,000 and redemptions that are sent to an address other than the
address of record.
BY TELEPHONE. You may redeem Fund shares by calling the Transfer Agent
at (800) ___-____ prior to the close of regular trading on the New York Stock
Exchange ("NYSE") generally 4:00 p.m. If you do not wish to have telephone
exchange/ redemption privileges, you should so elect by completing the
appropriate section of the Account Application.
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
17
<PAGE>
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. 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 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. The redemption price will be the net asset value per
share next determined after receipt by the transfer agent of all required
documents in good order. "Good order" means that the request must include the
following information:
o the number or amount of shares and the class of shares to be redeemed
and shareholder account number have been indicated;
18
<PAGE>
o any written request is signed by a shareholder and by all co-owners of
the account with exactly the same name or names used in establishing the
account;
o the signatures on any written redemption request of $50,000 or more and
on any certificates for shares (or an accompanying stock power) have
been guaranteed by 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. Signature guarantees also will be accepted from savings
banks and certain other financial institutions that are deemed
acceptable by the transfer agent under its current signature guarantee
program.
Payment of redemption proceeds normally will be made in cash within
seven days following the Fund's receipt of your request for redemption in good
order. 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. Shares purchased by check may
not be redeemed until the funds have cleared, 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. The net asset value per share
of a 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
19
<PAGE>
price prior to the close of trading the NYSE. 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.
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 and forward currency contracts 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 4.75% and, in the case of Class B
shares and Class C 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
20
<PAGE>
net asset value per Class A share and Class B shares and Class C share over a
period of time, adjusted for dividends and other distributions. Class A Share
and Class C 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.
MANAGEMENT AND ADMINISTRATION OF THE FUND
BOARD OF TRUSTEES. The Fund's business and affairs are managed under the
direction of the 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. ________________________, 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 owns a controlling interest in the
Adviser.
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
______ __, 1998, the Fund pays the Adviser a fee at an annualized rate, based on
a percentage of its daily net assets of 0.90%.
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,
21
<PAGE>
founded in 1988, is a registered investment adviser. The Subadviser provides
financial services to retail and institutional clients, with over $ ____ in
assets under management as of May 30, 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. _________________ serves as portfolio manager of
the Fund. _______ is responsible for the day-to-day management of the Fund's
investment portfolio, subject to the general oversight of Trustees.
ADMINISTRATOR. The Fund has entered into an Administrative Services
Agreement with the administrator ("Administrator") that obligates the
Administrator to provide the Fund with administrative and management services,
other than investment advisory services. As compensation for these services, the
Fund pays the Administrator a fee of _________.
DISTRIBUTOR. Distributor 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.
TRANSFER AGENT AND CUSTODIAN. Transfer Agent serves as the transfer
agent and custodian of the portfolio securities of the Fund.
INDEPENDENT AUDITORS. ____________________ are the auditors of and the
independent public accountants for the Fund.
DISTRIBUTION PLANS
Pursuant separate distribution plans pertaining to Class A, Class B and
Class C shares ("Class A Plan" or "Class B Plan" or "Class C Plan," and
collectively, "Plans"), 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 Plans, 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.
Pursuant to the Class A Plan, the Fund is authorized to pay the
Distributor a distribution fee of up to 0.10% and a service fee of up to 0.25%
of the Fund's average daily net assets attributable to Class A shares. Pursuant
to the Class B Plan and the Class C Plan, the Fund is authorized to pay the
22
<PAGE>
Distributor a distribution fee of up to 0.75% and a service fee of up to 0.25%
of the Fund's average daily net assets attributable to Class B shares and Class
C shares, respectively. These fees are computed daily and paid monthly. Payments
made to the Distributor under the Plans represent compensation for distribution
and service activities, not reimbursement for specific expenses incurred.
If a Plan is terminated, 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, Class B or Class C 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 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 Internal Revenue Code of 1986, as
amended ("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 (generally consisting of net investment income, net short-term capital
gains, and net gains from certain foreign currency transactions) and net capital
gain (the excess of net long-term capital gain over net short-term capital loss)
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
23
<PAGE>
additional Fund shares and regardless of the length of time the shares have been
held. 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 information regarding
capital gain distributions designates the portions of those distributions that
are subject to (1) the 20% maximum rate of tax (10% for investors in the 15%
marginal tax bracket) enacted by the Taxpayer Relief Act of 1997 ("Tax Act"),
which applies to non-corporate taxpayers' net capital gain on securities and
other capital assets held for more than 18 months, and (2) the 28% maximum tax
rate, applicable to such gain on capital assets held for more than one year and
up to 18 months (which, prior to enactment of the Tax Act, applied to all such
gain on capital assets held for more than one 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.
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
24
<PAGE>
establish. The shares of beneficial interest of the Fund presently are offered
through two classes of shares.
Class A shares, Class B shares and Class C 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.
SHAREHOLDER INQUIRIES. Shareholder inquiries can be made by telephone to
the Fund at (800) ___-____.
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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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.
THE GOLF FUND
2801 OCEAN VIEW DRIVE, SUITE 204
VERO BEACH, FLORIDA 32963
(800) ___-____
Statement Of Additional Information Dated ______________, 1998
This is a Statement of Additional Information ("SAI") for The Golf Fund
(the "Fund"), an open-end diversified management investment company. The Fund
offers Class A shares, Class B shares and Class C 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 Objective...................................................1
Investment Instruments and Policies....................................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 Intention.....................................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......................15
Brokerage Practices...................................................16
Distribution of Shares................................................17
Administration of the Fund............................................18
Potential Liability...................................................18
APPENDIX...................................................................A-1
<PAGE>
GENERAL INFORMATION
The Golf Fund (the "Fund") was established as a Massachusetts business
trust under a Declaration of Trust dated June 11, 1998. The Fund currently
offers three classes of shares, Class A shares sold subject to a 4.75% maximum
front-end sales charge ("Class A shares"), Class B shares sold subject to a
maximum 5% contingent deferred sales charge ("CDSC"), declining over a six-year
period ("Class B shares") and Class C shares sold subject to a 1% CDSC ("Class C
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 entitled "Investment Objective and Policies" and "Investment
Techniques and Other Investment Policies" in the Prospectus for a discussion of
the investment objective and policies of the Fund. _____________ (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.
INVESTMENT OBJECTIVE
The investment objective of the Fund is stated in the Prospectus.
INVESTMENT INSTRUMENTS AND POLICIES
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
objectives.
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 used
outside the United States.
BANKERS' 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.
<PAGE>
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
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 preferred stock with the potential for capital
appreciation. The market value of convertible securities tends to decline as
2
<PAGE>
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
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
3
<PAGE>
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
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 144-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.
MONEY MARKET INSTRUMENTS. Investments in commercial paper are limited to
obligations rated Prime-1 by Moody's or A-1 by 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. Investments in certificates of deposit are made only with
domestic institutions with assets in excess of $1.0 billion. See the Appendix
for a description of commercial paper ratings.
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.
4
<PAGE>
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
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 at least
equal to 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 (formerly, 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.
5
<PAGE>
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.
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,
6
<PAGE>
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
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 (1) Golf
Investments as defined in the Prospectus and (2)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
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<PAGE>
agencies and instrumentalities, or purchase more than 10% of the voting
securities of any one issuer.
NET ASSET VALUE
The net asset value per share of Class A shares, Class B shares and Class
C 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)[SUPERSCRIPT]n = 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 4.75% is deducted from the initial $1,000
payment and, for Class B shares and Class C shares, the applicable CDSC imposed
on a redemption of Class B shares or Class C 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
8
<PAGE>
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
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 CDSCs charged on Class B shares and Class C 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 and Class C 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, Class B shares and Class C 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 $25,000. 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
(ii) 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 INTENTION
Investors also may obtain the reduced sales charges shown in the
Prospectus by means of a written Letter of Intention, which expresses the
investor's intention to invest not less than $25,000 within a period of 13
months in Class A shares of the Fund. Each purchase of Class A shares under a
Letter of Intention 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 Intention is not a binding obligation upon the investor to
purchase the full amount indicated. The minimum initial investment under a
Letter of Intention 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 Intention 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 Intention 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 Redeem 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 C shares, if made within one year of
the date of purchase, will be charged a CDSC of 1%. 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. 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 and Class C 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 Systematic
Withdrawal Plan at any time without charge or penalty by giving written notice
10
<PAGE>
to the Adviser or the Distributor. The Fund, and the 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 Automatic 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 and Class C 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 signed by the shareholder has been provided to the Distributor
or a participating dealer prior to settlement date.
11
<PAGE>
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 b 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.
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
12
<PAGE>
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.
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
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<PAGE>
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 ____________________.
<TABLE>
<CAPTION>
Position
with Principal Occupation
Name the Fund During Past Five Years
---- -------- ----------------------
<S> <C> <C>
Michael T. Williams * (Age) Trustee President, Wilshire Financial
2801 Ocean Drive, Suite 204 Group (since 1991); Principal,
Vero Beach, Florida 32963 Williams Financial Group (since
1991).
Jeffrey P. Meyer (Age) Treasurer Vice President, Citrus Bank NA
2801 Ocean Drive, Suite 204 (1995-1998); Vice President,
Vero Beach, Florida 32963 Wilshire Financial Group
(1993-1995).
</TABLE>
* Mr. Williams is an "interested person" 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 $_________ annually and $_______ per meeting of the Board of Trustees.
Trustees also are 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:
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<PAGE>
ESTIMATED COMPENSATION TABLE
Total Compensation From
the Fund and the Fund
Name of Person, Aggregate Compensation Complex of Funds Paid to
Position from the Fund Trustees1
-------- ------------- ---------
Michael T. Williams, None None
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 August 31, 1999.
INVESTMENT ADVISER AND ADMINISTRATOR; SUBADVISER
As noted above, the investment adviser and administrator for the Fund is
____________. 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 ______________, 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, a division of the
Adviser, 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
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 shareholders 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
15
<PAGE>
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.
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."
16
<PAGE>
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 for each
class of shares (each a "Plan" and collectively, the "Plans"). These Plans
permit 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, Class B and Class C shares.
Each 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
such Plans, the Board determined that there is a reasonable likelihood that the
Fund and its shareholders will benefit from each Plan.
Each 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. A Plan may be amended by vote
of the Board, including a majority of the Independent Trustees, cast in person
at a meeting called for such purpose. Any change in a 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.
17
<PAGE>
The Distribution Agreement and each 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. _______
provides administrative, fund accounting, transfer agent and custodian
services to the Fund.
Pursuant to an Administration Servicing Agreement ("Service Agreement")
between the Fund and ___________ ("Administrator"), the Administrator provides
the Fund with administrative and management services (other than investment
advisory services). As compensation for these services, the Fund pays the
Administrator a fee of ._____________.
Pursuant to a Fund Accounting Servicing Agreement between the Fund and
__________("Fund Accountant"), the Fund Accountant provides the Fund with
accounting services, including portfolio accounting services, tax accounting
services and furnishing financial reports. For these services, the Fund pays the
Fund Accountant a fee of _________. The Fund Accountant also is entitled to
reimbursement for certain out-of-pocket expenses, including pricing expenses.
Pursuant to a Custodian Agreement, ____________ ("Custodian") also 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. __________, 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 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 only if the
Fund itself cannot meet its obligations to indemnify shareholders and pay
judgments against them.
18
<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 - 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.
A-1
<PAGE>
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.
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
A-2
<PAGE>
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>
THE GOLF FUND
PART C OTHER INFORMATION
Item 23. EXHIBITS
(a) Declaration of Trust (filed herewith)
(b) By-Laws (filed herewith)
(c) Voting trust agreement - None
(d)(i) Investment Advisory Agreement*
(ii) Subadvisory Agreement*
(iii) Administrative Services Agreement*
(e) Distribution Agreement*
(f) Bonus, profit sharing contracts - None
(g) Custodian Agreement*
(h) Transfer Agency and Service Agreement*
(i) Opinion and consent of counsel*
(j) Consent of Independent Auditors*
(k) Financial statements omitted from prospectus - None
(l) Letter of investment intent*
(m) Plan pursuant to Rule 12b-1*
(n) Financial Data Schedule*
(o) Plan pursuant to Rule 18f-3*
- -------
* To be filed by subsequent amendment.
Item 24. PERSONS CONTROLLED BY OR UNDER
COMMON CONTROL WITH REGISTRANT
None.
<PAGE>
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
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:
C-2
<PAGE>
(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. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
_____________________ (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.
Further information to be provided by subsequent amendment.
Item 27. PRINCIPAL UNDERWRITER
To be provided by subsequent amendment.
Item 28. LOCATION OF ACCOUNTS AND RECORDS
To be provided by subsequent amendment.
Item 29. MANAGEMENT SERVICES
Not applicable.
Item 30. UNDERTAKINGS
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.
C-3
<PAGE>
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 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 June 11, 1998.
THE GOLF 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 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 June 11, 1998
- -----------------------
Michael T. Williams
/s/ Jeffrey P. Meyer
- ----------------------- Treasurer June 11, 1998
Jeffrey P. Meyer
<PAGE>
INDEX TO EXHIBITS
Exhibit
NUMBER DESCRIPTION
PAGE
a Declaration of Trust (filed herewith)
b By-Laws (filed herewith)
c Voting trust agreement - None
d (i) Investment Advisory Agreement*
(ii) Administrative Services Agreement*
e Distribution Agreement*
f Bonus, profit sharing contracts - None
g Custodian Agreement*
h Transfer Agency and Service Agreement*
i Opinion and consent of counsel*
j Consent of Independent Auditors*
k Financial statements omitted from prospectus --
(not applicable)
l Letter of investment intent*
m Plan pursuant to Rule 12b-1*
n Financial Data Schedule*
o Plan Pursuant to Rule 18f-3*
- ----------
* To be filed by subsequent amendment.
THE GOLF FUND
A MASSACHUSETTS BUSINESS TRUST
DECLARATION OF TRUST
JUNE 11, 1998
<PAGE>
THE GOLF 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..................................................1
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......................................................4
Section 1: Management of the Trust.........................................4
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........................................9
ARTICLE VI -- EXPENSES OF THE TRUST..........................................10
ARTICLE VII - INVESTMENT ADVISER, PRINCIPAL UNDERWRITER AND .................10
TRANSFER AGENT
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.......................................12
<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
<PAGE>
THE GOLF FUND
DECLARATION OF TRUST
--------------------
This DECLARATION OF TRUST is made on June 11, 1998, by the undersigned
Trustee and by the holders of Shares of beneficial interest to be issued
hereunder as hereinafter provided.
WITNESSETH that
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 shall be known as "The Golf 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.
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.
<PAGE>
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 Fund; and
(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.
2
<PAGE>
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
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.
3
<PAGE>
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).
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.
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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,
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.
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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 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
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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.
(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.
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(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 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.
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(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.
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.
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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
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.
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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
be financially interested or otherwise affiliated with persons who are parties
to any or all of the agreements mentioned in this Section 4.
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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.
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
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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 Shares of that Series held by such
holders at the date and time of record established for the payment of such
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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
appraisal of assets and liabilities. At any time the Trustees may cause the net
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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), actual or threatened while a
Covered Person is in office or thereafter, and the words "liability"
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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, expenses or charges
allocated to that Class. Nothing in this Declaration of Trust shall
preclude the Trustees from distributing such remaining proceeds or assets
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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
Fund, has executed this instrument.
June 11, 1998 /s/ Michael T. Williams
- ----------------- ----------------------------------
Date Michael T. Williams
Trustee
2801 Ocean Drive
Vero Beach, Florida 32963
21
THE GOLF FUND
A MASSACHUSETTS BUSINESS TRUST
BY-LAWS
JUNE 11, 1998
<PAGE>
THE GOLF FUND
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......................1
Section 1: Management of the Trust - General..............................1
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......................................................2
Section 8: Vice President.................................................3
Section 9: Assistant Treasurer............................................3
Section 10: Assistant Secretary...........................................3
Section 11: Other Officers................................................3
ARTICLE III - SHAREHOLDERS' MEETINGS.........................................3
Section 1: Special Meetings...............................................3
Section 2: Notice.........................................................3
Section 3: Place of Meeting...............................................4
Section 4: Ballots........................................................4
Section 5: Proxies........................................................4
Section 6: Action Without a Meeting.......................................4
ARTICLE IV - TRUSTEES' MEETINGS..............................................4
Section 1: Special Meetings...............................................4
Section 2: Regular Meetings...............................................5
Section 3: Quorum.........................................................5
Section 4: Notice.........................................................5
Section 5: Special Action.................................................5
Section 6: Action By Consent..............................................5
ARTICLE V - SHARES OF BENEFICIAL INTEREST....................................5
Section 1: Beneficial Interest............................................5
Section 2: Transfer of Shares.............................................6
Section 3: Equitable Interest Not Recognized..............................6
ARTICLE VI - INSPECTION OF BOOKS.............................................6
ARTICLE VII - FISCAL YEAR....................................................6
ARTICLE VIII - AMENDMENTS....................................................6
ARTICLE IX - PRINCIPAL OFFICE OF THE TRUST...................................6
<PAGE>
BY-LAWS OF THE GOLF FUND
------------------------
These By-Laws of 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.
<PAGE>
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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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
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
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<PAGE>
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
