As filed with the Securities and Exchange Commission on October 13, 1998
Securities Act Registration No. 333-_______
Investment Company Act Registration No. 811-_______
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. ___ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. ___
LA CROSSE FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
311 Main Street
La Crosse, Wisconsin 54602
(Address of Principal Executive (Zip Code)
Offices)
Registrant's Telephone Number, including Area Code:
(608) 782-1148
Steven J. Hulme
La Crosse Funds, Inc.
311 Main Street
La Crosse, Wisconsin 54602
(Name and Address of Agent for Service)
Copies to:
Scott A. Moehrke
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202
Approximate date of commencement of proposed
sale to the public: As soon as practicable
after this Registration Statement becomes
effective.
The Registrant hereby amends this Registration
Statement on such date or dates as may be necessary to
delay its effective date until the Registrant shall
file a further amendment which specifically states that
this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may
determine.
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES
AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS
SUBJECT TO COMPLETION
October __, 1998
[Logo]
La Crosse Funds, Inc.
La Crosse Large Cap Growth & Income Fund
207 East Buffalo Street, Suite 315
Milwaukee, Wisconsin 53202
Telephone: 1-888-___-____
Facsimile: 1-608-784-3880
The investment objective of the La Crosse
Large Cap Growth & Income Fund (the "Fund") is
long-term capital appreciation and income. The
Fund invests primarily in common stocks of large
capitalization companies. La Crosse Advisers,
L.L.C. (the "Adviser"), a subsidiary of North
Central Trust Company ("North Central"), is the
investment adviser to the Fund. The Fund is a
long-term investment, intended to complement your
other investments.
This Prospectus contains important
information you should consider before you invest
in the Fund, including information about risks.
Please read it carefully and keep it for future
reference.
____________________
Neither the Securities and Exchange
Commission (the "SEC") nor any state securities
commission has approved or disapproved of the
securities offered by this Prospectus, nor has the
SEC or any state securities commission passed upon
the adequacy of this Prospectus. Any
representation to the contrary is a criminal
offense.
<PAGE>
TABLE OF CONTENTS
HIGHLIGHTS 3
FEES AND EXPENSES OF THE FUND 4
INVESTMENT OBJECTIVE 5
INVESTMENT STRATEGIES 5
IMPLEMENTATION OF INVESTMENT OBJECTIVE 5
FUND MANAGEMENT AND DISTRIBUTION 6
INVESTMENT PERFORMANCE 7
YOUR ACCOUNT 8
VALUATION OF FUND SHARES 14
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS, AND TAX
TREATMENT 14
YEAR 2000 ISSUE 14
ADDITIONAL INFORMATION 16
In deciding whether to invest in the Fund, you
should rely only on information in this Prospectus or
the Statement of Additional Information ("SAI"). The
Fund has not authorized others to provide additional
information. The Fund does not authorize use of this
Prospectus in any state or jurisdiction where the
offering cannot legally be made.
<PAGE>
HIGHLIGHTS
What are the goals of the Fund?
The Fund's goal is long-term capital appreciation
and income. This goal is sometimes referred to as the
Fund's investment objective. The Fund tries to achieve
this goal by choosing investments that are expected to
increase in value. The Fund also tries to choose
investments that will pay current income, usually
dividends. You should consider the Fund's current
income goal as secondary to the Fund's goal of capital
appreciation. The Fund cannot guarantee that it will
achieve its goal. For more information, see
"Investment Objective" and "Investment Strategies."
What are the Fund's Investment Strategies?
The Fund invests primarily in common stocks. The
Fund will emphasize investments in the common stocks of
U.S. large capitalization companies. In trying to
achieve its goal, the Fund's common stocks will be
those that the Adviser believes are under valued
relative to the company's future earnings potential.
The Fund may also invest a limited amount of assets in
foreign stocks and use options in trying to achieve its
goal. For more information, see "Investment
Strategies."
What are the main risks of investing in the Fund?
The main risks of investing in the Fund are:
Stock Market Risk. Stock funds like the Fund are
subject to stock market risks and significant
fluctuations in value. If the stock market declines in
value, the Fund is likely to decline in value.
Increases or decreases in value of stocks are generally
greater than for bonds or other income investments.
Stock Selection Risk. The stocks selected by the
Adviser for inclusion in the Fund's portfolio may
decline in value or not increase in value when the
stock market in general is rising. The Adviser has not
previously acted as an investment adviser to a mutual
fund.
Not Bank Insured. An investment in the Fund is
not a deposit of a bank and not insured or guaranteed
by the Federal Deposit Insurance Corporation or any
other government agency.
You should be aware that you may lose money by
investing in the Fund.
Is the Fund an appropriate investment for me?
The Fund is suitable for long-term investors only.
The Fund is not a short-term investment vehicle. An
investment in the Fund may be appropriate if:
your goal is long-term capital appreciation and
income;
you do not require significant current income from
this investment; and
you are willing to accept short-term to
intermediate-term fluctuations in investment value to
seek possible higher long-term returns.
Because the Fund has been in operation for less
than a full calendar year, it has no annual returns
history.
<PAGE>
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that
you may pay if you buy and hold shares of the Fund.
Shareholder Fees (fees paid directly from your
investment)(1)
Maximum sales charge (load) imposed on purchases None
(as a percentage of offering price)
Maximum deferred sales charge (load) imposed on None
redemptions (as a percentage of amount redeemed)
Redemption fee (as a percentage of amount redeemed) None
Annual Fund Operating Expenses (expenses that are
deducted from Fund assets) (2)
Management fees 0.75%
Distribution and service (12b-1) fees None
Other expenses(3) 0.37%
Total annual Fund operating expenses(3) 1.12%
____________
(1)If you redeem shares by wire, you will be charged a
$[15] service fee. See "Your Account_Redeeming
Shares."
(2)Stated as a percentage of the Fund's average daily
net assets. Fund operating expenses are deducted
from Fund assets before computing the daily share
price or making distributions. As a result, they
do not appear on your account statement, but
instead reduce the amount of total return you
receive.
(3)Based on estimated amounts for the current fiscal
year. For the fiscal year ending December 31,
1999, the Adviser has agreed to waive its
management fee and/or reimburse the Fund's
operating expenses to the extent necessary to
ensure that the total annual operating expenses for
the Fund, which include management and
administration fees, but which exclude interest,
taxes, brokerage commissions and other costs
incurred in connection with the purchase and sale
of portfolio securities, and extraordinary items,
do not exceed 1.00%. "Other expenses" are
presented before any such waivers/reimbursements.
If "other expenses" were calculated based on such
waivers and/or reimbursements, other expenses and
total annual operating expenses for the Fund would
be .25% and 1.00%, respectively. The Adviser is
entitled to recoup amounts waived or reimbursed for
a period of up to three years from the date such
amounts were reimbursed or waived. For additional
information, see "Fund Management and
Distribution_Management."
<PAGE>
Example
The following Example is intended to help you
compare the cost of investing in the Fund with the cost
of investing in other mutual funds. The Example
assumes that you invest $10,000 in the Fund for the
time periods indicated and then redeem all of your
shares at the end of those periods. The Example also
assumes that your investment has a 5% return each year
and that the Fund's total annual operating expenses
remain the same each year. Although your actual costs
may be higher or lower, based on these assumptions,
your costs would be as follows:
1 Year 3 Years
$11 $36
Investment OBJECTIVE
The Fund's investment objective is to seek long-
term capital appreciation and income.
INVESTMENT STRATEGIES
The Adviser will attempt to achieve the Fund's
investment objective by investing the Fund's assets in
U.S. companies that have a large market capitalization
("large-cap companies"). A large-cap company is one
with a market capitalization of at least $1 billion.
The Adviser currently intends to invest at least 70% of
the Fund's assets in companies with market
capitalizations of $5 billion or more. The Adviser's
strategy under normal market conditions is to be fully
invested, holding securities for their long-term total
return potential over a three- to five-year time frame.
When making purchase decisions for the Fund, the
Adviser uses a blend of value and growth investing.
The Adviser values each company in which it may invest
based on its future earnings potential. Using its own
model, the Adviser establishes this value by reviewing
estimates of a particular company's future earnings and
considering other information, including sales and
earnings data and risks associated with that particular
company and with the economy as a whole. The Adviser
reviews and may adjust its valuation in light of
valuations and fundamental research reports prepared by
others in the securities industry. The Adviser then
prepares a list of securities for inclusion in the
Fund's portfolio based upon these valuations and
purchases the securities when their prices fall within
a pre-determined range. Securities included on this
list as well as those securities which are purchased
for the Fund are monitored for variations from
expectations regarding capital growth or dividend
policy. The Adviser intends to maintain broad
diversification within industries and economic sectors,
including between 50 and 100 different stocks in the
Fund's portfolio at any given time.
The Adviser makes sell decisions for the Fund
based on a number of factors, including significant
deterioration in a company's underlying fundamentals,
strong price appreciation suggesting an overweighted
position or overvalued security, change in theme or
sector orientation, or better relative value in other
securities.
IMPLEMENTATION OF INVESTMENT OBJECTIVE
In implementing its investment objective, the Fund
may invest in the following securities and use the
following investment techniques. Some of these
securities and investment techniques involve special
risks, which are described below, elsewhere in this
Prospectus, and in the SAI.
Common Stocks
The Fund will invest primarily in common stocks.
Common stocks generally increase or decrease in value
based on the earnings of a company and on general
industry and market conditions. Because the Fund
invests a
<PAGE>
significant amount of its assets in common
stocks, it is likely to have greater fluctuations in
share price than a fund that invests a significant
portion of its assets in fixed-income securities.
Foreign Securities
While the Fund currently intends to invest
primarily in common stocks of U.S. companies, from time
to time it may invest in foreign equity securities.
Risks associated with investing in foreign securities
generally include lack of information regarding a
foreign company and fluctuations in the Fund's net
asset value during periods when shares of the Fund may
not be redeemed. In addition, a number of European
countries have agreed to enter into an economic and
monetary union which may have adverse effects on the
foreign securities in the Fund's portfolio if the union
does not take effect as planned, if a country withdraws
from the union or if the accounting and trading systems
used by the Fund do not recognize the new currency
adopted in the union.
Options
Occasionally the Fund may buy options in order to
protect, or "hedge," against possible adverse changes
in the price of specific securities held in the Fund's
portfolio or of the Fund's equity securities as a
whole. An option is a contract in which the "holder"
(the buyer) pays an amount of money to the "writer"
(the seller) for the right to buy from the writer (a
call option) or to sell to the writer (a put option) a
specific security at an agreed upon price during a
specific period of time. Holders benefit from
favorable movements in the price of the underlying
security and are not exposed to losses from adverse
movements in the price of the underlying security.
Writers receive fees or premiums from holders for
writing options, but are exposed to losses from adverse
movements in the price of the underlying security. The
Fund may also buy index options in order to obtain
broad market exposure for Fund assets pending their
investment in specific securities. It is unlikely that
the Fund will invest a significant portion of its
assets in options.
Temporary Strategies
Prior to investing the proceeds from sales of Fund
shares, to meet ordinary daily cash needs, and to
retain the flexibility to respond promptly to adverse
changes in market and economic conditions, the Fund may
hold cash and/or invest all or a portion of its assets
in money market instruments or other investment grade
short-term fixed-income securities issued by private
and governmental institutions. It is impossible to
predict when or for how long the Adviser may employ
these strategies for the Fund. To the extent the Fund
engages in any of these temporary strategies, the Fund
may not achieve its investment objective.
FUND MANAGEMENT AND DISTRIBUTION
Management
The Fund has entered into an Investment Advisory
Agreement with the Adviser under which the Adviser
manages the Fund's investments and business affairs,
subject to the supervision of the Fund's Board of
Directors.
Adviser. The Adviser was organized as a Wisconsin
limited liability company in June 1998 and is located
at 311 Main Street, La Crosse, Wisconsin 54602. Under
the Investment Advisory Agreement, the Fund pays the
Adviser an annual management fee of .75% of the Fund's
average daily net assets. The advisory fee is accrued
daily and paid monthly. For the fiscal year ending
December 31, 1999, the Adviser has agreed to waive its
management fee and/or reimburse Fund operating expenses
to the extent necessary to ensure that the total annual
operating expenses for the Fund will not exceed 1.00%
of average daily net assets. Any waivers or
reimbursements will have the effect of lowering the
overall expense ratio for the Fund and increasing its
overall return to investors at the time any such
amounts were waived and/or reimbursed. The Adviser is
entitled to recoup amounts waived or reimbursed for a
period of up to three years from the date such amounts
were reimbursed or waived.
Under the Investment Advisory Agreement, not only
is the Adviser responsible for management of the Fund's
assets, but also for portfolio transactions and
brokerage. Before the Fund commenced operations, the
Adviser had no prior experience advising mutual funds.
The Fund is the Adviser's only mutual fund client.
<PAGE>
North Central. North Central, a Wisconsin trust
company, is the parent company of the Adviser. North
Central, prior to the date hereof, managed a collective
investment fund (the "Collective Fund") since April 1,
1971 and a common trust fund (the "Common Fund," and
together with the Collective Fund, the "Trust Funds")
since June 1, 1995. North Central decided to convert
the assets of the Trust Funds into shares of the Fund.
In connection with this conversion, North Central
decided to place its advisory operations into a
separate entity, and for that purpose established the
Adviser.
Portfolio Manager. Steven J. Hulme is the
President, Secretary and portfolio manager of the Fund.
Since 1993, Mr. Hulme has served as Vice President and
head of North Central's investment division, during
which time he has managed the Trust Funds. He is also
the President, a Director and a Member of the Adviser.
Mr. Hulme received his undergraduate degree from the
University of Nebraska and his MBA from the University
of Chicago. Mr. Hulme is a Chartered Financial
Analyst.
Service Providers
Certain administrative and other functions are
performed on behalf of the Fund by related and
unrelated service providers. North Central acts as
custodian of the Fund's assets. Sunstone Investor
Services, LLC (the "Transfer Agent") acts as the Fund's
dividend-disbursing and transfer agent. Sunstone
Distribution Services, LLC, a registered broker-dealer
and member of the National Association of Securities
Dealers, Inc. (the "NASD"), acts as distributor of the
Fund's shares. Sunstone Financial Group, Inc. acts as
the Fund's administrator and fund accountant.
INVESTMENT PERFORMANCE
The Fund proposes to commence operations on
December 31, 1998. The Fund may calculate the
performance of the Fund for periods commencing prior to
December 31, 1998, by including the corresponding total
return of the Collective Fund, adjusted to reflect the
deduction of the anticipated fees and expenses
applicable to shares of the Fund as set forth under
"Fees and Expenses of the Fund." The Collective Fund
commenced operations on April 1, 1971, and has the same
investment objective and substantially similar
investment policies as the Fund. The Collective Fund
was not registered under the Investment Company Act of
1940, as amended (the "1940 Act"), and therefore was
not subject to certain investment restrictions that are
imposed by the 1940 Act. If the Collective Fund had
been registered under the 1940 Act, its performance may
have been lower.
The Fund from time-to-time may advertise certain
investment performance figures. These figures are
based on historical earnings but past performance data
is not necessarily indicative of future performance of
the Fund. The Fund may advertise its total return and
its holding period return (also known as cumulative
total return) for various periods of time. Total
return is calculated by determining, over a period of
time as stated in the advertisement, the average annual
compounded rate of return that an investment in the
Fund earned over that period, assuming reinvestment of
all distributions. Holding period return refers to the
percentage change in the value of an investment in a
Fund over a period of time (as stated in the
advertisement), assuming reinvestment of all
distributions. Total return differs from holding
period return principally in that total return is an
average annual figure while holding period return is an
aggregate figure for the entire period.
The following table shows the Collective Fund's
prior five year quarterly and annual total return
calculations together with 1 year, 3 year, 5 year, 10
year and since inception total return calculations as
of the most recent calendar quarter.
<PAGE>
First Second Third Fourth Annual
Year Quarter Quarter Quarter Quarter Total
Return
1993 1.8% 3.2% 5.9% -1.9% 9.2%
1994 -3.3% -2.1% 7.7% -6.6% -4.8%
1995 8.3% 11.4% 9.6% 4.7% 38.7%
1996 4.3% 3.4% 6.9% 8.1% 24.9%
1997 2.4% 15.1% 15.6% -3.9% 31.1%
1998 11.2% -1.9% -19.5% N/A 12.3% *
12 Months ended 9/30/98 -15.8%
3 Years ended 9/30/98 14.6%
5 Years ended 9/30/98 13.2%
10 Years ended 9/30/98 11.9%
Since Inception (4/1/77) 10.3%
* Year to date
This quoted performance data includes the
performance of the Collective Fund (as adjusted as
described above) for all periods prior to September
30, 1998, including the period from January 1, 1993
to January 1, 1995 during which North Central
delegated the management of the Collective Fund to
Northern Capital Management Incorporated, an unrelated
investment adviser. The performance data included in
the table above does not include the performance of
the Common Fund, which was acquired by North Central
on June 1, 1995. Prior to that time the Common Fund
was managed by Milwaukee Western Trust Company, a
trust company which was unaffiliated with North
Central prior to its acquisition by North Central.
Employee benefit plans that have invested their assets
in the Collective Fund may be subject to certain other
charges as set forth in their respective plan documents.
YOUR ACCOUNT
Net Asset Value
Shares of the Fund are offered and sold on a
continual basis at the net asset value per share which
is next computed after both a properly completed
purchase order and payment are received by the Transfer
Agent.
Investing in the Fund
To open an account and invest in Fund shares, you
should:
(1) Read this Prospectus carefully.
(2) Determine how much you would like to invest.
When you open an account with the Fund, you
must invest at least:
Non-retirement account: $_____
Retirement account: $_____
Automatic Investment Plan ("AIP"): $_____
When you add to an account, you must invest
at least:
Non-retirement account: $_____
Retirement account: $_____
<PAGE>
The Fund may change or waive these minimums
at any time; you will be given at least ____
days' notice of any increase in the minimum
dollar amount of purchases.
(3) Complete the appropriate parts of the
purchase application, carefully following the
instructions. If you have questions about
the purchase application, please contact the
Fund at 1-888-____-______. Purchase
applications will be accepted by the Transfer
Agent. [The Fund will not accept your
account if you are investing for another
person as attorney-in-fact. The Fund also
will not accept accounts with a "Power of
Attorney" or "POA" in the registration
section of the purchase application.]
(4) Make your initial investment, and any
subsequent investments, following the
instructions set forth below. Purchase
applications are subject to acceptance by the
Fund. Purchase applications are not binding
on the Fund until so accepted. The Fund
reserves the right to accept or reject a
purchase application in whole or in part.
The Fund also reserves the right to limit or
suspend, without prior notice, the offering
of its shares.
Purchasing Shares
You may purchase shares of the Fund in two ways -
by mail and by wire.
Opening an Account by Mail. You may open an
account by mail as follows:
Please complete the purchase application. You
may duplicate any application or you can obtain
additional copies of the purchase application
from the Fund by calling 1-888-___-____.
Write a check in an amount equal to the amount
that you would like to invest in the Fund.
Make the check payable to "La Crosse Large Cap
Growth & Income Fund." You must make your
purchase in U.S. dollars. Your check must be
drawn on a U.S. bank, savings and loan
institution or credit union. You may not make
your purchase with cash, credit cards or third
party checks.
Mail your completed purchase application and
check to:
La Crosse Funds, Inc.
P.O. Box _____
Milwaukee, WI 53201-____
OR
Send your completed purchase application and
check by overnight or express mail to:
La Crosse Funds, Inc.
c/o Sunstone Investor Services, LLC
207 East Buffalo Street, Suite 315
Milwaukee, WI 53202-5712
Adding to an Account by Mail. You may make
additional investments by mail as follows:
Write a check in an amount equal to the
additional amount that you would like to invest
in the Fund. The amount of your check must be
equal to or greater than the minimum amount
listed in item 2, above. Make the check
payable to "La Crosse Large Cap Growth & Income
Fund." You must make your additional purchase
in U.S. dollars. Your check must be drawn on a
U.S. bank, saving and loan institution or
credit union. You may not make an additional
purchase with cash, credit cards or third party
checks.
<PAGE>
Complete an additional investment slip from a
recent account statement. If you do not have
an additional investment slip, write a note
which gives the full name of your account and
the account number.
Send the check with the additional investment
slip or note to the Fund by mail or by
overnight courier or express mail to the
address indicated above.
Opening an Account by Wire. You may open an
account by wire transfer as follows:
Complete a purchase application.
Send the purchase application to the Fund by
mail or by overnight or express mail to the
address indicated above.
After the Transfer Agent has received a
properly completed purchase application, you
may call the Fund at 1-888-___-____ for wire
instructions and to obtain an investor account
number.
Wire the funds through the Federal Reserve
System as follows:
North Central Trust Company
A.B.A. Number: _______________________
For credit to: La Crosse Funds, Inc.
Account Number: ______________________
For further credit to:
(investor account number)
(name or account registration)
(Social Security or Taxpayer Identification Number)
Adding to an Account by Wire. You may make
additional investments by wire as follows:
Wire the funds through the Federal Reserve
System as indicated above.
Opening an Account by Telephone. You may not open
an account by telephone.
Adding to an Account by Telephone. If you filled
out the "Telephone [Purchase and] Redemption" section
of your purchase application which authorizes the Fund
to withdraw the payment for shares of the Fund from
your bank account by electronic funds transfer, then
you may make additional investments by telephone as
follows:
Please call 1-888-___-____ to place your
telephone purchase order.
You must purchase shares by telephone in
amounts equal to at least $________.
Payment for the shares purchased by telephone
will be withdrawn from the bank account listed
on your purchase application within
approximately 2-3 days after the purchase order
is placed.
Purchasing Shares Through Other Institutions. If
you purchase shares through a program of services
offered or administered by a broker-dealer, financial
institution, or other service provider, you should read
the program materials, including information relating
to fees, in addition to the Fund's Prospectus. Certain
services of the Fund may not be available or may be
modified in connection with the program of services
provided. The Fund may only accept requests from the
broker-dealer to purchase additional shares through a
broker-dealer street name account.
The Fund has authorized one or more broker-
dealers, financial institutions or other service
providers ("Brokers") to receive on its behalf purchase
and redemption orders for Fund shares. Such Brokers
may charge
<PAGE>
transaction fees on the purchase and/or sale
of Fund shares. Such Brokers are authorized to
designate other intermediaries to receive purchase and
redemption orders on the Fund's behalf. The Fund will
be deemed to have received a purchase or redemption
order when an authorized Broker, or, if applicable, the
Broker's authorized designee, receives the order.
Orders for the purchase or redemption of Fund shares
will be priced at the Fund's net asset value next
computed after the authorized Broker or its authorized
designee receives such orders. It is the
responsibility of the Broker to place the order with
the Fund on a timely basis. If payment is not received
within the time specified in the agreement, the Broker
could be held liable for any resulting fees or losses.
Additional Purchase Information.
The Fund will charge a $23 service fee against
your account for any check or electronic funds
transfer that is returned unpaid for any reason
and your purchase will be canceled. You will
also be responsible for any losses suffered by
the Fund as a result.
In order to relieve you of responsibility for
the safekeeping and delivery of stock
certificates, the Fund does not issue
certificates.
When a purchase is made by check and a
redemption is requested shortly thereafter, the
Fund may delay payment of redemption proceeds
for up to 10 calendar days. This delay allows
the Fund to verify that a check used to
purchase Fund shares will not be returned due
to insufficient funds. This delay also
protects the other Fund investors from loss.
By completing and submitting a purchase
application and providing bank account
information, you are automatically granted the
privilege to make purchases and request
redemptions by telephone. You may waive this
privilege by checking the appropriate box on
the purchase application. If you have any
questions as to how to waive this privilege, or
how to add or delete this privilege after you
open an account, please call the Fund at
1-888-___-____. Generally, after you open an
account, your request to waive, add or delete a
privilege must be in writing and signed by each
registered holder of the account with
signatures guaranteed by a U.S. commercial bank
or trust company, a member of the NASD or other
eligible guarantor institution. A notary
public is not an acceptable guarantor. For a
more detailed discussion of the rights,
responsibilities and risks of telephone
transactions, please refer to "Redeeming Shares
- Important Note About Wire and Telephone
Redemptions."
Automatic Investment Plan. The Automatic
Investment Plan ("AIP") is a method of purchasing Fund
shares using dollar cost averaging, which is an
investment strategy that involves investing a fixed
amount of money at a regular time interval. By always
investing the same amount, you will be purchasing more
shares when the price is low and fewer shares when the
price is high. The AIP allows you to make regular,
systematic investments in shares of the Fund from your
bank account on the 5th, 10th, 15th, 20th, 25th or last
day of each month. If one of these dates falls on a
weekend, the investment will be made on the next
business day. The minimum initial investment for
investors using the AIP is $________. To maintain an
AIP, you must invest at least $_______ per month in the
Fund. Please call 1-888-___-____ for instructions as
to how you may establish an AIP for your account.
Redeeming Shares
You may redeem some or all of your shares of the
Fund at any time. The price at which your shares will
be redeemed is the net asset value per share next
determined after the Fund receives proper redemption
instructions from you. See "Valuation of Fund Shares."
You may redeem your shares of the Fund by mail, wire or
telephone. The Fund may delay payment of redemption
proceeds until amounts for purchases which you made by
check, telephone or pursuant to the AIP have been
collected. Collection may take up to 15 days from the
date on which you made the purchase. Depending upon
the redemption price you receive, you may realize a
capital gain or loss for federal income tax purposes.
<PAGE>
Redeeming Shares by Mail. You may redeem your
shares by mail as follows:
Write a letter instructing the Fund to redeem your
shares. In your letter, indicate your account number,
the name(s) in which the account is registered, and the
dollar value or number of shares you wish to sell. If
the dollar amount requested to be redeemed is greater
than the current account value as determined by the net
asset value on the effective date of the redemption,
the entire account balance will be redeemed.
Include in your letter all required signatures.
The letter must be signed exactly as the shares are
registered. Enclose any additional documents that may
be required. See "Redeeming Shares_Special
Situations," below.
Send the letter, along with any required
additional documents, to the Transfer Agent at the
address listed above.
The Transfer Agent will mail a check in the amount
of the redemption proceeds to the address of the person
in whose name(s) the account is registered, or
otherwise according to your letter of instruction. If
the amount requested is greater than $10,000, or if the
proceeds are to be sent to a person other than the
shareholder(s) of record or to an address other than
the address of record, or if the redemption request is
made within 30 days of an address change, then each
required signature on the letter of instruction must be
guaranteed by a U.S. commercial bank or trust company,
a member firm of the NASD or other eligible guarantor
institution. A notary public is not an acceptable
guarantor. Additional documentation may be required
for the redemption of shares held in corporate,
partnership or fiduciary accounts. See "Redeeming
Shares - Special Situations - Corporate Accounts" for
instructions on redeeming shares in corporate accounts.
[Additional documentation is required for the
redemption of shares held by persons acting pursuant to
a power of attorney.] If you have any questions about
redemptions by mail, call the Fund in advance of making
the redemption request.
The Fund will mail payment for redemption proceeds
within seven days after it receives proper instructions
for redemption.
Important Note About Wire and Telephone
Redemptions. In order to redeem your shares by wire or
telephone, you must have filled out the "Telephone
Redemption" section of your purchase application when
you first opened your account. To verify that you have
telephone redemption privileges, call the transfer
agent at 1-888-___-____. If you do not have telephone
privileges and you now want to arrange for wire or
telephone redemptions, or if you do have telephone
privileges and you now want to change the bank, the
account or the address designated to receive redemption
proceeds, then you must send a letter making this
request to the Transfer Agent. The letter must be
signed by each person who is listed on the account.
The signatures must be guaranteed. The Transfer Agent
may request additional documents from corporations,
executors, administrators, trustees and guardians. See
"Redeeming Shares - Special Situations - Corporate
Accounts," below.
The Fund reserves the right to refuse any wire or
telephone redemption request. The Fund may further
limit the dollar amount or number of shares that you
may redeem. You may not cancel or modify a telephone
or wire redemption request after you make the request.
Neither the Fund nor the Transfer Agent will be
responsible for the authenticity of redemption
instructions received by telephone. Accordingly, you
bear the risk of loss. However, the Fund will use
reasonable procedures to ensure that instructions
received by telephone are genuine, including recording
telephonic transactions and sending written
confirmation of redemptions to you. You may experience
difficulty in implementing a telephone redemption
during periods of drastic economic or market changes.
If you are unable to contact the Transfer Agent by
telephone, you may also redeem shares by written
request, as described above.
Redeeming Shares by Wire. You may redeem your
shares by wire as follows:
Please call 1-888-___-____ to place your wire
redemption request.
<PAGE>
You may request redemptions by wire in amounts
equal to at least $1,000 but not more than $10,000.
You must make redemption requests for less than $1,000
or more than $10,000 in writing.
Funds will be wired on the next business day. A
$[15] fee will be deducted from your account.
Redeeming Shares by Telephone. You may redeem
your shares by telephone as follows:
Please call 1-888-___-____ to place your telephone
redemption request.
You may request redemptions by telephone in
amounts equal to at least $1,000 but not more than
$10,000. You must make redemption requests for less
than $1,000 or more than $10,000 in writing.
Proceeds redeemed by telephone will be mailed or
transferred only to your address or bank of record as
shown on the records of the Transfer Agent.
Special Situations
Attorney-in-Fact. If you are acting as an
attorney-in-fact for another person, or as a trustee or
on behalf of a corporation, additional documentation
may be required in order to effect a redemption.
Questions regarding such circumstances may be directed
to the Transfer Agent by calling 1-888-___-____.
Signature Guarantees. The Fund requires a
signature guarantee for all authorized owners of an
account: (i) when you submit a written redemption
request for more than $10,000, (ii) when you add the
telephone redemption option to your existing account,
(iii) if you transfer ownership of your account to
another individual or entity, or (iv) if you request
redemption proceeds to be sent to an address or bank
other than the address or bank that appears on your
account. A signature guarantee may be obtained from
any eligible guarantor institution. These institutions
include U.S. banks, saving associations, credit unions,
brokerage firms, and others. A notary public stamp or
seal is not acceptable.
Corporate Accounts. You must send the following
documents, in addition to any other required documents,
to the Transfer Agent if you request any redemptions or
transfer of ownership for a corporate account:
1. A written letter of instruction signed by the
required number of authorized officers, along
with their respective positions. For
redemption requests in excess of $10,000, the
written request must be signature guaranteed.
2. A certified corporate resolution that states
the date the resolution was adopted and who is
empowered to act, transfer or sell assets on
behalf of the corporation.
3. If the corporate resolution is more than 60
days old from the date of the transaction
request, a certificate of incumbency from the
corporate secretary which specifically states
that the officer or officers named in the
resolution have the authority to act on the
account. The certificate of incumbency must
be dated within 60 days of the requested
transaction. If the corporate resolution
confers authority on officers by title and not
by name, the certificate of incumbency must
name the officer(s) and their title(s).
Suspension of Redemptions. The Fund reserves the
right to suspend or postpone redemptions during any
period when: trading on the New York Stock Exchange
(the "NYSE") is restricted, as determined by the SEC,
or the NYSE is closed for other than customary weekend
and holiday closing; the SEC has by order permitted
such suspension; or an emergency, as determined by the
SEC, exists, making disposal of portfolio securities or
valuation of net assets of the Fund not reasonably
practicable.
<PAGE>
IRAs. Shareholders who have an Individual
Retirement Account or other retirement plan must
indicate on their redemption requests whether or not to
withhold federal income taxes. Redemption requests
failing to indicate an election will be subject to
withholding for taxes.
Termination of Accounts. Your account may be
terminated by the Fund if, at the time of any
redemption of shares in your account, the value of the
remaining shares in your account falls below $1,000. A
check for the proceeds of redeeming the remaining
shares in your account will be sent to you within seven
days of the redemption.
VALUATION OF FUND SHARES
The price of Fund shares is based on the Fund's
net asset value, which is calculated using the fair
value method of valuation and is determined as of the
close of trading (generally 4:00 p.m., Eastern Time) on
each day the NYSE is open for business. The Fund does
not determine net asset value on days the NYSE is
closed. The current policy of the NYSE is to close on
New Year's Day, Martin Luther King Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day. In addition,
if any of these holidays falls on a Saturday, the NYSE
will not be open for trading on the preceding Friday,
and when such holiday falls on a Sunday, the NYSE will
not be open for trading on the succeeding Monday,
unless unusual business conditions exist, such as the
ending of a monthly or yearly accounting period. The
price at which a purchase order or redemption request
is effected is based on the next calculation of net
asset value after the order or request is placed.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS, AND TAX
TREATMENT
For federal income tax purposes, all dividends and
distributions of net realized short-term capital gains
you receive from the Fund are taxable as ordinary
income, whether reinvested in additional shares or
received in cash. Distributions of net realized long-
term capital gains you receive from the Fund, whether
reinvested in additional shares or received in cash,
are taxable as a capital gain. The capital gain
holding period (and the applicable tax rate) is
determined by the length of time the Fund has held the
security and not the length of time you have held
shares in the Fund. You will be informed annually as
to the amount and nature of all dividends and capital
gains paid during the prior year. Such capital gains
and dividends may also be subject to state or local
taxes. If you are not required to pay taxes on your
income, you are generally not required to pay federal
income taxes on the amounts distributed to you.
Dividends and capital gains, if any, will be
distributed at least annually in December. The Fund
expects that, because of its investment objective, its
distributions will consist primarily of long-term
capital gains and dividends. You should measure the
success of your investment by both the value of your
investment at any given time and the distributions you
receive.
All dividends and capital gains distributions will
automatically be reinvested in additional Fund shares
at the then prevailing net asset value unless you
specifically request that dividends or capital gains or
both be paid in cash. The election to receive
dividends in cash or reinvest them in shares may be
changed by writing to the Fund at La Crosse Funds,
Inc., c/o Sunstone Investor Services, LLC, 207 East
Buffalo Street, Suite 315, Milwaukee, Wisconsin 53202.
Such notice must be received at least ten days prior to
the record date of any dividend or capital gain
distribution.
YEAR 2000 ISSUE
The Fund's operations depend on the seamless
functioning of computer systems in the financial
service industry, including those of the Adviser and
the Transfer Agent. Many computer software systems in
use today cannot properly process date-related
information after December 31, 1999 because of the
method by which dates are encoded and calculated. This
failure, commonly referred to as the "Year 2000
Problem," could adversely affect the handling of
security trades, pricing, and account servicing for the
Fund.
<PAGE>
The Adviser has made compliance with the Year 2000
Problem a high priority and is taking steps that it
believes are reasonably designed to address the Year
2000 Problem with respect to its computer systems. The
Adviser has also been informed that comparable steps
are being taken by the Fund's other major service
providers. The Adviser does not currently anticipate
that the Year 2000 Problem will have a material impact
on its ability to continue to fulfill its duties as
investment adviser to the Fund.
<PAGE>
ADDITIONAL INFORMATION
DIRECTORS CUSTODIAN
Donald F. Sieger North Central Trust Company
Darwin F. Isaacson 311 Main Street
La Crosse, WI 54602
OFFICERS INDEPENDENT ACCOUNTANTS
Steven J. Hulme Arthur Andersen, LLP
Darwin F. Isaacson 100 East Wisconsin Avenue
Milwaukee, WI 53202
INVESTMENT ADVISER LEGAL COUNSEL
La Crosse Advisers, L.L.C. Godfrey & Kahn, S.C.
311 Main Street 780 North Water Street
La Crosse, WI 54602 Milwaukee, WI 53202
ADMINISTRATOR AND FUND ACCOUNTANT DISTRIBUTOR
Sunstone Financial Group, Inc. Sunstone Distribution Services, LLC
207 East Buffalo Street, Suite 315 207 East Buffalo Street, Suite 315
Milwaukee, WI 53202 Milwaukee, WI 53202
DIVIDEND-DISBURSING AND TRANSFER AGENT
Sunstone Investor Services, LLC
For overnight deliveries, use: For regular mail deliveries, use:
La Crosse Funds, Inc. La Crosse Funds, Inc.
c/o Sunstone Investor Services, LLC c/o Sunstone Investor Services, LLC
207 East Buffalo Street, Suite 315 P.O. Box 3210
Milwaukee, WI 53202 Milwaukee, WI 53201-3210
The SAI for the Fund contains additional information
about the Fund. The Fund's SAI, which is incorporated
by reference into this Prospectus, is available without
charge upon request to the address or toll-free
telephone number noted on the cover page of this
Prospectus. To request other information about the
Fund or to make shareholder inquiries you may call the
toll-free telephone number on the cover page of this
Prospectus.
Information about the Fund (including the SAI) may be
reviewed and copied at the SEC's Public Reference Room
in Washington, D.C. Please call the SEC at 1-888-SEC-
0330 for information relating to the operation of the
Public Reference Room. Reports and other information
about the Fund are also available on the SEC's Internet
Website located at http//www.sec.gov. Alternatively,
copies of this information may be obtained, upon
payment of a duplicating fee, by writing the Public
Reference Section of the SEC, Washington, D.C. 20549-
6009.
The Fund's 1940 Act File Number is 811-_______.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
[Logo]
La Crosse Funds, Inc.
La Crosse Large Cap Growth & Income Fund
207 East Buffalo Street, Suite 315
Milwaukee, Wisconsin 53202
Telephone: 1-888-___-____
Facsimile: 1-608-784-3880
This Statement of Additional Information ("SAI")
is not a prospectus and should be read together with
the Prospectus of the La Crosse Large Cap Growth &
Income Fund (the "Fund"), dated ___________, 1998. The
Fund's prospectus may be obtained by calling the
telephone number indicated above. The Fund is a series
of La Crosse Funds, Inc. (the "Corporation").
This Statement of Additional Information is dated ___________, 1998.
<PAGE>
TABLE OF CONTENTS
FUND ORGANIZATION 1
FUND POLICIES: FUNDAMENTAL AND NON-FUNDAMENTAL 1
IMPLEMENTATION OF INVESTMENT OBJECTIVE 3
Temporary Strategies 3
Convertible Securities 4
Illiquid Securities 4
Reverse Repurchase Agreements 5
Derivative Instruments 5
Depositary Receipts 14
Warrants 14
Short Sales Against the Box 14
Borrowing 14
Lending Portfolio Securities 14
Concentration 15
DIRECTORS AND OFFICERS 15
PRINCIPAL SHAREHOLDERS 16
INVESTMENT ADVISER 16
FUND TRANSACTIONS AND BROKERAGE 17
CUSTODIAN 18
TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT 18
ADMINISTRATOR AND FUND ACCOUNTANT 19
DISTRIBUTOR 19
FINANCIAL INTERMEDIARIES 19
PURCHASE AND PRICING OF SHARES 19
TAXATION OF THE FUND 20
PERFORMANCE INFORMATION 20
Total Return 20
Comparisons 21
INDEPENDENT ACCOUNTANTS 22
FINANCIAL STATEMENTS 22
No person has been authorized to give any information or to make any
representations other than those contained in this SAI and related Prospectus,
and if given or made, such information or representations may not be relied
upon as having been authorized by the Fund. This SAI does not constitute an
offer to sell securities in any state or jurisdiction in which such offering
may not lawfully be made.
<PAGE>
FUND ORGANIZATION
The Corporation is a diversified, open-end
management investment company, commonly referred to as
a mutual fund. The Corporation is organized as a
Wisconsin company and was incorporated on September 4,
1998.
The Corporation is authorized to issue shares of
common stock in series and classes. The Corporation
currently offers one series of shares: the La Crosse
Large Cap Growth & Income Fund (the "Fund"). La Crosse
Advisers, L.L.C. (the "Adviser") is the investment
adviser to the Fund. Each share of common stock of the
Fund is entitled to one vote, and each share is
entitled to participate equally in dividends and
capital gains distributions and in the residual assets
of the Fund in the event of liquidation.
No certificates will be issued for shares held in
your account. You will, however, have full shareholder
rights.
Generally, the Fund will not hold annual
shareholders' meetings unless required by the
Investment Company Act of 1940, as amended (the "1940
Act"), or Wisconsin law.
FUND POLICIES: FUNDAMENTAL AND NON-FUNDAMENTAL
The following are the Fund's fundamental
investment policies which cannot be changed without the
approval of a majority of the Fund's outstanding voting
securities. As used herein, a "majority of the Fund's
outstanding voting securities" means the lesser of (i)
67% of the shares of common stock of the Fund
represented at a meeting at which more than 50% of the
outstanding shares are present, or (ii) more than 50%
of the outstanding shares of common stock of the Fund.
The Fund:
1. May not, with respect to 75% of its total
assets, purchase the securities of any issuer
(except securities issued or guaranteed by
the U.S. government or its agencies or
instrumentalities) if, as a result, (i) more
than 5% of the Fund's total assets would be
invested in the securities of that issuer or
(ii) the Fund would hold more than 10% of the
outstanding voting securities of that issuer.
2. May not issue senior securities, except as
permitted under the 1940 Act.
3. May (i) borrow money from banks for temporary
or emergency purposes (but not for leveraging
or the purchase of investments), and (ii)
make other investments or engage in other
transactions permissible under the 1940 Act
which may involve a borrowing, including
borrowing through reverse repurchase
agreements, provided that the combination of
(i) and (ii) shall not exceed 33 1/3% of the
value of the Fund's assets (including the
amount borrowed), less the Fund's liabilities
(other than borrowings). If the amount
borrowed at any time exceeds 33 1/3% of the
Fund's total assets, the Fund will, within
three days thereafter (not including Sundays,
holidays and any longer permissible period),
reduce the amount of the borrowings such that
the borrowings do not exceed 33 1/3% of the
Fund's total assets. The Fund may also
borrow money from other persons to the extent
permitted by applicable law.
4. May not act as an underwriter of another
issuer's securities, except to the extent
that the Fund may be deemed to be an
underwriter within the meaning of the
Securities Act of 1933, as amended (the
"Securities Act"), in connection with the
purchase and sale of portfolio securities.
5. May not purchase the securities of any issuer
if, as a result, more than 25% of the Fund's
total assets would be invested in the
securities of issuers, the principal business
activities of which are in the same industry.
<PAGE>
6. May not purchase or sell real estate unless
acquired as a result of ownership of
securities or other instruments (but this
shall not prohibit the Fund from purchasing
or selling securities or other instruments
backed by real estate or of issuers engaged
in real estate activities).
7. May not make loans if, as a result, more than
33 1/3% of the Fund's total assets would be
lent to other persons, except through (i)
purchases of debt securities or other debt
instruments, or (ii) engaging in repurchase
agreements.
8. May not purchase or sell physical commodities
unless acquired as a result of ownership of
securities or other instruments (but this
shall not prevent the Fund from purchasing or
selling options, futures contracts, or other
derivative instruments, or from investing in
securities or other instruments backed by
physical commodities).
9. Notwithstanding any other fundamental
investment policy or restriction, may invest
all of its assets in the securities of a
single open-end management investment company
with substantially the same fundamental
investment objective, policies, and
restrictions as the Fund.
The Fund's investment objective, which is to seek
capital appreciation and income, is also a fundamental
investment policy which cannot be changed without the
approval of a majority of the Fund's outstanding voting
securities.
The following are the Fund's non-fundamental
investment policies which may be changed by the Board
of Directors of the Corporation without shareholder
approval.
The Fund may not:
1. Sell securities short, unless the Fund owns
or has the right to obtain securities
equivalent in kind and amount to the
securities sold short, or unless it covers
such short sale as required by the current
rules and positions of the Securities and
Exchange Commission (the "SEC") or its staff,
and provided that transactions in options,
futures contracts, options on futures
contracts, or other derivative instruments
are not deemed to constitute selling
securities short.
2. Purchase securities on margin, except that
the Fund may obtain such short-term credits
as are necessary for the clearance of
transactions; and provided that margin
deposits in connection with futures
contracts, options on futures contracts, or
other derivative instruments shall not
constitute purchasing securities on margin.
3. Invest in illiquid securities if, as a result
of such investment, more than 15% of its net
assets would be invested in illiquid
securities.
4. Purchase securities of other investment
companies except in compliance with the 1940
Act and applicable state law.
5. Engage in futures or options on futures
transactions which are impermissible pursuant
to Rule 4.5 under the Commodity Exchange Act
(the "CEA") and, in accordance with Rule 4.5,
will use futures or options on futures
transactions solely for bona fide hedging
transactions (within the meaning of the CEA);
provided, however, that the Fund may, in
addition to bona fide hedging transactions,
use futures and options on futures
transactions if the aggregate initial margin
and premiums required to establish such
positions, less the amount by which any such
options positions are in the money (within
the meaning of the CEA), do not exceed 5% of
the Fund's net assets.
6. Make any loans, except through (i) purchases
of debt securities or other debt instruments,
or (ii) engaging in repurchase agreements.
<PAGE>
7. Borrow money except from banks or through
reverse repurchase agreements, and will not
purchase securities when bank borrowings
exceed 5% of its total assets.
8. Under normal circumstances, invest less than
[65%] [80%] of the value of its total assets
in the securities of large capitalization
companies. For purposes hereof, large
capitalization companies are companies with a
market capitalization of at least $1 billion.
Except for the fundamental investment limitations
listed above and the Fund's investment objective, the
other investment policies described in the Prospectus
and this SAI are not fundamental and may be changed
with approval of the Corporation's Board of Directors.
Unless noted otherwise, if a percentage restriction is
adhered to at the time of investment, a later increase
or decrease in percentage resulting from a change in
the Fund's assets (i.e., due to cash inflows or
redemptions) or in the market value of the investment
or the Fund's assets will not constitute a violation of
that restriction.
IMPLEMENTATION OF INVESTMENT OBJECTIVE
The following information supplements the
discussion of the Fund's investment objective and
strategy described in the Prospectus under the headings
"Investment Objective" and "Investment Strategies."
The following represent strategies that are not
principal strategies of the Fund, but may be used from
time to time.
Temporary Strategies
As described in the Prospectus under the heading
"Implementation of Investment Objective," prior to
investing proceeds from sales of Fund shares, to meet
ordinary daily cash needs, and to retain the
flexibility to respond promptly to changes in market
and economic conditions, the Fund may hold cash and/or
invest all or a portion of its assets in money market
instruments which are "investment grade" as determined
by Standard & Poor's Corporation ("S&P"), Moody's
Investors Service, Inc. ("Moody's"), a comparable
rating agency or the Adviser. The investment grade
money market instruments which the Fund may purchase
may include:
U.S. Government Securities. Obligations issued or
guaranteed as to principal and interest by the United
States or its agencies (such as the Export-Import Bank
of the United States, Federal Housing Administration
and Government National Mortgage Association) or its
instrumentalities (such as the Federal Home Loan Bank),
including Treasury bills, notes, and bonds;
Bank Obligations. Obligations (including
certificates of deposit, bankers' acceptances,
commercial paper (see below) and other debt
obligations) of banks subject to regulation by the U.S.
Government and instruments secured by such obligations,
not including obligations of foreign branches of
domestic banks;
Obligations of Savings Institutions. Certificates
of deposit of savings banks and savings and loan
associations;
Fully Insured Certificates of Deposit.
Certificates of deposit of banks and savings
institutions, if the principal amount of the obligation
is insured by the Bank Insurance Fund or the Savings
Association Insurance Fund (each of which is
administered by the Federal Deposit Insurance
Corporation), limited to $100,000 principal amount per
certificate and to 15% or less of the Fund's total
assets in all such obligations and in all illiquid
assets, in the aggregate;
Commercial Paper. Commercial paper rated within
the two highest grades by Moody's, S&P or, if not
rated, issued by a company having an outstanding debt
issue rated at least Aaa by Moody's or AAA by S&P; and
Money Market Funds. Securities issued by
registered investment companies holding themselves out
as money market funds ("Money Market Funds") which
attempt to maintain a stable net asset value of $1.00
per share. The Fund shall not purchase securities
issued by a Money Market Fund if, after such purchase,
the Fund would own
<PAGE>
(i) more than 3% of the outstanding
voting stock of the Money Market Fund, (ii) securities
of the Money Market Funds having an aggregate value in
excess of 5% of the total value of the Fund, or (iii)
securities issued by the Money Market Fund and all
other investment companies having an aggregate value in
excess of 10% of the value of the total assets of the
Fund.
Repurchase Agreements. The Fund may enter into
repurchase agreements with certain banks or non-bank
dealers. In a repurchase agreement, the Fund buys a
security at one price, and at the time of sale, the
seller agrees to repurchase the obligation at a
mutually agreed upon time and price (usually within
seven days). The repurchase agreement, thereby,
determines the yield during the purchaser's holding
period, while the seller's obligation to repurchase is
secured by the value of the underlying security. The
Adviser will monitor, on an ongoing basis, the value of
the underlying securities to ensure that the value
always equals or exceeds the repurchase price plus
accrued interest. Repurchase agreements could involve
certain risks in the event of a default or insolvency
of the other party to the agreement, including possible
delays or restrictions upon the Fund's ability to
dispose of the underlying securities. Although no
definitive creditworthiness criteria are used, the
Adviser reviews the creditworthiness of the banks and
non-bank dealers with which the Fund enters into
repurchase agreements to evaluate those risks.
Convertible Securities
The Fund may invest in convertible securities,
which are bonds, debentures, notes, preferred stocks,
or other securities that may be converted into or
exchanged for a specified amount of common stock or
warrants of the same or a different company within a
particular period of time at a specified price or
formula. A convertible security entitles the holder to
receive interest normally paid or accrued on debt or
the dividend paid on preferred stock until the
convertible security matures or is redeemed, converted,
or exchanged. Convertible securities have unique
investment characteristics in that they generally (i)
have higher yields than common stocks, but lower yields
than comparable non-convertible securities, (ii) are
less subject to fluctuation in value than the
underlying stock (or warrant) since they have fixed
income characteristics, and (iii) provide the potential
for capital appreciation if the market price of the
underlying common stock (or warrant) increases. A
convertible security may be subject to redemption at
the option of the issuer at a price established in the
convertible security's governing instrument. If a
convertible security held by the Fund is called for
redemption, the Fund will be required to permit the
issuer to redeem the security, convert it into the
underlying common stock (or warrant), or sell it to a
third party.
Illiquid Securities
The Fund may invest up to 15% of its net assets in
illiquid securities (i.e., securities that are not
readily marketable). For purposes of this restriction,
illiquid securities include, but are not limited to,
restricted securities (securities the disposition of
which is restricted under the federal securities laws),
repurchase agreements with maturities in excess of
seven days, and other securities that are not readily
marketable. The Board of Directors of the Corporation,
or its delegate, has the ultimate authority to
determine, to the extent permissible under the federal
securities laws, which securities are liquid or
illiquid for purposes of this 15% limitation. Certain
securities exempt from registration or issued in
transactions exempt from registration under the
Securities Act, such as securities that may be resold
to institutional investors under Rule 144A under the
Securities Act, may be considered liquid under
guidelines adopted by the Board of Directors. However,
investing in securities which may be resold pursuant to
Rule 144A under the Securities Act could have the
effect of increasing the level of the Fund's
illiquidity to the extent that institutional investors
become, for a time, uninterested in purchasing such
securities.
The Board of Directors has delegated to the
Adviser the day-to-day determination of the liquidity
of any security, although it has retained oversight and
ultimate responsibility for such determinations.
Although no definitive liquidity criteria are used, the
Board of Directors has directed the Adviser to look to
such factors as (i) the nature of the market for a
security (including the institutional private resale
market), (ii) the terms of certain securities or other
instruments allowing for the disposition to a third
party or the issuer thereof (e.g., certain repurchase
obligations and demand instruments), (iii) the
availability of market quotations (e.g., for securities
quoted in the PORTAL system), and (iv) other
permissible relevant factors.
Restricted securities may be sold only in
privately negotiated transactions or in a public
offering with respect to which a registration statement
is in effect under the Securities Act. Where
registration is required, the Fund may
<PAGE>
be obligated to
pay all or part of the registration expenses and a
considerable period may elapse between the time of the
decision to sell and the time the Fund may be permitted
to sell a security under an effective registration
statement. If, during such a period, adverse market
conditions were to develop, the Fund might obtain a
less favorable price than that which prevailed when it
decided to sell. Restricted securities will be priced
at fair value as determined in good faith by the Board
of Directors. If, through the appreciation of
restricted securities or the depreciation of
unrestricted securities, the Fund should be in a
position where more than 15% of the value of its net
assets are invested in illiquid securities, including
restricted securities which are not readily marketable
(except for Rule 144A securities deemed to be liquid by
the Adviser), the affected Fund will take such steps as
is deemed advisable, if any, to protect liquidity.
Reverse Repurchase Agreements
The Fund may, with respect to up to 5% of its net
assets, engage in reverse repurchase agreements. In a
reverse repurchase agreement, the Fund would sell a
security and enter into an agreement to repurchase the
security at a specified future date and price. The
Fund generally retains the right to interest and
principal payments on the security. Since the Fund
receives cash upon entering into a reverse repurchase
agreement, it may be considered a borrowing. When
required by guidelines of the SEC, the Fund will set
aside permissible liquid assets in a segregated account
to secure its obligations to repurchase the security.
Derivative Instruments
In General. Although it does not currently intend
to engage in derivative transactions, the Fund may
invest up to 5% of its respective net assets in
derivative instruments. Derivative instruments may be
used for any lawful purpose consistent with the Fund's
investment objective such as hedging or managing risk,
but not for speculation. Derivative instruments are
commonly defined to include securities or contracts
whose value depend on (or "derive" from) the value of
one or more other assets, such as securities,
currencies, or commodities. These "other assets" are
commonly referred to as "underlying assets."
A derivative instrument generally consists of, is
based upon, or exhibits characteristics similar to
options or forward contracts. Options and forward
contracts are considered to be the basic "building
blocks" of derivatives. For example, forward-based
derivatives include forward contracts, swap contracts,
as well as exchange-traded futures. Option-based
derivatives include privately negotiated, over-the-
counter (OTC) options (including caps, floors, collars,
and options on forward and swap contracts) and exchange-
traded options on futures. Diverse types of
derivatives may be created by combining options or
forward contracts in different ways, and by applying
these structures to a wide range of underlying assets.
An option is a contract in which the "holder" (the
buyer) pays a certain amount (the "premium") to the
"writer" (the seller) to obtain the right, but not the
obligation, to buy from the writer (in a "call") or
sell to the writer (in a "put") a specific asset at an
agreed upon price at or before a certain time. The
holder pays the premium at inception and has no further
financial obligation. The holder of an option-based
derivative generally will benefit from favorable
movements in the price of the underlying asset but is
not exposed to corresponding losses due to adverse
movements in the value of the underlying asset. The
writer of an option-based derivative generally will
receive fees or premiums but generally is exposed to
losses due to changes in the value of the underlying
asset.
A forward is a sales contract between a buyer
(holding the "long" position) and a seller (holding the
"short" position) for an asset with delivery deferred
until a future date. The buyer agrees to pay a fixed
price at the agreed future date and the seller agrees
to deliver the asset. The seller hopes that the market
price on the delivery date is less than the agreed upon
price, while the buyer hopes for the contrary. The
change in value of a forward-based derivative generally
is roughly proportional to the change in value of the
underlying asset.
Hedging. The Fund may use derivative instruments
to protect against possible adverse changes in the
market value of securities held in, or are anticipated
to be held in, the Fund's portfolio. Derivatives may
also be used by the Fund to "lock-in" its realized but
unrecognized gains in the value of its portfolio
securities. Hedging strategies, if successful, can
reduce the risk of loss by wholly or partially
offsetting the negative effect of unfavorable price
movements in the investments being hedged. However,
hedging strategies can also reduce the opportunity for
gain by offsetting the positive effect of favorable
price movements in the hedged investments.
<PAGE>
Managing Risk. The Fund may also use derivative
instruments to manage the risks of the Fund's
portfolio. Risk management strategies include, but are
not limited to, facilitating the sale of portfolio
securities, managing the effective maturity or duration
of debt obligations in the Fund's portfolio,
establishing a position in the derivatives markets as a
substitute for buying or selling certain securities, or
creating or altering exposure to certain asset classes,
such as equity, debt, and foreign securities. The use
of derivative instruments may provide a less expensive,
more expedient or more specifically focused way for the
Fund to invest than "traditional" securities (i.e.,
stocks or bonds) would.
Exchange or OTC Derivatives. Derivative
instruments may be exchange-traded or traded in OTC
transactions between private parties. Exchange-traded
derivatives are standardized options and futures
contracts traded in an auction on the floor of a
regulated exchange. Exchange contracts are generally
liquid. The exchange clearinghouse is the counterparty
of every contract. Thus, each holder of an exchange
contract bears the credit risk of the clearinghouse
(and has the benefit of its financial strength) rather
than that of a particular counterparty. OTC
transactions are subject to additional risks, such as
the credit risk of the counterparty to the instrument,
and are less liquid than exchange-traded derivatives
since they often can only be closed out with the other
party to the transaction.
Risks and Special Considerations. The use of
derivative instruments involves risks and special
considerations as described below. Risks pertaining to
particular derivative instruments are described in the
sections that follow.
(1) Market Risk. The primary risk of derivatives
is the same as the risk of the underlying assets;
namely, that the value of the underlying asset may go
up or down. Adverse movements in the value of an
underlying asset can expose the Fund to losses.
Derivative instruments may include elements of leverage
and, accordingly, the fluctuation of the value of the
derivative instrument in relation to the underlying
asset may be magnified. The successful use of
derivative instruments depends upon a variety of
factors, particularly the Adviser's ability to predict
movements of the securities, currencies, and
commodities markets, which requires different skills
than predicting changes in the prices of individual
securities. There can be no assurance that any
particular strategy adopted will succeed. A decision
to engage in a derivative transaction will reflect the
Adviser's judgment that the derivative transaction will
provide value to the Fund and its shareholders and is
consistent with the Fund's objectives, investment
limitations, and operating policies. In making such a
judgment, the Adviser will analyze the benefits and
risks of the derivative transaction and weigh them in
the context of the Fund's entire portfolio and
investment objective.
(2) Credit Risk. The Fund will be subject to the
risk that a loss may be sustained by the Fund as a
result of the failure of a counterparty to comply with
the terms of a derivative instrument. The counterparty
risk for exchange-traded derivative instruments is
generally less than for privately-negotiated or OTC
derivative instruments, since generally a clearing
agency, which is the issuer or counterparty to each
exchange-traded instrument, provides a guarantee of
performance. For privately-negotiated instruments,
there is no similar clearing agency guarantee. In all
transactions, the Fund will bear the risk that the
counterparty will default, and this could result in a
loss of the expected benefit of the derivative
transaction and possibly other losses to the Fund. The
Fund will enter into transactions in derivative
instruments only with counterparties that the Adviser
reasonably believes are capable of performing under the
contract.
(3) Correlation Risk. When a derivative
transaction is used to completely hedge another
position, changes in the market value of the combined
position (the derivative instrument plus the position
being hedged) result from an imperfect correlation
between the price movements of the two instruments.
With a perfect hedge, the value of the combined
position remains unchanged for any change in the price
of the underlying asset. With an imperfect hedge, the
value of the derivative instrument and its hedge are
not perfectly correlated. Correlation risk is the risk
that there might be imperfect correlation, or even no
correlation, between price movements of an instrument
and price movements of investments being hedged. For
example, if the value of a derivative instrument used
in a short hedge (such as writing a call option, buying
a put option, or selling a futures contract) increased
by less than the decline in value of the hedged
investments, the hedge would not be perfectly
correlated. Such a lack of correlation might occur due
to factors unrelated to the value of the investments
being hedged, such as speculative or other pressures on
the markets in which these instruments are traded. The
effectiveness of hedges using instruments on
<PAGE>
indices
will depend, in part, on the degree of correlation
between price movements in the index and price
movements in the investments being hedged.
(4) Liquidity Risk. Derivatives are also subject
to liquidity risk. Liquidity risk is the risk that a
derivative instrument cannot be sold, closed out, or
replaced quickly at or very close to its fundamental
value. Generally, exchange contracts are very liquid
because the exchange clearinghouse is the counterparty
of every contract. OTC transactions are less liquid
than exchange-traded derivatives since they often can
only be closed out with the other party to the
transaction. The Fund might be required by applicable
regulatory requirement to maintain assets as "cover,"
maintain segregated accounts, and/or make margin
payments when it takes positions in derivative
instruments involving obligations to third parties
(i.e., instruments other than purchased options). If
the Fund is unable to close out its positions in such
instruments, it might be required to continue to
maintain such assets or accounts or make such payments
until the position expired, matured, or is closed out.
The requirements might impair the Fund's ability to
sell a portfolio security or make an investment at a
time when it would otherwise be favorable to do so, or
require that the Fund sell a portfolio security at a
disadvantageous time. The Fund's ability to sell or
close out a position in an instrument prior to
expiration or maturity depends on the existence of a
liquid secondary market or, in the absence of such a
market, the ability and willingness of the counterparty
to enter into a transaction closing out the position.
Therefore, there is no assurance that any derivatives
position can be sold or closed out at a time and price
that is favorable to the Fund.
(5) Legal Risk. Legal risk is the risk of loss
caused by the legal unenforceability of a party's
obligations under the derivative. While a party
seeking price certainty agrees to surrender the
potential upside in exchange for downside protection,
the party taking the risk is looking for a positive
payoff. Despite this voluntary assumption of risk, a
counterparty that has lost money in a derivative
transaction may try to avoid payment by exploiting
various legal uncertainties about certain derivative
products.
(6) Systemic or "Interconnection" Risk.
Interconnection risk is the risk that a disruption in
the financial markets will cause difficulties for all
market participants. In other words, a disruption in
one market will spill over into other markets, perhaps
creating a chain reaction. Much of the OTC derivatives
market takes place among the OTC dealers themselves,
thus creating a large interconnected web of financial
obligations. This interconnectedness raises the
possibility that a default by one large dealer could
create losses for other dealers and destabilize the
entire market for OTC derivative instruments.
General Limitations. The use of derivative
instruments is subject to applicable regulations of the
SEC, the several options and futures exchanges upon
which they may be traded, and the Commodity Futures
Trading Commission ("CFTC").
The Corporation has filed a notice of eligibility
for exclusion from the definition of the term
"commodity pool operator" with the CFTC and the
National Futures Association, which regulate trading in
the futures markets. In accordance with Rule 4.5 of
the regulations under the CEA, the notice of
eligibility for the Fund includes representations that
the Fund will use futures contracts and related options
solely for bona fide hedging purposes within the
meaning of CFTC regulations, provided that the Fund may
hold other positions in futures contracts and related
options that do not qualify as a bona fide hedging
position if the aggregate initial margin deposits and
premiums required to establish these positions, less
the amount by which any such futures contracts and
related options positions are "in the money," do not
exceed 5% of the Fund's net assets. To the extent the
Fund were to engage in derivative transactions, it will
limit such transactions to no more than 5% of its net
assets.
The SEC has identified certain trading practices
involving derivative instruments that involve the
potential for leveraging the Fund's assets in a manner
that raises issues under the 1940 Act. In order to
limit the potential for the leveraging of the Fund's
assets, as defined under the 1940 Act, the SEC has
stated that the Fund may use coverage or the
segregation of the Fund's assets. The Fund will also
set aside permissible liquid assets in a segregated
custodial account if required to do so by SEC and CFTC
regulations. Assets used as cover or held in a
segregated account cannot be sold while the derivative
position is open, unless they are replaced with similar
assets. As a result, the commitment of a large portion
of the Fund's assets to segregated accounts could
impede portfolio management or the Fund's ability to
meet redemption requests or other current obligations.
<PAGE>
In some cases the Fund may be required to maintain
or limit exposure to a specified percentage of its
assets to a particular asset class. In such cases,
when the Fund uses a derivative instrument to increase
or decrease exposure to an asset class and is required
by applicable SEC guidelines to set aside liquid assets
in a segregated account to secure its obligations under
the derivative instruments, the Adviser may, where
reasonable in light of the circumstances, measure
compliance with the applicable percentage by reference
to the nature of the economic exposure created through
the use of the derivative instrument and not by
reference to the nature of the exposure arising from
the assets set aside in the segregated account (unless
another interpretation is specified by applicable
regulatory requirements).
Options. The Fund may use options for any lawful
purpose consistent with the Fund's investment objective
such as hedging or managing risk but not for
speculation. An option is a contract in which the
"holder" (the buyer) pays a certain amount (the
"premium") to the "writer" (the seller) to obtain the
right, but not the obligation, to buy from the writer
(in a "call") or sell to the writer (in a "put") a
specific asset at an agreed upon price (the "strike
price" or "exercise price") at or before a certain time
(the "expiration date"). The holder pays the premium
at inception and has no further financial obligation.
The holder of an option will benefit from favorable
movements in the price of the underlying asset but is
not exposed to corresponding losses due to adverse
movements in the value of the underlying asset. The
writer of an option will receive fees or premiums but
is exposed to losses due to changes in the value of the
underlying asset. The Fund may purchase (buy) or write
(sell) put and call options on assets, such as
securities, currencies, commodities, and indices of
debt and equity securities ("underlying assets") and
enter into closing transactions with respect to such
options to terminate an existing position. Options
used by the Fund may include European, American, and
Bermuda style options. If an option is exercisable
only at maturity, it is a "European" option; if it is
also exercisable prior to maturity, it is an "American"
option. If it is exercisable only at certain times, it
is a "Bermuda" option.
The Fund may purchase (buy) and write (sell) put
and call options and enter into closing transactions
with respect to such options to terminate an existing
position. The purchase of call options serves as a
long hedge, and the purchase of put options serves as a
short hedge. Writing put or call options can enable
the Fund to enhance income by reason of the premiums
paid by the purchaser of such options. Writing call
options serves as a limited short hedge because
declines in the value of the hedged investment would be
offset to the extent of the premium received for
writing the option. However, if the security
appreciates to a price higher than the exercise price
of the call option, it can be expected that the option
will be exercised and the Fund will be obligated to
sell the security at less than its market value or will
be obligated to purchase the security at a price
greater than that at which the security must be sold
under the option. All or a portion of any assets used
as cover for OTC options written by the Fund would be
considered illiquid to the extent described under
"Investment Policies and Techniques Illiquid
Securities." Writing put options serves as a limited
long hedge because increases in the value of the hedged
investment would be offset to the extent of the premium
received for writing the option. However, if the
security depreciates to a price lower than the exercise
price of the put option, it can be expected that the
put option will be exercised and the Fund will be
obligated to purchase the security at more than its
market value.
The value of an option position will reflect,
among other things, the historical price volatility of
the underlying investment, the current market value of
the underlying investment, the time remaining until
expiration, the relationship of the exercise price to
the market price of the underlying investment, and
general market conditions.
The Fund may effectively terminate its right or
obligation under an option by entering into a closing
transaction. For example, the Fund may terminate its
obligation under a call or put option that it had
written by purchasing an identical call or put option;
this is known as a closing purchase transaction.
Conversely, the Fund may terminate a position in a put
or call option it had purchased by writing an identical
put or call option; this is known as a closing sale
transaction. Closing transactions permit the Fund to
realize the profit or limit the loss on an option
position prior to its exercise or expiration.
The Fund may purchase or write both exchange-
traded and OTC options. Exchange-traded options are
issued by a clearing organization affiliated with the
exchange on which the option is listed that, in effect,
guarantees completion of every exchange-traded option
transaction. In contrast, OTC options are contracts
between the Fund and the other party to the transaction
("counterparty") (usually a securities dealer or a
bank) with no clearing organization guarantee. Thus,
when the Fund purchases or writes an OTC option, it
relies on the counterparty to
<PAGE>
make or take delivery of
the underlying investment upon exercise of the option.
Failure by the counterparty to do so would result in
the loss of any premium paid by the Fund as well as the
loss of any expected benefit of the transaction.
The Fund's ability to establish and close out
positions in exchange-listed options depends on the
existence of a liquid market. The Fund intends to
purchase or write only those exchange-traded options
for which there appears to be a liquid secondary
market. However, there can be no assurance that such a
market will exist at any particular time. Closing
transactions can be made for OTC options only by
negotiating directly with the counterparty, or by a
transaction in the secondary market if any such market
exists. Although the Fund will enter into OTC options
only with counterparties that are expected to be
capable of entering into closing transactions with the
Fund, there is no assurance that the Fund will in fact
be able to close out an OTC option at a favorable price
prior to expiration. In the event of insolvency of the
counterparty, the Fund might be unable to close out an
OTC option position at any time prior to its
expiration. If the Fund were unable to effect a
closing transaction for an option it had purchased, it
would have to exercise the option to realize any
profit.
The Fund may engage in options transactions on
indices in much the same manner as the options on
securities discussed above, except the index options
may serve as a hedge against overall fluctuations in
the securities market in general.
The writing and purchasing of options is a highly
specialized activity that involves investment
techniques and risks different from those associated
with ordinary portfolio securities transactions.
Imperfect correlation between the options and
securities markets may detract from the effectiveness
of attempted hedging.
Spread Transactions. The Fund may use spread
transactions for any lawful purpose consistent with the
Fund's investment objective such as hedging or managing
risk, but not for speculation. The Fund may purchase
covered spread options from securities dealers. Such
covered spread options are not presently exchange-
listed or exchange-traded. The purchase of a spread
option gives the Fund the right to put, or sell, a
security that it owns at a fixed dollar spread or fixed
yield spread in relationship to another security that
the Fund does not own, but which is used as a
benchmark. The risk to the Fund in purchasing covered
spread options is the cost of the premium paid for the
spread option and any transaction costs. In addition,
there is no assurance that closing transactions will be
available. The purchase of spread options will be used
to protect the Fund against adverse changes in
prevailing credit quality spreads, i.e., the yield
spread between high quality and lower quality
securities. Such protection is only provided during
the life of the spread option.
Futures Contracts. The Fund may use futures
contracts for any lawful purpose consistent with the
Fund's investment objective such as hedging and
managing risk but not for speculation. The Fund may
enter into futures contracts, including interest rate,
index, and currency futures. The Fund may also
purchase put and call options, and write covered put
and call options, on futures in which it is allowed to
invest. The purchase of futures or call options
thereon can serve as a long hedge, and the sale of
futures or the purchase of put options thereon can
serve as a short hedge. Writing covered call options
on futures contracts can serve as a limited short
hedge, and writing covered put options on futures
contracts can serve as a limited long hedge, using a
strategy similar to that used for writing covered
options in securities. The Fund's hedging may include
purchases of futures as an offset against the effect of
expected increases in currency exchange rates and
securities prices and sales of futures as an offset
against the effect of expected declines in currency
exchange rates and securities prices.
To the extent required by regulatory authorities,
the Fund may enter into futures contracts that are
traded on national futures exchanges and are
standardized as to maturity date and underlying
financial instrument. Futures exchanges and trading
are regulated under the CEA by the CFTC. Although
techniques other than sales and purchases of futures
contracts could be used to reduce the Fund's exposure
to market, currency, or interest rate fluctuations, the
Fund may be able to hedge its exposure more effectively
and perhaps at a lower cost through using futures
contracts.
An interest rate futures contract provides for the
future sale by one party and purchase by another party
of a specified amount of a specific financial
instrument (e.g., debt security) or currency for a
specified price at a designated date, time, and place.
An index futures contract is an agreement pursuant to
which the parties agree to
<PAGE>
take or make delivery of an
amount of cash equal to the difference between the
value of the index at the close of the last trading day
of the contract and the price at which the index
futures contract was originally written. Transaction
costs are incurred when a futures contract is bought or
sold and margin deposits must be maintained. A futures
contract may be satisfied by delivery or purchase, as
the case may be, of the instrument or the currency or
by payment of the change in the cash value of the
index. More commonly, futures contracts are closed out
prior to delivery by entering into an offsetting
transaction in a matching futures contract. Although
the value of an index might be a function of the value
of certain specified securities, no physical delivery
of those securities is made. If the offsetting
purchase price is less than the original sale price,
the Fund realizes a gain; if it is more, the Fund
realizes a loss. Conversely, if the offsetting sale
price is more than the original purchase price, the
Fund realizes a gain; if it is less, the Fund realizes
a loss. The transaction costs must also be included in
these calculations. There can be no assurance,
however, that the Fund will be able to enter into an
offsetting transaction with respect to a particular
futures contract at a particular time. If the Fund is
not able to enter into an offsetting transaction, the
Fund will continue to be required to maintain the
margin deposits on the futures contract.
No price is paid by the Fund upon entering into a
futures contract. Instead, at the inception of a
futures contract, the Fund is required to deposit in a
segregated account with its custodian, in the name of
the futures broker through whom the transaction was
effected, "initial margin," consisting of cash, U.S.
government securities or other liquid, high-grade debt
obligations, in an amount generally equal to 10% or
less of the contract value. Margin must also be
deposited when writing a call or put option on a
futures contract, in accordance with applicable
exchange rules. Unlike margin in securities
transaction, initial margin on futures contracts does
not represent a borrowing, but rather is in the nature
of a performance bond or good-faith deposit that is
returned to the Fund at the termination of the
transaction if all contractual obligations have been
satisfied. Under certain circumstances, such as
periods of high volatility, the Fund may be required by
an exchange to increase the level of its initial margin
payment, and initial margin requirements might be
increased generally in the future by regulatory action.
Subsequent "variation margin" payments are made to
and from the futures broker daily as the value of the
futures position varies, a process known as "marking to
market." Variation margin does not involve borrowing,
but rather represents a daily settlement of the Fund's
obligations to or from a futures broker. When the Fund
purchases an option on a future, the premium paid plus
transaction costs is all that is at risk. In contrast,
when the Fund purchases or sells a futures contract or
writes a call or put option thereon, it is subject to
daily variation margin calls that could be substantial
in the event of adverse price movements. If the Fund
has insufficient cash to meet daily variation margin
requirements, it might need to sell securities at a
time when such sales are disadvantageous. Purchasers
and sellers of futures positions and options on futures
can enter into offsetting closing transactions by
selling or purchasing, respectively, an instrument
identical to the instrument held or written. Positions
in futures and options on futures may be closed only on
an exchange or board of trade that provides a secondary
market. The Fund intends to enter into futures
transactions only on exchanges or boards of trade where
there appears to be a liquid secondary market.
However, there can be no assurance that such a market
will exist for a particular contract at a particular
time.
Under certain circumstances, futures exchanges may
establish daily limits on the amount that the price of
a future or option on a futures contract can vary from
the previous day's settlement price; once that limit is
reached, no trades may be made that day at a price
beyond the limit. Daily price limits do not limit
potential losses because prices could move to the daily
limit for several consecutive days with little or no
trading, thereby preventing liquidation of unfavorable
positions.
If the Fund were unable to liquidate a futures or
option on a futures contract position due to the
absence of a liquid secondary market or the imposition
of price limits, it could incur substantial losses.
The Fund would continue to be subject to market risk
with respect to the position. In addition, except in
the case of purchased options, the Fund would continue
to be required to make daily variation margin payments
and might be required to maintain the position being
hedged by the future or option or to maintain certain
liquid securities in a segregated account.
Certain characteristics of the futures market
might increase the risk that movements in the prices of
futures contracts or options on futures contracts might
not correlate perfectly with movements in the prices of
the investments being hedged. For example, all
participants in the futures and options on futures
contracts markets are subject to daily variation margin
calls and might be compelled to liquidate futures or
options on futures contracts positions
<PAGE>
whose prices are
moving unfavorably to avoid being subject to further
calls. These liquidations could increase the price
volatility of the instruments and distort the normal
price relationship between the futures or options and
the investments being hedged. Also, because initial
margin deposit requirements in the futures markets are
less onerous than margin requirements in the securities
markets, there might be increased participation by
speculators in the future markets. This participation
also might cause temporary price distortions. In
addition, activities of large traders in both the
futures and securities markets involving arbitrage,
"program trading," and other investment strategies
might result in temporary price distortions.
Foreign Currencies. The Fund may purchase and
sell foreign currency on a spot basis, and may use
currency-related derivatives instruments such as
options on foreign currencies, futures on foreign
currencies, options on futures on foreign currencies
and forward currency contracts (i.e., an obligation to
purchase or sell a specific currency at a specified
future date, which may be any fixed number of days from
the contract date agreed upon by the parties, at a
price set at the time the contract is entered into).
The Fund may use these instruments for hedging or any
other lawful purpose consistent with its investment
objective, including transaction hedging, anticipatory
hedging, cross hedging, proxy hedging, and position
hedging. The Fund's use of currency-related derivative
instruments will be directly related to the Fund's
current or anticipated portfolio securities, and the
Fund may engage in transactions in currency-related
derivative instruments as a means to protect against
some or all of the effects of adverse changes in
foreign currency exchange rates on its portfolio
investments. In general, if the currency in which a
portfolio investment is denominated appreciates against
the U.S. dollar, the dollar value of the security will
increase. Conversely, a decline in the exchange rate
of the currency would adversely effect the value of the
portfolio investment expressed in U.S. dollars.
For example, the Fund might use currency-related
derivative instruments to "lock in" a U.S. dollar price
for a portfolio investment, thereby enabling the Fund
to protect itself against a possible loss resulting
from an adverse change in the relationship between the
U.S. dollar and the subject foreign currency during the
period between the date the security is purchased or
sold and the date on which payment is made or received.
The Fund also might use currency-related derivative
instruments when the Adviser believes that one currency
may experience a substantial movement against another
currency, including the U.S. dollar, and it may use
currency-related derivative instruments to sell or buy
the amount of the former foreign currency,
approximating the value of some or all of the Fund's
portfolio securities denominated in such foreign
currency. Alternatively, where appropriate, the Fund
may use currency-related derivative instruments to
hedge all or part of its foreign currency exposure
through the use of a basket of currencies or a proxy
currency where such currency or currencies act as an
effective proxy for other currencies. The use of this
basket hedging technique may be more efficient and
economical than using separate currency-related
derivative instruments for each currency exposure held
by the Fund. Furthermore, currency-related derivative
instruments may be used for short hedges - for example,
the Fund may sell a forward currency contract to lock
in the U.S. dollar equivalent of the proceeds from the
anticipated sale of a security denominated in a foreign
currency.
In addition, the Fund may use a currency-related
derivative instrument to shift exposure to foreign
currency fluctuations from one foreign country to
another foreign country where the Adviser believes that
the foreign currency exposure purchased will appreciate
relative to the U.S. dollar and thus better protect the
Fund against the expected decline in the foreign
currency exposure sold. For example, if the Fund owns
securities denominated in a foreign currency and the
Adviser believes that currency will decline, it might
enter into a forward contract to sell an appropriate
amount of the first foreign currency, with payment to
be made in a second foreign currency that the Adviser
believes would better protect the Fund against the
decline in the first security than would a U.S. dollar
exposure. Hedging transactions that use two foreign
currencies are sometimes referred to as "cross hedges."
The effective use of currency-related derivative
instruments by the Fund in a cross hedge is dependent
upon a correlation between price movements of the two
currency instruments and the underlying security
involved, and the use of two currencies magnifies the
risk that movements in the price of one instrument may
not correlate or may correlate unfavorably with the
foreign currency being hedged. Such a lack of
correlation might occur due to factors unrelated to the
value of the currency instruments used or investments
being hedged, such as speculative or other pressures on
the markets in which these instruments are traded.
The Fund also might seek to hedge against changes
in the value of a particular currency when no hedging
instruments on that currency are available or such
hedging instruments are more expensive than certain
other hedging
<PAGE>
instruments. In such cases, the Fund may
hedge against price movements in that currency by
entering into transactions using currency-related
derivative instruments on another foreign currency or a
basket of currencies, the values of which the Adviser
believes will have a high degree of positive
correlation to the value of the currency being hedged.
The risk that movements in the price of the hedging
instrument will not correlate perfectly with movements
in the price of the currency being hedged is magnified
when this strategy is used.
The use of currency-related derivative instruments
by the Fund involves a number of risks. The value of
currency-related derivative instruments depends on the
value of the underlying currency relative to the U.S.
dollar. Because foreign currency transactions
occurring in the interbank market might involve
substantially larger amounts than those involved in the
use of such derivative instruments, the Fund could be
disadvantaged by having to deal in the odd lot market
(generally consisting of transactions of less than $1
million) for the underlying foreign currencies at
prices that are less favorable than for round lots
(generally consisting of transactions of greater than
$1 million).
There is no systematic reporting of last sale
information for currencies or any regulatory
requirement that quotations available through dealers
or other market sources be firm or revised on a timely
basis. Quotation information generally is
representative of very large transactions in the
interbank market and thus might not reflect odd-lot
transactions where rates might be less favorable. The
interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options
or futures markets are closed while the markets for the
underlying currencies remain open, significant price
and rate movements might take place in the underlying
markets that cannot be reflected in the markets for the
derivative instruments until they re-open.
Settlement of transactions in currency-related
derivative instruments might be required to take place
within the country issuing the underlying currency.
Thus, the Fund might be required to accept or make
delivery of the underlying foreign currency in
accordance with any U.S. or foreign regulations
regarding the maintenance of foreign banking
arrangements by U.S. residents and might be required to
pay any fees, taxes and charges associated with such
delivery assessed in the issuing country.
When the Fund engages in a transaction in a
currency-related derivative instrument, it relies on
the counterparty to make or take delivery of the
underlying currency at the maturity of the contract or
otherwise complete the contract. In other words, the
Fund will be subject to the risk that it may sustain a
loss as a result of the failure of the counterparty to
comply with the terms of the transaction. The
counterparty risk for exchange-traded instruments is
generally less than for privately-negotiated or OTC
currency instruments, since generally a clearing
agency, which is the issuer or counterparty to each
instrument, provides a guarantee of performance. For
privately-negotiated instruments, there is no similar
clearing agency guarantee. In all transactions, the
Fund will bear the risk that the counterparty will
default, and this could result in a loss of the
expected benefit of the transaction and possibly other
losses to the Fund. The Fund will enter into
transactions in currency-related derivative instruments
only with counterparties that the Adviser reasonably
believes are capable of performing under the contract.
Purchasers and sellers of currency-related
derivative instruments may enter into offsetting
closing transactions by selling or purchasing,
respectively, an instrument identical to the instrument
purchased or sold. Secondary markets generally do not
exist for forward currency contracts, with the result
that closing transactions generally can be made for
forward currency contracts only by negotiating directly
with the counterparty. Thus, there can be no assurance
that the Fund will, in fact, be able to close out a
forward currency contract (or any other currency-
related derivative instrument) at a time and price
favorable to the Fund. In addition, in the event of
insolvency of the counterparty, the Fund might be
unable to close out a forward currency contract at any
time prior to maturity. In the case of an exchange-
traded instrument, the Fund will be able to close the
position out only on an exchange which provides a
market for the instruments. The ability to establish
and close out positions on an exchange is subject to
the maintenance of a liquid market, and there can be no
assurance that a liquid market will exist for any
instrument at any specific time. In the case of a
privately-negotiated instrument, the Fund will be able
to realize the value of the instrument only by entering
into a closing transaction with the issuer or finding a
third party buyer for the instrument. While the Fund
will enter into privately-negotiated transactions only
with entities who are expected to be capable of
entering into a closing transaction, there can be no
assurance that the Fund will, in fact, be able to enter
into such closing transactions.
<PAGE>
The precise matching of currency-related
derivative instrument amounts and the value of the
portfolio securities involved generally will not be
possible because the value of such securities, measured
in the foreign currency, will change after the currency-
related derivative instrument position has been
established. Thus, the Fund might need to purchase or
sell foreign currencies in the spot (cash) market. The
projection of short-term currency market movements is
extremely difficult, and the successful execution of a
short-term hedging strategy is highly uncertain.
Permissible foreign currency options will include
options traded primarily in the OTC market. Although
options on foreign currencies are traded primarily in
the OTC market, the Fund will normally purchase or sell
OTC options on foreign currency only when the Adviser
reasonably believes a liquid secondary market will
exist for a particular option at any specific time.
There will be a cost to the Fund of engaging in
transactions in currency-related derivative instruments
that will vary with factors such as the contract or
currency involved, the length of the contract period
and the market conditions then prevailing. In using
these instruments, the Fund may have to pay a fee or
commission or, in cases where the instruments are
entered into on a principal basis, foreign exchange
dealers or other counterparties will realize a profit
based on the difference ("spread") between the prices
at which they are buying and selling various
currencies. Thus, for example, a dealer may offer to
sell a foreign currency to the Fund at one rate, while
offering a lesser rate of exchange should the Fund
desire to resell that currency to the dealer.
When required by the SEC guidelines, the Fund will
set aside permissible liquid assets in segregated
accounts or otherwise cover its potential obligations
under currency-related derivatives instruments. To the
extent the Fund's assets are so set aside, they cannot
be sold while the corresponding currency position is
open, unless they are replaced with similar assets. As
a result, if a large portion of the Fund's assets are
so set aside, this could impede portfolio management or
the Fund's ability to meet redemption requests or other
current obligations.
The Adviser's decision to engage in a transaction
in a particular currency-related derivative instrument
will reflect the Adviser's judgment that the
transaction will provide value to the Fund and its
shareholders and is consistent with the Fund's
objectives and policies. In making such a judgment,
the Adviser will analyze the benefits and risks of the
transaction and weigh them in the context of the Fund's
entire portfolio and objectives. The effectiveness of
any transaction in a currency-related derivative
instrument is dependent on a variety of factors,
including the Adviser's skill in analyzing and
predicting currency values and upon a correlation
between price movements of the currency instrument and
the underlying security. There might be imperfect
correlation, or even no correlation, between price
movements of an instrument and price movements of
investments being hedged. Such a lack of correlation
might occur due to factors unrelated to the value of
the investments being hedged, such as speculative or
other pressures on the markets in which these
instruments are traded. In addition, the Fund's use of
currency-related derivative instruments is always
subject to the risk that the currency in question could
be devalued by the foreign government. In such a case,
any long currency positions would decline in value and
could adversely affect any hedging position maintained
by the Fund.
The Fund's dealing in currency-related derivative
instruments will generally be limited to the
transactions described above. However, the Fund
reserves the right to use currency-related derivatives
instruments for different purposes and under different
circumstances. Of course, the Fund is not required to
use currency-related derivatives instruments and will
not do so unless deemed appropriate by the Adviser. It
should also be realized that use of these instruments
does not eliminate, or protect against, price movements
in the Fund's securities that are attributable to other
(i.e., non-currency related) causes. Moreover, while
the use of currency-related derivatives instruments may
reduce the risk of loss due to a decline in the value
of a hedged currency, at the same time the use of these
instruments tends to limit any potential gain which may
result from an increase in the value of that currency.
Additional Derivative Instruments and Strategies.
In addition to the derivative instruments and
strategies described above, the Adviser expects to
discover additional derivative instruments and other
hedging or risk management techniques. The Adviser may
utilize these new derivative instruments and techniques
to the extent that they are consistent with the Fund's
investment objective and permitted by the Fund's
investment limitations, operating policies, and
applicable regulatory authorities.
<PAGE>
Depositary Receipts
The Fund may invest in foreign securities by
purchasing depositary receipts, including American
Depositary Receipts ("ADRs") and European Depositary
Receipts ("EDRs") or other securities convertible into
securities or issuers based in foreign countries.
These securities may not necessarily be denominated in
the same currency as the securities into which they may
be converted. Generally, ADRs, in registered form, are
denominated in U.S. dollars and are designed for use in
the U.S. securities markets, while EDRs, in bearer
form, may be denominated in other currencies and are
designed for use in European securities markets. ADRs
are receipts typically issued by a U.S. Bank or trust
company evidencing ownership of the underlying
securities. EDRs are European receipts evidencing a
similar arrangement. For purposes of the Fund's
investment policies, ADRs and EDRs are deemed to have
the same classification as the underlying securities
they represent. Thus, an ADR or EDR representing
ownership of common stock will be treated as common
stock.
ADR facilities may be established as either
"unsponsored" or "sponsored." While ADRs issued under
these two types of facilities are in some respects
similar, there are distinctions between them relating
to the rights and obligations of ADR holders and the
practices of market participants. For example, a non-
sponsored depositary may not provide the same
shareholder information that a sponsored depositary is
required to provide under its contractual arrangements
with the issuer, including reliable financial
statements. Under the terms of most sponsored
arrangements, depositories agree to distribute notices
of shareholder meetings and voting instructions, and to
provide shareholder communications and other
information to the ADR holders at the request of the
issuer of the deposited securities.
Warrants
The Fund may invest in warrants, valued at the
lower of cost or market value, if, after giving effect
thereto, not more than 5% of its net assets will be
invested in warrants other than warrants acquired in
units or attached to other securities. Warrants are
options to purchase equity securities at a specific
price for a specific period of time. They do not
represent ownership of the securities but only the
right to buy them. Investing in warrants is purely
speculative in that they have no voting rights, pay no
dividends and have no rights with respect to the assets
of the corporation issuing them. In addition, the
value of a warrant does not necessarily change with the
value of the underlying securities, and a warrant
ceases to have value if it is not exercised prior to
its expiration date.
Short Sales Against the Box
The Fund may sell securities short against the box
to hedge unrealized gains on portfolio securities.
Selling securities short against the box involves
selling a security that the Fund owns or has the right
to acquire, for delivery at a specified date in the
future. If the Fund sells securities short against the
box, it may protect unrealized gains, but will lose the
opportunity to profit on such securities if the price
rises.
Borrowing
The Fund is authorized to borrow money from banks
and make other investments or engage in other
transactions permissible under the 1940 Act which may
be considered a borrowing (such as reverse repurchase
agreements), provided that the amount borrowed may not
exceed 33 1/3% of the value of the Fund's net assets.
The Fund's borrowings create an opportunity for greater
return to the Fund and, ultimately, the Fund's
shareholders, but at the same time increase exposure to
losses. In addition, interest payments and fees paid
by the Fund on any borrowings may offset or exceed the
return earned on borrowed funds. The Fund currently
intends to borrow money only for temporary,
extraordinary or emergency purposes.
Lending Portfolio Securities
The Fund may lend portfolio securities with a
value not exceeding 33 1/3% of the Fund's total assets
to brokers or dealers, banks or other institutional
borrowers of securities as a means of earning income.
In return, the Fund will receive collateral in cash or
money market instruments. Such collateral will be
maintained at all times in an amount equal to at least
100% of the current market value of the loaned
securities. The purpose of such securities
<PAGE>
lending is
to permit the borrower to use such securities for
delivery to purchasers when such borrower has sold
short. The Fund will continue to receive the
equivalent of the interest or dividends paid by the
issuer of the securities lent, and the Fund may also
receive interest on the investment of collateral, or a
fee from the borrower as compensation for the loan.
The Fund may pay reasonable custodial and
administrative fees in connection with the loan. The
Fund will retain the right to call, upon notice, lent
securities. While there may be delays in recovery or
even a loss of right in collateral should the borrower
fail financially, the Fund's investment adviser will
review the credit worthiness of the entities to which
such loans are made to evaluate those risks. Although
the Fund is authorized to lend securities, the Fund
does not presently intend to engage in lending.
Concentration
The Fund has adopted a fundamental investment
policy which prohibits the Fund from investing more
than 25% of its assets in the securities of companies
in any one industry. An industry is defined as a
business-line subsector of a stock-market sector.
While the Fund may be heavily invested in a single
market sector like technology or health care, for
example, it will not invest more than 25% of its assets
in securities of companies in any one industry or
subsector. Technology industries or subsectors include
networking, telecommunications, software,
semiconductors, and voice-processing business lines.
Health care industries or subsectors include medical
devices and information systems business lines.
DIRECTORS AND OFFICERS
Under the laws of the State of Wisconsin, the
Board of Directors of the Fund is responsible for
managing the Fund's business and affairs.
The directors and officers of the Fund, together
with information as to their principal business
occupations during the last five years, and other
information, are shown below. Each director and
officer who is deemed an "interested person" of the
Fund, as defined in the 1940 Act, is indicated by an
asterisk.
*Donald F. Sieger, age ______. Mr. Sieger is a
Director of the Fund. Since 19___, Mr. Sieger has been
employed by North Central Trust Company ("North
Central") and currently serves as a Senior Vice
President specializing in estate planning and business
services.
*Darwin F. Isaacson, age _____. Mr. Isaacson is
the Treasurer and a Director of the Fund. Since 1991,
Mr. Isaacson has been employed by North Central and
currently serves as a Vice President in the estate and
financial planning area.
*Steven J. Hulme, age _____. Mr. Hulme is the
President, Secretary and portfolio manager of the Fund.
Since 1993, Mr. Hulme has served as Vice President and
head of North Central's investment division, during
which time he has managed the collective investment
fund and the common trust fund for which North Central
serves as trustee. He is also the President, a
Director and a Class B Member of La Crosse Advisers,
L.L.C. Mr. Hulme received his undergraduate degree
from the University of Nebraska and his MBA from the
University of Chicago. Mr. Hulme is a Chartered
Financial Analyst.
The address of each director and officer is 311
Main Street, La Crosse, Wisconsin 54602.
As of December 1, 1998, officers and directors of
the Fund beneficially owned none of the shares of the
Fund's then outstanding shares.
Directors and officers of the Fund who are also
officers, directors, or employees of the Adviser do not
receive any remuneration from the Fund for serving as
directors or officers. Accordingly, neither Mr. Sieger
nor Mr. Isaacson receive any remuneration from the Fund
for their services as directors and/or officers.
However, Messrs. _______________, ________________ and
_____________________ receive the following fees for
their services as directors of the Fund:
<PAGE>
Name Cash Other Total
Compensation(1) Compensation
__________
(1)Each director who is not deemed an "interested
person" of the Fund, as defined in the 1940 Act,
will receive $________ for each Board of Directors
meeting attended by such person, a $_______ per
fiscal year stipend if all such meetings are
attended, and reimbursement of reasonable expenses
incurred in connection therewith. The Board
expects to hold four meetings during fiscal 1999.
Thus, each disinterested director would receive
$________ during such time period from the
Corporation, plus reasonable expenses.
PRINCIPAL SHAREHOLDERS
As of December 1, 1998, the following persons
owned of record or are known by the Fund to own
beneficially 5% or more of the outstanding shares of
the Fund:
Name and Address Number of Percentage
Shares
La Crosse 10,000 100%
Advisers, L.L.C.
311 Main Street
La Crosse, Wisconsin 54602
Based on the foregoing, as of December 1, 1998,
the Adviser owned a controlling interest in the Fund.
Shareholders with a controlling interest could effect
the outcome of proxy voting or the direction of
management of the Fund. The amount of fund shares
owned by Fund directors and officers as a group is less
than 1% of the outstanding shares of the Fund.
The initial investors in the Fund will be the
collective investment fund and the common trust fund
(the "Trust Funds") for which North Central Trust
Company, the parent company of the Adviser ("North
Central"), serves as trustee. The ownership that will
result from the conversion of the Trust Funds based
upon present holdings in and commitments for
participations in the Trust Funds is expected to be as
follows:
Name and Number of Percentage
Address Shares
INVESTMENT ADVISER
La Crosse Advisers, L.L.C. (the "Adviser") is the
investment adviser to the Fund. The Adviser is a
subsidiary of North Central, a state-chartered trust
company bank.
The investment advisory agreement between the Fund
and the Adviser dated as of ____________, 1998 (the
"Advisory Agreement") has an initial term of two years
and thereafter is required to be approved annually by
the Board of Directors of the Fund or by vote of a
majority of the Fund's outstanding voting securities.
Each annual renewal must also be approved by the vote
of a majority of the directors who are not parties to
the Advisory Agreement or interested persons of any
such party ("disinterested directors"), cast in person
at a meeting called for
<PAGE>
the purpose of voting on such
approval. The Advisory Agreement was approved on
_______________, 1998 by the full Board of Directors, a
majority of the disinterested directors and the initial
shareholder of the Fund. The Advisory Agreement is
terminable without penalty on 60 days' written notice
by the Board of Directors, by vote of a majority of the
Fund's outstanding voting securities, or by the
Adviser, and will terminate automatically in the event
of its assignment.
Under the terms of the Advisory Agreement, the
Adviser manages the Fund's investments and business
affairs, subject to the supervision of the Board of
Directors. At its expense, the Adviser provides office
space and all necessary office facilities, equipment,
and personnel for managing the investments of the Fund.
As compensation for its services, the Corporation pays
the Adviser an annual management fee of .75% of the
Fund's average daily net assets. The advisory fee is
accrued daily and paid monthly. The organizational
expenses are estimated to be approximately
$_______________.
For the fiscal year ending December 31, 1999, the
Adviser has agreed to waive its management fees and/or
reimburse the Fund's operating expenses to the extent
necessary to ensure that the total annual operating
expenses for the Fund will not exceed 1.00% of average
daily net assets. After such date, the Adviser may
from time to time voluntarily waive all or a portion of
its fee and/or absorb expenses for the Fund. Any
waiver of fees or reimbursement of expenses will be
made on a monthly basis and, with respect to the
latter, will be paid to the Fund by reduction of the
Adviser's fee. Any such waiver and/or reimbursement is
subject to later adjustment during the term of the
Advisory Agreement to allow the Adviser to recoup
amounts waived and/or reimbursed to the extent actual
fees and expenses are less than the expense limitation
caps, provided, however, that the Adviser shall only be
entitled to recoup such amounts for a maximum period of
three years from the date such amount was waived or
reimbursed.
FUND TRANSACTIONS AND BROKERAGE
Under the Advisory Agreement, the Adviser is
responsible for decisions to buy and sell securities
for the Fund and for the placement of the Fund's
securities business, the negotiation of the commissions
to be paid on such transactions, and the allocation of
portfolio brokerage and principal business. Purchases
may be made from brokers, dealers and, on occasion,
issuers. The purchase price of securities purchased
from a broker or dealer may include commissions and
dealer spreads. The Fund may also pay mark-ups on
principal transactions.
In executing transactions on behalf of the Fund,
the Adviser has no obligation to deal with any
particular broker or dealer. Rather, the Adviser seeks
to obtain the best execution at the best security price
available with respect to each transaction. The best
price means the best net price without regard to the
mix between purchase or sale price and commission, if
any. While the Adviser seeks reasonably competitive
commission rates, the Fund does not necessarily pay the
lowest available commission. Brokerage may be
allocated based on the sale of the Fund's shares where
best execution and price may be obtained from more than
one broker or dealer.
Section 28(e) of the Securities Exchange Act of
1934, as amended ("Section 28(e)"), permits an
investment adviser, under certain circumstances, to
cause an account to pay a broker or dealer who supplies
brokerage and research services a commission for
effecting a transaction in excess of the amount of
commission another broker or dealer would have charged
for effecting the transaction. Brokerage and research
services include (i) furnishing advice as to the value
of securities, the advisability of investing,
purchasing, or selling securities, and the availability
of securities or purchasers or sellers of securities;
(ii) furnishing analyses and reports concerning
issuers, industries, sectors, securities, economic
factors and trends, portfolio strategy, and the
performance of accounts; and (iii) effecting securities
transactions and performing functions incidental
thereto (such as clearance, settlement, and custody).
In selecting brokers or dealers, the Adviser
considers investment and market information and other
research, such as economic, securities, and performance
measurement research provided by such brokers or
dealers and the quality and reliability of brokerage
services, including execution capability, performance,
and financial responsibility. Accordingly, the
commissions charged by any such broker or dealer may be
greater than the amount another firm
<PAGE>
might charge if
the Adviser determines in good faith that the amount of
such commissions is reasonable in relation to the value
of the research information and brokerage services
provided by such broker or dealer to the Fund. The
Adviser believes that the research information received
in this manner provides the Fund with benefits by
supplementing the research otherwise available to the
Fund. Such higher commissions will not, however, be
paid by the Fund unless (i) the Adviser determines in
good faith that the amount is reasonable in relation to
the services in terms of the particular transaction or
in terms of the Adviser's overall responsibilities with
respect to the accounts, including the Fund, as to
which it exercises investment discretion; (ii) such
payment is made in compliance with the provisions of
Section 28(e) and other applicable state and federal
laws; and (iii) in the opinion of the Adviser, the
total commissions paid by the Fund will be reasonable
in relation to the benefits to the Fund over the long
term.
The Adviser [places] [may place] portfolio
transactions for other advisory accounts in addition to
the Fund. Research services furnished by firms through
which the Fund effects its securities transactions may
be used by the Adviser in servicing all of its
accounts; that is, not all of such services may be used
by the Adviser in connection with the Fund. The
Adviser believes it is not possible to measure
separately the benefits from research services received
by each of the accounts (including the Fund) managed by
it. Because the volume and nature of the trading
activities of the accounts are not uniform, the amount
of commissions in excess of those charged by another
broker or dealer paid by each account for brokerage and
research services will vary. However, the Adviser
believes that such costs to the Fund will not be
disproportionate to the benefits received by the Fund
on a continuing basis. The Adviser seeks to allocate
portfolio transactions equitably whenever concurrent
decisions are made to purchase or sell securities by
the Fund and another advisory account. In some cases,
this procedure could have an adverse effect on the
price or the amount of securities available to the
Fund. There can be no assurance that a particular
purchase or sale opportunity will be allocated to the
Fund. In making such allocations between the Fund and
other advisory accounts, certain factors considered by
the Adviser are the respective investment objectives,
the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for
investment, and the size of investment commitments
generally held.
CUSTODIAN
As custodian of the Fund's assets, North Central,
the parent company of the Adviser, has custody of all
securities and cash of the Fund, delivers and receives
payment for portfolio securities sold, receives and
pays for portfolio securities purchased, collects
income from investments, if any, and performs other
duties, all as directed by the officers of the
Corporation. [describe basis for remuneration]
TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
Sunstone Investor Services, LLC (the "Transfer
Agent"), 207 East Buffalo Street, Suite 315, Milwaukee,
Wisconsin 53202-5712, serves as the transfer agent and
dividend-disbursing agent for the Fund.
From time to time, the Corporation, on behalf of
the Fund, directly or indirectly through arrangements
with the Adviser, the Distributor (as defined below) or
the Transfer Agent, may pay amounts to third parties
that provide transfer agent type services and other
administrative services relating to the Fund to persons
who beneficially have interests in the Fund, such as
participants in 401(k) plans. These services may
include, among other things, sub-accounting services,
transfer agent type activities, answering inquiries
relating to the Fund, transmitting proxy statements,
annual reports, updated prospectuses, other
communications regarding the Fund and related services
as the Fund or beneficial owners may reasonably
request. In such cases, the Fund will not pay fees
based on the number of beneficial owners at a rate that
is greater than the rate the Fund is currently paying
the Transfer Agent for providing these services to the
Fund's shareholders.
<PAGE>
ADMINISTRATOR AND FUND ACCOUNTANT
Sunstone Financial Group, Inc. ("Sunstone
Financial") provides administrative and fund accounting
services to the Fund pursuant to an administration and
fund accounting agreement dated as of ________________,
1998 (the "Administrative Agreement"). Under the
Administrative Agreement, Sunstone Financial calculates
the daily net asset value of the shares; prepares and
files all federal and state tax returns; oversees the
Fund's insurance relationships; participates in the
preparation of registration statements, proxy
statements and reports; prepares compliance filings
relating to the registration of the Fund's shares
pursuant to state securities laws; compiles data for
and prepares notices to the SEC; prepares financial
statements for annual and semi-annual reports; monitors
the Fund's expense accruals and performs securities
valuations; monitors compliance with the Fund's
investment policies; and generally assists in the
Fund's administrative operations. For the foregoing
services, Sunstone Financial receives from the Fund a
fee, computed daily and payable monthly based on the
average net asset value of the Fund, at the annual rate
of ______________________________, subject to an annual
minimum of $___________, plus out-of-pocket expenses.
DISTRIBUTOR
Under a distribution agreement dated as of
___________________, 1998 (the "Distribution
Agreement"), Sunstone Distribution Services, LLC (the
"Distributor") acts as principal distributor of the
Fund's shares. Under the Distribution Agreement, the
Distributor shall offer shares of the Fund on a
continuous basis and may engage in advertising and
solicitation activities in connection therewith. The
Distributor is not obligated to sell any certain number
of shares of the Fund. The Distributor's principal
business address is 207 East Buffalo Street, Suite 315,
Milwaukee, Wisconsin 53202.
FINANCIAL INTERMEDIARIES
If you purchase or redeem shares of the Fund
through a financial intermediary (such as a broker-
dealer), certain features of the Fund relating to such
transactions may not be available or may be modified.
In addition, certain operational policies of the Fund,
including those related to settlement and dividend
accrual, may vary from those applicable to direct
shareholders of the Fund and may vary among
intermediaries. You should consult your financial
intermediary for more information regarding these
matters. Refer to "Transfer Agent and Dividend-
Disbursing Agent" for information regarding certain
fees paid by the Corporation to financial
intermediaries. Certain financial intermediaries may
charge you an advisory, transaction or other fee for
their services. You will not be charged for such fees
if you purchase or redeem your Fund shares directly
from the Fund without the intervention of a financial
intermediary.
PURCHASE AND PRICING OF SHARES
Shares of the Fund are offered to the public at
the net asset value per share next computed after the
time a properly completed purchase application and
funds are received by the Transfer Agent.
The net asset value per share is determined as of
the close of trading (generally 4:00 p.m., Eastern
Time) on each day the New York Stock Exchange ("NYSE")
is open for business. Purchase orders and redemption
requests received on a day the NYSE is open for
trading, prior to the close of trading on that day,
will be valued as of the close of trading on that day.
Applications for the purchase of shares and requests
for the redemption of shares received after the close
of trading on the NYSE will be valued as of the close
of trading on the next day the NYSE is open. The Fund
is not required to calculate its net asset value on
days during which the Fund receives no orders to
purchase or redeem shares. Net asset value per share
is calculated by taking the fair value of the total
assets of the Fund, including interest or dividends
accrued, but not yet collected, less all liabilities,
and
<PAGE>
dividing by the total number of shares outstanding
of the Fund. The result, rounded to the nearest cent,
is the net asset value per share.
In determining net asset value, expenses are
accrued and applied daily and securities and other
assets for which market quotations are available are
valued at fair value. Common stocks and other equity-
type securities are valued at the last sales price on
the national securities exchange or NASDAQ on which
such securities are primarily traded, however,
securities traded on a national securities exchange or
NASDAQ for which there were no transactions on a given
day, and securities not listed on a national securities
exchange or NASDAQ, are valued at the average of the
most recent bid and asked prices. Any securities or
other assets for which market quotations are not
readily available are valued at fair value as
determined in good faith by the Board of Directors of
the Fund or its delegate. The Board of Directors may
approve the use of pricing services to assist the Fund
in the determination of net asset value. All money
market instruments held by the Fund will be valued on
an amortized cost basis.
TAXATION OF THE FUND
The Fund intends to qualify annually for treatment
as a "regulated investment company" under Subchapter M
of the Internal Revenue Code of 1986, as amended, and,
if so qualified, will not be liable for federal income
taxes to the extent earnings are distributed to
shareholders on a timely basis. In the event the Fund
fails to qualify as a "regulated investment company,"
it will be treated as a regular corporation for federal
income tax purposes. Accordingly, the Fund would be
subject to federal income taxes and any distributions
that it makes would be taxable and non-deductible by
the Fund. What this means for shareholders of the Fund
is that the cost of investing in the Fund would
increase. Under these circumstances, it would be more
economical for shareholders to invest directly in
securities held by the Fund, rather than invest
indirectly in such securities through the Fund.
PERFORMANCE INFORMATION
The Fund's historical performance or return may be
shown in the form of various performance figures,
including average annual total return, total return,
and cumulative total return. The Fund's performance
figures are based upon historical results and are not
necessarily representative of future performance.
Factors affecting the Fund's performance include
general market conditions, operating expenses,
investment management, and the imposition of sales
charges. Any additional fees charged by a dealer or
other financial services firm would reduce the returns
described in this section.
Total Return
Average annual total return and total return
figures measure both the net investment income
generated by, and the effect of any realized and
unrealized appreciation or depreciation of, the
underlying investments of the Fund over a specified
period of time, assuming the reinvestment of all
dividends and distributions. Average annual total
return figures are annualized and therefore represent
the average annual percentage change over the specified
period. Total return figures are not annualized and
therefore represent the aggregate percentage or dollar
value change over the period.
The average annual total return of the Fund is
computed by finding the average annual compounded rates
of return over the periods that would equate the
initial amount invested to the ending redeemable value,
according to the following formula:
<PAGE>
P(1+T)n = ERV
P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of a
hypothetical $1,000 payment made at
the beginning of the stated periods at
the end of the stated periods.
Performance for a specific period is calculated by
first taking an investment (assumed to be $1,000) (the
"initial investment") in the shares on the first day of
the period and computing the "ending value" of that
investment at the end of the period. The total return
percentage is then determined by subtracting the
initial investment from the ending value and dividing
the remainder by the initial investment and expressing
the result as a percentage. The calculation assumes
that all income and capital gains dividends paid by the
Fund have been reinvested at the net asset value of the
shares on the reinvestment dates during the period.
The calculation also assumes that all recurring fees
have been charged to all shareholder accounts. Total
return may also be shown as the increased dollar value
of the hypothetical investment over the period.
Cumulative total return represents the simple
change in the value of an investment over a stated
period and may be quoted as a percentage or as a dollar
amount. Total returns may be broken down into their
components of income and capital (including capital
gains and changes in share price) in order to
illustrate the relationship between these factors and
their contributions to total return.
Comparisons
From time to time, in marketing and other Fund
literature, the performance of shares of the Fund may
be compared to the performance of other mutual funds in
general or to the performance of particular types of
mutual funds with similar investment goals, as tracked
by independent organizations. Among these
organizations, Lipper Analytical Services, Inc.
("Lipper"), a widely used independent research firm
which ranks mutual funds by overall performance,
investment objectives, and assets, may be cited.
Lipper performance figures are based on changes in net
asset value, with all income and capital gains
dividends reinvested. Shares of the Fund will be
compared to Lipper's appropriate fund category; that
is, by fund objective and portfolio holdings.
The performance of the Fund may be compared in
publications to averages, performance rankings, or
other information prepared by recognized mutual fund
statistical services. The Fund's performance may also
be compared to the performance of other mutual funds by
Morningstar, Inc. ("Morningstar"), which ranks funds on
the basis of historical risk and total return.
Morningstar's rankings range from five stars (highest)
to one star (lowest) and represent Morningstar's
assessment of the historical risk level and total
return of a fund as a weighted average for 3, 5, and 10
year periods. Rankings are not absolute or necessarily
predictive of future performance.
Evaluations of the Fund's performance made by
independent sources may also be used in advertisements
concerning the Fund, including reprints of or
selections from editorials or articles about the Fund.
Sources for Fund performance and articles about the
Fund may include publications such as Money, Forbes,
Kiplinger's, Financial World, Business Week, U.S. News
and World Report, The Wall Street Journal, Barron's,
and a variety of investment newsletters.
The Fund may compare the performance of the shares
of the Fund to a wide variety of indices and measures
of inflation, including the Lipper Growth & Income
Index. There are differences and similarities between
the investments that the Fund may purchase and the
investments measured by these indices. The performance
of the Fund may be compared in publications to the
performance of various indices and investments for
which reliable performance data is available. The
Fund's performance may also be discussed during
television interviews of the Adviser personnel
conducted by news organizations to be broadcast in the
United States and elsewhere.
<PAGE>
INDEPENDENT ACCOUNTANTS
Arthur Andersen, LLP has been selected as the
independent accountant for the Fund.
FINANCIAL STATEMENTS
The following financial statements of the Fund are
contained herein:
(a) Report of Independent Accountants.*
(b) Statement of Asset and Liabilities.*
(c) Notes to Statement of Assets and Liabilities.*
___________________
* To be filed by amendment.
<PAGE>
APPENDIX
SHORT-TERM RATINGS
Standard & Poor's Short-Term Debt Credit Ratings
A Standard & Poor's credit rating is a current
opinion of the creditworthiness of an obligor with
respect to a specific financial obligation, a specific
class of financial obligations or a specific financial
program. It takes into consideration the
creditworthiness of guarantors, insurers or other forms
of credit enhancement on the obligation and takes into
account the currency in which the obligation is
denominated. The credit rating is not a recommendation
to purchase, sell or hold a financial obligation,
inasmuch as it does not comment as to market price or
suitability for a particular investor.
Credit ratings are based on current information
furnished by the obligors or obtained by Standard &
Poor's from other sources it considers reliable.
Standard & Poor's does not perform an audit in
connection with any credit rating and may, on occasion,
rely on unaudited financial information. Credit
ratings may be changed, suspended or withdrawn as a
result of changes in, or unavailability of, such
information, or based on other circumstances.
Short-term ratings are generally assigned to those
obligations considered short-term in the relevant
market. In the U.S., for example, that means
obligations with an original maturity of no more than
365 days_including commercial paper. Short-term
ratings are also used to indicate the creditworthiness
of an obligor with respect to put features on long-term
obligations. The result is a dual rating, in which the
short-term rating addresses the put feature, in
addition to the usual long-term rating.
Ratings are graded into several categories,
ranging from `A-1' for the highest quality obligations
to `D' for the lowest. These categories are as
follows:
A-1 A short-term obligation rated `A-1' is rated
in the highest category by Standard & Poor's.
The obligor's capacity to meet its financial
commitment on the obligation is strong.
Within this category, certain obligations are
designated with a plus sign (+). This
indicates that the obligor's capacity to meet
its financial commitment on these obligations
is extremely strong.
A-2 A short-term obligation rated `A-2' is
somewhat more susceptible to the adverse
effects of changes in circumstances and
economic conditions than obligations in
higher rating categories. However, the
obligor's capacity to meet its financial
commitment on the obligation is satisfactory.
A-3 A short-term obligation rated `A-3' exhibits
adequate protection parameters. However,
adverse economic conditions or changing
circumstances are more likely to lead to a
weakened capacity of the obligor to meet its
financial commitment on the obligation.
B A short-term obligation rated `B' is regarded
as having significant speculative
characteristics. The obligor currently has
the capacity to meet its financial commitment
on the obligation; however, it faces major
ongoing uncertainties which could lead to the
obligor's inadequate capacity to meet its
financial commitment on the obligation.
C A short-term obligation rated `C' is
currently vulnerable to nonpayment and is
dependent upon favorable business, financial
and economic conditions for the obligor to
meet its financial commitment on the
obligation.
D A short-term obligation rated `D' is in
payment default. The `D' rating category is
used when payments on an obligation are not
made on the date due even if the applicable
grace period has not expired, unless Standard
& Poor's 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 or the taking of a
similar action if payments on an obligation
are jeopardized.
<PAGE>
Moody's Short-Term Debt Ratings
Moody's short-term debt ratings are opinions of
the ability of issuers to repay punctually senior debt
obligations. These obligations have an original
maturity not exceeding one year, unless explicitly
noted. Moody's ratings are opinions, not
recommendations to buy or sell, and their accuracy is
not guaranteed.
Moody's employs the following three designations,
all judged to be investment grade, to indicate the
relative repayment ability of rated issuers:
PRIME-1 Issuers rated `Prime-1' (or supporting
institutions) have a superior ability for
repayment of senior short-term debt
obligations. Prime-1 repaying 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 rated `Prime-2' (or supporting
institutions) 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.
PRIME-3 Issuers rated `Prime-3' (or supporting
institutions) have an acceptable ability for
repayment of senior short-term obligations.
The effect of industry characteristics and
market compositions may be more pronounced.
Variability in earnings and profitability may
result in changes in the level of debt
protection measurements and may require
relatively high financial leverage. Adequate
alternate liquidity is maintained.
NOT PRIME Issuers rated `Not Prime' do not fall within
any of the Prime rating categories.
Fitch IBCA International Short-Term Debt Credit Ratings
Fitch IBCA's international debt credit ratings are
applied to the spectrum of corporate, structured and
public finance. They cover sovereign (including
supranational and subnational), financial, bank,
insurance and other corporate entities and the
securities they issue, as well as municipal and other
public finance entities, securities backed by
receivables or other financial assets and
counterparties. When applied to an entity, these short-
term ratings assess its general creditworthiness on a
senior basis. When applied to specific issues and
programs, these ratings take into account the relative
preferential position of the holder of the security and
reflect the terms, conditions and covenants attaching
to that security.
International credit ratings assess the capacity
to meet foreign currency or local currency commitments.
Both "foreign currency" and "local currency" ratings
are internationally comparable assessments. The local
currency rating measures the probability of payment
within the relevant sovereign state's currency and
jurisdiction and therefore, unlike the foreign currency
rating, does not take account of the possibility of
foreign exchange controls limiting transfer into
foreign currency.
<PAGE>
A short-term rating has a time horizon of less
than 12 months for most obligations, or up to three
years for U.S. public finance securities, and thus
places greater emphasis on the liquidity necessary to
meet financial commitments in a timely manner.
F-1 Highest credit quality. Indicates the
strongest capacity for timely payment of
financial commitments; may have an added "+"
to denote any exceptionally strong credit
feature.
F-2 Good credit quality. A satisfactory capacity
for timely payment of financial commitments,
but the margin of safety is not as great as
in the case of the higher ratings.
F-3 Fair credit quality. The capacity for timely
payment of financial commitments is adequate;
however, near term adverse changes could
result in a reduction to non-investment
grade.
B Speculative. Minimal capacity for timely
payment of financial commitments, plus
vulnerability to near term adverse changes in
financial and economic conditions.
C High default risk. Default is a real
possibility. Capacity for meeting financial
commitments is solely reliant upon a
sustained, favorable business and economic
environment.
D Default. Denotes actual or imminent payment
default.
Duff & Phelps, Inc. Short-Term Debt Ratings
Duff & Phelps Credit Ratings' short-term debt
ratings are consistent with the rating criteria used by
money market participants. The ratings apply to all
obligations with maturities of under one year,
including commercial paper, the uninsured portion of
certificates of deposit, unsecured bank loans, master
notes, bankers acceptances, irrevocable letters of
credit and current maturities of long-term debt. Asset-
backed commercial paper is also rated according to this
scale.
Emphasis is placed on liquidity which is defined
as not only cash from operations, but also access to
alternative sources of funds including trade credit,
bank lines and the capital markets. An important
consideration is the level of an obligor's reliance on
short-term funds on an ongoing basis.
The distinguishing feature of Duff & Phelps Credit
Ratings' short-term debt ratings is the refinement of
the traditional `1' category. The majority of short-
term debt issuers carry the highest rating, yet quality
differences exist within that tier. As a consequence,
Duff & Phelps Credit Rating has incorporated gradations
of `1+' (one plus) and `1-` (one minus) to assist
investors in recognizing those differences.
These ratings are recognized by the SEC for broker-
dealer requirements, specifically capital computation
guidelines. These ratings meet Department of Labor
ERISA guidelines governing pension and profit sharing
investments. State regulators also recognize the
ratings of Duff & Phelps Credit Rating for insurance
company investment portfolios.
Rating Scale: Definition
High Grade
D-1+ Highest certainty of timely payment.
Short-term liquidity, including internal
operating factors and/or access to
alternative sources of funds, is outstanding,
and safety is just below risk-free U.S.
Treasury short-term obligations.
D-1 Very high certainty of timely payment.
Liquidity factors are excellent and supported
by good fundamental protection factors. Risk
factors are minor.
D-1- High certainty of timely payment.
Liquidity factors are strong and supported by
good fundamental protection factors. Risk
factors are very small.
<PAGE>
Good Grade
D-2 Good certainty of timely payment.
Liquidity factors and company fundamentals
are sound. Although ongoing funding needs may
enlarge total financing requirements, access
to capital markets is good. Risk factors are
small.
Satisfactory Grade
D-3 Satisfactory liquidity and other
protection factors qualify issue as to
investment grade. Risk factors are larger
and subject to more variation. Nevertheless,
timely payment is expected.
Non-investment Grade
D-4 Speculative investment characteristics.
Liquidity is not sufficient to insure against
disruption in debt service. Operating
factors and market access may be subject to a
high degree of variation.
Default
D-5 Issuer failed to meet scheduled
principal and/or interest payments.
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits
See "Exhibit Index."
Item 24. Persons Controlled by or under Common Control
with Registrant
The Registrant neither controls any person nor is
under common control with any other person.
Item 25. Indemnification
Article VII of the Registrant's By-laws provides
as follows:
ARTICLE VII. INDEMNIFICATION OF OFFICERS AND
DIRECTORS
SECTION 7.01. Mandatory Indemnification.
The Corporation shall indemnify, to the full
extent permitted by the WBCL, as in effect from
time to time, the persons described in Sections
180.0850 through 180.0859 (or any successor
provisions) of the WBCL or other provisions of the
law of the State of Wisconsin relating to
indemnification of directors and officers, as in
effect from time to time. The indemnification
afforded such persons by this section shall not be
exclusive of other rights to which they may be
entitled as a matter of law.
SECTION 7.02. Permissive Supplementary
Benefits. The Corporation may, but shall not be
required to, supplement the right of
indemnification under Section 7.01 by (a) the
purchase of insurance on behalf of any one or more
of such persons, whether or not the Corporation
would be obligated to indemnify such person under
Section 7.01; (b) individual or group
indemnification agreements with any one or more of
such persons; and (c) advances for related
expenses of such a person.
SECTION 7.03. Amendment. This Article VII
may be amended or repealed only by a vote of the
shareholders and not by a vote of the Board of
Directors.
SECTION 7.04. Investment Company Act. In no
event shall the Corporation indemnify any person
hereunder in contravention of any provision of the
Investment Company Act.
Item 26. Business and Other Connections of Investment
Adviser
[to come]
Item 27. Principal Underwriters
(a) [to come]
(b) The principal business address of
Sunstone Distribution Services, LLC
("Sunstone"), the Registrant's principal
underwriter, is 207 East Buffalo Street,
Suite 315, Milwaukee, Wisconsin 53202. The
following information relates to each
director and officer of Sunstone:
<PAGE>
Positions and Offices Positions and Offices
Name With Underwriter With Registrant
[to come]
(c) None.
Item 28. Location of Accounts and Records
All accounts, books or other documents required to
be maintained by Section 31(a) of the Investment
Company Act of 1940, as amended, and the rules
promulgated thereunder are in the possession of
La Crosse Advisers, L.L.C., the Registrant's investment
adviser, and North Central Trust Company, the
Registrant's custodian, at the Registrant's corporate
offices, except for records held and maintained by
Sunstone Financial Group, Inc., the Registrant's
administrator and fund accountant, Sunstone Investor
Services, LLC, the Registrant's dividend-disbursing and
transfer agent and Sunstone Distribution Services, LLC,
the Registrant's distributor, all of which are located
at 207 East Buffalo Street, Suite 315, Milwaukee,
Wisconsin 53202.
Item 29. Management Services
All management-related service contracts entered
into by Registrant are discussed in Parts A and B of
this Registration Statement.
Item 30. Undertakings.
The Registrant undertakes to file an amendment to
its Registration Statement with certified financial
statements showing the initial capital received before
accepting subscriptions from more than 25 persons.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act
of 1933 and the Investment Company Act of 1940, the
Registrant has duly caused this Registration Statement
on Form N-1A to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of
La Crosse and State of Wisconsin on the 8th day of
October, 1998.
LA CROSSE FUNDS, INC.
(Registrant)
By: /s/ Steven J. Hulme
--------------------------
Steven J. Hulme
President and Secretary
Each person whose signature appears below
constitutes and appoints Steven J. Hulme his true and
lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to
sign any and all amendments to this Registration
Statement and to file the same, with all exhibits
thereto, and any other documents in connection
therewith, with the Securities and Exchange Commission
and any other regulatory body, granting unto said
attorney-in-fact and agent, full power and authority to
do and perform each and every act and thing requisite
and necessary to be done, as fully to all intents and
purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact
and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act
of 1933, this Registration Statement on Form N-1A has
been signed below by the following persons in the
capacities and on the date(s) indicated.
Name Title Date
/s/ Donald F. Sieger
- -------------------------- Director October 8, 1998
Donald F. Sieger
/s/ Darwin F. Isaacson
- -------------------------- Treasurer October 8, 1998
Darwin F. Isaacson and a Director
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
(a) Registrant's Articles of Incorporation
(b) Registrant's By-Laws
(c) None
(d) Investment Advisory Agreement dated as
of __________, 1998 between La Crosse
Funds, Inc. and La Crosse Advisers, L.L.C.*
(e) Distribution Agreement dated as of
__________, 1998 between La Crosse Funds,
Inc. and Sunstone Distribution Services,
L.L.C.*
(f) None
(g) Custodian Agreement dated as of
__________, 1998 between La Crosse Funds,
Inc. and North Central Trust Company*
(h.1) Transfer Agency Agreement dated
as of __________, 1998 between La Crosse
Funds, Inc. and Sunstone Investor Services,
L.L.C.*
(h.2) Administration and Fund Accounting Agreement dated
as of __________, 1998 between La Crosse Funds,
Inc. and Sunstone Financial Group, Inc.*
(i) Opinion and Consent of Godfrey & Kahn, S.C.*
(j) Consent of Arthur Andersen, LLP*
(k) None
(l) Initial Subscription Agreement*
(m) None
(n) Financial Data Schedule*
(o) None
___________________
* To be filed by amendment.
ARTICLES OF INCORPORATION
OF LA CROSSE FUNDS, INC.
The undersigned, for the purpose of forming a
Wisconsin corporation under Chapter 180 of the
Wisconsin Statutes, hereby adopts the following
Articles of Incorporation:
ARTICLE I
The name of the corporation (hereinafter, the
"Corporation") is:
LaCrosse Funds, Inc.
ARTICLE II
The period of existence of the Corporation shall be
perpetual.
ARTICLE III
The purpose for which the Corporation is organized
is, without limitation, to act as an investment company
pursuant to the Investment Company Act of 1940, as
amended from time to time (the "Investment Company
Act"), and for any other purposes for which
corporations may be organized under Chapter 180 of the
Wisconsin Statutes, as amended from time to time (the
"WBCL").
ARTICLE IV
A. The aggregate number of shares which the
Corporation shall have the authority to issue is Nine
Thousand (9,000) shares of Common Stock with a par
value of $.00001 per share. Subject to the following
paragraph, the authorized shares are classified as
follows:
Class Authorized Number of Shares
LaCrosse U.S. Large Cap 9,000
Growth & Income Fund
B. The Board of Directors is authorized to classify
or to reclassify (i.e. into classes and series of
classes), from time to time, any unissued shares of the
Corporation, whether now or hereafter authorized, by
setting, changing, or eliminating the distinguishing
designation and the preferences, limitations, and
relative rights, in whole or in part, to the fullest
extent permissible under the WBCL.
Unless otherwise provided by the Board of Directors
prior to the issuance of shares, the shares of any and
all classes and series shall be subject to the
following:
1. The Board of Directors may redesignate a
class or series whether or not shares of such class or
series are issued and outstanding, provided that such
redesignation does not affect the preferences,
limitations, and relative rights, in whole or in part,
of such class or series.
2. The assets and liabilities and the income and
expenses for each class shall be attributable to that
class. The assets and liabilities and the income and
expenses of each series within a class shall be
determined separately and, accordingly, the net asset
value of shares may vary from series to series within a
class. The income or gain and the expense or
liabilities of the Corporation shall be allocated to
each class or series as determined by or under the
direction of the Board of Directors.
3. Shares of each class or series shall be
entitled to such dividends or distributions, in shares
or in cash or both, as may be declared from time to
time by the Board of Directors with respect to such
class or series. Dividends or distributions shall be
paid on shares of a class or series only out of the
assets belonging to that class or series.
4. Any shares redeemed by the Corporation shall
be deemed to be canceled and restored to the status of
authorized but unissued shares of the particular class
or series.
5. In the event of the liquidation or
dissolution of the Corporation, the holders of a class
or series shall be entitled to receive, as a class or
series, out of the assets of the Corporation available
for distribution to shareholders, the assets belonging
to that class or series less the liabilities allocated
to that class or series. The assets so distributable
to the holders of a class or series shall be
distributed among such holders in proportion to the
number of shares of that class or series held by them
and recorded on the books of the Corporation. In the
event that there are any assets available for
distribution that are not attributable to any
particular class or series, such assets shall be
allocated to all classes or series in proportion to the
net asset value of the respective class or series.
6. All holders of shares shall vote as a single
class and series except with respect to any matter
which affects only one or more series or class of
shares, in which case only the holders of shares of the
class or series affected shall be entitled to vote.
7. For purposes of the Corporation's
Registration Statement filed with the Securities and
Exchange Commission under the Securities Act of 1933,
as amended, and the Investment Company Act, including
all prospectuses and Statements of Additional
Information, and other reports filed under the
Investment Company Act, references therein to "classes"
of the Corporation's common stock shall mean "series",
as used in these Articles of Incorporation and the
WBCL, and references therein to "series" shall mean
"classes", as used in these Articles of Incorporation
and the WBCL.
C. The Corporation may issue fractional shares. Any
fractional shares shall carry proportionately all the
rights of whole shares, including, without limitation,
the right to vote and the right to receive dividends
and distributions.
D. The Board of Directors of the Corporation may
authorize the issuance and sale of any class or series
of shares from time to time in such amount and on such
terms and conditions, for such purposes and for such
amounts or kinds of consideration as the Board of
Directors shall determine, subject to any limits
required by then applicable law. Nothing in this
paragraph shall be construed in any way as limiting the
authority of the Board of Directors to issue the
Corporation's shares in connection with a share
dividend under the WBCL.
E. Subject to the suspension of the right of
redemption or postponement of the date of payment or
satisfaction upon redemption in accordance with the
Investment Company Act, each holder of any class or
series of the Common Stock of the Corporation, upon
request and after complying with the redemption
procedures established by or under the supervision of
the Board of Directors, shall be entitled to require
the Corporation to redeem out of legally available
funds all or any part of the Common Stock standing in
the name of such holder on the books of the Corporation
at the net asset value (as determined in accordance
with the Investment Company Act) of such shares (less
any applicable redemption fee), which shall be paid in
cash or other property and under procedures adopted by
the Board of Directors. Any such redeemed shares shall
be canceled and restored to the status of authorized
but unissued shares.
F. The Board of Directors may authorize the
Corporation, at its option and to the extent permitted
by and in accordance with the Investment Company Act,
to redeem any shares of Common Stock of any class or
series of the Corporation owned by any shareholder
under circumstances deemed appropriate by the Board of
Directors in its sole discretion from time to time,
including without limitation the failure to maintain
ownership of a specified minimum number or value of
shares of Common Stock of any class or series of the
Corporation, at the net asset value (as determined in
accordance with the Investment Company Act) of such
shares (less any applicable redemption fee).
G. The Board of Directors of the Corporation may,
upon reasonable notice to the holders of Common Stock
of any class or series of the Corporation, impose a fee
for the redemption of shares, such fee to be not in
excess of the amount set forth in the Corporation's
then existing By-Laws and to apply in the case of such
redemptions and under such terms and conditions as the
Board of Directors shall determine. The Board of
Directors shall have the authority to rescind
imposition of any such fee in its discretion and to
reimpose the redemption fee from time to time upon
reasonable notice.
H. No holder of the Common Stock of any class or
series of the Corporation shall, as such holder, have
any right to purchase or subscribe for any shares of
the Common Stock of any class or series of the
Corporation which it may issue or sell (whether out of
the number of shares authorized by these Articles of
Incorporation, or out of any shares of the Common Stock
of any class or series of the Corporation acquired by
it after the issue thereof, or otherwise) other than
such right, if any, as the Board of Directors, in its
sole discretion, may determine.
I. With respect to any class or series, the Board of
Directors may adopt provisions to seek to maintain a
stable net asset value per share. Without limiting the
foregoing, the Board of Directors may determine that
the net asset value per share of any class or series
should be maintained at a designated constant value and
may establish procedures, not inconsistent with
applicable law, to accomplish that result. Such
procedures may include a requirement, in the event of a
net loss with respect to the particular class or series
from time to time, for automatic pro rata capital
contributions from each shareholder of that class or
series in amounts sufficient to maintain the designated
constant share value.
ARTICLE V
The number of directors shall be fixed by the By-Laws
of the Corporation.
ARTICLE VI
The Corporation reserves the right to enter into,
from time to time, investment advisory agreements
providing for the management and supervision of the
investments of the Corporation, the furnishing of
advice to the Corporation with respect to the
desirability of investing in, purchasing or selling
securities or other assets and the furnishing of
clerical and administrative services to the
Corporation. Such agreements shall contain such other
terms, provisions and conditions as the Board of
Directors of the Corporation may deem advisable and as
are permitted by the Investment Company Act.
The Corporation may, without limitation, designate
distributors, custodians, transfer agents, registrars
and/or disbursing agents for the stock and assets of
the Corporation and employ and fix the powers, rights,
duties, responsibilities and compensation of each such
distributor, custodian, transfer agent, registrar
and/or disbursing agent.
ARTICLE VII
The address of the initial registered office of the
Corporation is 311 Main Street, LaCrosse, Wisconsin
54602 and the name of the initial registered agent at
such address is Gary M. Veldey.
ARTICLE VIII
The name and address of the Corporation's
incorporator is: Scott A. Moehrke, Godfrey & Kahn,
S.C., 780 North Water Street, Milwaukee, Wisconsin
53202.
Dated this 28th day of August , 1998.
/s/ Scott A. Moehrke
-------------------------
Name: Scott A. Moehrke
Title: Incorporator
This instrument was drafted by:
Dennis F. Connolly
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202
BY-LAWS
OF
LA CROSSE FUNDS, INC.
(a Wisconsin corporation)
BY-LAWS
ARTICLE I. OFFICES
SECTION 1.01. Principal and Other Offices.
The principal office of the Corporation shall be
located at any place either within or outside the State
of Wisconsin as designated in the Corporation's most
current Annual Report filed with the Wisconsin
Secretary of State. The Corporation may have such
other offices, either within or outside the State of
Wisconsin, as the Board of Directors may designate or
as the business of the Corporation may require from
time to time.
SECTION 1.02. Registered Office. The
registered office of the Corporation required by the
Wisconsin Business Corporation Law (the "WBCL") to be
maintained in the State of Wisconsin may, but need not,
be the same as any of its places of business. The
registered office may be changed from time to time.
SECTION 1.03. Registered Agent. The
registered agent of the Corporation required by the
WBCL to maintain a business office in the State of
Wisconsin may, but need not, be an officer or employee
of the Corporation as long as such agent's business
office is identical with the registered office. The
registered agent may be changed from time to time.
ARTICLE II. SHAREHOLDERS
SECTION 2.01. Annual Meeting. The annual
meeting of the shareholders, if the annual meeting
shall be held, shall be held in April of each year, or
at such other time and date as may be fixed by or under
the authority of the Board of Directors, for the
purpose of electing directors and for the transaction
of such other business as may properly come before the
meeting. The Corporation shall not be required to hold
an annual meeting in any year in which none of the
following is required to be acted on by shareholders
under the Investment Company Act of 1940, as amended,
and the rules and regulations promulgated thereunder
(the "Investment Company Act"):
(i) Election of directors;
(ii) Approval of the Corporation's
investment advisory contract;
(iii) Ratification of the selection of the
Corporation's independent public accountants; or
(iv) Approval of the Corporation's
distribution agreement.
SECTION 2.02. Special Meetings. Special
meetings of the shareholders for any purpose or
purposes, unless otherwise prescribed by the WBCL, may
be called by the Board of Directors, the Chairman of
the Board, Vice Chairman or President. Notwithstanding
any other provision of these By-Laws, the Corporation
shall call a special meeting of shareholders in the
event that the holders of at least 10% of all of the
votes entitled to be cast on any issue proposed to be
considered at the proposed special meeting sign, date
and deliver to the Corporation one or more written
demands for the meeting describing one or more purposes
for which it is to be held. The Secretary shall inform
such shareholders of the reasonable estimated costs of
preparing and mailing the notice of the meeting, and
upon payment to the Corporation of such costs, the
Corporation shall give not less than ten nor more than
sixty days notice of the special meeting.
SECTION 2.03. Place of Meeting. The Board
of Directors may designate any place, either within or
without the State of Wisconsin, as the place of meeting
for any annual or special meeting of shareholders. If
no designation is made, the place of meeting shall be
the principal office of the Corporation. Any meeting
may be adjourned to reconvene at any place designated
by vote of a majority of the shares represented
thereat.
SECTION 2.04. Notice of Meeting. Written
notice stating the date, time and place of any meeting
of shareholders and, in case of a special meeting, the
purpose or purposes for which the meeting is called,
shall be delivered not less than ten days nor more than
sixty days before the date of the meeting (unless a
different time is provided by applicable law or
regulation or the Articles of Incorporation), either
personally or by mail, by or at the direction of the
Chairman of the Board, Vice Chairman, President or
Secretary, to each shareholder of record entitled to
vote at such meeting and to such other persons as
required by the WBCL. If mailed, such notice shall be
deemed to be effective when deposited in the United
States mail, addressed to the shareholder at his or her
address as it appears on the stock record books of the
Corporation, with postage thereon prepaid. If an
annual or special meeting of shareholders is adjourned
to a different date, time or place, the Corporation
shall not be required to give notice of the new date,
time or place if the new date, time or place is
announced at the meeting before adjournment; provided,
however, that if a new record date for an adjourned
meeting is or must be fixed, the Corporation shall give
notice of the adjourned meeting to persons who are
shareholders as of the new record date.
SECTION 2.05. Waiver of Notice. A
shareholder may waive any notice required by the WBCL,
the Articles of Incorporation or these By-Laws before
or after the date and time stated in the notice. The
waiver shall be in writing and signed by the
shareholder entitled to the notice, contain the same
information that would have been required in the notice
under applicable provisions of the WBCL (except that
the time and place of meeting need not be stated) and
be delivered to the Corporation for inclusion in the
corporate records. A shareholder's attendance at a
meeting, in person or by proxy, waives objection to all
of the following: (a) lack of notice or defective
notice of the meeting, unless the shareholder at the
beginning of the meeting or promptly upon arrival
objects to holding the meeting or transacting business
at the meeting; and (b) consideration of a particular
matter at the meeting that is not within the purpose
described in the meeting notice, unless the shareholder
objects to considering the matter when it is presented.
SECTION 2.06. Fixing of Record Date. For
the purpose of determining shareholders of any voting
group entitled to notice of or to vote at any meeting
of shareholders or any adjournment thereof, or
shareholders entitled to receive payment of any
distribution or dividend, or in order to make a
determination of shareholders for any other proper
purpose, the Board of Directors may fix in advance a
date as the record date for any such determination of
shareholders. Such record date shall not be more than
70 days prior to the date on which the particular
action, requiring such determination of shareholders,
is to be taken. If no record date is so fixed for the
determination of shareholders entitled to notice of, or
to vote at a meeting of shareholders, or shareholders
entitled to receive a share dividend or distribution,
the record date for determination of such shareholders
shall be at the close of business on:
(a) With respect to an annual shareholders
meeting or any special shareholders meeting called
by the Board of Directors or any person
specifically authorized by the Board of Directors
or these By-Laws to call a meeting, the day before
the first notice is mailed to shareholders;
(b) With respect to a special shareholders
meeting demanded by the shareholders, the date the
first shareholder signs the demand;
(c) With respect to the payment of a share
dividend, the date the Board of Directors
authorizes the share dividend; and
(d) With respect to a distribution to
shareholders (other than one involving a
repurchase or reacquisition of shares), the date
the Board of Directors authorizes the
distribution.
SECTION 2.07. Voting Lists. After fixing a
record date for a meeting, the Corporation shall
prepare a list of the name of all its shareholders who
are entitled to notice of a shareholders meeting. The
list shall be arranged by class or series of shares and
show the address of and the number of shares held by
each shareholder. The shareholders list must be
available for inspection by any shareholder, beginning
two business days after notice of the meeting is given
for which the list was prepared and continuing to the
date of the meeting. The list shall be available at
the Corporation's principal office or at a place
identified in the meeting notice in the city where the
meeting is to be held. Subject to the provisions of
the WBCL, a shareholder or his or her agent or attorney
may, on written demand, inspect and copy the list
during regular business hours and at his expense,
during the period it is available for inspection. The
Corporation shall make the shareholders list available
at the meeting, and any shareholder or his or her agent
or attorney may inspect the list at any time during the
meeting or any adjournment thereof. Refusal or failure
to prepare or make available the shareholders list
shall not affect the validity of any action taken at
such meeting.
SECTION 2.08. Shareholder Quorum and Voting
Requirements. Shares entitled to vote as a separate
voting group may take action on a matter at a meeting
only if a quorum of those shares exists with respect to
that matter. Unless the Articles of Incorporation or
the WBCL provide otherwise, a majority of the votes
entitled to be cast on the matter by the voting group
constitutes a quorum of that voting group for action on
that matter.
If the Articles of Incorporation or the WBCL
provide for voting by two or more voting groups on a
matter, action on that matter is taken only when voted
upon by each of those voting groups counted separately
as provided in the WBCL. Action may be taken by one
voting group on a matter even though no action is taken
by another voting group entitled to vote on the matter.
A voting group described in the WBCL constitutes a
single voting group for purpose of voting on the matter
on which the shares are entitled to vote, unless
otherwise required under applicable laws and
regulations, including the Investment Company Act.
Once a share is represented for any purpose
at a meeting, other than for the purpose of objecting
to holding the meeting or transacting business at the
meeting, it is deemed present for purposes of
determining whether a quorum exists, for the remainder
of the meeting and for any adjournment of that meeting
to the extent provided in Section 2.13.
If a quorum exists, action on a matter, other
than the election of directors, by a voting group is
approved if the votes cast within the voting group
favoring the action exceed the votes cast opposing the
action, unless the Articles of Incorporation, the By-
Laws, the WBCL or other applicable laws and
regulations, including the Investment Company Act,
require a greater number of affirmative votes. With
respect to the election of directors, unless otherwise
provided in the Articles of Incorporation, directors
are elected by a plurality of the votes cast by the
shares entitled to vote. For purposes of this Section
2.08, "plurality" means that the individuals with the
largest number of votes are elected as directors up to
the maximum number of directors to be chosen at the
election.
SECTION 2.09. Proxies. For all meetings of
shareholders, a shareholder may appoint a proxy to vote
or otherwise act for the shareholder by signing an
appointment form, either personally or by a duly
authorized attorney-in-fact. Such proxy shall be
effective when filed with the Secretary of the
Corporation or other officer or agent authorized to
tabulate votes before or at the time of the meeting.
No proxy shall be valid after eleven months from the
date of its execution, unless otherwise provided in the
proxy.
SECTION 2.10. Voting of Shares. Unless
otherwise provided in the Articles of Incorporation,
each outstanding share, regardless of class, is
entitled to one vote upon each matter submitted to a
vote at a meeting of shareholders.
No shares in the Corporation held by another
corporation may be voted if the Corporation owns,
directly or indirectly, a sufficient number of shares
entitled to elect a majority of the directors of such
other corporation; provided, however, that the
Corporation shall not be limited in its power to vote
any shares, including its own shares, held by it in a
fiduciary capacity.
Redeemable shares are not entitled to vote
after written notice of redemption that complies with
the WBCL is mailed to the holders thereof and a sum
sufficient to redeem the shares has been deposited with
a bank, trust company or other financial institution
under an irrevocable obligation to pay the holders the
redemption price on surrender of the shares.
SECTION 2.11. Voting Shares Owned by the
Corporation. Shares of the Corporation belonging to it
shall not be voted directly or indirectly at any
meeting and shall not be counted in determining the
total number of outstanding shares at any given time,
but shares held by the Corporation in a fiduciary
capacity may be voted and shall be counted in
determining the total number of outstanding shares at
any given time.
SECTION 2.12. Acceptance of Instruments
Showing Shareholder Action.
(a) If the name signed on a vote, consent,
waiver or proxy appointment corresponds to the
name of a shareholder, the Corporation, if acting
in good faith, may accept the vote, consent,
waiver or proxy appointment and give it effect as
the act of the shareholder.
(b) If the name signed on a vote, consent,
waiver or proxy appointment does not correspond to
the name of a shareholder, the Corporation, if
acting in good faith, may accept the vote,
consent, waiver or proxy appointment and give it
effect as the act of the shareholder if any of the
following apply:
(1) the shareholder is an entity,
within the meaning of the WBCL, and the name
signed purports to be that of an officer or
agent of the entity;
(2) the name signed purports to be
that of a personal representative,
administrator, executor, guardian or
conservator representing the shareholder and,
if the Corporation or its agent request,
evidence of fiduciary status acceptable to
the Corporation is presented with respect to
the vote, consent, waiver or proxy
appointment;
(3) the name signed purports to be
that of a receiver or trustee in bankruptcy
of the shareholder and, if the Corporation or
its agent request, evidence of this status
acceptable to the Corporation is presented
with respect to the vote, consent, waiver or
proxy appointment;
(4) the name signed purports to be
that of a pledgee, beneficial owner, or
attorney-in-fact of the shareholder and, if
the Corporation or its agent request,
evidence acceptable to the Corporation of the
signatory's authority to sign for the
shareholder is presented with respect to the
vote, consent, waiver or proxy appointment;
or
(5) two or more persons are the
shareholders as cotenants or fiduciaries and
the name signed purports to be the name of at
least one of the coowners and the persons
signing appears to be acting on behalf of all
coowners.
(c) The Corporation may reject a vote,
consent, waiver or proxy appointment if the
Secretary or other officer or agent of the
Corporation who is authorized to tabulate votes,
acting in good faith, has reasonable basis for
doubt about the validity of the signature on it or
about the signatory's authority to sign for the
shareholder.
SECTION 2.13. Adjournments. An annual or
special meeting of shareholders may be adjourned at any
time, including after action on one or more matters, by
a majority of shares represented, even if less than a
quorum. The meeting may be adjourned for any purpose,
including, but not limited to, allowing additional time
to solicit votes on one or more matters, to disseminate
additional information to shareholders or to count
votes. Upon being reconvened, the adjourned meeting
shall be deemed to be a continuation of the initial
meeting.
(a) Quorum. Once a share is represented for
any purpose at the original meeting, other than
for the purpose of objecting to holding the
meeting or transacting business at a meeting, it
is considered present for purposes of determining
if a quorum exists, for the remainder of the
meeting and for any adjournment of that meeting
unless a new record date is or must be set for
that adjourned meeting.
(b) Record Date. When a determination of
shareholders entitled to notice of or to vote at
any meeting of shareholders has been made as
provided in Section 2.06, such determination shall
be applied to any adjournment thereof unless the
Board of Directors fixes a new record date, which
it shall do if the meeting is adjourned to a date
more than 120 days after the date fixed for the
original meeting.
(c) Notice. Unless a new record date for an
adjourned meeting is or must be fixed pursuant to
Section 2.13(b), the Corporation is not required
to give notice of the new date, time or place if
the new date, time or place is announced at the
meeting before adjournment.
SECTION 2.14. Waiver of Notice by
Shareholders. A shareholder may waive any notice
required by the WBCL, the Articles of Incorporation or
the By-Laws before or after the date and time stated in
the notice. The waiver shall be in writing and signed
by the shareholder entitled to the notice, contain the
same information that would have been required in the
notice under any applicable provisions of the WBCL,
except that the time and place of the meeting need not
be stated, and be delivered to the Corporation for
inclusion in the Corporation's records. A
shareholder's attendance at a meeting, in person or by
proxy, waives objection to (i) lack of notice or
defective notice of the meeting, unless the shareholder
at the beginning of the meeting or promptly upon
arrival objects to the holding of the meeting or
transacting business at the meeting, and (ii)
consideration of a particular matter at the meeting
that is not within the purpose described in the meeting
notice, unless the shareholder objects to considering
the matter when it is presented.
SECTION 2.15. Conduct of Meeting. The
Chairman of the Board, Vice Chairman, President or any
person chosen by the Chairman of the Board, shall call
the meeting of the shareholders to order and shall act
as chairman of the meeting, and the Secretary of the
Corporation or any other person appointed by the
chairman of the meeting, shall act as secretary of all
meetings of the shareholders.
SECTION 2.16. Unanimous Consent without
Meeting. Any action required or permitted to be taken
at a meeting of shareholders may be taken without a
meeting only by unanimous written consent or consents
signed by all of the shareholders of the Corporation
and delivered to the Corporation for inclusion in the
Corporation's records.
ARTICLE III. BOARD OF DIRECTORS
SECTION 3.01. General Powers and Number.
All corporate powers shall be exercised by or under the
authority of, and the business and affairs of the
Corporation managed under the direction of, the Board
of Directors. The number of directors of the
Corporation shall initially be ___________________.
The number of directors of the Corporation may be
amended from time to time by resolution adopted by vote
of a majority of the entire Board of Directors then in
office.
SECTION 3.02. Tenure and Qualifications.
Each director shall hold office until the next annual
meeting of shareholders and until his or her successor
shall have been elected and, if necessary, qualified,
or until there is a decrease in the number of directors
which takes effect after the expiration of his or her
term, or until his or her prior death, resignation or
removal. A director may be removed by the
shareholders, with or without cause, only at a meeting
called for the purpose of removing the director, and
the meeting notice shall state that the purpose, or one
of the purposes, of the meeting is removal of the
director. A director may resign at any time by
delivering written notice which complies with the WBCL
to the Board of Directors, to the Chairman of the Board
or to the Corporation. A director's resignation is
effective when the notice is delivered unless the
notice specifies a later effective date. Directors
need not be residents of the State of Wisconsin or
shareholders of the Corporation.
SECTION 3.03. Regular Meetings. A regular
meeting of the Board of Directors shall be held without
other notice than this Section 3.03 immediately before
or after the annual meeting of shareholders and each
adjourned session thereof. The place of such regular
meeting shall be the same as the place of the meeting
of shareholders which precedes or follows it, as the
case may be, or such other suitable place as may be
announced at such meeting of shareholders. The Board
of Directors shall provide, by resolution, the date,
time and place, either within or without the State of
Wisconsin, for the holding of additional regular
meetings of the Board of Directors without other notice
than such resolution. Regular meetings of the Board of
Directors may also be called by the Chairman of the
Board, Vice Chairman, President or Secretary.
SECTION 3.04. Special Meetings. Special
meetings of the Board of Directors may be called by or
at the request of the Chairman of the Board, Vice
Chairman, President, Secretary or any two directors.
The Chairman of the Board, Vice Chairman, President or
Secretary may fix any place, either within or without
the State of Wisconsin, as the place for holding any
special meeting of the Board of Directors, and if no
other place is fixed the place of the meeting shall be
the principal business office of the Corporation in the
State of Wisconsin.
SECTION 3.05. Notice; Waiver. Notice of
special meetings shall be given at least twenty-four
hours previously thereto and shall state the date, time
and place of the meeting of the Board of Directors or
committee. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of
the Board of Directors or committee need be specified
in the notice of such meeting. Notice may be
communicated in person, by telephone, telegraph,
teletype, facsimile or other form of wire or wireless
communication, or by mail or private carrier. Written
notice is effective at the earliest of the following:
(1) when received; (2) when mailed postpaid and
correctly addressed; (3) when given to a telegram
carrier; or (4) the date it is deposited with a private
carrier. Oral notice is deemed effective when
communicated. Facsimile or teletype notice is deemed
effective when sent.
A director may waive any notice required by
the WBCL, the Articles of Incorporation or the By-Laws
before or after the date and time stated in the notice.
The waiver shall be in writing, signed by the director
entitled to the notice and retained by the Corporation.
Notwithstanding the foregoing, a director's attendance
at or participation in a meeting waives any required
notice to such director of the meeting unless the
director at the beginning of the meeting or promptly
upon such director's arrival objects to holding the
meeting or transacting business at the meeting and does
not thereafter vote for or assent to action taken at
the meeting.
SECTION 3.06. Quorum. Except as otherwise
provided by the WBCL, the Articles of Incorporation or
the By-Laws, a majority of the number of directors
specified in Section 3.01 shall constitute a quorum for
the transaction of business at any meeting of the Board
of Directors. A majority of the directors present
(though less than such quorum) may adjourn any meeting
of the Board of Directors or any committee thereof, as
the case may be, from time to time without further
notice.
SECTION 3.07. Manner of Acting. The
affirmative vote of a majority of the directors present
at a meeting of the Board of Directors at which a
quorum is present shall be the act of the Board of
Directors, unless the WBCL, the Articles of
Incorporation, the By-Laws or other applicable law or
regulation, including the Investment Company Act,
require the vote of a greater number of directors.
SECTION 3.08. Conduct of Meetings. The
Chairman of the Board, and in his absence, the Vice
Chairman or any director chosen by the directors
present, shall call meetings of the Board of Directors
to order and shall act as chairman of the meeting. The
Secretary of the Corporation shall act as secretary of
all meetings of the Board of Directors unless the
presiding officer appoints another person present to
act as secretary of the meeting. Minutes of any
regular or special meeting of the Board of Directors
shall be prepared and distributed to each director.
SECTION 3.09. Vacancies. Except as provided
below, any vacancy occurring in the Board of Directors,
including a vacancy resulting from an increase in the
number of directors, may be filled, subject to the
requirements of the Investment Company Act, by any of
the following: (a) the shareholders; (b) the Board of
Directors; or (c) if the directors remaining in office
constitute fewer than a quorum of the Board of
Directors, the directors, by the affirmative vote of a
majority of all directors remaining in office. If the
vacant office was held by a director elected by a
voting group of shareholders, only the holders of
shares of that voting group may vote to fill the
vacancy if it is filled by the shareholders, and only
the remaining directors elected by that voting group
may vote to fill the vacancy if it is filled by the
directors. A vacancy that will occur at a specific
later date, because of a resignation effective at a
later date or otherwise, may be filled before the
vacancy occurs, but the new director may not take
office until the vacancy occurs.
SECTION 3.10. Compensation. No director
shall receive any stated salary or fees from the
Corporation for his services as such director if such
director is, otherwise than by reason of being such
director, an interested person (as such term is defined
by the Investment Company Act) of the Corporation or
its investment adviser. Except as provided in the
preceding sentence, directors shall be entitled to
receive such compensation from the Corporation for
their services as may from time to time be voted by the
Board of Directors.
SECTION 3.11. Presumption of Assent. A
director who is present and is announced as present at
a meeting of the Board of Directors, when corporate
action is taken, assents to the action taken unless any
of the following occurs: (a) the director objects at
the beginning of the meeting or promptly upon his or
her arrival to holding the meeting or transacting
business at the meeting; (b) the director dissents or
abstains from an action taken and minutes of the
meeting are prepared that show the director's dissent
or abstention; (c) the director delivers written notice
that complies with the WBCL of his or her dissent or
abstention to the presiding officer of the meeting
before its adjournment or to the Corporation
immediately after adjournment of the meeting; or (d)
the director dissents or abstains from an action taken,
minutes of the meeting are prepared that fail to show
the director's dissent or abstention from the action
taken and the director delivers to the Corporation a
written notice of that failure that complies with the
WBCL promptly after receiving the minutes. Such right
of dissent or abstention shall not apply to a director
who votes in favor of the action taken.
SECTION 3.12. Telephonic Meetings. Except
as herein provided and notwithstanding any place set
forth in the notice of the meeting or these By-Laws,
members of the Board of Directors may participate in
regular or special meetings by, or through the use of,
any means of communication by which all participants
may simultaneously hear each other, such as by
conference telephone. If a meeting is conducted by
such means, then at the commencement of such meeting
the presiding officer shall inform the participating
directors that a meeting is taking place at which
official business may be transacted. Any participant
in a meeting by such means shall be deemed present in
person at such meeting. Notwithstanding the foregoing,
no action may be taken at any meeting held by such
means (i) on any particular matter which the presiding
officer determines, in his or her sole discretion, to
be inappropriate under the circumstances for action at
a meeting held by such means (such determination shall
be made and announced in advance of such meeting), or
(ii) if the action must be approved in person pursuant
to the requirements of the Investment Company Act.
SECTION 3.13. Action Without Meeting. Any
action required or permitted by the WBCL to be taken at
a meeting of the Board of Directors may be taken
without a meeting if the action is taken by all members
of the Board. The action shall be evidenced by one or
more written consents describing the action taken,
signed by each director and retained by the
Corporation. Such action shall be effective when the
last director signs the consent, unless the consent
specifies a different effective date. Notwithstanding
this Section 3.13, no action may be taken by the Board
of Directors pursuant to a written consent with respect
to which the action must be approved in person pursuant
to the requirements of the Investment Company Act.
ARTICLE IV. OFFICERS
SECTION 4.01. Number. The principal
officers of the Corporation shall be a Chairman of the
Board, a Vice Chairman of the Board, a President, the
number of Vice Presidents as authorized from time to
time by the Board of Directors, a Secretary, and a
Treasurer, each of whom shall be elected by the Board
of Directors. Such other officers and assistant
officers as may be deemed necessary may be elected or
appointed by the Board of Directors. The Board of
Directors may also authorize any duly authorized
officer to appoint one or more officers or assistant
officers. Any two or more offices may be held by the
same person.
SECTION 4.02. Election and Term of Office.
The officers of the Corporation to be elected by the
Board of Directors shall be elected annually by the
Board of Directors at the first meeting of the Board of
Directors held after each annual meeting of the
shareholders, if any, or on or after the anniversary of
the last annual meeting if no annual meeting is held.
If the election of officers shall not be held at such
first meeting of the Board of Directors, such election
shall be held as soon thereafter as is practicable.
Each officer shall hold office until his or her
successor shall have been duly elected or until his or
her prior death, resignation or removal.
SECTION 4.03. Removal. The Board of
Directors may remove any officer and, unless restricted
by the Board of Directors or these By-Laws, an officer
may remove any officer or assistant officer appointed
by that officer. An officer may be removed at any
time, with or without cause and notwithstanding the
contract rights, if any, of the officer removed. The
appointment of an officer does not of itself create
contract rights.
SECTION 4.04. Resignation. An officer may
resign at any time by delivering notice to the
Corporation that complies with the WBCL. The
resignation shall be effective when the notice is
delivered, unless the notice specifies a later
effective date and the Corporation accepts the later
effective date.
SECTION 4.05. Vacancies. A vacancy in any
principal office because of death, resignation,
removal, disqualification or otherwise, shall be filled
by the Board of Directors for the unexpired portion of
the term. If a resignation of an officer is effective
at a later date as contemplated by Section 4.04 hereof,
the Board of Directors may fill the pending vacancy
before the effective date if the Board provides that
the successor may not take office until the effective
date of the registration.
SECTION 4.06. Chairman of the Board. The
Chairman of the Board shall be the chief executive
officer of the Corporation. The Chairman of the Board
shall preside at all meetings of the shareholders and
directors, shall have general and active management of
the business of the Corporation, and shall see that all
orders and resolutions of the Board of Directors are
carried into effect.
SECTION 4.07. The Vice Chairman. During the
absence or disability of the Chairman of the Board, the
Vice Chairman shall exercise all the functions of the
Chairman of the Board. The Vice Chairman shall perform
all duties incident to the office of the Vice Chairman
and such other duties as shall from time to time be
assigned by the Board of Directors, the Chairman of the
Board or as prescribed by these By-Laws.
SECTION 4.08. President. The President
shall be the chief operating officer of the Corporation
and, subject to the direction of the Board of
Directors, shall in general supervise and control all
of the business and affairs of the Corporation. The
President shall, when present, preside at all meetings
of the shareholders in the absence of the Chairman of
the Board and the Vice Chairman. The President shall
have authority, subject to such rules as may be
prescribed by the Board of Directors, to appoint such
agents and employees of the Corporation as he or she
shall deem necessary, to prescribe their powers, duties
and compensation, and to delegate authority to them.
Such agents and employees shall hold office at the
discretion of the President. The President shall have
authority to sign, execute and acknowledge, on behalf
of the Corporation, all deeds, mortgages, bonds, stock
certificates, contracts, leases, reports and all other
documents or instruments necessary or proper to be
executed in the course of the Corporation's regular
business, or which shall be authorized by resolution of
the Board of Directors; and, except as otherwise
provided by law or the Board of Directors, he or she
may authorize any Vice President or other officer or
agent of the Corporation to sign, execute and
acknowledge such documents or instruments in his or her
place and stead. In general he or she shall perform
all duties incident to the office of President and such
other duties as may be prescribed by the Board of
Directors from time to time.
SECTION 4.09. The Vice Presidents. In the
absence of the President or in the event of the
President's death, inability or refusal to act, or in
the event for any reason it shall be impracticable for
the President to act personally, the Vice President (or
in the event there be more than one Vice President, the
Vice Presidents in the order designated by the Board of
Directors, or in the absence of any designation, then
in the order of their election) shall perform the
duties of the President, and when so acting, shall have
all the powers of and be subject to all the
restrictions upon the President. Any Vice President
may sign, with the Secretary or Assistant Secretary,
certificates for shares of the Corporation; and shall
perform such other duties and have such authority as
from time to time may be delegated or assigned to him
or her by the Chairman of the Board, Vice Chairman or
President or by the Board of Directors. The execution
of any instrument of the Corporation by any Vice
President shall be conclusive evidence, as to third
parties, of his or her authority to act for the
Corporation.
SECTION 4.10. The Secretary. The Secretary
shall: (a) keep minutes of the meetings of the
shareholders and of the Board of Directors (and of
committees thereof) in one or more books provided for
that purpose (including records of actions taken by the
shareholders or the Board of Directors (or committees
thereof) without a meeting); (b) see that all notices
are duly given in accordance with the provisions of
these By-Laws or as required by the WBCL; (c) be
custodian of the corporate records and of the seal of
the Corporation and see that the seal of the
Corporation is affixed to all documents the execution
of which on behalf of the Corporation under its seal is
duly authorized; (d) maintain a record of the
shareholders of the Corporation, in a form that permits
preparation of a list of the names and addresses of all
shareholders, by class or series of shares and showing
the number and class or series of shares held by each
shareholder; (e) sign with the President, a Vice
President, or any other officer authorized by the Board
of Directors, certificates for shares of the
Corporation, the issuance of which shall have been
authorized by resolution of the Board of Directors; (f)
have general charge of the stock transfer books of the
Corporation; and (g) in general perform all duties
incident to the office of Secretary and have such other
duties and exercise such authority as from time to time
may be delegated or assigned by the Chairman of the
Board, Vice Chairman, President or the Board of
Directors.
SECTION 4.11. The Treasurer. The Treasurer
shall be the principal financial and accounting officer
of the Corporation and shall have general charge of the
finances and books of account of the Corporation.
Except as otherwise provided by the Board of Directors,
he or she shall have general supervision of the funds
and property of the Corporation and of the performance
by the Custodian of its duties with respect thereto.
The Treasurer shall render to the Board of Directors,
whenever directed by the Board, an account of the
financial condition of the Corporation and of all his
or her transactions as Treasurer. The Treasurer shall
perform all acts incidental to the office of Treasurer,
subject to the control of the Board of Directors.
SECTION 4.12. Assistant Secretaries and
Assistant Treasurers. There shall be such number of
Assistant Secretaries and Assistant Treasurers as the
Board of Directors may from time to time authorize.
The Assistant Secretaries may sign with the President,
a Vice President or any other officer authorized by the
Board of Directors, certificates for shares of the
Corporation the issuance of which shall have been
authorized by a resolution of the Board of Directors.
The Assistant Secretaries and Assistant Treasurers, in
general, shall perform such duties and have such
authority as shall from time to time be delegated or
assigned to them by the Secretary or the Treasurer,
respectively, or by the Chairman of the Board, Vice
Chairman, President or the Board of Directors.
SECTION 4.13. Other Assistants and Acting
Officers. The Board of Directors shall have the power
to appoint, or to authorize any duly appointed officer
of the Corporation to appoint, any person to act as
assistant to any officer, or as agent for the
Corporation in his or her stead, or to perform the
duties of such officer whenever for any reason it is
impracticable for such officer to act personally, and
such assistant or acting officer or other agent so
appointed by the Board of Directors or an authorized
officer shall have the power to perform all the duties
of the office to which he or she is so appointed to be
an assistant, or as to which he or she is so appointed
to act, except as such power may be otherwise defined
or restricted by the Board of Directors or the
appointing officer.
SECTION 4.14. Surety Bonds. The Board of
Directors may require any officer or agent of the
Corporation to execute a bond (including, without
limitation, any bond required by the Investment Company
Act of 1940) to the Corporation in such sum and with
such surety or sureties as the Board of Directors may
determine, conditioned upon the faithful performance of
his or her duties to the Corporation, including
responsibility for negligence and for the accounting of
any of the Corporation's property, funds or securities
that may come into his or her hands.
ARTICLE V. CERTIFICATES FOR SHARES; TRANSFER OF SHARES
SECTION 5.01. Certificates for Shares. Each
shareholder shall be entitled upon request to have a
certificate or certificates which shall represent and
certify the number and kind of shares owned by him or
her in the Corporation. Certificates representing
shares of the Corporation shall be in such form,
consistent with the WBCL, as shall be determined by the
Board of Directors. Such certificates shall be signed,
either manually or in facsimile, by the President, a
Vice President or any other officer authorized by the
Board of Directors and by the Secretary or an Assistant
Secretary. All certificates for shares shall be
consecutively numbered or otherwise identified. The
name and address of the person to whom the shares
represented thereby are issued, with the number of
shares and class of shares and series, if any, and date
of issue, shall be entered on the stock transfer books
of the Corporation. All certificates surrendered to
the Corporation for transfer shall be cancelled and no
new certificate shall be issued until the former
certificate for a like number of shares shall have been
surrendered and cancelled, except as provided in
Section 5.04.
Shares may also be issued without
certificates. Within a reasonable time after issuance
or transfer of shares without certificates, the
Corporation shall send the shareholder a written
statement of the information required on share
certificates under the WBCL, including the following:
(a) the name of the Corporation;
(b) the name of the person to whom shares
were issued;
(c) the number and class of shares and the
designation of the series, if any, of the shares
issued; and
(d) either (i) a summary of the
designations, relative rights, preferences and
limitations, applicable to each class, and the
variations in rights, preferences and limitations
determined for each series and the authority of
the Board of Directors to determine variations for
future series, or (ii) a conspicuous statement
that the Corporation will furnish the information
specified in clause (i), above, on request, in
writing and without charge.
SECTION 5.02. Signature by Former Officers.
The validity of a share certificate is not affected if
a person who signed the certificate (either manually or
in facsimile) no longer holds office when the
certificate is issued.
SECTION 5.03. Transfer of Shares. Prior to
due presentment of a certificate for shares for
redemption or registration of transfer, the Corporation
may treat the registered owner of such shares as the
person exclusively entitled to vote, to receive
notifications and otherwise to have and exercise all
the rights and power of an owner. Where a certificate
for shares is presented to the Corporation with a
request for redemption or to register for transfer, the
Corporation shall not be liable to the owner or any
other person suffering loss as a result of such
registration of transfer or redemption if (a) there
were on or with the certificate the necessary
endorsements, and (b) the Corporation had no duty to
inquire into adverse claims or has discharged any such
duty. The Corporation may require reasonable assurance
that such endorsements are genuine and effective and
compliance with such other regulations as may be
prescribed by or under the authority of the Board of
Directors. All certificates and uncertificated shares
surrendered to the Corporation for redemption shall be
cancelled, returned to the status of authorized and
unissued shares and the transaction recorded in the
stock transfer books. Transfer or redemption of shares
of the Corporation shall be made only on the stock
transfer books of the Corporation by the holder of
record thereof or by his legal representative, who
shall furnish proper evidence of authority to transfer,
or by his attorney thereunto duly authorized by power
of attorney duly executed and filed with the transfer
agent or the Secretary of the Corporation, and on
surrender for cancellation of the certificate for such
shares, if any.
SECTION 5.04. Lost, Destroyed or Stolen
Certificates. Where the owner claims that certificates
for shares have been lost, destroyed or wrongfully
taken, a new certificate shall be issued in place
thereof if the owner (a) so requests before the
Corporation has notice that such shares have been
acquired by a bona fide purchaser, (b) files with the
Corporation a sufficient indemnity bond if required by
the Board of Directors or any principal officer, and
(c) satisfies such other reasonable requirements as may
be prescribed by or under the authority of the Board of
Directors.
SECTION 5.05. Stock Regulations. The Board
of Directors shall have the power and authority to make
all such further rules and regulations not inconsistent
with law as it may deem expedient concerning the issue,
transfer and registration of shares of the Corporation
and to appoint or designate one or more stock transfer
agents and one or more stock registrars.
ARTICLE VI. SEAL
SECTION 6.01. The seal of the Corporation
shall be circular in form and shall bear, at a minimum,
the name of the Corporation, Wisconsin as its state of
incorporation and the words "Corporate Seal."
ARTICLE VII. INDEMNIFICATION OF OFFICERS AND DIRECTORS
SECTION 7.01. Mandatory Indemnification.
The Corporation shall indemnify, to the full extent
permitted by the WBCL, as in effect from time to time,
the persons described in Sections 180.0850 through
180.0859 (or any successor provisions) of the WBCL or
other provisions of the law of the State of Wisconsin
relating to indemnification of directors and officers,
as in effect from time to time. The indemnification
afforded such persons by this section shall not be
exclusive of other rights to which they may be entitled
as a matter of law.
SECTION 7.02. Permissive Supplementary
Benefits. The Corporation may, but shall not be
required to, supplement the right of indemnification
under Section 7.01 by (a) the purchase of insurance on
behalf of any one or more of such persons, whether or
not the Corporation would be obligated to indemnify
such person under Section 7.01; (b) individual or group
indemnification agreements with any one or more of such
persons; and (c) advances for related expenses of such
a person.
SECTION 7.03. Amendment. This Article VII
may be amended or repealed only by a vote of the
shareholders and not by a vote of the Board of
Directors.
SECTION 7.04. Investment Company Act. In no
event shall the Corporation indemnify any person
hereunder in contravention of any provision of the
Investment Company Act.
ARTICLE VIII. AMENDMENTS
SECTION 8.01. By Shareholders. These By-
Laws may be amended or repealed and new By-Laws may be
adopted by the shareholders at any annual or special
meeting of the shareholders at which a quorum is in
attendance.
SECTION 8.02. By Board of Directors. Except
as otherwise provided by the WBCL, the Articles of
Incorporation or a particular By-Law herein, these By-
Laws may also be amended or repealed and new By-Laws
may be adopted by the Board of Directors by affirmative
vote of a majority of the number of directors present
at any meeting at which a quorum is in attendance;
provided, however, that the shareholders in adopting,
amending or repealing a particular By-Law may provide
therein that the Board of Directors may not amend,
repeal or readopt that By-Law.
SECTION 8.03. Implied Amendments. Any
action taken or authorized by the shareholders or by
the Board of Directors which would be inconsistent with
the By-Laws then in effect but which is taken or
authorized by affirmative vote of not less than the
number of shares or the number of directors required to
amend the By-Laws so that the By-Laws would be
consistent with such action shall be given the same
effect as though the By-Laws had been temporarily
amended or suspended so far, but only so far, as is
necessary to permit the specific action so taken or
authorized.
ARTICLE IX. DEPOSITARIES, CUSTODIANS, ENDORSEMENTS
SECTION 9.01. Depositories. The funds of
the Corporation shall be deposited with such banks or
other depositories as the Board of Directors of the
Corporation may from time to time determine in
accordance with the requirements of the Investment
Company Act.
SECTION 9.02. Custodians. All securities
and other similar investments of the Corporation shall
be deposited in the safekeeping of such banks or other
companies as the Board of Directors may from time to
time determine in accordance with the requirements of
the Investment Company Act. Every arrangement entered
into with any bank or other company for the safekeeping
of the securities and other similar investments of the
Corporation shall contain provisions complying with the
requirements of the Investment Company Act.
SECTION 9.03. Checks, Notes, Drafts, etc.
Checks, notes, drafts, acceptances, bills of exchange
and other orders or obligations for the payment of
money shall be signed by such officer or officers or
such person or persons as designated from time to time
by the
Board of Directors.
SECTION 9.04. Endorsements, Assignments and
Transfer of Securities. All endorsements, assignments,
stock powers or other instruments of transfer of
securities standing in the name of the Corporation or
its nominee or directions for the transfer of
securities belonging to the Corporation shall be made
by such officer or officers or other person or persons
as may be designated from time to time by the Board of
Directors.
ARTICLE X. INDEPENDENT PUBLIC ACCOUNTANTS
SECTION 10.01. Independent Public
Accountants. The Corporation shall employ an
independent public accountant or a firm of independent
public accountants as its accountants to examine the
accounts of the Corporation and to sign and certify
financial statements filed by the Corporation.
ARTICLE XI. SALES AND REDEMPTION OF SHARES; DIVIDENDS
SECTION 11.01. Sale of Shares. Shares of
Common Stock of the Corporation shall be sold by it for
the net asset value per share of such Common Stock
calculated in accordance with the requirements of the
Investment Company Act, and the Corporation's then
current prospectus.
SECTION 11.02. Periodic Investment, Dividend
Reinvestment and Other Plans. The Corporation shall
offer such periodic investment, dividend reinvestment,
periodic redemption or other plans as are specified in
the Corporation's then current prospectus, provided
such plans are offered in accordance with the
requirements of the Investment Company Act. Any such
plans may be discontinued at any time if determined
advisable by or under the authority of the Board of
Directors.
SECTION 11.03. Redemption of Shares.
Subject to the suspension of the right of redemption or
postponement of the date of payment or satisfaction
upon redemption in accordance with the Investment
Company Act, each shareholder, upon request and after
complying with the redemption procedures established by
or under the supervision of the Board of Directors,
shall be entitled to require the Corporation to redeem
out of legally available funds all or any part of the
Common Stock standing in the name of such holder at the
net asset value per share calculated in accordance with
the requirements of the Investment Company Act, and the
Corporation's then current prospectus.
SECTION 11.04. Dividends and Other
Distributions. The Corporation shall pay such
dividends and make other distributions to shareholders,
at such times and in such amounts as are determined by
or under the authority of the Board of Directors, from
time to time and in accordance with the requirements of
the WBCL, the Investment Company Act, and other
applicable laws and regulations.
