As filed with the Securities and Exchange Commission on January 27, 2000
Securities Act File No. 33-80993
Investment Company Act File No. 811-9393
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No.
Post Effective Amendment No. 2
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 5
(Check appropriate box or boxes)
TRUST FOR INVESTMENT MANAGERS
(Exact Name of Registrant as Specified in Charter)
2020 E. Financial Way
Suite 100
Glendora, CA 91741
(Principal Address of Executive Offices, including Zip Code)
(626) 852-1033
(Registrant's Telephone Number, including Area Code)
Julie Allecta, Esq.
Paul, Hastings, Janofsky & Walker LLP
345 California Street
San Francisco, CA 94104
(Name and Address of Agent for Service)
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It is proposed that this filing will become effective (check appropriate box)
[ ] Immediately upon filing pursuant to paragraph (b)
[ ] On _______________ pursuant to paragraph (b)
[X] 60 days after filing pursuant to paragraph (a)(1)
[ ] On _______________ pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] On ___________ pursuant to paragraph (a)(2) of Rule 485
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GILFORD OAKWOOD EQUITY FUND
A SERIES OF TRUST FOR INVESTMENT MANAGERS
The Gilford Oakwood Equity Fund seeks long-term growth of capital. The Fund
will pursue this objective by investing primarily in equity securities. The
Fund's investment advisor is Oakwood Capital Management LLC. This Prospectus
contains information about the Class B and Class C shares of the Fund.
AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION DOES NOT
APPROVE OR DISAPPROVE OF THESE SHARES OR DETERMINE IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is______________, 2000
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TABLE OF CONTENTS
Summary of Investment Goal, Strategies and Risks........................... 3
Performance Information ................................................... 4
Fees and Expenses ......................................................... 4
Investment Objective and Principal Investment Strategies .................. 5
Principal Risks of Investing in the Fund .................................. 6
Investment Advisor ........................................................ 7
Shareholder Information ................................................... 9
Pricing of Fund Shares .................................................... 14
Dividends and Distributions ............................................... 14
Tax Consequences .......................................................... 14
Rule 12b-1 Fees ........................................................... 15
Multiple Class Information ................................................ 15
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SUMMARY OF INVESTMENT GOAL, STRATEGIES AND RISKS
WHAT IS THE FUND'S INVESTMENT GOAL?
The Fund seeks long term growth of capital.
WHAT ARE THE FUND'S PRIMARY INVESTMENT STRATEGIES?
The Fund primarily invests in the common stock of domestic companies with a
market capitalization in excess of $1 billion. In selecting investments, the
Advisor evaluates domestic and international economic conditions and events. The
Advisor then identifies those companies that are best able to benefit from those
conditions.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?
As with all mutual funds, there is the risk that you could lose money on your
investment in the Fund. For example, the following risks could affect the value
of your investment:
* MARKET RISK - Either the stock market as a whole, or the value of an
individual company, goes down resulting in a decrease in the value of
the Fund.
* MANAGEMENT RISK - If the Advisor's investment strategies do not
produce the expected results, the value of the Fund would decrease.
* MEDIUM-SIZE COMPANIES - Securities of medium-size companies involve
greater risk than investing in larger companies because they can be
subject to more abrupt or erratic share price changes than larger
companies.
WHO MAY WANT TO INVEST IN THE FUND?
The Fund may be appropriate for investors who:
* Are pursuing a long-term investment horizon
* Want to add an investment in larger capitalization stocks to their
equity portfolio
* Can accept the greater risks of investing in a portfolio with
significant common stock holdings
The Fund may not be appropriate for investors who:
* Need regular income or stability of principal
* Are pursuing a short-term goal
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PERFORMANCE INFORMATION
Because the Fund has been in operation for less than a full calendar year, its
total return bar chart and performance table have not been included.
FEES AND EXPENSES
The following tables describes the fees and expenses that a shareholder in the
Fund will pay.
Class B Class C
Shares Shares
------ ------
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) .................... None None
Maximum deferred sales charge (load)
(as a percentage of the lower of purchase
price or redemption price) ............................ 5.00% 1.00%
ANNUAL OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees ......................................... 1.00% 1.00%
Distribution and Service (12b-1) Fees.................... 1.00% 1.00%
Other Expenses* ........................................ 0.50% 0.50%
Total Annual Fund Operating Expenses .................... 2.50% 2.50%
==== ====
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* Other expenses are estimated for the first fiscal year of the Fund. The
Advisor has contractually agreed to reduce its fees and/or pay expenses of
the Fund for a one year period ending December 31, 2000 to ensure that
Total Fund Operating Expenses will not exceed 2.50% per year. The Advisor
may be reimbursed for any waiver of its fees or expenses paid on behalf of
the Fund if the Fund's expenses are less than the limit agreed to by the
Fund. The Trustees may terminate this expense reimbursement arrangement at
any time.
EXAMPLE
Use this example to compare the costs of investing in the Fund to those of
investing in other funds. Of course, your actual costs may be higher or lower.
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This example assumes that you invest $10,000 in the Fund for the time periods
indicated. The Example also assumes that your investment has a 5% return each
year, that dividends and distributions are reinvested and that the Fund's
operating expenses remain the same. Although your actual costs may be higher or
lower, under the assumptions, your costs would be:
If you redeem your shares:
One Year Three Years
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Class B shares $766 $1,102
Class C shares $346 $ 779
If you do not redeem your shares:
One Year Three Years
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Class B shares $253 $779
Class C shares $253 $779
INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES
The Fund seeks long-term growth of capital. Of course, there can be no guarantee
that the Fund will achieve its investment objective. This investment objective
may be changed only by approval of the Fund's shareholders. You will be notified
of any changes that are material and, if such changes are made, you should
consider whether the Fund remains an appropriate investment for you.
The Fund will emphasize the purchase of equity securities, including common
stocks, preferred stocks, convertibles and warrants with a market capitalization
in excess of $1 billion. Under normal market conditions, at least 65% of the
Fund's total assets will be invested in such securities. Although the Fund may
invest in various equity securities, it is anticipated that the Fund will
primarily invest in domestic common stocks.
The selection of securities for the Fund's portfolio begins with a top down
analysis of factors affecting the capital markets globally. In its attempt to
get a broad picture of the market in general, the Advisor considers the
following factors:
* Changes in interest rates
* Changes in the value of the U.S. dollar as compared to the currencies of
other countries
* Changes in commodity prices
* Changes in an industry or economic sector and the impact of those changes
on companies
In this first stage of the Advisor's selection process, the Advisor also looks
for companies that are able to best capitalize on the social and technological
changes that are happening in a global economy.
The Advisor then utilizes a quantitative model to narrow the broad universe of
securities into attractive portfolio candidates. The model encompasses the
Advisor's research and forecast of financial statements and company earnings.
This results in the Advisor's estimates of such factors as:
* The potential for earnings growth
* Return on invested capital
* Price-to-earnings ratio relative to earnings growth
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This smaller universe of securities is subject to a bottom-up analysis where the
Advisor analyzes each individual company, which may include meetings with
management, and evaluates:
* The company's business strategy
* The company's competitive standing in its peer industry group
* The company's financial statement
* The quality and depth of the company's management team
* The outlook for future earnings
Although not a principal investment strategy, the Fund may invest to a limited
extent in U.S. dollar denominated foreign securities.
Every security purchased is assigned a target price and constantly reassessed.
As these targets are reached the stock is re-evaluated and the target is either
changed or the issue is sold.
The Fund anticipates that it will have a portfolio turnover rate of about 30%.
This means that the Advisor will not, under normal circumstances, purchase and
sell securities held in the portfolio in order to realize short term gains. It
also means that the Fund is likely to have lower transaction costs than funds
with higher portfolio turnover rates.
Under normal market conditions, the Fund will stay fully invested in equity
securities. However, the Fund may temporarily depart from its principal
investment strategies by making short term investments in cash equivalents in
response to adverse market, economic, or political conditions. This may result
in the Fund not achieving its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
MANAGEMENT RISK. Management risk means that your investment in the Fund varies
with the success and failure of the Advisor's investment strategies and the
Advisor's research, analysis and security selection decisions. If the Advisor's
investment strategies do not produce the expected results, your investment could
be diminished or even lost.
MARKET RISK. The value of a share of the Fund--its "net asset value" or "NAV"
depends upon the market value of all of the Fund's investments. The principal
risk of investing in the Fund is that the market value of securities held by the
Fund will move up and down. These up and down fluctuations, which can occur
rapidly and unpredictably, may cause the Fund's investments to be worth less
than the price originally paid, or less than it was worth at an earlier time;
this in turn will affect the Fund's net asset value per share. Market risk may
affect a single company, industry, sector of the economy or the market as a
whole.
MEDIUM-SIZE COMPANY RISK. The risk of investing in securities of medium-size
companies may involve greater risk than investing in larger companies because
they can be subject to more abrupt or erratic share price change than larger
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companies. Such companies may have limited product lines, markets or financial
and managerial resources and their securities may have limited market liquidity.
As a result, the Fund's net asset value may be more volatile.
YEAR 2000 RISK. The risk that the Fund could be adversely affected if the
computer systems used by the Advisor and other service providers do not properly
process and calculate information related to dates beginning January 1, 2000.
This is commonly known as the "Year 2000 Issue." Although the Advisor does not
anticipate that its services or the services of the Fund's other service
providers will be adversely affected as a result of the Year 2000 Issue, it will
continue to monitor the situation. If malfunctions related to the Year 2000
Issue do arise, the Fund and its investments could be adversely affected, as
well as companies in which the Fund invests.
INVESTMENT ADVISOR
Oakwood Capital Management LLC is the investment advisor to the Fund. The
Advisor's address is 1901 Avenue of the Stars, Los Angeles, CA 90067. The
Advisor provides investment advisory services to individual and institutional
clients with assets under management of approximately $250 million. The Advisor
provides the Fund with advice on buying and selling securities. The Advisor also
furnishes the Fund with office space and certain administrative services and
provides most of the personnel needed by the Fund. For its services, the Fund
pays the Advisor a monthly management fee which is calculated at the annual rate
of 1.00% of the Fund's average daily net assets.
EXPENSE LIMITATION AGREEMENT
The Fund is responsible for its own operating expenses. The Advisor has
contractually agreed to reduce its fees and/or pay expenses of the Fund for a
one year period to ensure that Total Fund Operating Expenses will not exceed
2.50% of average daily net assets annually. Any reduction in advisory fees or
payment of expenses made by the Advisor are subject to reimbursement by the Fund
if requested by the Advisor in subsequent fiscal years. Under the expense
limitation agreement, the Advisor may recoup reimbursements made in the Fund's
first fiscal year in any of the five succeeding fiscal years, reimbursements
made in the Fund's second fiscal year in any of the four succeeding fiscal years
and any reimbursement in years subsequent to fiscal year two, over the
subsequent three fiscal years after the reimbursement made. Any such
reimbursement will be reviewed by the Trustees, who may terminate the
reimbursement arrangement at any time. The Fund must pay its current ordinary
operating expenses before the Advisor is entitled to any reimbursement of fees
and/or expenses.
PORTFOLIO MANAGERS
Mr. James M. Lyon, CFA, ICI, will be Lead Manager of the Fund's portfolio. Mr.
Lyon, Senior Vice President and Senior Security Analyst of the Advisor, has been
associated with the Advisor since April 1998. During this time he has functioned
as a portfolio manager and securities analyst. From 1996 until joining the
Advisor, Mr. Lyon was President of Lyon Investment Management, Inc., a
registered investment advisor, and from 1993 to 1996, a registered principal of
Spelman & Co., Inc., a broker-dealer and registered investment advisor. At both
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Lyon Investment Management, Inc. and Spelman & Co., Inc., Mr. Lyon functioned as
a portfolio manager and securities analyst and was solely responsible for the
buy and sell decisions made for the investment management clients.
Ms. Marla L. Harkness, CFA, CIC, will be Co-Manager of the Fund's portfolio. Ms.
Harkness, Executive Vice President and Director of Equity Investments of the
Advisor, has been associated with the Advisor since its inception in March 1998.
During this time, Ms. Harkness has functioned as a portfolio manager and
securities analyst. From 1986 to 1998, Ms. Harkness was Vice President of RNC
Capital Management Co., a registered investment advisor. At RNC, Ms. Harkness
functioned as a portfolio manager and securities analyst.
ADVISOR'S PRIOR INVESTMENT RETURNS
Set forth in the table below are certain performance data provided by the
Advisor relating to its individually managed accounts. These are all the
Advisor's accounts that had substantially the same investment objective as the
Fund and were managed using substantially similar investment strategies and
techniques as those that will be used in managing the Fund. This performance
data is not that of the Fund and is not indicative of the Fund's future
performance.
The results shown will differ from those the Fund could have obtained because of
differences in brokerage commissions paid, account expenses, including
investment advisory fees (which expenses and fees may be higher for the Fund
than for the Advisor's other accounts), the size of positions taken in relation
to account size, diversification of securities, timing of purchases and sales,
timing of cash additions and withdrawals, the private character of the composite
accounts compared with the public character of the Fund, and the tax-exempt
status of some of the account holders compared with shareholders in the Fund.
These accounts also are not subject to certain investment limitations,
diversification requirements and other restrictions imposed by the Investment
Company Act of 1940 and the Internal Revenue Code, which, if they applied, may
have adversely affected the results shown. Investors should be aware that the
use of different methods of determining performance could result in different
performance results. Investors should not rely on the following performance data
as an indication of future performance of the Advisor or of the Fund.
Average Annual Cumulative
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Total Return Total Return Total Return Return
4/1/98-12/31/99 4/1/98-12/3 1999 4/1/98-12/31/99
--------------- ----------- ---- ---------------
Capital Appreciation
Accounts 22.59% 13.05% 26.82% 43.37%
S&P 500 Index* 19.31% 12.84% 21.04% 36.58%
S&P 400 Index** 12.53% 7.30% 14.72% 23.10%
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* The S&P 500 Index is an unmanaged index generally representative of the
market for the stocks of large-sized U.S. companies.
** The S&P 400 Index is an unmanaged index generally representative of the
market for the stocks of medium-sized U.S. companies.
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1. Oakwood Capital Management LLC has prepared and presented the above report in
compliance with the Performance Presentation Standards of the Association for
Investment Management and Research (AIMR-PPS(TM)). AIMR has not been involved
with the preparation or review of this report. AIMR is a non-profit membership
and education organization with more than 60,000 members worldwide that, among
other things, has formulated a set of performance presentation standards for
investment advisers. These AIMR performance presentation standards are intended
to (i) promote full and fair presentations by investment advisers of their
performance results, and (ii) ensure uniformity in reporting so that performance
results of investment advisers are directly comparable.
2. Results were calculated on a total return basis. Returns are presented after
the deduction of investment advisory fees, brokerage commissions and expenses
applicable to the Advisor's Accounts. Use of the Fund's expense structure would
have lowered the performance results in the Average Annual Total Returns in the
table above.
3. Investors should note that the Fund will compute and disclose its average
annual total return using the standard formula set forth in SEC rules, which is
different from the AIMR method noted above. Unlike the AIMR performance
presentation standards that link quarterly rates of return, the SEC total return
calculation method calls for computation and disclosure of an average annual
compounded rate of return for one, five and ten year periods or shorter periods
from inception. The calculation provides a rate of return that equates a
hypothetical initial investment of $1,000 to an ending redeemable value.
4. The information shown includes all accounts managed by the Advisor that meet
the criteria for inclusion in the composite for each period presented.
SHAREHOLDER INFORMATION
HOW TO BUY SHARES
You may open a Fund account with $5,000 and add to your account at any time with
$1,000 or more. You may open a retirement account with $1,000 and add to your
account at any time with $500 or more. After you have opened a Fund account, you
also may make automatic subsequent monthly investments with $500 or more through
the Automatic Investment Plan. The minimum investment requirements may be waived
from time to time by the Fund.
You may purchase shares of the Fund by check or wire. All purchases by check
must be in U.S.
dollars. Third party checks and cash will not be accepted. A charge may be
imposed if your check does not clear. The Fund is not required to issue share
certificates. The Fund reserves the right to reject any purchase in whole or in
part.
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BY CHECK
If you are making an initial investment in the Fund, simply complete the
Application Form included with this Prospectus and mail it with a check (made
payable to "Gilford Oakwood Equity Fund") to:
Gilford Oakwood Equity Fund
P. O. Box 5536
Hauppauge, NY 11788-0132
If you wish to send your Application Form and check via an overnight delivery
service (such as FedEx), you should call the Transfer Agent at (800) 282-2340
for instructions.
If you are making a subsequent purchase, a stub is attached to the account
statement you will receive after each transaction. Detach the stub from the
statement and mail it together with a check made payable to "Gilford Oakwood
Equity Fund" to the Fund in the envelope provided with your statement or to the
address noted above. Your account number should be written on the check.
BY WIRE
If you are making an initial investment in the Fund, before you wire funds you
should call the Transfer Agent at (800) 282-2340 between 9:00 a.m. and 4:00
p.m., Eastern time, on a day when the New York Stock Exchange ("NYSE") is open
to advise them that you are making an investment by wire. The Transfer Agent
will ask for your name and the dollar amount you are investing. You will then
receive your account number and an order confirmation number. You should then
complete the Account Application included with this Prospectus. Include the date
and the order confirmation number on the Account Application and mail the
completed Account Application to the address at the top of the Account
Application. Your bank should transmit immediately available funds by wire in
your name to:
Firstar Bank, N.A. Cinti/Trust
ABA Routing #042000013
Gilford Oakwood Equity Fund
DDA #821637725
Account name (shareholder name)
Shareholder account number
If you are making a subsequent purchase, your bank should wire funds as
indicated above. Before each wire purchase, you should be sure to notify the
Transfer Agent. IT IS ESSENTIAL THAT YOUR BANK INCLUDE COMPLETE INFORMATION
ABOUT YOUR ACCOUNT IN ALL WIRE INSTRUCTIONS. If you have questions about how to
invest by wire, you may call the Transfer Agent. Your bank may charge you a fee
for sending a wire to the Fund.
You may buy and sell shares of the Fund through certain brokers (and their
agents) that have made arrangements with the Fund to sell its shares. When you
place your order with such a broker or its authorized agent, your order is
treated as if you had placed it directly with the Fund's Transfer Agent, and you
will pay or receive the next price calculated by the Fund. The broker (or agent)
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holds your shares in an omnibus account in the broker's (or agent's) name, and
the broker (or agent) maintains your individual ownership records. The Fund may
pay the broker (or its agent) for maintaining these records as well as providing
other shareholder services. The broker (or its agent) may charge you a fee for
handling your order. The broker (or agent) is responsible for processing your
order correctly and promptly, keeping you advised regarding the status of your
individual account, confirming your transactions and ensuring that you receive
copies of the Fund's prospectus.
AUTOMATIC INVESTMENT PLAN
For your convenience, the Fund offers an Automatic Investment Plan. Under this
Plan, after your initial investment, you authorize the Fund to withdraw from
your personal checking account each month an amount that you wish to invest,
which must be at least $500. If you wish to enroll in this Plan, complete the
appropriate section in the Account Application. The Fund may terminate or modify
this privilege at any time. You may terminate your participation in the Plan at
any time by notifying the Transfer Agent in writing.
RETIREMENT PLANS
The Fund offers an Individual Retirement Account ("IRA") plan. You may obtain
information about opening an IRA account by calling (800) 282-2340. If you wish
to open a Keogh, Section 403(b) or other retirement plan, please contact your
securities dealer.
HOW TO EXCHANGE SHARES
Should your investment needs change, you may exchange your Fund shares for
shares of the Firstar Stellar Treasury Fund ("Firstar Fund"), a money market
fund affiliated with the Fund's Custodian. Exchanges may be made in amounts of
$2,500 or more. Although you will not be charged a contingent deferred sales
charge ("CDSC") at the time you make the exchange, when you redeem your Firstar
Fund shares, you may be subject to a CDSC. The CDSC will be calculated in the
manner described below under "How to Sell Shares." However, if you exchange your
Firstar Fund shares back into the Fund within 60 days of the original exchange,
you will not be subject to a CDSC.
You may exchange your shares by simply sending a written request to the Fund's
Transfer Agent. You should give your account number and the number of shares or
dollar amount to be exchanged The letter should be signed by all of the
shareholders whose names appear on the account registration.
If your account has telephone privileges, you may also exchange Fund shares by
calling the Transfer Agent at (800) 282-2340 between the hours of 9:00 a.m. and
4:00 p.m., Eastern time, on any day the NYSE is open for regular trading. If you
are exchanging shares by telephone, you will be subject to certain
identification procedures which are listed below under "How to Sell Shares."
This exchange privilege does not constitute an offering or recommendation on the
part of the Fund or Advisor of an investment in the Firstar Fund. Prior to
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making such an exchange, you should obtain and carefully read the prospectus for
the Firstar Fund. The Fund may modify the exchange privilege by giving 60 days'
written notice to its shareholders
HOW TO SELL SHARES
You may sell (redeem) your Fund shares on any day the NYSE is open for business
either directly to the Fund or through your investment representative.
The price you will pay to buy Fund shares is the Fund's net asset value. You may
be charged a CDSC when you sell your shares. There is no charge on shares which
you acquire by reinvesting your dividends. The CDSC is based on the original
cost of your shares or the market value of them when you sell, whichever is
less.
Class C shareholders will pay a 1.00% CDSC on shares which are sold within one
year of their purchase.
Class B shareholders will pay a CDSC which is determined by the length of time
the shares being sold have been held, as follows:
Years After Contingent Deferred
Purchase Sales Charge
-------- ------------
1 5.00%
2 4.00%
3 3.00%
4 3.00%
5 2.00%
6 1.00%
Within the 7th Year None
After seven years, Class B shares will automatically convert to a new class of
shares to be established. The new class of shares will have lower distribution
fees. This will mean that your Fund account upon conversion will be subject to
lower overall charges. The conversion will be a non-taxable event for you.
To keep your CDSC as low as possible, when you place an order to sell your
shares, the Fund will first sell any shares in your account that are not subject
to a CDSC. With respect to Class B shares, next, the Fund will sell shares
subject to the lowest CDSC. For purposes of determining the CDSC, all purchases
made during a calendar month are counted as having been made on the first day of
that month at the average cost of all purchases made during that month.
The CDSC may be reduced or waived under certain circumstances and for certain
groups. Call (212) 888-6400 for details.
You may redeem your shares by simply sending a written request to the Transfer
Agent. You should give your account number and state whether you want all or
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some of your shares redeemed. The letter should be signed by all of the
shareholders whose names appear on the account registration. Certain redemptions
require a signature guarantee. Call the Transfer Agent for details. You should
send your redemption request to:
Gilford Oakwood Equity Fund
American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
If you complete the Redemption by Telephone portion of the Account Application,
you may redeem all or some of your shares by calling the Transfer Agent at (800)
282-2340 between the hours of 9:00 a.m. and 4:00 p.m., Eastern time. Redemption
proceeds will be mailed on the next business day to the address that appears on
the Transfer Agent's records. If you request, redemption proceeds will be wired
on the next business day to the bank account you designated on the Account
Application. The minimum amount that may be wired is $1,000. Wire charges, if
any, will be deducted from your redemption proceeds. Telephone redemptions
cannot be made if you notify the Transfer Agent of a change of address within 30
days before the redemption request. If you have a retirement account, you may
not redeem shares by telephone.
When you establish telephone privileges, you are authorizing the Fund and its
Transfer Agent to act upon the telephone instructions of the person or persons
you have designated on your Account Application. Redemption proceeds will be
transferred to the bank account you have designated on your Account Application.
Before acting upon an instruction received by telephone, the Fund and the
Transfer Agent will use procedures to confirm that the telephone instructions
are genuine. These procedures will include recording the telephone call and
asking the caller for a form of personal identification. If the Fund and the
Transfer Agent follow these procedures, they will not be liable for any loss,
expense, or cost arising out of any telephone redemption request that is
reasonably believed to be genuine. This includes any fraudulent or unauthorized
request. The Fund may change, modify or terminate these privileges at any time
upon at least 60 days' notice to shareholders.
You may request telephone redemption privileges after your account is opened by
calling the Transfer Agent at (800) 282-2340 for instructions.
You may have difficulties in making a telephone redemption during periods of
abnormal market activity. If this occurs, you may make your redemption request
in writing.
Payment of your redemption proceeds will be made promptly, but not later than
seven days after the receipt of your written request in proper form. If you made
your initial investment by wire, payment of your redemption proceeds for those
shares will not be made until one business day after your completed Account
Application is received by the Fund. If you did not purchase your shares with a
certified check or wire, the Fund may delay payment of your redemption proceeds
for up to 15 days from date of purchase or until your check has cleared,
whichever occurs first.
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The Fund may redeem the shares in your account if the value of your account is
less than $1,000 as a result of redemptions you have made. This does not apply
to retirement plan or Uniform Gifts or Transfers to Minors Act accounts. You
will be notified that the value of your account is less than $1,000 before the
Fund makes an involuntary redemption. You will then have 30 days in which to
make an additional investment to bring the value of your account to at least
$1,000 before the Fund takes any action. You will not be charged a CDSC on a low
balance redemption.
The Fund has the right to pay redemption proceeds to you in whole or in part by
a distribution of securities from the Fund's portfolio. It is not expected that
the Fund would do so except in unusual circumstances.
PRICING OF FUND SHARES
The price of the Fund's shares is based on the Fund's net asset value. This is
done by dividing the Fund's assets, minus its liabilities, by the number of
shares outstanding. The Fund's assets are the market value of securities held in
its portfolio, plus any cash and other assets. The Fund's liabilities are fees
and expenses owed by the Fund. The number of Fund shares outstanding is the
amount of shares which have been issued to shareholders. The price you will pay
to buy Fund shares or the amount you will receive when you sell your Fund shares
is based on the net asset value next calculated after your order is received by
the Transfer Agent with complete information and meeting all the requirements
discussed in this Prospectus.
The net asset value of the Fund's shares is determined as of the close of the
regular daily trading session on the NYSE. This is normally 4:00 p.m., Eastern
time. Fund shares will not be priced on days that the NYSE is closed for trading
(including certain U.S. holidays).
DIVIDENDS AND DISTRIBUTIONS
The Fund will make distributions of dividends and capital gains, if any, at
least annually, typically after year end. The Fund will make another
distribution of any additional undistributed capital gains earned during the
12-month period ended October 31 on or about December 31.
All distributions will be reinvested in Fund shares unless you request in
writing to the Transfer Agent that you wish to receive your distributions in
cash. This written request must be received by the Transfer Agent in advance of
the payment date for the distribution.
TAX CONSEQUENCES
The Fund intends to make distributions of dividends and capital gains. Dividends
are taxable to you as ordinary income. The rate you pay on capital gain
distributions will depend on how long the Fund held the securities that
generated the gains, not on how long you owned your Fund shares. You will be
taxed in the same manner whether you receive your dividends and capital gain
distributions in cash or reinvest them in additional Fund shares.
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<PAGE>
If you sell or exchange your Fund shares, it is considered a taxable event for
you. Depending on the purchase price and the sale price of the shares you
exchange or sell, you may have a gain or a loss on the transaction. You are
responsible for any tax liabilities generated by your transaction.
RULE 12b-1 FEES
The Fund has adopted a distribution plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940. This rule allows the Fund to pay distribution
fees for the sale and distribution of its shares. The plan provides for the
payment of a distribution fee at the annual rate of 0.75% of the Fund's average
daily net assets and a service fee at the annual rate of 0.25% of the Fund's
average daily net assets. The fees are payable to Gilford Securities, the Fund's
Distributor. Because these fees are paid out of the Fund's assets on an on-going
basis, over time these fees will increase the cost of your investment in Fund
shares and may cost you more than paying other types of shares charges.
MULTIPLE CLASS INFORMATION
The Fund offers two classes of shares - Class B and Class C. While both classes
invest in the same portfolio of securities, each class has a separate CDSC. The
principal advantage of Class B is that after time, the CDSC is reduced, until
ultimately, after seven years, the CDSC is zero. Therefore, Class B may be best
for investors who intend to hold their shares for a long period of time. In
addition, Class B shares will automatically convert to a new class of shares,
not yet established, that will pay lower distribution expenses. This new class
will have an overall lower expense structure than Class B and Class C. Class C
shares are not eligible for this conversion.
The principal advantage of Class C is that Class C has a consistent CDSC that
does not change over time. Therefore, Class C may be best for investors who may
need to sell Fund shares after a short period of time.
15
<PAGE>
GILFORD OAKWOOD EQUITY FUND
A SERIES OF TRUST FOR INVESTMENT MANAGERS (THE "TRUST")
For investors who want more information about the Fund, the following document
is available free upon request:
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Fund and is incorporated by reference into this
Prospectus.
You can get free copies of the SAI, request other information and discuss your
questions about the Fund by contacting the Fund at:
American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
Telephone: 1-800-282-2340
You can review and copy information including the Fund's SAI at the Public
Reference Room of the Securities and Exchange Commission in Washington, D.C. You
can obtain information on the operation of the Public Reference Room by calling
1-202-942-8090. Reports and other information about the Fund are also available:
* Free of charge from the Commission's EDGAR database on the Commission's
Internet website at http://www.sec.gov., or
* For a fee, by writing to the Public Reference Room of the Commission,
Washington, DC 20549-0102, or
* For a fee, by electronic request at the following e-mail address:
[email protected].
(The Trust's SEC Investment Company Act
file number is 811-09393)
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
________________, 2000
GILFORD OAKWOOD EQUITY FUND,
A SERIES OF TRUST FOR INVESTMENT MANAGERS
1901 AVENUE OF THE STARS, SUITE 390
LOS ANGELES, CA 90067
1-800-282-2340
This Statement of Additional Information ("SAI") is not a prospectus and it
should be read in conjunction with the Prospectus dated__________, 2000, as may
be revised, of the Gilford Oakwood Equity Fund (the "Fund"), a series of Trust
for Investment Managers (the "Trust"). Oakwood Capital Management LLC (the
"Advisor") is the advisor to the Fund. A copy of the Fund's Prospectus is
available by calling either of the numbers listed above.
TABLE OF CONTENTS
The Trust ................................................................ B-2
Investment Objective and Policies ........................................ B-2
Investment Restrictions .................................................. B-10
Distributions and Tax Information ........................................ B-11
Trustees and Executive Officers .......................................... B-13
The Fund's Investment Advisor ............................................ B-14
The Fund's Administrator ................................................. B-15
The Fund's Distributor ................................................... B-15
Execution of Portfolio Transactions ...................................... B-16
Portfolio Turnover ....................................................... B-18
Additional Purchase and Redemption Information ........................... B-18
Determination of Share Price ............................................. B-20
Performance Information .................................................. B-21
General Information ...................................................... B-21
Appendix ................................................................. B-23
B-1
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THE TRUST
The Trust for Investment Managers (the "Trust") is an open-end management
investment company organized as a Delaware business trust. The Trust may consist
of various series which represent separate investment portfolios. This SAI
relates only to the Fund.
The Trust is registered with the SEC as a management investment company. Such a
registration does not involve supervision of the management or policies of the
Fund. The Prospectus of the Fund and this SAI omit certain of the information
contained in the Registration Statement filed with the SEC. Copies of such
information may be obtained from the SEC upon payment of the prescribed fee.
INVESTMENT OBJECTIVE AND POLICIES
The Fund has the investment objective of seeking long-term growth of capital.
The Fund is diversified, which under the Investment Company Act of 1940 ("1940
Act") means that as to 75% of its total assets, no more than 5% may be invested
in the securities of a single issuer and that it may hold no more than 10% of
the voting securities of a single issuer. The following information supplements
the discussion of the Fund's investment objective and policies as set forth in
its Prospectus. There can be no guarantee that the Fund's objective will be
attained.
CONVERTIBLE SECURITIES AND WARRANTS. The Fund may invest in convertible
securities and warrants. A convertible security is a fixed-income security (a
debt instrument or a preferred stock) which may be converted at a stated price
within a specified period of time into a certain quantity of the common stock of
the same or a different issuer. Convertible securities are senior to common
stocks in an issuer's capital structure, but are usually subordinated to similar
non-convertible securities. While providing a fixed income stream (generally
higher in yield than the income derivable from common stock but lower than that
afforded by a similar nonconvertible security), a convertible security also
affords an investor the opportunity, through its conversion feature, to
participate in the capital appreciation attendant upon a market price advance in
the convertible security's underlying common stock.
A warrant gives the holder a right to purchase at any time during a specified
period a predetermined number of shares of common stock at a fixed price. Unlike
convertible debt securities or preferred stock, warrants do not pay a fixed
dividend. Investments in warrants involve certain risks, including the possible
lack of a liquid market for resale of the warrants, potential price fluctuations
as a result of speculation or other factors, and failure of the price of the
underlying security to reach or have reasonable prospects of reaching a level at
which the warrant can be prudently exercised (in which event the warrant may
expire without being exercised, resulting in a loss of the Fund's entire
investment therein).
PREFERRED STOCK. The Fund may invest in preferred stocks. A preferred stock is a
blend of the characteristics of a bond and common stock. It can offer the higher
yield of a bond and has priority over common stock in equity ownership, but does
not have the seniority of a bond and, unlike common stock, its participation in
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the issuer's growth may be limited. Preferred stock has preference over common
stock in the receipt of dividends and in any residual assets after payment to
creditors should the issuer be dissolved. Although the dividend is set at a
fixed annual rate, in some circumstances it can be changed or omitted by the
issuer.
INVESTMENT COMPANIES. The Fund may invest in shares of other investment
companies in pursuit of its investment objective. This may include investment in
money market mutual funds in connection with the Fund's management of daily cash
positions. In addition to the advisory and operational fees the Fund bears
directly in connection with its own operation, the Fund and its shareholders
will also bear the pro rata portion of each other investment company's advisory
and operational expenses.
DOMESTIC COMPANIES WITH FOREIGN OPERATIONS. Securities of companies which have
significant foreign operations, often called "multinational companies," involve
certain risks not associated with those operating domestically, including
foreign currency risk. Multinational companies that receive a substantial
portion of their revenues in foreign currencies are subject to the risk that
those currencies will decline in value relative to the U.S. dollar.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements. Under such
agreements, the seller of the security agrees to repurchase it at a mutually
agreed upon time and price. The repurchase price may be higher than the purchase
price, the difference being income to the Fund, or the purchase and repurchase
prices may be the same, with interest at a stated rate due to the Fund together
with the repurchase price on repurchase. In either case, the income to the Fund
is unrelated to the interest rate on the U.S. Government security itself. Such
repurchase agreements will be made only with banks with assets of $500 million
or more that are insured by the Federal Deposit Insurance Corporation or with
Government securities dealers recognized by the Federal Reserve Board and
registered as broker-dealers with the Securities and Exchange Commission ("SEC")
or exempt from such registration. The Fund will generally enter into repurchase
agreements of short durations, from overnight to one week, although the
underlying securities generally have longer maturities. The Fund may not enter
into a repurchase agreement with more than seven days to maturity if, as a
result, more than 15% of the value of its net assets would be invested in
illiquid securities including such repurchase agreements.
For purposes of the 1940 Act, a repurchase agreement is deemed to be a loan from
the Fund to the seller of the U.S. Government security subject to the repurchase
agreement. It is not clear whether a court would consider the U.S. Government
security acquired by the Fund subject to a repurchase agreement as being owned
by the Fund or as being collateral for a loan by the Fund to the seller. In the
event of the commencement of bankruptcy or insolvency proceedings with respect
to the seller of the U.S. Government security before its repurchase under a
repurchase agreement, the Fund may encounter delays and incur costs before being
able to sell the security. Delays may involve loss of interest or a decline in
price of the U.S. Government security. If a court characterizes the transaction
as a loan and the Fund has not perfected a security interest in the U.S.
Government security, the Fund may be required to return the security to the
seller's estate and be treated as an unsecured creditor of the seller. As an
unsecured creditor, the Fund would be at the risk of losing some or all of the
principal and income involved in the transaction. As with any unsecured debt
instrument purchased for the Fund, the Advisor seeks to minimize the risk of
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<PAGE>
loss through repurchase agreements by analyzing the creditworthiness of the
other party, in this case the seller of the U.S. Government security.
Apart from the risk of bankruptcy or insolvency proceedings, there is also the
risk that the seller may fail to repurchase the security. However, the Fund will
always receive as collateral for any repurchase agreement to which it is a party
securities acceptable to it, the market value of which is equal to at least 100%
of the amount invested by the Fund plus accrued interest, and the Fund will make
payment against such securities only upon physical delivery or evidence of book
entry transfer to the account of its Custodian. If the market value of the U.S.
Government security subject to the repurchase agreement becomes less than the
repurchase price (including interest), the Fund will direct the seller of the
U.S. Government security to deliver additional securities so that the market
value of all securities subject to the repurchase agreement will equal or exceed
the repurchase price. It is possible that the Fund will be unsuccessful in
seeking to impose on the seller a contractual obligation to deliver additional
securities.
ILLIQUID SECURITIES. The Fund may not invest more than 15% of the value of its
net assets in securities that at the time of purchase have legal or contractual
restrictions on resale or are otherwise illiquid. The Advisor will monitor the
amount of illiquid securities in the Fund's portfolio, under the supervision of
the Trust's Board of Trustees, to ensure compliance with the Fund's investment
restrictions.
Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933 (the "Securities Act"), securities
which are otherwise not readily marketable and repurchase agreements having a
maturity of longer than seven days. Securities which have not been registered
under the Securities Act are referred to as private placement or restricted
securities and are purchased directly from the issuer or in the secondary
market. Mutual funds do not typically hold a significant amount of these
restricted or other illiquid securities because of the potential for delays on
resale and uncertainty in valuation. Limitations on resale may have an adverse
effect on the marketability of portfolio securities and the Fund might be unable
to sell restricted or other illiquid securities promptly or at reasonable prices
and might thereby experience difficulty satisfying redemption requests within
seven days. The Fund might also have to register such restricted securities in
order to sell them, resulting in additional expense and delay. Adverse market
conditions could impede such a public offering of securities.
In recent years, however, a large institutional market has developed for certain
securities that are not registered under the Securities Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale to the general public or
to certain institutions may not reflect the actual liquidity of such
investments. If such securities are subject to purchase by institutional buyers
in accordance with Rule 144A promulgated by the SEC under the Securities Act,
the Trust's Board of Trustees may determine that such securities are not
illiquid securities despite their legal or contractual restrictions on resale.
In all other cases, however, securities subject to restrictions on resale will
be deemed illiquid.
B-4
<PAGE>
FOREIGN SECURITIES. The Fund may invest up to 20% of its total assets in US
Dollar denominated securities issued by foreign companies. The Fund may also
invest up to 5% of it total assets in securities of foreign issuers that are not
publicly traded in the United States, including securities from emerging
markets. The Fund may also invest in American Depositary Receipts (ADRs") and
European Depositary Receipts ("EDRs").
DEPOSITARY RECEIPTS. 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.
RISKS OF INVESTING IN FOREIGN SECURITIES. Investments in foreign securities
involve certain inherent risks, including the following:
Political and Economic Factors. Individual foreign economies of certain
countries may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, and diversification and balance of
payments position. The internal politics of some foreign countries may not be as
stable as those of the United States. Governments in some foreign countries also
continue to participate to a significant degree, through ownership interest or
regulation, in their respective economies. Action by these governments could
include restrictions on foreign investment, nationalization, expropriation of
goods or imposition of taxes, and could have a significant effect on market
prices of securities and payment of interest. The economies of many foreign
countries are heavily dependent upon international trade and are affected by the
trade policies and economic conditions of their trading partners. If these
trading partners enacted protectionist trade legislation, it could have a
significant adverse effect upon the securities markets of such countries.
CURRENCY FLUCTUATIONS. The Fund will invest only in securities denominated in
U.S. dollars. For this reason, the value of the Fund's assets may not be subject
to risks associated with variations in the value of foreign currencies relative
to the U.S. dollar to the same extent as might otherwise be the case. Changes in
the value of foreign currencies against the U.S. dollar may, however, affect the
value of the assets and/or income of foreign companies whose U.S. dollar
denominated securities are held by the Fund. Such companies may also be affected
significantly by currency restrictions and exchange control regulations enacted
from time to time.
EURO CONVERSION. Several European countries adopted a single uniform currency
known as the "euro," effective January 1, 1999. The euro conversion, that will
take place over a several-year period, could have potential adverse effects on
the Fund's ability to value its portfolio holdings in foreign securities, and
could increase the costs associated with the Fund's operations. The Fund and the
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Advisor are working with providers of services to the Fund in the areas of
clearance and settlement of trade to avoid any material impact on the Fund due
to the euro conversion; there can be no assurance, however, that the steps taken
will be sufficient to avoid any adverse impact on the Fund.
MARKET CHARACTERISTICS. The Advisor expects that many foreign securities in
which the Fund invests will be purchased in over-the-counter markets or on
exchanges located in the countries in which the principal offices of the issuers
of the various securities are located, if that is the best available market.
Foreign exchanges and markets may be more volatile than those in the United
States. While growing, they usually have substantially less volume than U.S.
markets, and the Fund's foreign securities may be less liquid and more volatile
than U.S. securities. Also, settlement practices for transactions in foreign
markets may differ from those in United States markets, and may include delays
beyond periods customary in the United States. Foreign security trading
practices, including those involving securities settlement where Fund assets may
be released prior to receipt of payment or securities, may expose the Fund to
increased risk in the event of a failed trade or the insolvency of a foreign
broker-dealer.
LEGAL AND REGULATORY MATTERS. Certain foreign countries may have less
supervision of securities markets, brokers and issuers of securities, and less
financial information available to issuers, than is available in the United
States.
TAXES. The interest and dividends payable on some of the Fund's foreign
portfolio securities may be subject to foreign withholding taxes, thus reducing
the net amount of income available for distribution to Fund shareholders.
COSTS. To the extent that the Fund invests in foreign securities, its expense
ratio is likely to be higher than those of investment companies investing only
in domestic securities, since the cost of maintaining the custody of foreign
securities is higher.
OPTIONS ON SECURITIES. The Fund may write (sell) covered call options to a
limited extent on its portfolio securities ("covered options") in an attempt to
enhance gain.
When the Fund writes a covered call option, it gives the purchaser of the option
the right, upon exercise of the option, to buy the underlying security at the
price specified in the option (the "exercise price") at any time during the
option period, generally ranging up to nine months. If the option expires
unexercised, the Fund will realize income to the extent of the amount received
for the option (the "premium"). If the call option is exercised, a decision over
which the Fund has no control, the Fund must sell the underlying security to the
option holder at the exercise price. By writing a covered option, the Fund
forgoes, in exchange for the premium less the commission ("net premium") the
opportunity to profit during the option period from an increase in the market
value of the underlying security above the exercise price.
The Fund may terminate its obligation as writer of a call option by purchasing
an option with the same exercise price and expiration date as the option
previously written. This transaction is called
a "closing purchase transaction."
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<PAGE>
Closing sale transactions enable the Fund immediately to realize gains or
minimize losses on its options positions. There is no assurance that a liquid
secondary market on an options exchange will exist for any particular option, or
at any particular time, and for some options no secondary market may exist. If
the Fund is unable to effect a closing purchase transaction with respect to
options it has written, it will not be able to terminate its obligations or
minimize its losses under such options prior to their expiration. If the Fund is
unable to effect a closing sale transaction with respect to options that it has
purchased, it would have to exercise the option in order to realize any profit.
The hours of trading for options may not conform to the hours during which the
underlying securities are traded. To the extent that the options markets close
before the markets for the underlying securities, significant price and rate
movements may take place in the underlying markets that cannot be reflected in
the options markets. The purchase of options is a highly specialized activity
which involves investment techniques and risks different from those associated
with ordinary portfolio securities transactions.
OPTIONS ON SECURITIES INDICES. The Fund may write (sell) covered call options on
securities indices in an attempt to increase gain. A securities index option
written by the Fund would obligate it, upon exercise of the options, to pay a
cash settlement, rather than to deliver actual securities, to the option holder.
Although the Fund will not ordinarily own all of the securities comprising the
stock indices on which it writes call options, such options will usually be
written on those indices which correspond most closely to the composition of the
Fund's portfolio. As with the writing of covered call options on securities, the
Fund will realize a gain in the amount of the premium received upon writing an
option if the value of the underlying index increases above the exercise price
and the option is exercised, the Fund will be required to pay a cash settlement
that may exceed the amount of the premium received by the Fund. The Fund may
purchase call options in order to terminate its obligations under call options
it has written.
The Fund may purchase call and put options on securities indices for the purpose
of hedging against the risk of unfavorable price movements adversely affecting
the value of the Fund's securities or securities the Fund intends to buy.
Securities index options will not be purchased for speculative purposes. Unlike
an option on securities, which gives the holder the right to purchase or sell
specified securities at a specified price, an option on a securities index gives
the holder the right, upon the exercise of the option, to receive a cash
"exercise settlement amount" equal to (i) the difference between the exercise
price of the option and the value of the underlying securities index on the
exercise date multiplied by (ii) a fixed "index multiplier."
A securities index fluctuates with changes in the market value of the securities
included in the index. For example, some securities index options are based on a
broad market index such as the Standard & Poor's 500 or the Value Line Composite
Index, or a narrower market index such as the Standard & Poor's 100. Indices may
also be based on industry or market segments.
The Fund may purchase put options in order to hedge against an anticipated
decline in stock market prices that might adversely affect the value of the
Fund's portfolio securities. If the Fund purchases a put option on a stock
index, the amount of payment it receives on exercising the option depends on the
extent of any decline in the level of the stock index below the exercise price.
Such payments would tend to offset a decline in the value of the Fund's
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portfolio securities. If, however, the level of the stock index increases and
remains above the exercise price while the put option is outstanding, the Fund
will not be able to profitably exercise the option and will lose the amount of
the premium and any transaction costs. Such loss may be partially offset by an
increase in the value of the Fund's portfolio securities. The Fund may write put
options on stock indices in order to close out positions in stock index put
options which it has purchased.
The Fund may purchase call options on stock indices in order to participate in
an anticipated increase in stock market prices or to lock in a favorable price
on securities that it intends to buy in the future. If the Fund purchases a call
option on a stock index, the amount of the payment it receives upon exercising
the option depends on the extent of any increase in the level of the stock index
above the exercise price. Such payments would in effect allow the Fund to
benefit from stock market appreciation even though it may not have had
sufficient cash to purchase the underlying stocks. Such payments may also offset
increases in the price of stocks that the Fund intends to purchase. If, however,
the level of the stock index declines and remains below the exercise price while
the call option is outstanding, the Fund will not be able to exercise the option
profitably and will lose the amount of the premium and transaction costs. Such
loss may be partially offset by a reduction in the price the Fund pays to buy
additional securities for its portfolio. The Fund may write call options on
stock indices in order to close out positions in stock index call options which
it has purchased.
The effectiveness of hedging through the purchase of options on securities
indices will depend upon the extent to which price movements in the portion of
the securities portfolio being hedged correlate with price movements in the
selected stock index. Perfect correlation is not possible because the securities
held or to be acquired by the Fund will not exactly match the composition of the
stock indices on which the options are available. In addition, the purchase of
stock index options involves the risk that the premium and transaction costs
paid by the Fund in purchasing an option will be lost as a result of
unanticipated movements in prices of the securities comprising the stock index
on which the option is based.
CORPORATE DEBT SECURITIES. The Fund may invest up to 20% of its assets in debt
securities, including debt securities rated below investment grade. Bonds rated
below BBB by S&P or Baa by Moody's, commonly referred to "junk bonds," typically
carry higher coupon rates than investment grade bonds, but also are described as
speculative by both S&P and Moody's and may be subject to greater market price
fluctuations, less liquidity and greater risk of income or principal including
greater possibility of default and bankruptcy of the issuer of such securities
than more highly rated bonds. Lower rated bonds also are more likely to be
sensitive to adverse economic or company developments and more subject to price
fluctuations in response to changes in interest rates. The market for
lower-rated debt issues generally is thinner and less active than that for
higher quality securities, which may limit the Fund's ability to sell such
securities at fair value in response to changes in the economy or financial
markets. During periods of economic downturn or rising interest rates, highly
leveraged issuers of lower rated securities may experience financial stress
which could adversely affect their ability to make payments of interest and
principal and increase the possibility of default.
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Ratings of debt securities represent the rating agencies' opinions regarding
their quality, are not a guarantee of quality and may be reduced after the Fund
has acquired the security. If a security's rating is reduced while it held by
the Fund, the Advisor will consider whether the Fund should continue to hold the
security but is not required to dispose of it. Credit ratings attempt to
evaluate the safety of principal and interest payments and do not evaluate the
risks of fluctuations in market value. Also, rating agencies may fail to make
timely changes in credit ratings in response to subsequent events, so that an
issuer's current financial conditions may be better or worse than the rating
indicates. The ratings for corporate debt securities are described in Appendix
A.
LENDING PORTFOLIO SECURITIES. The Fund may lend its portfolio securities in an
amount not exceeding 33-1/3% of its total assets to financial institutions such
as banks and brokers if the loan is collateralized in accordance with applicable
regulations. Under the present regulatory requirements which govern loans of
portfolio securities, the loan collateral must, on each business day, at least
equal the value of the loaned securities and must consist of cash, letters of
credit of domestic banks or domestic branches of foreign banks, or securities of
the U.S. Government or its agencies. To be acceptable as collateral, letters of
credit must be irrevocable and obligate a bank to pay amounts demanded by the
Fund if the demand meets the terms of the letter. Such terms and the issuing
bank would have to be satisfactory to the Fund. Any loan might be secured by any
one or more of the three types of collateral. The terms of the Fund's loans must
permit the Fund to reacquire loaned securities on three days' notice or in time
to vote on any serious matter and must meet certain tests under the Internal
Revenue Code (the "Code").
SHORT-TERM INVESTMENTS. The Fund may invest in any of the following securities
and instruments:
CERTIFICATES OF DEPOSIT, BANKERS' ACCEPTANCES AND TIME DEPOSITS. The Fund may
acquire certificates of deposit, bankers' acceptances and time deposits.
Certificates of deposit are negotiable certificates issued against funds
deposited in a commercial bank for a definite period of time and earning a
specified return. Bankers' acceptances are negotiable drafts or bills of
exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning in effect that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Certificates of deposit and bankers' acceptances acquired by the Fund will be
dollar- denominated obligations of domestic banks, savings and loan associations
or financial institutions which, at the time of purchase, have capital, surplus
and undivided profits in excess of $100 million (including assets of both
domestic and foreign branches), based on latest published reports, or less than
$100 million if the principal amount of such bank obligations are fully insured
by the U.S. Government.
In addition to purchasing certificates of deposit and bankers' acceptances, to
the extent permitted under its investment objective and policies stated above
and in its prospectus, the Fund may make interest-bearing time or other
interest-bearing deposits in commercial or savings banks. Time deposits are
non-negotiable deposits maintained at a banking institution for a specified
period of time at a specified interest rate.
COMMERCIAL PAPER AND SHORT-TERM NOTES. The Fund may invest a portion of its
assets in commercial paper and short-term notes. Commercial paper consists of
unsecured promissory notes issued by corporations. Issues of commercial paper
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and short-term notes will normally have maturities of less than nine months and
fixed rates of return, although such instruments may have maturities of up to
one year.
Commercial paper and short-term notes will consist of issues rated at the time
of purchase "A-2" or higher by Standard & Poor's Ratings Group, "Prime-1" or
"Prime-2" by Moody's Investors Service, Inc., or similarly rated by another
nationally recognized statistical rating organization or, if unrated, will be
determined by the Adviser to be of comparable quality. These rating symbols are
described in the Appendix.
INVESTMENT RESTRICTIONS
The following policies and investment restrictions have been adopted by the Fund
and (unless otherwise noted) are fundamental and cannot be changed without the
affirmative vote of a majority of the Fund's outstanding voting securities as
defined in the 1940 Act. The Fund may not:
1. Make loans to others, except (a) through the purchase of debt securities in
accordance with its investment objectives and policies, (b) to the extent the
entry into a repurchase agreement is deemed to be a loan.
2. (a) Borrow money, except as stated in the Prospectus and this SAI. Any such
borrowing will be made only if immediately thereafter there is an asset coverage
of at least 300% of all borrowings.
(b) Mortgage, pledge or hypothecate any of its assets except in connection
with any such borrowings.
3. Purchase securities on margin, participate on a joint or joint and several
basis in any securities trading account, or underwrite securities. (Does not
preclude the Fund from obtaining such short- term credit as may be necessary for
the clearance of purchases and sales of its portfolio securities).
4. Purchase or sell real estate, commodities or commodity contracts. (As a
matter of operating policy, the Board of Trustees may authorize the Fund in the
future to engage in certain activities regarding futures contracts for bona fide
hedging purposes; any such authorization will be accompanied by appropriate
notification to shareholders).
5. Invest 25% or more of the market value of its assets in the securities of
companies engaged in any one industry. (Does not apply to investment in the
securities of the U.S. Government, its agencies or instrumentalities.)
6. Issue senior securities, as defined in the 1940 Act, except that this
restriction shall not be deemed to prohibit the Fund from (a) making any
permitted borrowings, mortgages or pledges, or (b) entering into options,
futures, forward or repurchase transactions.
7. With respect to 75% of its total assets, invest more than 5% of its total
assets in securities of a single issuer or hold more than 10% of the voting
securities of such issuer. (Does not apply to investment in the securities of
the U.S. Government, its agencies or instrumentalities.)
B-10
<PAGE>
The Fund observes the following policies, which are not deemed fundamental and
which may be changed without shareholder vote. The Fund may not:
8. Invest in any issuer for purposes of exercising control or management.
9. Invest in securities of other investment companies except as permitted under
the 1940 Act.
10. Invest, in the aggregate, more than 15% of its net assets in securities with
legal or contractual restrictions on resale, securities which are not readily
marketable and repurchase agreements with more than seven days to maturity.
11. With respect to fundamental investment restriction 2(a) above, the Fund will
not purchase portfolio securities while outstanding borrowings exceed 5% of its
assets.
If a percentage restriction described in the Prospectus or in this SAI is
adhered to at the time of investment, a subsequent increase or decrease in a
percentage resulting from a change in the values of assets will not constitute a
violation of that restriction, except with respect to borrowing or the purchase
of restricted or illiquid securities.
DISTRIBUTIONS AND TAX INFORMATION
Distributions. Dividends from net investment income and distributions from net
profits from the sale of securities are generally made annually. Also, the Fund
expects to distribute any undistributed net investment income on or about
December 31 of each year. Any net capital gains realized through the period
ended October 31 of each year will also be distributed by December 31 of each
year.
Each distribution by the Fund is accompanied by a brief explanation of the form
and character of the distribution. In January of each year the Fund will issue
to each shareholder a statement of the federal income tax status of all
distributions.
TAX INFORMATION. Each series of the Trust is treated as a separate entity for
federal income tax purposes. The Fund intends to continue to qualify and elect
to be treated as a "regulated investment company" under Subchapter M of the
Internal Revenue Code of 1986 (the "Code"), provided that it complies with all
applicable requirements regarding the source of its income, diversification of
its assets and timing of distributions. It is the Fund's policy to distribute to
its shareholders all of its investment company taxable income and any net
realized capital gains for each fiscal year in a manner that complies with the
distribution requirements of the Code, so that the Fund will not be subject to
any federal income tax or excise taxes based on net income. To avoid the excise
tax, the Fund must also distribute (or be deemed to have distributed) by
December 31 of each calendar year (i) at least 98% of its ordinary income for
such year, (ii) at least 98% of the excess of its realized capital gains over
its realized capital losses for the one-year period ending on October 31 during
such year and (iii) any amounts from the prior calendar year that were not
distributed and on which the Fund paid no federal excise tax.
B-11
<PAGE>
The Fund's ordinary income generally consists of interest and dividend income,
less expenses. Net realized capital gains for a fiscal period are computed by
taking into account any capital loss carryforward of the Fund.
Distributions of net investment income and net short-term capital gains are
taxable to shareholders as ordinary income. In the case of corporate
shareholders, a portion of the distributions may qualify for the intercorporate
dividends-received deduction to the extent the Portfolio designates the amount
distributed as a qualifying dividend. This designated amount cannot, however,
exceed the aggregate amount of qualifying dividends received by the Portfolio
for its taxable year. The deduction, if any, may be reduced or eliminated if
Portfolio shares held by a corporate investor are treated as debt-financed or
are held for fewer than 46 days.
Any long-term capital gain distributions are taxable to shareholders as
long-term capital gains regardless of the length of time they have held their
shares. Capital gains distributions are not eligible for the dividends-received
deduction referred to in the previous paragraph. Distributions of any ordinary
income and net realized capital gains will be taxable as described above,
whether received in shares or in cash. Shareholders who choose to receive
distributions in the form of additional shares will have a cost basis for
federal income tax purposes in each share so received equal to the net asset
value of a share on the reinvestment date. Distributions are generally taxable
when received. However, distributions declared in October, November or December
to shareholders of record on a date in such a month and paid the following
January are taxable as if received on December 31. Distributions are includable
in alternative minimum taxable income in computing a shareholder's liability for
the alternative minimum tax.
Under the Code, the Fund will be required to report to the Internal Revenue
Service all distributions of ordinary income and capital gains as well as gross
proceeds from the redemption of Portfolio shares, except in the case of exempt
shareholders, which includes most corporations. Pursuant to the backup
withholding provisions of the Code, distributions of any taxable income and
capital gains and proceeds from the redemption of Fund shares may be subject to
withholding of federal income tax at the current maximum federal tax rate of 31
percent in the case of non-exempt shareholders who fail to furnish the Fund with
their taxpayer identification numbers and with required certifications regarding
their status under the federal income tax law. If the backup withholding
provisions are applicable, any such distributions and proceeds, whether taken in
cash or reinvested in additional shares, will be reduced by the amounts required
to be withheld. Corporate and other exempt shareholders should provide the Fund
with their taxpayer identification numbers or certify their exempt status in
order to avoid possible erroneous application of backup withholding. The Fund
reserves the right to refuse to open an account for any person failing to
certify the person's taxpayer identification number.
The Fund will not be subject to corporate income tax in the State of Delaware as
long as its qualifies as regulated investment companies for federal income tax
purposes. Distributions and the transactions referred to in the preceding
paragraphs may be subject to state and local income taxes, and the tax treatment
thereof may differ from the federal income tax treatment.
The foregoing discussion of U.S. federal income tax law relates solely to the
application of that law to U.S. citizens or residents and U.S. domestic
B-12
<PAGE>
corporations, partnerships, trusts and estates. Each shareholder who is not a
U.S. person should consider the U.S. and foreign tax consequences of ownership
of shares of the Fund, including the possibility that such a shareholder may be
subject to a U.S. withholding tax at a rate of 30 percent (or at a lower rate
under an applicable income tax treaty) on amounts constituting ordinary income.
In addition, the foregoing discussion of tax law is based on existing provisions
of the Code, existing and proposed regulations thereunder, and current
administrative rulings and court decisions, all of which are subject to change.
Any such charges could affect the validity of this discussion. The discussion
also represents only a general summary of tax law and practice currently
applicable to the Fund and certain shareholders therein, and, as such, is
subject to change. In particular, the consequences of an investment in shares of
the Fund under the laws of any state, local or foreign taxing jurisdictions are
not discussed herein. Each prospective investor should consult his or her own
tax advisor to determine the application of the tax law and practice in his or
her own particular circumstances.
TRUSTEES AND EXECUTIVE OFFICERS
The Trustees of the Trust, who were elected for an indefinite term by the
initial shareholders of the Trust, are responsible for the overall management of
the Trust, including general supervision and review of the investment activities
of the Fund. The Trustees, in turn, elect the officers of the Trust, who are
responsible for administering the day-to-day operations of the Trust and its
separate series. The current Trustees and officers, their affiliations, dates of
birth and principal occupations for the past five years are set forth below.
Unless noted otherwise, each person has held the position listed for a minimum
of five years.
<TABLE>
<CAPTION>
Name, Address Position(s) Held Principal Occupation(s) During
and Age With Trust Past Five Years
------- ---------- ---------------
<S> <C> <C>
George J. Rebhan, 7/10/34 Trustee Retired. Formerly, President Hotchkis
1920 Mission St. and Wiley Fund (mutual funds) from
South Pasadena, CA 91030 1985 to 1993.
Ashley T. Rabun 5/10/52 Trustee Founder and Chief Executive Officer,
2161 India St. InvestorReach, Inc. (financial services
San Diego, CA 92101 and marketing and distribution
Consulting). Formerly, Partner and
Director, Nicholas-Applegate Capital
Management (investment management)
from 1992 to 1996.
James Clayburn LaForce 12/28/28 Trustee Dean Emeritus, John E. Anderson
P.O. Box 1595 Graduate School of Management,
San Diego, CA 92101 University of California, Los Angeles.
</TABLE>
B-13
<PAGE>
<TABLE>
<CAPTION>
Name, Address Position(s) Held Principal Occupation(s) During
and Age With Trust Past Five Years
------- ---------- ---------------
<S> <C> <C>
Robert H. Wadsworth* 1/25/40 Trustee and President of Investment Company
4455 Camelback Rd. President Administration, LLC ("ICA") (mutual
Phoenix, AZ 85018 fund administrator and the Trust's
Administrator) and First Fund
Distributors, Inc. (registered broker-dealer
and the Trust's Distributor).
Robert M. Slotky* 6/16/47 Treasurer Senior Vice President, ICA since May 1997.
2020 E. Financial Way Formerly, instructor of accounting at
Glendora, CA 91741 California State University-Northridge
(1997); Chief Financial Officer, Wanger
Asset Management L.P. and Treasurer of
Acorn Investment Trust (1992-1996).
</TABLE>
- ----------
* Indicates an "interested person" of the Trust as defined in the 1940 Act.
Set forth below is the rate of compensation received by the following Trustees
from all portfolios of the Trust. This total amount is allocated among the
portfolios. Disinterested Trustees receive an annual retainer of $7,500. The
Trustees also receive a fee of $750 for any special meeting or committee meeting
attended on a date other than that of a regularly scheduled meeting.
Disinterested trustees are also reimbursed for expenses in connection with each
Board meeting attended. No other compensation or retirement benefits were
received by any Trustee or officer from the portfolios of the Trust.
Name of Trustee Total Annual Compensation
- --------------- -------------------------
George J. Rebhan $7,500
Ashley T. Rabun $7,500
James Clayburn LaForce $7,500
As of the date of this SAI, the Trustees and officers of the Trust as a group
did not own more than 1% of the outstanding shares of the Fund.
THE FUND'S INVESTMENT ADVISOR
As stated in the Prospectus, investment advisory services are provided to the
Fund by Oakwood Capital Management LLC, the Advisor, pursuant to an Investment
Advisory Agreement. (the "Advisory Agreement"). As compensation, the Fund pays
the Advisor a monthly management fee (accrued daily) based upon the average
daily net assets of the Fund at the annual rate of 1.00%.
The Advisory Agreement continues in effect for successive annual periods so long
as such continuation is approved at least annually by the vote of (1) the Board
of Trustees of the Trust (or a majority of the outstanding shares of the Fund,
and (2) a majority of the Trustees who are not interested persons of any party
to the Advisory Agreement, in each case cast in person at a meeting called for
the purpose of voting on such approval. The Advisory Agreement may be terminated
at any time, without penalty, by either party to the Advisory Agreement upon
sixty days' written notice and is automatically terminated in the event of its
"assignment," as defined in the 1940 Act.
B-14
<PAGE>
THE FUND'S ADMINISTRATOR
The Fund has an Administration Agreement with Investment Company Administration,
LLC (the "Administrator"), a corporation owned and controlled in part by Mr.
Wadsworth with offices at 4455 E. Camelback Rd., Ste. 261-E, Phoenix, AZ 85018.
The Administration Agreement provides that the Administrator will prepare and
coordinate reports and other materials supplied to the Trustees; prepare and/or
supervise the preparation and filing of all securities filings, periodic
financial reports, prospectuses, statements of additional information, marketing
materials, tax returns, shareholder reports and other regulatory reports or
filings required of the Fund; prepare all required notice filings necessary to
maintain the Fund's ability to sell shares in all states where the Fund
currently does, or intends to do business; coordinate the preparation, printing
and mailing of all materials (e.g., Annual Reports) required to be sent to
shareholders; coordinate the preparation and payment of Fund related expenses;
monitor and oversee the activities of the Fund's servicing agents (i.e.,
transfer agent, custodian, fund accountants, etc.); review and adjust as
necessary the Fund's daily expense accruals; and perform such additional
services as may be agreed upon by the Fund and the Administrator. For its
services, the Administrator receives a monthly fee at the following annual rate:
Average Net Assets Fee or Fee Rate
- ------------------ ---------------
Less than $22.5 million $45,000
$22.5 to $50 million 0.20%
$50 to $100 million 0.15%
$100 to $150 million 0.10%
Over $150 million 0.05%
THE FUND'S DISTRIBUTOR
Gilford Securities (the "Distributor"), 850 Third Avenue, New York, NY 10022
acts as the Fund's principal underwriter in a continuous public offering of the
Fund's shares. The Distribution Agreement between the Fund and the Distributor
continues in effect from year to year if approved at least annually by (i) the
Board of Trustees or the vote of a majority of the outstanding shares of the
Fund (as defined in the 1940 Act) and (ii) a majority of the Trustees who are
not interested persons of any such party, in each case cast in person at a
meeting called for the purpose of voting on such approval. The Distribution
Agreement may be terminated without penalty by the parties thereto upon sixty
days' written notice, and is automatically terminated in the event of its
assignment as defined in the 1940 Act.
Pursuant to a plan of distribution adopted by the Trust, on behalf of the Fund,
pursuant to Rule 12b-1 under the 1940 Act (the "Plan"), the Fund will pay a
distribution fee at an annual rate of 0.75% of its average daily net assets to
the Distributor. The Plan provides for the compensation to the Distributor
regardless of the Fund's distribution expenses.
The Plan allows excess distribution expenses to be carried forward by the
Distributor and resubmitted in a subsequent fiscal year, provided that (i)
distribution expenses cannot be carried forward for more than three years
B-15
<PAGE>
following initial submission; (ii) the Trustees have made a determination at the
time of initial submission that the distribution expenses are appropriate to be
carried forward and (iii) the Trustees make a further determination, at the time
any distribution expenses which have been carried forward are submitted for
payment, that payment at the time is appropriate, consistent with the objectives
of the Plan and in the current best interests of shareholders.
Under the Plan, the Trustees will be furnished quarterly with information
detailing the amount of expenses paid under the Plan and the purposes for which
payments were made. The Plan may be terminated at any time by vote of a majority
of the Trustees of the Trust who are not interested persons. Continuation of the
Plan is considered by such Trustees no less frequently than annually.
The Fund also has a Shareholder Servicing Agreement with the Distributor
pursuant to which payments or reimbursements of payments may be made to selected
brokers, dealers or administrators which have entered into agreements for
services provided to shareholders of the Fund. Under the Agreement, the Fund is
authorized to pay the Distributor a maximum fee in the amount of 0.25% of the
Fund's average daily net assets annually. Payment to the Distributor under the
Agreement reimburses the Distributor for payments it makes to selected brokers,
dealers and administrators who have entered into Service Agreements for services
provided to shareholders of the Fund.
EXECUTION OF PORTFOLIO TRANSACTIONS
Pursuant to the Advisory Agreement, the Advisor determines which securities are
to be purchased and sold by the Fund and which broker-dealers are eligible to
execute the Fund's portfolio transactions. Purchases and sales of securities in
the over-the-counter market will generally be executed directly with a
"market-maker" unless, in the opinion of the Advisor, a better price and
execution can otherwise be obtained by using a broker for the transaction.
Purchases of portfolio securities for the Fund also may be made directly from
issuers or from underwriters. Where possible, purchase and sale transactions
will be effected through dealers (including banks) which specialize in the types
of securities which the Fund will be holding, unless better executions are
available elsewhere. Dealers and underwriters usually act as principal for their
own accounts. Purchases from underwriters will include a concession paid by the
issuer to the underwriter and purchases from dealers will include the spread
between the bid and the asked price. If the execution and price offered by more
than one dealer or underwriter are comparable, the order may be allocated to a
dealer or underwriter that has provided research or other services as discussed
below.
In placing portfolio transactions, the Advisor will use its reasonable efforts
to choose broker-dealers capable of providing the services necessary to obtain
the most favorable price and execution available. The full range and quality of
services available will be considered in making these determinations, such as
the size of the order, the difficulty of execution, the operational facilities
of the firm involved, the firm's risk in positioning a block of securities, and
other factors. In those instances where it is reasonably determined that more
B-16
<PAGE>
than one broker-dealer can offer the services needed to obtain the most
favorable price and execution available, consideration may be given to those
broker-dealers which furnish or supply research and statistical information to
the Advisor that it may lawfully and appropriately use in its investment
advisory capacities, as well as provide other services in addition to execution
services. The Advisor considers such information, which is in addition to and
not in lieu of the services required to be performed by it under its Agreement
with the Fund, to be useful in varying degrees, but of indeterminable value.
Portfolio transactions may be placed with broker-dealers who sell shares of the
Fund subject to rules adopted by the National Association of Securities Dealers,
Inc.
While it is the Fund's general policy to seek first to obtain the most favorable
price and execution available in selecting a broker-dealer to execute portfolio
transactions for the Fund, weight is also given to the ability of a
broker-dealer to furnish brokerage and research services to the Fund or to the
Advisor, even if the specific services are not directly useful to the Fund and
may be useful to the Advisor in advising other clients. In negotiating
commissions with a broker or evaluating the spread to be paid to a dealer, the
Fund may therefore pay a higher commission or spread than would be the case if
no weight were given to the furnishing of these supplemental services, provided
that the amount of such commission or spread has been determined in good faith
by the Advisor to be reasonable in relation to the value of the brokerage and/or
research services provided by such broker-dealer. The standard of reasonableness
is to be measured in light of the Advisor's overall responsibilities to the
Fund.
Investment decisions for the Fund are made independently from those of other
client accounts or mutual funds ("Funds") managed or advised by the Advisor.
Nevertheless, it is possible that at times identical securities will be
acceptable for both the Fund and one or more of such client accounts or Funds.
In such event, the position of the Fund and such client account(s) or Funds in
the same issuer may vary and the length of time that each may choose to hold its
investment in the same issuer may likewise vary. However, to the extent any of
these client accounts or Funds seeks to acquire the same security as the Fund at
the same time, the Fund may not be able to acquire as large a portion of such
security as it desires, or it may have to pay a higher price or obtain a lower
yield for such security. Similarly, the Fund may not be able to obtain as high a
price for, or as large an execution of, an order to sell any particular security
at the same time. If one or more of such client accounts or Funds simultaneously
purchases or sells the same security that the Fund is purchasing or selling,
each day's transactions in such security will be allocated between the Fund and
all such client accounts or Funds in a manner deemed equitable by the Advisor,
taking into account the respective sizes of the accounts and the amount being
purchased or sold. It is recognized that in some cases this system could have a
detrimental effect on the price or value of the security insofar as the Fund is
concerned. In other cases, however, it is believed that the ability of the Fund
to participate in volume transactions may produce better executions for the
Fund.
The Fund does not effect securities transactions through brokers in accordance
with any formula, nor does it effect securities transactions through brokers
solely for selling shares of the Fund, although the Fund may consider the sale
of shares as a factor in allocating brokerage. However, as stated above,
broker-dealers who execute brokerage transactions may effect purchase of shares
of the Fund for their customers.
B-17
<PAGE>
PORTFOLIO TURNOVER
Although the Fund generally will not invest for short-term trading purposes,
portfolio securities may be sold without regard to the length of time they have
been held when, in the opinion of the Advisor, investment considerations warrant
such action. Portfolio turnover rate is calculated by dividing (1) the lesser of
purchases or sales of portfolio securities for the fiscal year by (2) the
monthly average of the value of portfolio securities owned during the fiscal
year. A 100% turnover rate would occur if all the securities in the Fund's
portfolio, with the exception of securities whose maturities at the time of
acquisition were one year or less, were sold and either repurchased or replaced
within one year. A high rate of portfolio turnover (100% or more) generally
leads to transaction costs and may result in a greater number of taxable
transactions. See "Execution of Portfolio Transactions."
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The information provided below supplements the information contained in the
Fund's Prospectus regarding the purchase and redemption of Fund shares.
HOW TO BUY SHARES. The public offering price of Fund shares is the net asset
value. Each Fund receives the net asset value. Shares are purchased at the
public offering price next determined after the Transfer Agent receives your
order in proper form. In most cases, in order to receive that day's public
offering price, the Transfer Agent must receive your order in proper form before
the close of regular trading on the New York Stock Exchange ("NYSE"), normally
4:00 p.m., Eastern time.
The NYSE annually announces the days on which it will not be open for trading.
The most recent announcement indicates that it will not be open on the following
days: New Year's Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
However, the NYSE may close on days not included in that announcement.
The Trust reserves the right in its sole discretion (i) to suspend the continued
offering of the Fund's shares, (ii) to reject purchase orders in whole or in
part when in the judgment of the Advisor or the Distributor such rejection is in
the best interest of the Fund, and (iii) to reduce or waive the minimum for
initial and subsequent investments for certain fiduciary accounts or under
circumstances where certain economies can be achieved in sales of the Fund's
shares.
HOW TO SELL SHARES. You can sell your Fund shares any day the NYSE is open for
regular trading. The Fund may require documentation for the sale of shares by a
corporation, partnership, agent or fiduciary, or a surviving joint owner.
Contact the Transfer Agent for details.
SIGNATURE GUARANTEES. If you sell shares having a net asset value of $10,000 a
signature guarantee is required. Certain other transactions, including
redemptions, also require a signature guarantee. Signature guarantees may be
obtained from a bank, broker-dealer, credit union (if authorized under state
law), securities exchange or association, clearing agency or savings
institution. A notary public cannot provide a signature guarantee.
B-18
<PAGE>
DELIVERY OF REDEMPTION PROCEEDS. Payments to shareholders for shares of the Fund
redeemed directly from the Fund will be made as promptly as possible but no
later than seven days after receipt by the Fund's Transfer Agent of the written
request in proper form, with the appropriate documentation as stated in the
Prospectus, except that the Fund may suspend the right of redemption or postpone
the date of payment during any period when (a) trading on the NYSE is restricted
as determined by the SEC or the NYSE is closed for other than weekends and
holidays; (b) an emergency exists as determined by the SEC making disposal of
portfolio securities or valuation of net assets of the Fund not reasonably
practicable; or (c) for such other period as the SEC may permit for the
protection of the Fund's shareholders. Under unusual circumstances, the Fund may
suspend redemptions, or postpone payment for more than seven days, but only as
authorized by SEC rules.
The value of shares on redemption or repurchase may be more or less than the
investor's cost, depending upon the market value of the Fund's portfolio
securities at the time of redemption or repurchase.
TELEPHONE REDEMPTIONS. Shareholders must have selected telephone transactions
privileges on the Account Application when opening a Fund account. Upon receipt
of any instructions or inquiries by telephone from a shareholder or, if held in
a joint account, from either party, or from any person claiming to be the
shareholder, the Fund or its agent is authorized, without notifying the
shareholder or joint account parties, to carry out the instructions or to
respond to the inquiries, consistent with the service options chosen by the
shareholder or joint shareholders in his or their latest Account Application or
other written request for services, including purchasing or redeeming shares of
the Fund and depositing and withdrawing monies from the bank account specified
in the Bank Account Registration section of the shareholder's latest Account
Application or as otherwise properly specified to the Fund in writing.
The Transfer Agent will employ these and other reasonable procedures to confirm
that instructions communicated by telephone are genuine; if it fails to employ
reasonable procedures, the Fund and the Transfer Agent may be liable for any
losses due to unauthorized or fraudulent instructions. If these procedures are
followed, an investor agrees, however, that to the extent permitted by
applicable law, neither the Fund nor its agents will be liable for any loss,
liability, cost or expense arising out of any redemption request, including any
fraudulent or unauthorized request. For information, consult the Transfer Agent.
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Transfer Agent by telephone. In this event,
you may wish to submit a written redemption request, as described in the
Prospectus. The Telephone Redemption Privilege may be modified or terminated
without notice.
REDEMPTIONS-IN-KIND. The Trust has filed an election under SEC Rule 18f-1
committing to pay in cash all redemptions by a shareholder of record up to
amounts specified by the rule (in excess of the lesser of (i) $250,000 or (ii)
1% of the Fund's assets). The Fund has reserved the right to pay the redemption
price of its shares in excess of the amounts specified by the rule, either
totally or partially, by a distribution in kind of portfolio securities (instead
of cash). The securities so distributed would be valued at the same amount as
B-19
<PAGE>
that assigned to them in calculating the net asset value for the shares being
sold. If a shareholder receives a distribution in kind, the shareholder could
incur brokerage or other charges in converting the securities to cash.
AUTOMATIC INVESTMENT PLAN. As discussed in the Prospectus, the Fund provides an
Automatic Investment Plan for the convenience of investors who wish to purchase
shares of the Fund on a regular basis. All record keeping and custodial costs of
the Automatic Investment Plan are paid by the Fund. The market value of the
Fund's shares is subject to fluctuation, so before undertaking any plan for
systematic investment, the investor should keep in mind that this plan does not
assure a profit nor protect against depreciation in declining markets.
WAIVER OF CONTINGENT DEFERRED SALES CHARGE. The contingent deferred sales charge
imposed on Fund shares does not apply to (a) any redemption pursuant to a
tax-free return of an excess contribution to an individual retirement account or
other qualified retirement plan if the Fund is notified at the time of such
request; (b) any redemption of a lump-sum or other distribution from qualified
retirement plans or accounts provided the shareholder has attained the minimum
age of 70 1/2 years and has held the Fund shares for a minimum period of three
years; (c) any redemption by advisory accounts managed by the Advisor or its
affiliates; (d) any redemption made by employees, officers or directors of the
Advisor or its affiliates; (e) any redemption by a tax-exempt employee benefit
plan if continuation of the investment would be improper under applicable laws
or regulations; and (f) any redemption or transfer of ownership of shares
following the death or disability, as defined in Section 72(m)(7) of the Code,
of a shareholder if the Fund is provided with proof of death or disability and
with all documents required by the Transfer Agent within one year after the
death or disability.
DETERMINATION OF SHARE PRICE
As noted in the Prospectus, the net asset value and offering price of shares of
the Fund will be determined once daily as of the close of public trading on the
NYSE (normally 4:00 p.m., Eastern time) on each day that the NYSE is open for
trading. The Fund does not expect to determine the net asset value of its shares
on any day when the NYSE is not open for trading even if there is sufficient
trading in its portfolio securities on such days to materially affect the net
asset value per share. However, the net asset value of the Fund's shares may be
determined on days the NYSE is closed or at times other than 4:00 p.m. if the
Board of Trustees decides it is necessary.
In valuing the Fund's assets for calculating net asset value, readily marketable
portfolio securities listed on a national securities exchange or on NASDAQ are
valued at the last sale price on the business day as of which such value is
being determined. If there has been no sale on such exchange or on NASDAQ on
such day, the security is valued at the closing bid price on such day. Readily
marketable securities traded only in the over-the-counter market and not on
NASDAQ are valued at the current or last bid price. If no bid is quoted on such
day, the security is valued by such method as the Board of Trustees of the Trust
shall determine in good faith to reflect the security's fair value. All other
assets of the Fund are valued in such manner as the Board of Trustees in good
faith deems appropriate to reflect their fair value.
The net asset value per share of the Fund is calculated as follows: all
liabilities incurred or accrued are deducted from the valuation of total assets
B-20
<PAGE>
which includes accrued but undistributed income; the resulting net assets are
divided by the number of shares of the Fund outstanding at the time of the
valuation and the result (adjusted to the nearest cent) is the net asset value
per share.
PERFORMANCE INFORMATION
From time to time, the Fund may state its total return in advertisements and
investor communications. Total return may be stated for any relevant period as
specified in the advertisement or communication. Any statements of total return
will be accompanied by information on the Fund's average annual compounded rate
of return for the most recent one, five and ten year periods, or shorter periods
from inception, through the most recent calendar quarter. The Fund may also
advertise aggregate and average total return information over different periods
of time.
The Fund's total return may be compared to relevant indices, including Standard
& Poor's 500 Composite Stock Index and indices published by Lipper Analytical
Services, Inc. From time to time, evaluations of the Fund's performance by
independent sources may also be used in advertisements and in information
furnished to present or prospective investors in the Fund.
Investors should note that the investment results of the Fund will fluctuate
over time, and any presentation of the Fund's total return for any period should
not be considered as a representation of what an investment may earn or what an
investor's total return may be in any future period.
The Fund's average annual compounded rate of return is determined by reference
to a hypothetical $1,000 investment that includes capital appreciation and
depreciation for the stated period, according to the following formula:
n
P(1+T) = ERV
Where: P = a hypothetical initial purchase order of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1,000 purchase at
the end of the period
Aggregate total return is calculated in a similar manner, except that the
results are not annualized. Each calculation assumes that all dividends and
distributions are reinvested at net asset value on the reinvestment dates during
the period.
GENERAL INFORMATION
Investors in the Fund will be informed of the Fund's progress through periodic
reports. Financial statements certified by independent public accountants will
be submitted to shareholders at least annually.
Firstar Institutional Custody Services, located at 425 Walnut St., Cincinnati,
Ohio 45201 acts as Custodian of the securities and other assets of the Fund.
B-21
<PAGE>
American Data Services, Inc., P.O. Box 5536, Hauppauge, NY 11788, acts as the
Fund's transfer and shareholder service agent. The Custodian and Transfer Agent
do not participate in decisions relating to the purchase and sale of securities
by the Fund.
Tait, Weller & Baker, 8 Penn Center Plaza, Philadelphia, PA 19103, are the
independent auditors for the Fund.
Paul, Hastings, Janofsky & Walker LLP, 345 California Street, 29th Floor, San
Francisco, California 94104, are legal counsel to the Fund.
The Trust was organized as a Delaware business trust on April 27, 1999. The
Agreement and Declaration of Trust permits the Board of Trustees to issue an
limited number of full and fractional shares of beneficial interest, without par
value, which may be issued in any number of series. The Board of Trustees may
from time to time issue other series, the assets and liabilities of which will
be separate and distinct from any other series.
Shares issued by the Fund have no preemptive, conversion, or subscription
rights. Shareholders have equal and exclusive rights as to dividends and
distributions as declared by the Fund and to the net assets of the Fund upon
liquidation or dissolution. The Fund, as a separate series of the Trust, votes
separately on matters affecting only the Fund (e.g., approval of the Advisory
Agreement); all series of the Trust vote as a single class on matters affecting
all series jointly or the Trust as a whole (e.g., election or removal of
Trustees). Voting rights are not cumulative, so that the holders of more than
50% of the shares voting in any election of Trustees can, if they so choose,
elect all of the Trustees. While the Trust is not required and does not intend
to hold annual meetings of shareholders, such meetings may be called by the
Trustees in their discretion, or upon demand by the holders of 10% or more of
the outstanding shares of the Trust, for the purpose of electing or removing
Trustees.
B-22
<PAGE>
APPENDIX
COMMERCIAL PAPER RATINGS
MOODY'S INVESTORS SERVICE, INC.
Prime-1: Issuers (or related supporting institutions) rated "Prime-1" have a
superior ability for repayment of senior short-term debt obligations. "Prime-1"
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries, high
rates of return on funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad margins in earnings
coverage of fixed financial charges and high internal cash generation, and
well-established access to a range of financial markets and assured sources of
alternate liquidity.
Prime-2: Issuers (or related supporting institutions) rated "Prime-2" have a
strong ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternative liquidity is maintained.
STANDARD & POOR'S RATINGS GROUP
A-1: This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign designation.
A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1."
B-23
<PAGE>
TRUST FOR INVESTMENT MANAGERS
PART C
ITEM 23. EXHIBITS.
(1) Agreement and Declaration of Trust (1)
(2) By-Laws (1)
(3) Specimen Share Certificate (2)
(4) Form of Investment Advisory Agreement (3)
(5) Form of Distribution Agreement
(6) Not applicable
(7) Form of Custodian Agreement (2) (8)
(a) Form of Administration Agreement (2)
(b) Fund Accounting Service Agreement (2)
(c) Transfer Agency and Service Agreement (2)
(d) Shareholder Servicing Agreement (3)
(e) Expense Reimbursement Agreement
(9) Opinion of Counsel (3)
(10) Powers of Attorney (3)
(11) Not applicable
(12) Initial capital agreement (2)
(13) (a) Distribution Plan-Class B shares
(b) Distribution Plan-Class C shares
(c) Shareholder Service Plan
(14) Not applicable
(15) Rule 18f-3 Plan
- ----------
(1) Incorporated by reference from Registrant's initial Registration Statement
on Form N-1A (File No. 333-80993) filed on June 18, 1999.
(2) Incorporated by reference from Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A (File No. 333-80993) filed
on September 17, 1999.
(3) Incorporated by reference from Post-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A (File No. 333-80993) filed
on October 13, 1999.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
<PAGE>
ITEM 25. INDEMNIFICATION
Article VI of Registrant's By-Laws states as follows:
Section 1. AGENTS, PROCEEDINGS AND EXPENSES. For the purpose of this
Article, "agent" means any person who is or was a Trustee, officer, employee or
other agent of this Trust or is or was serving at the request of this Trust as a
Trustee, director, officer, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust or other enterprise or was a
Trustee, director, officer, employee or agent of a foreign or domestic
corporation which was a predecessor of another enterprise at the request of such
predecessor entity; "proceeding" means any threatened, pending or completed
action or proceeding, whether civil, criminal, administrative or investigative;
and "expenses" includes without limitation attorney's fees and any expenses of
establishing a right to indemnification under this Article.
Section 2. ACTIONS OTHER THAN BY TRUST. This Trust shall indemnify any
person who was or is a party or is threatened to be made a party to any
proceeding (other than an action by or in the right of this Trust) by reason of
the fact that such person is or was an agent of this Trust, against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with such proceeding, if it is determined that person acted in
good faith and reasonably believed:
(a) in the case of conduct in his official capacity as a Trustee of the
Trust, that his conduct was in the Trust's best interests, and
(b) in all other cases, that his conduct was at least not opposed to the
Trust's best interests, and
(c) in the case of a criminal proceeding, that he had no reasonable cause
to believe the conduct of that person was unlawful.
The termination of any proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent shall not of
itself create a presumption that the person did not act in good faith and in a
manner which the person reasonably believed to be in the best interests of this
Trust or that the person had reasonable cause to believe that the person's
conduct was unlawful.
Section 3. ACTIONS BY THE TRUST. This Trust shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action by or in the right of this Trust to procure a judgment in
its favor by reason of the fact that that person is or was an agent of this
Trust, against expenses actually and reasonably incurred by that person in
connection with the defense or settlement of that action if that person acted in
good faith, in a manner that person believed to be in the best interests of this
Trust and with such care, including reasonable inquiry, as an ordinarily prudent
person in a like position would use under similar circumstances.
<PAGE>
Section 4. EXCLUSION OF INDEMNIFICATION. Notwithstanding any provision to
the contrary contained herein, there shall be no right to indemnification for
any liability arising by reason of willful misfeasance, bad faith, gross
negligence, or the reckless disregard of the duties involved in the conduct of
the agent's office with this Trust.
No indemnification shall be made under Sections 2 or 3 of this Article:
(a) In respect of any claim, issue, or matter as to which that person
shall have been adjudged to be liable on the basis that personal
benefit was improperly received by him, whether or not the benefit
resulted from an action taken in the person's official capacity; or
(b) In respect of any claim, issue or matter as to which that person shall
have been adjudged to be liable in the performance of that person's
duty to this Trust, unless and only to the extent that the court in
which that action was brought shall determine upon application that in
view of all the circumstances of the case, that person was not liable
by reason of the disabling conduct set forth in the preceding
paragraph and is fairly and reasonably entitled to indemnity for the
expenses which the court shall determine; or
(c) of amounts paid in settling or otherwise disposing of a threatened or
pending action, with or without court approval, or of expenses
incurred in defending a threatened or pending action which is settled
or otherwise disposed of without court approval, unless the required
approval set forth in Section 6 of this Article is obtained.
Section 5. SUCCESSFUL DEFENSE BY AGENT. To the extent that an agent of this
Trust has been successful on the merits in defense of any proceeding referred to
in Sections 2 or 3 of this Article or in defense of any claim, issue or matter
therein, before the court or other body before whom the proceeding was brought,
the agent shall be indemnified against expenses actually and reasonably incurred
by the agent in connection therewith, provided that the Board of Trustees,
including a majority who are disinterested, non-party Trustees, also determines
that based upon a review of the facts, the agent was not liable by reason of the
disabling conduct referred to in Section 4 of this Article.
Section 6. REQUIRED APPROVAL. Except as provided in Section 5 of this
Article, any indemnification under this Article shall be made by this Trust only
if authorized in the specific case on a determination that indemnification of
the agent is proper in the circumstances because the agent has met the
applicable standard of conduct set forth in Sections 2 or 3 of this Article and
is not prohibited from indemnification because of the disabling conduct set
forth in Section 4 of this Article, by:
(a) A majority vote of a quorum consisting of Trustees who are not parties
to the proceeding and are not interested persons of the Trust (as
defined in the Investment Company Act of 1940); or
(b) A written opinion by an independent legal counsel.
<PAGE>
Section 7. ADVANCE OF EXPENSES. Expenses incurred in defending any
proceeding may be advanced by this Trust before the final disposition of the
proceeding upon a written undertaking by or on behalf of the agent, to repay the
amount of the advance if it is ultimately determined that he or she is not
entitled to indemnification, together with at least one of the following as a
condition to the advance: (i)security for the undertaking; or (ii) the existence
of insurance protecting the Trust against losses arising by reason of any lawful
advances; or (iii) a determination by a majority of a quorum of Trustees who are
not parties to the proceeding and are not interested persons of the Trust, or by
an independent legal counsel in a written opinion, based on a review of readily
available facts that there is reason to believe that the agent ultimately will
be found entitled to indemnification. Determinations and authorizations of
payments under this Section must be made in the manner specified in Section 6 of
this Article for determining that the indemnification is permissible.
Section 8. OTHER CONTRACTUAL RIGHTS. Nothing contained in this Article
shall affect any right to indemnification to which persons other than Trustees
and officers of this Trust or any subsidiary hereof may be entitled by contract
or otherwise.
Section 9. LIMITATIONS. No indemnification or advance shall be made under
this Article, except as provided in Sections 5 or 6 in any circumstances where
it appears:
(a) that it would be inconsistent with a provision of the Agreement and
Declaration of Trust of the Trust, a resolution of the shareholders,
or an agreement in effect at the time of accrual of the alleged cause
of action asserted in the proceeding in which the expenses were
incurred or other amounts were paid which prohibits or otherwise
limits indemnification; or
(b) that it would be inconsistent with any condition expressly imposed by
a court in approving a settlement.
Section 10. INSURANCE. Upon and in the event of a determination by the
Board of Trustees of this Trust to purchase such insurance, this Trust shall
purchase and maintain insurance on behalf of any agent of this Trust against any
liability asserted against or incurred by the agent in such capacity or arising
out of the agent's status as such, but only to the extent that this Trust would
have the power to indemnify the agent against that liability under the
provisions of this Article and the Agreement and Declaration of Trust of the
Trust.
Section 11. FIDUCIARIES OF EMPLOYEE BENEFIT PLAN. This Article does not
apply to any proceeding against any Trustee, investment manager or other
fiduciary of an employee benefit plan in that person's capacity as such, even
though that person may also be an agent of this Trust as defined in Section 1 of
this Article. Nothing contained in this Article shall limit any right to
indemnification to which such a Trustee, investment manager, or other fiduciary
may be entitled by contract or otherwise which shall be enforceable to the
extent permitted by applicable law other than this Article.
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 ("Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable. In the event
that a claim for indemnification against such liabilities (other than payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in connection with the successful defense
of any action, suit or proceeding) is asserted against the Registrant by such
director, officer or controlling person in connection with the shares being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
With respect to the Investment Adviser, the response to this item is
incorporated by reference to the Adviser's Form ADV, as amended, File No.
801-702.
ITEM 27. PRINCIPAL UNDERWRITERS.
(a) The Registrant's principal underwriter also acts as principal
underwriter for the following investment companies:
Advisors Series Trust
Brandes Investment Trust
Fleming Mutual Fund Group
Fremont Mutual Funds
Guinness Flight Investment Funds
Jurika & Voyles Fund Group
Kayne Anderson Mutual Funds
Masters' Select Investment Trust
O'Shaughnessy Funds, Inc.
PIC Investment Trust
Purisima Funds
Rainier Investment Management Mutual Funds
RNC Mutual Fund Group
Professionally Managed Portfolios
<PAGE>
(b) The following information is furnished with respect to the officers and
directors of First Fund Distributors, Inc.:
Position and Offices Position and
Name and Principal with Principal Offices with
Business Address Underwriter Registrant
- ---------------- ----------- ----------
Robert H. Wadsworth President and Trustee
4455 E. Camelback Road Treasurer
Suite 261E
Phoenix, AZ 85018
Eric M. Banhazl Vice President None
2020 E. Financial Way
Glendora, CA 91741
Steven J. Paggioli Vice President and None
915 Broadway Secretary
New York, New York 10010
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the rules promulgated thereunder are in the possession the Registrant's
custodian and transfer agent, except those records relating to portfolio
transactions and the basic organizational and Trust documents of the Registrant
(see Subsections (2) (iii). (4), (5), (6), (7), (9), (10) and (11) of Rule
31a-1(b)), which, with respect to portfolio transactions are kept by the Fund's
Advisor at its address set forth in the prospectus and statement of additional
information and with respect to trust documents by its administrator at 2020 E.
Financial Way, Suite 100, Glendora, CA 91741.
ITEM 29. MANAGEMENT SERVICES.
There are no management-related service contracts not discussed in Parts A
and B.
ITEM 30. UNDERTAKINGS
The registrant undertakes:
(a) To furnish each person to whom a Prospectus is delivered a copy of
Registrant's latest annual report to shareholders, upon request and
without charge.
(b) If requested to do so by the holders of at least 10% of the Trust's
outstanding shares, to call a meeting of shareholders for the purposes
of voting upon the question of removal of a director and assist in
communications with other shareholders.
<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 amendment to
this Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Phoenix in the State of Arizona on
January 26, 2000.
TRUST FOR INVESTMENT MANAGERS
By /s/ Robert H. Wadsworth
--------------------------------
Robert H. Wadsworth
President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
/s/ Robert H. Wadsworth Trustee January 26, 2000
- ---------------------------
Robert H. Wadsworth
/s/ Robert M. Slotky Principal January 26, 2000
- --------------------------- Financial
Robert M. Slotky Officer
George J. Rebhan* Trustee January 26, 2000
- ---------------------------
George T. Rebhan
Ashley T. Rabun* Trustee January 26, 2000
- ---------------------------
Ashley T. Rabun
James Clayburn Laforce* Trustee January 26, 2000
- ---------------------------
James Clayburn LaForce
* By: /s/ Robert H. Wadsworth
-------------------------
Robert H. Wadsworth, Attorney-in-Fact under powers of
attorney as filed with Post-Effective Amendment No. 1 to the
Registration Statement filed on October 13, 1999
<PAGE>
EXHIBITS
Exhibit No. Description
- ----------- -----------
99.B.5 Form of Distribution Agreement
99.B.7.E Expense Reimbursement Agreement
99.B.13.A 12b-1 Plan-Class B shares
99.B.13.B 12b-1 Plan-Class C shares
99.B.13.C Shareholder Service Plan
99.B.15 Rule 18f-3 Plan
DISTRIBUTION AGREEMENT
This Agreement made as of the 6th day of December, 1999, by and between
TRUST FOR INVESTMENT MANAGERS, a Delaware business trust, (the "Trust"), and
Gilford Securities Incorporated, a New York corporation (the "Distributor").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940 (the "1940 Act"); and it is in
the interest of the Trust to offer its shares for sale continuously; and
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934 (the "1934 Act") and is a member in good
standing of the National Association of Securities Dealers, Inc. (the "NASD");
and
WHEREAS, the Trust and the Distributor wish to enter into an agreement with
each other with respect to the continuous offering of the shares of each
existing and future series (the "Shares") of the Trust;
NOW, THEREFORE, the parties agree as follows:
1. APPOINTMENT OF DISTRIBUTOR. The Trust hereby appoints the Distributor as
exclusive agent to sell and to arrange for the sale of the Shares, on the terms
and for the period set forth in this Agreement, and the Distributor hereby
accepts such appointment and agrees to act hereunder directly and/or through the
Trust's transfer agent in the manner set forth in the Prospectuses (as defined
below). It is understood and agreed that the services of the Distributor
hereunder are not exclusive, and the Distributor may act as principal
underwriter for the shares of any other registered investment company.
2. SERVICES AND DUTIES OF THE DISTRIBUTOR.
(a) The Distributor agrees to sell the Shares, as agent for the Trust, from
time to time during the term of this Agreement upon the terms described in a
Prospectus. As used in this Agreement, the term "Prospectus" shall mean a
prospectus and statement of additional information included as part of the
Trust's Registration Statement, as such prospectus and statement of additional
information may be amended or supplemented from time to time, and the term
"Registration Statement" shall mean the Registration Statement filed from time
to time by the Trust with the Securities and Exchange Commission ("SEC") and
currently effective under the Securities Act of 1933 (the "1933 Act") and the
1940 Act, as such Registration Statement is amended by any amendments thereto at
the time in effect. The Distributor shall not be obligated to sell any certain
number of Shares.
<PAGE>
(b) Upon commencement of operations of any series, the Distributor will
hold itself available to receive orders, satisfactory to the Distributor, for
the purchase of the Shares and will accept such orders and will transmit such
orders and funds received by it in payment for such Shares as are so accepted to
the Trust's transfer agent or custodian, as appropriate, as promptly as
practicable. Purchase orders shall be deemed accepted and shall be effective at
the time and in the manner set forth in the series' Prospectuses. The
Distributor shall not make any short sales of Shares.
(c) The offering price of the Shares shall be the net asset value per share
of the Shares, plus the sales charge, if any, (determined as set forth in the
Prospectuses). The Trust shall furnish the Distributor, with all possible
promptness, an advice of each computation of net asset value and offering price.
(d) The Distributor shall have the right to enter into selected dealer
agreements with securities dealers of its choice ("selected dealers") for the
sale of Shares. Shares sold to selected dealers shall be for resale by such
dealers only at the offering price of the Shares as set forth in the
Prospectuses. The Distributor shall offer and sell Shares only to such selected
dealers as are members in good standing of the NASD, unless such dealers are not
eligible for membership in the NASD.
3. DUTIES OF THE TRUST.
(a) MAINTENANCE OF FEDERAL REGISTRATION. The Trust shall, at its expense,
take, from time to time, all necessary action and such steps, including payment
of the related filing fees, as may be necessary to register and maintain
registration of a sufficient number of Shares under the 1933 Act. The Trust
agrees to file from time to time such amendments, reports and other documents as
may be necessary in order that there may be no untrue statement of a material
fact in a Registration Statement or Prospectus, or necessary in order that there
may be no omission to state a material fact in the Registration Statement or
Prospectus which omission would make the statements therein misleading.
(b) MAINTENANCE OF "BLUE SKY" QUALIFICATIONS. The Trust shall, at its
expense, use its best efforts to qualify and maintain the qualification of an
appropriate number of Shares for sale under the securities laws of such states
as the Distributor and the Trust may approve, and, if necessary or appropriate
in connection therewith, to qualify and maintain the qualification of the Trust
or the series as a broker or dealer in such states; provided that the Trust
shall not be required to amend its Agreement and Declaration of Trust or By-Laws
to comply with the laws of any state, to maintain an office in any state, to
change the terms of the offering of the Shares in any state, to change the terms
of the offering of the Shares in any state from the terms set forth in
Prospectuses, to qualify as a foreign trust in any state or to consent to
service of process in any state other than with respect to claims arising out of
the offering and sale of the Shares. The Distributor shall furnish such
information and other material relating to its affairs and activities as may be
required by the Trust or its series in connection with such qualifications.
(c) COPIES OF REPORTS AND PROSPECTUSES. The Trust shall, at its expense,
keep the Distributor fully informed with regard to its affairs and in connection
therewith shall furnish to the Distributor copies of all information, financial
-2-
<PAGE>
statements and other papers which the Distributor may reasonably request for use
in connection with the distribution of Shares, including such reasonable number
of copies of Prospectuses and annual and interim reports as the Distributor may
request and shall cooperate fully in the efforts of the Distributor to sell and
arrange for the sale of the Shares and in the performance of the Distributor
under this Agreement.
4. CONFORMITY WITH APPLICABLE LAW AND RULES. The Distributor agrees that in
selling Shares hereunder it shall conform in all respects with the laws of the
United States and of any state in which Shares may be offered, and with
applicable rules and regulations of the NASD.
5. INDEPENDENT CONTRACTOR. In performing its duties hereunder, the
Distributor shall be an independent contractor and neither the Distributor, nor
any of its officers, directors, employees, or representatives is or shall be an
employee of the Trust in the performance of the Distributor's duties hereunder.
The Distributor shall be responsible for its own conduct and the employment,
control, and conduct of its agents and employees and for injury to such agents
or employees or to others through its agents or employees. The Distributor
assumes full responsibility for its agents and employees under applicable
statutes and agrees to pay all employee taxes thereunder.
6. INDEMNIFICATION.
(a) INDEMNIFICATION OF TRUST. The Distributor agrees to indemnify and hold
harmless the Trust and each of its present or former Trustees, officers,
employees, representatives and each person, if any, who controls or previously
controlled the Trust within the meaning of Section 15 of the 1933 Act against
any and all losses, liabilities, damages, claims or expenses (including the
reasonable costs of investigating or defending any alleged loss, liability,
damage, claims or expense and reasonable legal counsel fees incurred in
connection therewith) to which the Trust or any such person may become subject
under the 1933 Act, under any other statute, at common law, or otherwise,
arising out of the acquisition of any Shares by any person which (i) may be
based upon any wrongful act by the Distributor or any of the Distributor's
directors, officers, employees or representatives, or (ii) may be based upon any
untrue statement or alleged untrue statement of a material fact contained in a
Registration Statement, Prospectus, shareholder report or other information
covering Shares filed or made public by the Trust or any amendment thereof or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in reliance upon
and in conformity with information furnished to the Trust by the Distributor. In
no case (i) is the Distributor's indemnity in favor of the Trust, or any person
indemnified to be deemed to protect the Trust or such indemnified person against
any liability to which the Trust or such person would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of the Trust's or such person's duties or by reason of reckless disregard of the
Trust's or such person's obligations and duties under this Agreement or (ii) is
the Distributor to be liable under its indemnity agreement contained in this
Paragraph with respect to any claim made against the Trust or any person
indemnified unless the Trust or such person, as the case may be, shall have
notified the Distributor in writing of the claim within a reasonable time after
-3-
<PAGE>
the summons or other first written notification giving information of the nature
of the claim shall have been served upon the Trust or upon such person (or after
the Trust or such person shall have received notice of such service on any
designated agent). However, failure to notify the Distributor of any such claim
shall not relieve the Distributor from any liability which the Distributor may
have to the Trust or any person against whom such action is brought otherwise
than on account of the Distributor's indemnity agreement contained in this
Paragraph.
The Distributor shall be entitled to participate, at its own expense, in
the defense, or, if the Distributor so elects, to assume the defense of any suit
brought to enforce any such claim, but, if the Distributor elects to assume the
defense, such defense shall be conducted by legal counsel chosen by the
Distributor and satisfactory to the Trust, and to the persons indemnified as
defendant or defendants, in the suit. In the event that the Distributor elects
to assume the defense of any such suit and retain such legal counsel, the Trust,
and the persons indemnified as defendant or defendants in the suit, shall bear
the fees and expenses of any additional legal counsel retained by them. If the
Distributor does not elect to assume the defense of any such suit, the
Distributor will reimburse the Trust and the persons indemnified defendant or
defendants in such suit for the reasonable fees and expenses of any legal
counsel retained by them. The Distributor agrees to promptly notify the Trust of
the commencement of any litigation of proceedings against it or any of its
officers, employees or representatives in connection with the issue or sale of
any Shares.
(b) INDEMNIFICATION OF THE DISTRIBUTOR. The Trust agrees to indemnify and
hold harmless the Distributor and each of its present or former directors,
officers, employees, representatives and each person, if any, who controls or
previously controlled the Distributor within the meaning of Section 15 of the
1933 Act against any and all losses, liabilities, damages, claims or expenses
(including the reasonable costs of investigating or defending any alleged loss,
liability, damage, claim or expense and reasonable legal counsel fees incurred
in connection therewith) to which the Distributor or any such person may become
subject under the 1933 Act, under any other statute, at common law, or
otherwise, arising out of the acquisition of any Shares by any person which (i)
may be based upon any wrongful act by the Trust or any of the Trust's Trustees,
officers, employees or representatives, or (ii) may be based upon any untrue
statement or alleged untrue statement of a material fact contained in a
Registration Statement, Prospectus, shareholder report or other information
covering Shares filed or made public by the Trust or any amendment thereof or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading unless such statement or omission was made in reliance
upon and in conformity with information furnished to the Trust by the
Distributor. In no case (i) is the Trust's indemnity in favor of the
Distributor, or any person indemnified to be deemed to protect the Distributor
or such indemnified person against any liability to which the Distributor or
such person would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of such person's duties or by
reason of reckless disregard of such person's obligations and duties under this
Agreement or (ii) is the Trust to be liable under their indemnity agreement
contained in this Paragraph with respect to any claim made against Distributor,
or person indemnified unless the Distributor, or such person, as the case may
be, shall have notified the Trust in writing of the claim within a reasonable
-4-
<PAGE>
time after the summons or other first written notification giving information of
the nature of the claim shall have been served upon the Distributor or upon such
person (or after the Distributor or such person shall have received notice of
such service on any designated agent). However, failure to notify the Trust of
any such claim shall not relieve the Trust from any liability which the Trust
may have to the Distributor or any person against whom such action is brought
otherwise than on account of the Trust's indemnity agreement contained in this
Paragraph.
The Trust shall be entitled to participate, at its own expense, in the
defense, or, if the Trust so elects, to assume the defense of any suit brought
to enforce any such claim, but if the Trust elects to assume the defense, such
defense shall be conducted by legal counsel chosen by the Trust and satisfactory
to the Distributor and to the persons indemnified as defendant or defendants, in
the suit. In the event that the Trust elects to assume the defense of any such
suit and retain such legal counsel, the Distributor, the persons indemnified as
defendant or defendants in the suit, shall bear the fees and expenses of any
additional legal counsel retained by them. If the Trust does not elect to assume
the defense of any such suit, the Trust will reimburse the Distributor and the
persons indemnified as defendant or defendants in such suit for the reasonable
fees and expenses of any legal counsel retained by them. The Trust agrees to
promptly notify the Distributor of the commencement of any litigation or
proceedings against it or any of its Trustees, officers, employees or
representatives in connection with the issue or sale of any Shares.
7. AUTHORIZED REPRESENTATIONS. The Distributor is not authorized by the
Trust to give on behalf of the Trust any information or to make any
representations in connection with the sale of Shares other than the information
and representations contained in a Registration Statement or Prospectus filed
with the SEC under the 1933 Act and/or the 1940 Act, covering Shares, as such
Registration Statement and Prospectus may be amended or supplemented from time
to time, or contained in shareholder reports or other material that may be
prepared by or on behalf of the Trust for the Distributor's use. This shall not
be construed to prevent the Distributor from preparing and distributing
tombstone ads and sales literature or other material as it may deem appropriate.
No person other than the Distributor is authorized to act as principal
underwriter (as such term is defined in the 1940 Act) for the Trust.
8. TERM OF AGREEMENT. The term of this Agreement shall begin on the date
first above written, and unless sooner terminated as hereinafter provided, this
Agreement shall remain in effect for a period of two years from the date first
above written. Thereafter, this Agreement shall continue in effect from year to
year, subject to the termination provisions and all other terms and conditions
thereof, so long as such continuation shall be specifically approved at least
annually by (i) the Board of Trustees or by vote of a majority of the
outstanding voting securities of each series of the Trust and, (ii) by the vote,
cast in person at a meeting called for the purpose of voting on such approval,
of a majority of the Trustees of the Trust who are not parties to this Agreement
or interested persons of any such party. The Distributor shall furnish to the
Trust, promptly upon its request, such information as may reasonably be
necessary to evaluate the terms of this Agreement or any extension, renewal or
amendment hereof.
-5-
<PAGE>
9. AMENDMENT OR ASSIGNMENT OF AGREEMENT. This Agreement may not be amended
or assigned except as permitted by the 1940 Act, and this Agreement shall
automatically and immediately terminate in the event of its assignment.
10. TERMINATION OF AGREEMENT. This Agreement may be terminated by either
party hereto, without the payment of any penalty, on not more than upon 60 days'
nor less than 30 days' prior notice in writing to the other party; provided,
that in the case of termination by the Trust such action shall have been
authorized by resolution of a majority of the Trustees of the Trust who are not
parties to this Agreement or interested persons of any such party, or by vote of
a majority of the outstanding voting securities of each series of the Trust.
11. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Nothing herein contained shall be deemed to require the Trust to take any
action contrary to its Agreement and Declaration of Trust or By-Laws, or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of Trustees of the Trust
of responsibility for and control of the conduct of the affairs of the Trust.
12. DEFINITION OF TERMS. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretation thereof, if any, by the United
States courts or, in the absence of any controlling decision of any such court,
by rules, regulations or orders of the SEC validly issued pursuant to the 1940
Act. Specifically, the terms "vote of a majority of the outstanding voting
securities", "interested persons," "assignment," and "affiliated person," as
used in Paragraphs 8, 9 and 10 hereof, shall have the meanings assigned to them
by Section 2(a) of the 1940 Act. In addition, where the effect of a requirement
of the 1940 Act reflected in any provision of this Agreement is relaxed by a
rule, regulation or order of the SEC, whether of special or of general
application, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
13. COMPLIANCE WITH SECURITIES LAWS. The Trust represents that it is
registered as an open-end management investment company under the 1940 Act, and
agrees that it will comply with all the provisions of the 1940 Act and of the
rules and regulations thereunder. The Trust and the Distributor each agree to
comply with all of the applicable terms and provisions of the 1940 Act, the 1933
Act and, subject to the provisions of Section 4(d), all applicable "Blue Sky"
laws. The Distributor agrees to comply with all of the applicable terms and
provisions of the 1934 Act.
-6-
<PAGE>
14. NOTICES. Any notice required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by registered mail, postage
prepaid, to the Distributor at 850 Third Avenue, 14th Floor, New York, New York,
10022, or to the Trust at 2020 E. Financial Way, Suite 100, Glendora, California
91741.
15. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the date first written above.
TRUST FOR INVESTMENT MANAGERS
By:
---------------------------------------
Name: Robert H. Wadsworth
Title: President
GILFORD SECURITIES INCORPORATED
By:
---------------------------------------
Name:
Title:
-7-
TRUST FOR INVESTMENT MANAGERS
OPERATING EXPENSES LIMITATION AGREEMENT
THIS OPERATING EXPENSES LIMITATION AGREEMENT (the "Agreement") is effective
as of 1999, by and between TRUST FOR INVESTMENT MANAGERS, a Delaware business
trust (the "Trust"), on behalf of the Gilford Oakwood Equity Fund (the "Fund"),
a series of the Trust, and the Advisor of such Fund, Oakwood Capital Management,
LLC (the "Advisor").
WITNESSETH:
WHEREAS, the Advisor renders advice and services to the Fund pursuant to
the terms and provisions of an Investment Advisory Agreement between the Trust
and the Advisor dated
____________ , 1999 (the "Investment Advisory Agreement"); and
WHEREAS, the Fund, is responsible for, and has assumed the obligation for,
payment of certain expenses pursuant to the Investment Advisory Agreement that
have not been assumed by the Advisor; and
WHEREAS, the Advisor desires to limit the Fund's Operating Expenses (as
that term is defined in Paragraph 2 of this Agreement) pursuant to the terms and
provisions of this Agreement, and the Trust (on behalf of the Fund) desires to
allow the Advisor to implement those limits;
NOW THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties, intending to be legally bound hereby,
mutually agree as follows:
1. LIMIT ON OPERATING EXPENSES. The Advisor hereby agrees to limit the
Fund's current Operating Expenses to an annual rate, expressed as a percentage
of the Fund's average annual net assets, of (the "Annual Limit"). In the event
that the current Operating Expenses of the Fund, as accrued each month, exceed
its Annual Limit, the Advisor will pay to the Fund, on a monthly basis, the
excess expense within 30 days of being notified that an excess expense payment
is due.
2. DEFINITION. For purposes of this Agreement, the term "Operating
Expenses" with respect to the Fund is defined to include all expenses necessary
or appropriate for the operation of the Fund, including the Advisor's investment
advisory or management fee detailed in the Investment Advisory Agreement, any
Rule 12b-1 fees and other expenses described in the Investment Advisory
Agreement, but does not include any front-end or contingent deferred loads,
taxes, leverage interest, brokerage commissions, expenses incurred in connection
with any merger or reorganization, or extraordinary expenses such as litigation.
-1-
<PAGE>
3. REIMBURSEMENT OF FEES AND EXPENSES. The Advisor retains its right to
receive reimbursement of any excess expense payments paid by it pursuant to this
Agreement under the same terms and conditions as it is permitted to receive
reimbursement of reductions of its investment management fee under the
Investment Advisory Agreement.
4. TERM. This Agreement shall become effective on the date specified herein
and shall remain in effect indefinitely and for a period of not less than one
year, unless sooner terminated as provided in Paragraph 5 of this Agreement.
5. TERMINATION. This Agreement may be terminated at any time, and without
payment of any penalty, by the Board of Trustees of the Trust, on behalf of the
Fund, upon sixty (60) days' written notice to the Advisor. This Agreement may
not be terminated by the Advisor without the consent of the Board of Trustees of
the Trust, which consent will not be unreasonably withheld. This Agreement will
automatically terminate if the Investment Advisory Agreement is terminated, with
such termination effective upon the effective date of the Investment Advisory
Agreement's termination.
6. ASSIGNMENT. This Agreement and all rights and obligations hereunder may
not be assigned without the written consent of the other party.
7. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute or rule, or shall be otherwise rendered
invalid, the remainder of this Agreement shall not be affected thereby.
8. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California without giving effect to
the conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the Investment Company Act of 1940, and the Investment Advisers
Act of 1940, and any rules and regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers, all on the day and
year first above written.
TRUST FOR INVESTMENT MANAGERS OAKWOOD CAPITAL MANAGEMENT, LLC
on behalf of the
Gilford Oakwood Equity Fund
By: By:
-------------------------------- ----------------------------------
Print name: Print name:
------------------------ --------------------------
Title: Title:
----------------------------- -------------------------------
-2-
TRUST FOR INVESTMENT MANAGERS
SHARE MARKETING PLAN
(Rule 12b-1 Plan)
(Fixed Compensation Plan in which Advisor
Acts as Distribution Coordinator)
GILFORD OAKWOOD EQUITY FUND, CLASS B
This Share Marketing Plan (the "Plan") is adopted in accordance with Rule
12b-1 (the "Rule") under the Investment Company Act of 1940, (the "Company
Act"), by Trust for Investment Managers (the "Trust") with respect to the
following series: Gilford Oakwood Equity Fund, Class B (the "Fund"). The Plan
has been approved by a majority of the Trust's Board of Trustees, including a
majority of the Trustees who are not interested persons of the Trust and who
have no direct or indirect financial interest in the operation of the Plan (the
"independent Trustees"), cast in person at a meeting called for the purpose of
voting on the Plan and by a majority of the Class B shareholders of the Fund, as
required by the Company Act.
In reviewing the Plan, the Board of Trustees considered the proposed range
and nature of payments and terms of the investment advisory agreement between
the Trust on behalf of the Fund and Oakwood Capital Management LLC (the
"Advisor") and the nature and amount of other payments, fees and commissions
that may be paid to the Advisor, its affiliates and other agents of the Trust.
The Board of Trustees, including the independent Trustees, concluded that the
proposed overall compensation of the Advisor and its affiliates was fair and not
excessive.
In its considerations, the Board of Trustees also recognized that
uncertainty may exist from time to time with respect to whether payments to be
made by the Fund to the Advisor, as the initial "distribution coordinator," or
other firms under agreements with respect to the Fund may be deemed to
constitute impermissible distribution expenses. As a general rule, an investment
company may not finance any activity primarily intended to result in the sale of
its shares, except pursuant to the Rule. Accordingly, the Board of Trustees
determined that the Plan also should provide that payments by the Fund and
expenditures made by others out of monies received from the Fund which are later
deemed to be for the financing of any activity primarily intended to result in
the sale of Fund shares shall be deemed to have been made pursuant to the Plan.
The approval of the Board of Trustees included a determination that in the
exercise of the Trustees' reasonable business judgment and in light of their
fiduciary duties, there is a reasonable likelihood that the Plan will benefit
the Fund to which the Plan applies and its shareholders.
1
<PAGE>
The provisions of the Plan are:
1. ANNUAL FEE. The Fund will pay to the Advisor as the Fund's distribution
coordinator, an annual fee for the Advisor's services in connection with the
promotion and distribution of the Fund's shares and related shareholder
servicing (collectively, "Distribution Expenses"). The annual fee paid to the
Advisor under the Plan will be calculated daily and paid monthly by the Fund
based on the average daily net assets of Class B of the Fund, as follows:
at an annual rate of up to .75%
This fee is not tied exclusively to actual distribution and service
expenses, and the fee may exceed the expenses actually incurred.
2. SERVICES COVERED BY THE PLAN. The fee paid under Section 1 of the Plan
is intended to compensate the Advisor for performing the following kinds of
services (but this list should not be viewed as exclusive of other similar
services): services primarily intended to result in the sale of the Fund's
shares ("distribution services"), including, but not limited to: (a) making
payments, including incentive compensation, to agents for and consultants to the
Advisor, any affiliate of the Advisor or the Trust, including pension
administration firms that provide distribution and shareholder related services
and broker-dealers that engage in the distribution of the Fund's shares; (b)
making payments to persons who provide support services in connection with the
distribution of the Fund's shares and related servicing of the Fund's
shareholders, including, but not limited to, personnel of the Advisor, office
space and equipment, telephone facilities, answering routine inquiries regarding
the Fund, processing shareholder transactions and providing any other
shareholder services not otherwise provided by the Trust's transfer agency or
other servicing arrangements; (c) formulating and implementing marketing and
promotional activities, including, but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising; (d)
printing and distributing prospectuses, statements of additional information and
reports of the Fund to prospective shareholders of the Fund; (e) preparing,
printing and distributing sales literature pertaining to the Fund; and (f)
obtaining whatever information, analyses and reports with respect to marketing
and promotional activities that the Trust may, from time to time, deem
advisable. Such services and activities shall be deemed to be covered by this
Plan whether performed directly by the Advisor or by a third party.
3. WRITTEN REPORTS. The Advisor (or Fund administrator) shall furnish to
the Board of Trustees of the Trust, for its review, on a quarterly basis, a
written report of the monies paid to the Advisor under the Plan with respect to
the Fund, and shall furnish the Board of Trustees of the Trust with such other
information as the Board of Trustees may reasonably request in connection with
the payments made under the Plan in order to enable the Board of Trustees to
make an informed determination of whether the Plan should be continued as to the
Fund.
4. TERMINATION. The Plan may be terminated as to the Fund at any time,
without penalty, by a vote of a majority of the independent Trustees or by vote
2
<PAGE>
of a majority of the outstanding Class B voting securities of the Fund, and the
Distribution Coordination Agreement under the Plan may be likewise terminated on
sixty (60) days' written notice. Failure to renew the Plan on an annual basis
within 15 months of its last prior renewal (or approval date) shall also
constitute termination of the Plan. Assignment of the Distribution Coordination
Agreement will automatically terminate it. Once either the Plan or the
Distribution Coordination Agreement is terminated, no further payments shall be
made under the Plan with respect to services performed or costs incurred after
the date of termination or with respect to unreimbursed current or carried
forward Distribution Expenses as of the date of termination.
5. AMENDMENTS. The Plan and the Distribution Coordination Agreement may be
amended with the approval of the Board of Trustees of the Trust provided that
neither the Plan nor the Distribution Coordination Agreement may be amended to
increase materially the amount to be spent for distribution and related
servicing of shares without approval by a majority of the outstanding Class B
voting securities. All material amendments to the Plan and the Distribution
Coordination Agreement shall also be approved by the independent Trustees cast
in person at a meeting called for the purpose of voting on any such amendment.
6. SELECTION OF INDEPENDENT TRUSTEES. So long as the Plan is in effect, the
selection and nomination of the Trust's independent Trustees shall be committed
to the discretion of such independent Trustees.
7. EFFECTIVE DATE OF PLAN. The Plan shall take effect at such time as it
has received requisite Trustee and shareholder approval and, unless sooner
terminated, shall continue in effect for a period of more than one year from the
date of its execution only so long as such continuance is specifically approved
at least annually by the Board of Trustees of the Trust, including the
independent Trustees, cast in person at a meeting called for the purpose of
voting on such continuance.
8. PRESERVATION OF MATERIALS. The Trust will preserve copies of the Plan,
any agreements relating to the Plan and any report made pursuant to Section 5
above, for a period of not less than six years (the first two years in an easily
accessible place) from the date of the Plan, agreement or report.
9. MEANINGS OF CERTAIN TERMS. As used in the Plan, the terms "interested
person" and "majority of the outstanding voting securities" will be deemed to
have the same meaning that those terms have under the Company Act and the rules
and regulations under the Company Act, subject to any exemption that may be
granted to the Trust under the Company Act by the Securities and Exchange
Commission.
This Plan and the terms and provisions thereof are hereby accepted and
agreed to by the Trust and Advisor, as distribution coordinator, as evidenced by
their execution hereof, as of the 6th day of December, 1999.
3
<PAGE>
TRUST FOR INVESTMENT MANAGERS
on behalf of Gilford Oakwood Equity Fund, Class B
By:
---------------------------------------------
Title:
------------------------------------------
Oakwood Captial Management LLC
as Distribution Coordinator
By:
---------------------------------------------
Title:
------------------------------------------
4
<PAGE>
TRUST FOR INVESTMENT MANAGERS
Distribution Coordination Agreement
EXHIBIT ONLY
Oakwood Capital Management LLC
Ladies and Gentlemen:
This Distribution Coordination Agreement ("Agreement") has been adopted
pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "Company
Act") by Trust for Investment Managers (the "Trust"), on behalf of following
series of the Trust: Gilford Oakwood Equity Fund, Class B (the "Fund"), and is
governed by the terms of the Trust's Share Marketing Plan pursuant to Rule 12b-1
(the "Plan").
The Plan has been approved by a majority of the Trustees who are not
interested persons of the Trust and who have no direct or indirect financial
interest in the operation of the Plan (the "independent Trustees"), cast in
person at a meeting called for the purpose of voting on such Plan. Such approval
included a determination that in the exercise of the reasonable business
judgment of the Board of Trustees and in light of the Trustees' fiduciary
duties, there is a reasonable likelihood that the Plan will benefit the Fund and
its shareholders. The Plan also has been approved by a vote of at least a
majority of the outstanding voting securities of the Class B shares of the Fund,
as defined by the Company Act.
I. To the extent you, in your capacity as the Distribution Coordinator
pursuant to this Agreement, provide eligible shareholder services of the type
identified in the Plan to the Fund, we shall pay you a monthly fee based on the
average net asset value of the Fund.
II. In no event may the aggregate annual fee paid to you pursuant to the
Plan exceed .75% of the value of the net assets of the Fund (determined in the
same manner as the Fund uses to compute its net assets as set forth in its
then-effective Prospectus), without approval by a majority of the outstanding
shares of the Fund.
III. You shall furnish to the Board of Trustees of the Trust, for its
review, on a quarterly basis, a written report of the amounts expended under the
Plan by you with respect to the Fund and the purposes for which such
expenditures were made.
<PAGE>
IV. All communications to the Fund shall be sent to you, as Distribution
Coordinator for the Fund, at the following address:
Oakwood Capital Management LLC
---------------------------------------
---------------------------------------
Any notice to you shall be duly given if mailed or telegraphed to you at
your address as indicated in this Agreement.
V. This Agreement may be terminated by us or by you, by the vote of a
majority of the Trustees of the Trust who are independent Trustees, or by a vote
of a majority of the outstanding Class B shares of the Fund, on sixty (60) days'
written notice, all without payment of any penalty. This Agreement shall also be
terminated automatically in the event of its assignment by you or by any act
that terminates the Plan. If this Agreement is terminated your ability to
receive fees under the Plan shall be limited as provided for in the Plan.
VI. The provisions of the Plan between the Trust and the Fund, insofar as
they relate to you, are incorporated herein by reference.
This Agreement shall take effect on the date indicated below, and the terms
and provisions thereof are hereby accepted and agreed to by us as evidenced by
our execution hereof.
TRUST FOR INVESTMENT MANAGERS
By:
---------------------------------------
Authorized Officer
Dated:
------------------------------------
Agreed and Accepted:
Oakwood Capital Management LLC
(Distribution Coordinator)
By:
--------------------------------
Authorized Officer
TRUST FOR INVESTMENT MANAGERS
SHARE MARKETING PLAN
(Rule 12b-1 Plan)
(Fixed Compensation Plan in which Advisor
Acts as Distribution Coordinator)
GILFORD OAKWOOD EQUITY FUND, CLASS C
This Share Marketing Plan (the "Plan") is adopted in accordance with Rule
12b-1 (the "Rule") under the Investment Company Act of 1940, (the "Company
Act"), by Trust for Investment Managers (the "Trust") with respect to the
following series: Gilford Oakwood Equity Fund, Class C (the "Fund"). The Plan
has been approved by a majority of the Trust's Board of Trustees, including a
majority of the Trustees who are not interested persons of the Trust and who
have no direct or indirect financial interest in the operation of the Plan (the
"independent Trustees"), cast in person at a meeting called for the purpose of
voting on the Plan and by a majority of the Class C shareholders of the Fund, as
required by the Company Act.
In reviewing the Plan, the Board of Trustees considered the proposed range
and nature of payments and terms of the investment advisory agreement between
the Trust on behalf of the Fund and Oakwood Capital Management LLC (the
"Advisor") and the nature and amount of other payments, fees and commissions
that may be paid to the Advisor, its affiliates and other agents of the Trust.
The Board of Trustees, including the independent Trustees, concluded that the
proposed overall compensation of the Advisor and its affiliates was fair and not
excessive.
In its considerations, the Board of Trustees also recognized that
uncertainty may exist from time to time with respect to whether payments to be
made by the Fund to the Advisor, as the initial "distribution coordinator," or
other firms under agreements with respect to the Fund may be deemed to
constitute impermissible distribution expenses. As a general rule, an investment
company may not finance any activity primarily intended to result in the sale of
its shares, except pursuant to the Rule. Accordingly, the Board of Trustees
determined that the Plan also should provide that payments by the Fund and
expenditures made by others out of monies received from the Fund which are later
deemed to be for the financing of any activity primarily intended to result in
the sale of Fund shares shall be deemed to have been made pursuant to the Plan.
The approval of the Board of Trustees included a determination that in the
exercise of the Trustees' reasonable business judgment and in light of their
fiduciary duties, there is a reasonable likelihood that the Plan will benefit
the Fund to which the Plan applies and its shareholders.
<PAGE>
The provisions of the Plan are:
1. ANNUAL FEE. The Fund will pay to the Advisor as the Fund's distribution
coordinator, an annual fee for the Advisor's services in connection with the
promotion and distribution of the Fund's shares and related shareholder
servicing (collectively, "Distribution Expenses"). The annual fee paid to the
Advisor under the Plan will be calculated daily and paid monthly by the Fund
based on the average daily net assets of Class C of the Fund, as follows:
at an annual rate of up to .75%
This fee is not tied exclusively to actual distribution and service
expenses, and the fee may exceed the expenses actually incurred.
2. SERVICES COVERED BY THE PLAN. The fee paid under Section 1 of the Plan
is intended to compensate the Advisor for performing the following kinds of
services (but this list should not be viewed as exclusive of other similar
services): services primarily intended to result in the sale of the Fund's
shares ("distribution services"), including, but not limited to: (a) making
payments, including incentive compensation, to agents for and consultants to the
Advisor, any affiliate of the Advisor or the Trust, including pension
administration firms that provide distribution and shareholder related services
and broker-dealers that engage in the distribution of the Fund's shares; (b)
making payments to persons who provide support services in connection with the
distribution of the Fund's shares and related servicing of the Fund's
shareholders, including, but not limited to, personnel of the Advisor, office
space and equipment, telephone facilities, answering routine inquiries regarding
the Fund, processing shareholder transactions and providing any other
shareholder services not otherwise provided by the Trust's transfer agency or
other servicing arrangements; (c) formulating and implementing marketing and
promotional activities, including, but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising; (d)
printing and distributing prospectuses, statements of additional information and
reports of the Fund to prospective shareholders of the Fund; (e) preparing,
printing and distributing sales literature pertaining to the Fund; and (f)
obtaining whatever information, analyses and reports with respect to marketing
and promotional activities that the Trust may, from time to time, deem
advisable. Such services and activities shall be deemed to be covered by this
Plan whether performed directly by the Advisor or by a third party.
3. WRITTEN REPORTS. The Advisor (or Fund administrator) shall furnish to
the Board of Trustees of the Trust, for its review, on a quarterly basis, a
written report of the monies paid to the Advisor under the Plan with respect to
the Fund, and shall furnish the Board of Trustees of the Trust with such other
information as the Board of Trustees may reasonably request in connection with
the payments made under the Plan in order to enable the Board of Trustees to
make an informed determination of whether the Plan should be continued as to the
Fund.
2
<PAGE>
4. TERMINATION. The Plan may be terminated as to the Fund at any time,
without penalty, by a vote of a majority of the independent Trustees or by vote
of a majority of the outstanding Class C voting securities of the Fund, and the
Distribution Coordination Agreement under the Plan may be likewise terminated on
sixty (60) days' written notice. Failure to renew the Plan on an annual basis
within 15 months of its last prior renewal (or approval date) shall also
constitute termination of the Plan. Assignment of the Distribution Coordination
Agreement will automatically terminate it. Once either the Plan or the
Distribution Coordination Agreement is terminated, no further payments shall be
made under the Plan with respect to services performed or costs incurred after
the date of termination or with respect to unreimbursed current or carried
forward Distribution Expenses as of the date of termination.
5. AMENDMENTS. The Plan and the Distribution Coordination Agreement may be
amended with the approval of the Board of Trustees of the Trust provided that
neither the Plan nor the Distribution Coordination Agreement may be amended to
increase materially the amount to be spent for distribution and related
servicing of shares without approval by a majority of the outstanding Class C
voting securities. All material amendments to the Plan and the Distribution
Coordination Agreement shall also be approved by the independent Trustees cast
in person at a meeting called for the purpose of voting on any such amendment.
6. SELECTION OF INDEPENDENT TRUSTEES. So long as the Plan is in effect, the
selection and nomination of the Trust's independent Trustees shall be committed
to the discretion of such independent Trustees.
7. EFFECTIVE DATE OF PLAN. The Plan shall take effect at such time as it
has received requisite Trustee and shareholder approval and, unless sooner
terminated, shall continue in effect for a period of more than one year from the
date of its execution only so long as such continuance is specifically approved
at least annually by the Board of Trustees of the Trust, including the
independent Trustees, cast in person at a meeting called for the purpose of
voting on such continuance.
8. Preservation of Materials. The Trust will preserve copies of the Plan,
any agreements relating to the Plan and any report made pursuant to Section 5
above, for a period of not less than six years (the first two years in an easily
accessible place) from the date of the Plan, agreement or report.
9. MEANINGS OF CERTAIN TERMS. As used in the Plan, the terms "interested
person" and "majority of the outstanding voting securities" will be deemed to
have the same meaning that those terms have under the Company Act and the rules
and regulations under the Company Act, subject to any exemption that may be
granted to the Trust under the Company Act by the Securities and Exchange
Commission.
This Plan and the terms and provisions thereof are hereby accepted and
agreed to by the Trust and Advisor, as distribution coordinator, as evidenced by
their execution hereof, as of the 6th day of December, 1999.
3
<PAGE>
TRUST FOR INVESTMENT MANAGERS
on behalf of Gilford Oakwood Equity Fund, Class C
By:
---------------------------------------------
Title:
------------------------------------------
Oakwood Captial Management LLC
as Distribution Coordinator
By:
---------------------------------------------
Title:
------------------------------------------
4
<PAGE>
TRUST FOR INVESTMENT MANAGERS
Distribution Coordination Agreement
EXHIBIT ONLY
Oakwood Capital Management LLC
Ladies and Gentlemen:
This Distribution Coordination Agreement ("Agreement") has been adopted
pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "Company
Act") by Trust for Investment Managers (the "Trust"), on behalf of following
series of the Trust: Gilford Oakwood Equity Fund, Class C (the "Fund"), and is
governed by the terms of the Trust's Share Marketing Plan pursuant to Rule 12b-1
(the "Plan").
The Plan has been approved by a majority of the Trustees who are not
interested persons of the Trust and who have no direct or indirect financial
interest in the operation of the Plan (the "independent Trustees"), cast in
person at a meeting called for the purpose of voting on such Plan. Such approval
included a determination that in the exercise of the reasonable business
judgment of the Board of Trustees and in light of the Trustees' fiduciary
duties, there is a reasonable likelihood that the Plan will benefit the Fund and
its shareholders. The Plan also has been approved by a vote of at least a
majority of the outstanding voting securities of the Class C shares of the Fund,
as defined by the Company Act.
I. To the extent you, in your capacity as the Distribution Coordinator
pursuant to this Agreement, provide eligible shareholder services of the type
identified in the Plan to the Fund, we shall pay you a monthly fee based on the
average net asset value of the Fund.
II. In no event may the aggregate annual fee paid to you pursuant to the
Plan exceed .75% of the value of the net assets of the Fund (determined in the
same manner as the Fund uses to compute its net assets as set forth in its
then-effective Prospectus), without approval by a majority of the outstanding
shares of the Fund.
III. You shall furnish to the Board of Trustees of the Trust, for its
review, on a quarterly basis, a written report of the amounts expended under the
Plan by you with respect to the Fund and the purposes for which such
expenditures were made.
<PAGE>
IV. All communications to the Fund shall be sent to you, as Distribution
Coordinator for the Fund, at the following address:
Oakwood Capital Management LLC
---------------------------------------
---------------------------------------
Any notice to you shall be duly given if mailed or telegraphed to you at
your address as indicated in this Agreement.
V. This Agreement may be terminated by us or by you, by the vote of a
majority of the Trustees of the Trust who are independent Trustees, or by a vote
of a majority of the outstanding Class C shares of the Fund, on sixty (60) days'
written notice, all without payment of any penalty. This Agreement shall also be
terminated automatically in the event of its assignment by you or by any act
that terminates the Plan. If this Agreement is terminated your ability to
receive fees under the Plan shall be limited as provided for in the Plan.
VI. The provisions of the Plan between the Trust and the Fund, insofar as
they relate to you, are incorporated herein by reference.
This Agreement shall take effect on the date indicated below, and the terms
and provisions thereof are hereby accepted and agreed to by us as evidenced by
our execution hereof.
TRUST FOR INVESTMENT MANAGERS
By:
---------------------------------------------
Title:
------------------------------------------
Authorized Officer
Dated:
------------------------------------------
Agreed and Accepted:
Oakwood Capital Management LLC
(Distribution Coordinator)
By:
----------------------------
Authorized Officer
TRUST FOR INVESTMENT MANAGERS
SHAREHOLDER SERVICE PLAN
with respect to Gilford Oakwood Equity Fund, Class B and Class C Shares
W H E R E A S:
Trust for Investment Managers (the "Trust") is registered as an open-end
investment company under the Investment Company Act of 1940 (the "Act"),
currently consisting of two series, and the Board of Trustees may establish
additional series in the future.
Gilford Oakwood Equity Fund (the "Fund") is a series of the Trust. The
Trust desires to adopt a Plan to provide for shareholder servicing of the Fund's
Class B and Class C Shares (the "Classes").
Gilford Securities Incorporated ("Gilford") will serve as shareholder
servicer for the Classes. .
NOW, THEREFORE, in consideration of the foregoing, the Trust hereby adopts
this Plan on behalf of each of the Classes on the following terms and
conditions:
1. The Fund will pay Gilford, as set forth in paragraph 3, for providing or
for arranging for the provision of non-distribution personal shareholder
services provided by Gilford or by securities broker-dealers and other
securities professionals ("Service Organizations") to beneficial owners of the
shares of each of the Classes ("Clients"), including but not limited to
shareholder servicing provided by Gilford at facilities dedicated to the
Classes, provided that such shareholder servicing is not duplicative of the
servicing otherwise provided on behalf of each of the Classes.
2. Such services may include, but are not limited to, (a) establishing and
maintaining accounts and records relating to Clients who invest in the Classes;
(b) aggregating and processing orders involving the shares of the Classes; (c)
processing dividend and other distribution payments from the Trust on behalf of
Clients; (d) providing information to Clients as to their ownership of shares of
the Classes or about other aspects of the operations of the Classes; (e)
preparing tax reports or forms on behalf of Clients; (f) forwarding
communications from the Classes to Clients; (g) assisting Clients in changing
the Classes' records as to their addresses, dividend options, account
registrations or other data; and (h) providing such other similar services as
Gilford may reasonably request to the extent the Service Organization is
permitted to do so under applicable statutes, rules or regulations.
3. The Fund shall pay Gilford, for its services, at an annual rate of 0.25
% of the average daily net assets of each of the Classes. The Fund may make such
payments monthly, and payments to Gilford may exceed the amount expended by
Gilford during the month or the year to date. In the event that payments to
Gilford during a fiscal year exceed the amounts expended (or accrued, in the
case of payments to Service Organizations) during a fiscal year, Gilford will
<PAGE>
promptly refund to each of the Classes any such excess. Payments to Gilford may
be discontinued, or the rate amended, at any time by the Board of Trustees of
the Trust, in its sole discretion.
Gilford may make final and binding decisions as to all matters relating to
payments to Service Organizations, including but not limited to (i) the identity
of Service Organizations; and (ii) what shares of each of the Classes, if any,
are to be attributed to a particular Service Organization, to a different
Service Organization or to no Service Organization.
4. While this Plan is in effect, Gilford shall report in writing at least
quarterly to the Trust's Board of Trustees, and the Board shall review, the
amounts expended under this Plan and the purposes for which such expenditures
were made.
5. This Plan has been approved by a vote of the Board of Trustees of the
Trust, including a majority of the Trustees who are not "interested persons" (as
defined in the Act) of the Trust and who have no direct or indirect financial
interest in the operation of this Plan (the "Disinterested Trustees"), by vote
cast in person at a meeting called for the purpose of voting on this Plan. This
Plan shall, unless terminated as hereinafter provided, continue in effect until
December 6, 2000, and from year to year thereafter only so long as such
continuance is specifically approved at least annually by the Trust's Board of
Trustees including the Disinterested Trustees cast in person at a meeting called
for the purpose of voting on such continuance. This Plan may be terminated at
any time by a vote of a majority of the Disinterested Trustees or by the vote of
the holders of a "majority" (as defined in the Act) of the outstanding voting
securities of each of the Classes.
TRUST FOR INVESTMENT MANAGERS
MULTIPLE CLASS PLAN
GILFORD OAKWOOD EQUITY FUND
This Multiple Class Plan (this "Plan") is required by Securities and Exchange
Commission Rule 18f-3 promulgated under the Investment Company Act of 1940, (the
"1940 Act").
This Plan shall govern the terms and conditions under which Gilford Oakwood
Equity Fund, a series of Trust for Investment Managers (the "Trust") may issue
separate classes of shares representing interests in Gilford Oakwood Equity Fund
(the "Fund"). To the extent that a subject matter herein is covered by the
Trust's Agreement and Declaration of Trust or Bylaws, the Agreement and
Declaration of Trust and Bylaws will control in the event of any inconsistencies
with the descriptions herein.
SECTION 1. RIGHTS AND OBLIGATIONS. Except as set forth herein, all classes of
shares issued by the Fund shall have identical voting, dividend, liquidation and
other rights, preferences, powers, restrictions, limitations, qualifications,
designations, and terms and conditions. The only differences among the various
classes of shares relate solely to the following: (a) each class may be subject
to different class expenses as discussed under Section 3 of this Plan; (b) each
class may bear a different identifying designation; (c) each class has exclusive
voting rights with respect to matters solely affecting such class; (d) each
class may have different exchange privileges; and (e) each class may provide
differently for the automatic conversion of that class into another class.
SECTION 2. CLASSES OF SHARES AND DESIGNATION THEREOF. The Fund may offer any or
all of the following classes of shares:
(A) CLASS B SHARES. "Class B Shares" will be sold at their net asset value
without the imposition of a front-end sales load. Class B Shares will
have a deferred sales charge ("DSC") of 5.00%. Class B Shares will be
subject to a Rule 12b-1 distribution fee at an annual rate of .75% of
the daily net assets attributable to the Class B Shares, and will be
subject to a shareholder servicing fee at an annual rate of up to .25%
of the daily net assets attributable to Class B Shares.
(B) CLASS C SHARES. "Class C Shares" will be sold at their net asset value
without the imposition of a front-end sales load. Class C Shares will
have a deferred sales charge ("DSC") of 1.00%. Class C Shares will be
subject to a Rule 12b-1 distribution fee at an annual rate of .75% of
the daily net assets attributable to the Class C Shares, and will be
subject to a shareholder servicing fee at an annual rate of up to .25%
of the daily net assets attributable to Class C Shares.
Multiple Class Plan - Gilford Oakwood Equity Fund
<PAGE>
SECTION 3. ALLOCATION OF EXPENSES.
(A) CLASS EXPENSES. Each class of shares may be subject to different class
expenses consisting of: (1) Rule 12b-1 plan distribution fees and
shareholder service fees, if applicable to a particular class; (2)
transfer agency and other recordkeeping costs to the extent allocated
to a particular class; (3) Securities and Exchange Commission ("SEC")
and blue sky registration fees incurred separately by a particular
class; (4) litigation or other legal expenses relating solely to a
particular class; (5) printing and postage expenses related to the
preparation and distribution of class specific materials such as
shareholder reports, prospectuses and proxies to shareholders of a
particular class; (6) expenses of administrative personnel and
services as required to support the shareholders of a particular
class; (7) audit or accounting fees or expenses relating solely to a
particular class; (8) director fees and expenses incurred as a result
of issues relating solely to a particular class and (9) any other
expenses subsequently identified that should be properly allocated to
a particular class, which shall be approved by the Board of Trustees
(collectively, "Class Expenses").
(B) OTHER EXPENSES. Except for the Class Expenses discussed above (which
will be allocated to the appropriate class), all expenses incurred by
each Fund will be allocated to each class of shares on the basis of
the relative net asset value of each class to the net asset value of
the Trust or the Fund, as the case may be.
(C) WAIVERS AND REIMBURSEMENTS OF EXPENSES. Each Fund's Advisor and any
provider of services to the Funds may waive or reimburse the expenses
of a particular class or classes, provided, however, that such waiver
shall not result in cross-subsidization between classes.
SECTION 4. ALLOCATION OF INCOME. Each Fund will allocate income and realized and
unrealized capital gains and losses based on the relative net assets of each
class of shares.
SECTION 5. EFFECTIVE WHEN APPROVED. This Plan shall not take effect until a
majority of the Trustees of the Trust, including a majority of the trustees who
are not interested persons of the Trust, find that this Plan, as proposed and
including the expense allocations, is in the best interests of each class
individually and the Trust as a whole.
SECTION 6. AMENDMENTS. This Plan may not be amended to materially change the
provisions of this Plan unless such amendment is approved in the manner
specified in Section 5 above.
Approved December 6, 1999
Multiple Class Plan - Gilford Oakwood Equity Fund 2
