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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
THE PRAIRIE FUND
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(Exact Name of Registrant as Specified in Charter)
1111 LINCOLN ROAD, #740, MIAMI BEACH, FLORIDA 33139
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(Address of Principal Executive Offices)
(305) 532-5044
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(Registrant's Telephone Number, including Area Code)
Matthew Zuckerman, President of Zuckerman Management Associates, Inc.
1111 Lincoln Road, #740, Miami Beach, Florida 33139
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(Name and Address of Agent for Service)
WITH COPIES TO:
Ethan W. Johnson
Morgan, Lewis & Bockius, LLP
5300 First Union Financial Center
200 South Biscayne Boulevard
Miami, Florida 33131-2339
EXPLANATORY NOTE
This Registration Statement has been filed by the Registrant pursuant to Section
8(b) of the Investment Company Act of 1940, as amended (the "1940 Act").
However, beneficial interests in the Registrant are not being registered under
the Securities Act of 1933, as amended (the "1933 Act"), since such interests
will be issued solely in private placement transactions which do not involve any
"public offering" within the meaning of Section 4(2) of the 1933 Act. This
Registration Statement does not constitute an offer to sell, or the solicitation
of an offer to buy, any beneficial interest in the Registrant.
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THE PRAIRIE FUND
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PROSPECTUS
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THE PRAIRIE FUND IS A NO-LOAD MUTUAL FUND
ADVISED BY ZUCKERMAN MANAGEMENT ASSOCIATES, INC.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN
OFFER TO BUY, ANY BENEFICIAL INTEREST IN THE PRAIRIE FUND. THIS PROSPECTUS HAS
BEEN PREPARED SOLELY FOR THE INFORMATION OF THE INVESTOR TO WHOM IT HAS BEEN
DELIVERED ON BEHALF OF THE PRAIRIE FUND AND MAY NOT BE REPRODUCED OR USED FOR
ANY OTHER PURPOSE.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
[Date]
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TABLE OF CONTENTS
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ABOUT THE FUND...................................................................................................1
PRINCIPAL RISKS..................................................................................................2
FUND FEES AND EXPENSES...........................................................................................3
FUND MANAGEMENT..................................................................................................4
PURCHASING AND REDEEMING SHARES..................................................................................4
TAXES AND DISTRIBUTIONS..........................................................................................7
ADDRESSES........................................................................................................7
HOW TO OBTAIN MORE INFORMATION...................................................................................9
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ABOUT THE FUND
INVESTMENT OBJECTIVE
The Prairie Fund's (the "Fund") investment objective is to seek long-term
capital appreciation.
INVESTMENT STRATEGIES AND POLICIES
The Fund invests in common stock issued by U.S. companies that Zuckerman
Management Associates, Inc. (the "Investment Adviser") believes will present
attractive long-term investment opportunities. The Investment Adviser buys and
holds common stock of "quality" U.S. companies for long-term investment. In this
context, "quality" refers to demonstrated earning power, sound finances, solid
competitive position, and capable executive leadership. The Investment Adviser
does not trade for quick profits. Stock market trends are largely ignored and no
effort is made to forecast the market or time the Fund's investments to profit
from the perceived outlook. Ordinarily the Fund will be fully invested.
Investments are not limited to any particular capitalization size. The
Investment Adviser generally will sell positions when there are negative long
term developments in the fundamental outlook of a company, such as a decrease in
its growth rate or profitability.
The Investment Adviser believes that value exists in businesses, not the stock
market. Consequently, a thorough analysis of the underlying fundamentals of
companies, and determinations based on these fundamentals, such as of whether or
not the companies are undervalued or overvalued in the marketplace, are the
essential elements of the Investment Adviser's approach. The Investment Adviser
also takes into account the industry in which the company participates, the
position of the company within that industry and the general business climate.
The Investment Adviser seeks to capitalize on the values that accumulate in such
enterprises over long periods. Quality companies that have fallen from investor
favor are often of interest because the price of their shares may fail to
reflect the business's intrinsic value. In such cases the Investment Adviser
seeks to determine whether the seemingly low price reflects temporary problems
or a serious impairment of economic value. Investments are made only when it is
believed that a company's long-term outlook is sound and the shares are fairly
priced.
The Fund's goals and investment strategy may be changed without shareholder
approval.
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PRINCIPAL RISKS
The fund is intended for long term investors. Investors in search of
unrealistically high returns, quick profits, income distributions, or to whom
quarterly performance is important, should not invest in the fund. There is no
guaranty that the Fund will meet its investment objective. It is possible for an
investor to lose money on an investment in the Fund.
MARKET RISK. Since it purchases common stock of companies, the Fund is subject
to the risks that stock prices both individually and market-wide will fall over
short or extended periods of time and that prices of the Fund's shares may
fluctuate from day-to-day. Historically, the stock markets have moved in cycles.
Individual companies may report poor results or be negatively affected by
industry and/or economic trends and developments. The stock prices of these
companies may suffer a decline in response. These factors contribute to price
volatility. Therefore, in order to be successful, investors must accept the fact
that although the stocks of good companies generally will rise over long
periods, they can trade at virtually any price in the short run. In addition,
the Fund's share price, yield and return may vary.
NO PRIOR HISTORY RISK. The Fund is a newly registered fund. As such, no prior
history is available to provide investors with a reflection of its past
performance as a registered fund. the fund succeeded to the assets of Prairie
Fund, Inc., a Florida corporation, on July __, 2000. Prairie Fund, Inc. was
managed following substantially the same objective, policies and philosophies as
are currently followed by the Fund. Prairie Fund, Inc., however, commenced
operations on January 3, 2000 and therefore also had only had a brief operating
period.
MANAGEMENT RISK. Investors in the Fund face the risk that the Investment
Adviser's business analyses may prove faulty. If the fundamentals of a number of
large holdings are misjudged, shareholders may suffer losses even during a time
when the general market and many other funds are rising.
NON-DIVERSIFICATION RISK. The Fund is "non-diversified," which means that it
invests its assets in a smaller number of issuers than many other funds. Funds
that invest in a relatively small number of issuers are more susceptible to
risks associated with a single economic, political or regulatory occurrence than
a more diversified fund might be.
HOLIDAY RISK. The Fund's Investment Adviser does not trade on the principal
Jewish holidays of Rosh Hashanah, Yom Kippur, Succoth, Passover and Shavuoth.
Trading may nevertheless continue on the securities exchanges. Investors in the
Fund face the risk that the Fund may not
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fully realize investment opportunities which arise on these holidays or may not
protect the existing investments against loss resulting from market downturns on
these holidays.
Temporary Defensive Investments: When the Fund's Investment Adviser believes
that changes in economic, financial or political conditions warrant, the Fund
may invest without limitation in fixed income securities for temporary defensive
purposes, as described in the Statement of Additional Information. If the
Investment Adviser incorrectly predicts the effects of these changes, the
defensive investments may adversely affect the Fund's performance.
FUND FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
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SHAREHOLDER TRANSACTION FEES
(fees paid directly from your investment) ............................................. None
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets as a percentage of average net assets)
Investment Advisory Fee ............................................................... 1.00%
Management Fee(1)...................................................................... 1.00%
Other Expenses (2).... ................................................................ 0.45%
Total Annual Fund Operating Expenses ....................................................... 2.45%
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(1) The "Management Fee" is paid directly to the Investment Adviser. The
Investment Adviser uses the management fee to pay the fees of the Fund's
custodian, administrator, transfer agent and Investment Company Institute
membership. With the exception of extraordinary non-recurring expenses, the
Investment Adviser will pay for any of the foregoing fees that exceed one
percent in the aggregate of the Fund's net asset value in a given year. To the
extent the foregoing fees are less than one percent in a given year, the
Investment Adviser will refund the unapplied amount to the Fund for that year.
(2) "Other Expenses" are comprised of the annual auditing, legal, filing,
fidelity insurance, securities brokerage commission, securities clearing,
licensing and other miscellaneous expenses and fees. The percentage shown is
based on the estimated amounts for the current fiscal year assuming that the
Fund has $3.7 million in net asset value.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. This example uses the same
assumptions that are in all SEC-registered mutual funds: a $10,000 investment
for the time periods indicated, a 5% return each year and fund operating
expenses that remain the same each year. The figures shown in this example are
entirely hypothetical. They are not representations of past or future
performance or expenses. Your actual costs and returns may be higher or lower.
1 YEAR 3 YEARS
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$243 $ 249
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FUND MANAGEMENT
INVESTMENT ADVISER
The Fund's Investment Adviser is Zuckerman Management Associates, Inc., 1111
Lincoln Road, # 740, Miami Beach, Florida 33139. The Investment Adviser is
registered with the Securities and Exchange Commission under the Investment
Advisers Act of 1940. Dr. Matthew M. Zuckerman is the president and sole owner
of the Investment Adviser which was incorporated in May 1999. The Investment
Adviser provides investment advice and portfolio management services and
oversees the administration of the Fund. Dr. Zuckerman has many years of
experience in managing investments. His investment management style has been to
target stocks of "quality" U.S. companies for long-term investment. In this
context, "quality" refers to demonstrated earning power, sound finances, solid
competitive position, and capable executive leadership. The Investment Adviser
does not trade for quick profits. Stock market trends are largely ignored and no
effort is made to forecast the market or time the Fund's investments to profit
from the perceived outlook. His principal occupation has been dentistry. Dr.
Zuckerman graduated from NYU in 1949. He received his degree in dentistry in
1954 from NYU College of Dentistry. As of March 31, 2000, the Investment Adviser
had approximately $8,758,499.00 in net assets under management.
The Investment Adviser will charge an annual investment advisory fee of one
percent per annum of the Fund's average daily net asset value paid quarterly.
The Investment Adviser will also charge an annual management fee of one percent
which will be used by the Investment Adviser to pay the fees of the Fund's
custodian, administrator, transfer agent and Investment Company Institute
membership. With the exception of extraordinary non-recurring expenses, the
Investment Adviser will pay for any of the foregoing fees that exceed one
percent in the aggregate of the Fund's net asset value in a given year. To the
extent the foregoing fees are less than one percent in a given year, the
Investment Adviser will refund the unapplied amount to the Fund for that year.
The Fund will be responsible for paying any brokerage fees or commissions
incurred on its behalf. The Investment Adviser will have the right to determine
which brokers and dealers the Fund will use.
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PURCHASING AND REDEEMING SHARES
PRICING FUND SHARES
The Fund will determine its net asset value on each business day ("Business
Day"). As used herein, the term "Business Day" means every day other than
Saturdays, Sundays and other days on which the New York Stock Exchange is closed
for trading. Orders to buy or redeem shares that are received in good order
prior to 4:00 P.M. Eastern Time on a Business Day will be processed at the net
asset value calculated that day. Net asset value per share is calculated by
dividing the Fund's net assets by the number of shares outstanding at the Fund's
close of business on each Business Day. In calculating net asset value, the Fund
generally values its portfolio at market price. If market prices are unavailable
or the Fund thinks that they are unreliable, fair value prices may be determined
in good faith using methods approved by the Board of Trustees.
HOW TO BUY SHARES
You may buy shares of the Fund on a no-load basis on any Business Day by
completing an account application and enclosing a check payable to "The Prairie
Fund." No interest is paid to subscribers on subscription funds held by the
Fund.
The minimum initial purchase is $5,000. Orders and redemptions are accepted for
fractional shares. You should send your check payable to "The Prairie Fund" with
a completed account application to Mutual Shareholder Services, LLC (the
"Administrator") at the following address:
Mutual Shareholder Services, LLC
1301 East Ninth Street, Suite 1005
Cleveland, OH 44114
ADDITIONAL INVESTMENTS
Additional purchases can be made for $1,000 or more and should be mailed to the
Administrator at the above address. Please remember to include your account
number on your check.
To open an account for a spouse or child you may be asked to present additional
documents as proof of the relationship in addition to an account application.
You will also be asked to provide your existing account number and taxpayer
identification number. You should use caution when giving these numbers to
another person because that person may be able to gain access to your account or
other confidential financial information.
o The Fund will not accept third-party checks (i.e., any checks which are not
made payable to the order of the Fund or the Administrator).
o You may make fixed, periodic investments into the Fund by means of
automatic money transfers from your bank checking accounts. To establish
automatic money transfers, you may contact the Administrator.
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HOW TO REDEEM SHARES
You may redeem your shares on any Business Day either in writing or by telephone
if you elected the telephone redemption privilege on your account application.
You should submit your written redemption request directly to:
Mutual Shareholder Services, LLC
1301 East Ninth Street, Suite 1005
Cleveland, OH 44114
(877) 593-8637
If your account is held in the name of a corporation, as a fiduciary or agent,
or as a surviving joint owner, you may be required to provide additional
documents with your redemption request. Please remember that all redemption
requests must include your name and account number.
Additional Purchase and Redemption Information
The Fund reserves the following rights as they relate to purchases and
redemptions:
o To redeem your shares if your account balance falls below $5,000 or for
any other reason set forth herein. You will receive 30 days notice to
increase the value of your account to $5,000 before the account is
closed;
o To refuse any purchase order;
o To refuse third-party checks for purchases of shares;
o To change or waive the Fund's investment minimums;
o To suspend the right to redeem and delay redemption proceeds during
times when trading on the New York Stock Exchange is restricted or
halted, or otherwise as permitted by the board of trustees when it
deems suspension or delay in the best interest of shareholders;
o To require a signature guaranty for fund redemptions sent to an address
different from the address of record; and
o To require a signature guaranty for some fund redemptions and IRA
transfers.
Shareholders should be aware that purchase and redemption requests mailed to the
Administrator will not be processed until they are received by the Fund at the
address above. You can avoid delays by faxing requests for purchases and
redemptions directly to the Administrator at (216) 875-8992. A subscription for
purchasing shares will not be finalized until any checks submitted as payment
for the subscription price have cleared the bank against which such checks have
been drawn. No redemption requests for the subscribed shares will be accepted by
the Administrator during this period.
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TAXES AND DISTRIBUTIONS
Distributions of investment company taxable income (which includes dividends,
taxable interest, taxable original issue discount and market discount income,
net short-term capital gain in excess of long-term capital loss, and any other
taxable income other than net capital gain) will be taxable to you as ordinary
income, regardless of whether such distributions are paid in cash or are
reinvested in additional shares. Distributions of the Fund's net capital gain
will be taxable to you as long-term capital gain, regardless of how long you
have held the shares, and regardless of whether such distributions are paid in
cash or are reinvested in additional shares. The Fund anticipates that it will
distribute substantially all of its investment company taxable income and net
capital gain for each taxable year. Distributions paid in January but declared
by the Fund in the previous year may be taxable to you in the previous year.
ADDRESSES
INVESTMENT ADVISER
Zuckerman Management Associates, Inc.
1111 Lincoln Road, #740
Miami Beach, FL 33139
CUSTODIAN
UMB Bank, N.A.
928 Grand Boulevard, 10th Floor
Kansas City, MO 64106
ADMINISTRATOR
Mutual Shareholder Services, LLC
1301 East Ninth Street, Suite 1005
Cleveland, OH 44114
TRANSFER AGENT
Mutual Shareholder Services, LLC
1301 East Ninth Street, Suite 1005
Cleveland, OH 44114
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LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
5300 First Union Financial Center
200 S. Biscayne Boulevard
Miami, FL 33131-2339
INDEPENDENT AUDITORS
Kaufman, Rossin & Co.
2699 South Bayshore Drive
Miami, FL 33133
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HOW TO OBTAIN MORE INFORMATION
The Fund's Statement of Additional Information ("SAI"), dated [Date], contains
additional, more detailed information about the Fund. The SAI is incorporated by
reference into this Prospectus. This means that the SAI is legally a part of
this Prospectus.
The Fund publishes annual and semi-annual reports ("Shareholder Reports") which
contain additional information about the Fund's investments. In the Fund's first
annual report following the commencement of operations, you will find a
discussion of the market conditions and the investment strategies that
significantly affected the Fund's performance during its first fiscal year.
You may obtain the SAI and Shareholder Reports without charge by contacting the
Administrator toll-free at (877) 593-8637 or by writing to Zuckerman Management
Associates, Inc., 1111 Lincoln Road, #740, Miami Beach, Florida 33139.
Information about the Fund, including the SAI and Shareholder Reports, may be
obtained from the Securities and Exchange Commission in any of the following
ways, (1) In person: you may review and copy documents in the Commission's
Public Reference Room in Washington D.C. (for information call 202-942-8090);
(2) On-line: you may retrieve information from the Commission's web site at
http://www.sec.gov; (3) By mail: you may request documents, upon payment of a
duplicating fee, by writing to Securities and Exchange Commission, Public
Reference Section, Washington, D.C. 20549-0102; or (4) By e-mail: you may
request documents, upon payment of a duplicating fee, by e-mailing the
Securities and Exchange Commission at the following address: [email protected].
To aid you in obtaining this information, the Fund's Investment Company Act
registration number is 811-09931.
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THE PRAIRIE FUND
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STATEMENT OF ADDITIONAL INFORMATION
----------
[Date]
This Statement of Additional Information does not constitute an offer to sell,
or the solicitation of an offer to buy, any beneficial interest in The Prairie
Fund. This Statement of Additional Information has been prepared solely for the
information of the investor to whom it has been delivered on behalf of The
Prairie Fund and may not be reproduced or used for any other purpose.
This Statement of Additional Information is not a Prospectus. This Statement of
Additional Information should be read in conjunction with the Prospectus dated
[Date]. A copy of the Prospectus may be obtained by writing Zuckerman Management
Associates, Inc., 1111 Lincoln Road #740, Miami Beach, Florida 33139, or by
telephoning the Administrator at (877) 593-8637.
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TABLE OF CONTENTS
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FUND HISTORY......................................................................................................1
INVESTMENTS.......................................................................................................1
INVESTMENT RESTRICTIONS...........................................................................................1
MANAGEMENT OF THE FUND............................................................................................3
INVESTMENT ADVISER AND OTHER SERVICES.............................................................................4
BROKERAGE SERVICES................................................................................................6
FISCAL YEAR.......................................................................................................7
REDEMPTION OF SHARES AND DETERMINATION OF
NET ASSET VALUE...................................................................................................7
TAXES.............................................................................................................8
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FUND HISTORY
The Prairie Fund (the "Fund") was organized on April 12, 2000 as a
Delaware business trust. The Fund is registered with the Securities and Exchange
Commission as a non-diversified open-end management investment company under the
Investment Company Act of 1940. Shares of beneficial interest of the Fund are
sold pursuant to Section 4(2) of the Securities Act of 1933, and are not
registered under that Act. The Fund succeeded to the assets of Prairie Fund,
Inc., a Florida corporation, on July __, 2000. Prairie Fund, Inc. commenced
operations on January 3, 2000 and was managed following substantially the same
objective, policies and philosophies as are currently followed by the Fund.
INVESTMENTS
Ordinarily the Fund will be fully invested in common stocks issued by
U.S. companies. However, during unusual economic or market conditions, or for
temporary defensive or liquidity purposes, the Fund may invest in any of the
following types of securities:
CERTIFICATES OF DEPOSIT. The Fund may invest in negotiable short-term
obligations issued by commercial banks or savings and loan associations against
funds deposited in the issuing institution (certificates of deposit). Variable
rate certificates of deposit are certificates of deposit on which the interest
rate is periodically adjusted prior to their stated maturity based upon a
specified market rate.
MUNICIPAL SECURITIES. The Fund may invest in fixed income securities
issued by local, state and regional governments that provide income that is
exempt from federal income taxes (municipal securities). Municipal securities
involve the risk that an issuer may call securities for redemption, which could
force the Investment Adviser to reinvest the proceeds at a lower rate of
interest.
U.S. TREASURY SECURITIES. The Fund is free to invest in U.S. Treasury
securities of varying maturities. There are usually no brokerage commissions, as
such, paid by the Fund in connection with the purchase of such instruments. The
value of such securities can be expected to vary inversely to the changes in
prevailing interest rates. Thus, if interest rates have increased from the time
a security was purchased, such security, if sold, might be sold at a price less
than its cost. Similarly, if interest rates have declined from the time a
security was purchased, such security, if sold, might be sold at a price greater
than its cost.
INVESTMENT RESTRICTIONS
The Fund is subject to the following restrictions which are fundamental
policies and may not be changed without a vote of the majority of the
outstanding voting securities of the Fund:
(1) Borrow money in excess of 5% of the value (taken at the
lower of cost or current value) of the Fund's total assets (not including the
amount borrowed) at the time the borrowing is made, and then only from banks as
a temporary measure to facilitate the meeting of redemption requests (and not
for leverage) or for extraordinary or emergency purposes.
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(2) Pledge, hypothecate, mortgage or otherwise encumber its
assets in excess of 10% of the Fund's total assets (taken at cost), and then
only to secure borrowings permitted by Restriction 1 above.
(3) Purchase securities on margin, except such short-term
credits as may be necessary for the clearance of purchases and sales of
securities.
(4) Make short sales of securities or maintain a short
position for the account of the Fund unless at all times when a short position
is open, the Fund owns an equal amount of such securities or owns securities
which, without payment of any further consideration, are convertible into or
exchangeable for securities of the same issue as, and equal in amount to, the
securities sold short.
(5) Underwrite securities issued by other persons except to
the extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under federal securities
laws.
(6) Purchase or sell real estate, although it may invest in
securities of issuers, which deal in real estate, including securities of real
estate investment trusts, and may purchase securities, which are secured by
interests in real estate.
(7) Purchase or sell commodities or commodity contracts,
including future contracts.
(8) Make loans, including lending portfolio securities, except
by purchase of debt obligations or by entering into repurchase agreements.
(9) acquire any securities of companies within one industry,
if, as a result of such acquisition, more than 25% of the value of the Fund's
total assets would be invested in securities of companies within such industry.
It is contrary to the Fund's present policy, which may be changed by
the Board of Trustees without shareholder approval, to borrow money, pledge or
hypothecate its assets, make any short sales of securities, maintain any short
position for the account of the Fund, issue senior securities, or purchase
foreign securities which are not publicly traded in the United States. In
addition, it is contrary to the Fund's present policy to:
(1) Invest more than 10% of the Fund's net assets in
securities, which at the time of such investment are not readily marketable.
(2) Write (sell) or purchase options.
(3) Buy or sell oil, gas or other mineral leases, rights or
royalty contracts.
(4) Make investments for the purpose of gaining control of a
company's management.
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All percentage limitations on investments set forth herein and in the
Prospectus will apply at the time of the making of an investment and shall not
be considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment.
The phrase "shareholder approval," as used in the Prospectus, and the
phrase "vote of a majority of the outstanding voting securities," as used
herein, means the affirmative vote of the lesser of (1) more than 50% of the
outstanding voting shares of the Fund, or (2) 67% or more of the voting shares
of the Fund present at a meeting if more than 50% of the outstanding
shareholders are present at the meeting in person or represented by proxy.
MANAGEMENT OF THE FUND
The Management of the Fund is overseen by a board of trustees ("Board
of Trustees"). The Board of Trustees meets regularly to review the Fund's
activities, contractual arrangements and performance.
The Trustees and officers of the Fund and their principal occupations
during the past five years are as follows:
Elias M. Herschmann, MD Age 62, Trustee; Gastroenterologist affiliated
with Miami Heart Institute in Miami Beach, Florida and Aventura
Hospital in Aventura, Florida. Dr. Herschmann was a Major in the United
States Air Force, Medical Corps, School of Aerospace Medicine. He was
the Chief of the Gastroenterology Section, Clinical Science Division,
United States Air Force School of Aerospace Medicine from 1968-1970.
Dr. Herschmann graduated from Yeshiva College in 1959 and received his
degree in medicine in 1963 from State University of New York, Downtown
Medical Center in Brooklyn, New York. Dr. Herschmann is presently a
Member of the City of Miami Bach Community Relations Board and
President of Young Israel of Miami Beach.
Jack Levine, CPA, Age 50, Trustee; Certified Public Accountant in the
State of Florida. President of Jack Levine, PA, CPA's for more than 20
years. Member of the American Institute of Certified Public Accounts,
the Florida Institute of Certified Public Accountants and the New York
Society of Certified Public Accountants. He is director of numerous
civic and charitable organizations and was formerly director of Bankers
Savings Bank in Coral Gables, Florida.
Nancy Z. Markovitch*, Age 40, Trustee, Treasurer and Secretary of the
Fund; Private Investor since 1990. Ms. Markovitch is a Trustee for
various trust funds for the benefit of her children and in this
capacity has been active in the management of investments over a number
of years. Ms. Markovitch is a member of the executive board of
directors of the Hillel Day School of Boca Raton (the "School"), as
well as the Chairman of the School's Building Committee and Annual Fund
Raising Committee. Ms. Markovitch also sits on the Security Committee
of the Palm Beach County Jewish Federation, which focuses on safety
issues surrounding the numbers of Federation. She was employed from
1980 to 1988 by Eric Emmanuel Company, municipal bond investments, in
New York City as a registered broker, executive secretary and office
manager.
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Joseph Wiesel, Age 58, Trustee; Chief Financial Officer of Ivory
International, Inc. since 1995. Mr. Wiesel is active in The Hebrew
Academy and served two terms as president of Beth Israel Congregation
in Miami Beach. Mr. Wiesel is a 1962 graduate of City College of New
York.
Matthew M. Zuckerman,* Age 70, Chairman of the Board of Trustees and
President of the Fund; Principal of Zuckerman Management Associates.
Mr. Zuckerman manages and has managed trust portfolios for 40 years.
His principal occupation is dentistry. Dr. Zuckerman graduated from NYU
in 1949. He received his degree in dentistry in 1954 from NYU College
of Dentistry. Mr. Zuckerman is a member of the board of directors of
Beth Israel Congregation in Miami Beach, Florida. He is also a senior
attending physician at Mount Sinai Hospital, as well as an adjunct
professor at the University of Miami School of Medicine.
* Trustees Markovitch and Zuckerman are deemed to be "interested
persons" of the Fund as that term is defined in the Investment Company
Act of 1940.
The mailing address of the trustees and officers is c/o the Fund, 1111
Lincoln Road, Suite 740, Miami Beach, Florida 33139.
The Fund's Declaration of Trust provides that the Fund will indemnify
each of its Trustees against liabilities and expenses incurred in connection
with the litigation in which they may be involved because of their offices with
the Fund, except if it is determined in the manner specified in the Bylaws that
they have not acted in good faith in the reasonable belief that their actions
were in the best interests of the Fund.
Trustees and officers of the Fund will not receive fees or salaries
from the Fund, but will receive reimbursements from the Fund for attending Board
of Trustees meetings. Matthew Zuckerman, as an officer and sole stockholder, and
Nancy Markovitch, as an officer, of the Investment Adviser, will benefit from
the investment advisory fee paid by the Fund.
INVESTMENT ADVISER AND OTHER SERVICES
THE INVESTMENT ADVISER
Under a written advisory contract ("Investment Advisory Agreement")
between the Fund and the Investment Adviser, subject to such policies as the
Trustees of the Fund may determine, the Investment Adviser, at its expense,
furnishes an investment program for the Fund and makes investment decisions on
behalf of the Fund and places all orders for the purchase and sale of portfolio
securities subject always to applicable investment objectives, policies and
restrictions.
Pursuant to the Investment Advisory Agreement and subject to the
oversight of the Trustees, the Investment Adviser also manages, supervises and
conducts the other affairs and business of the Fund, furnishes office space and
equipment, provides bookkeeping and certain
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<PAGE> 19
clerical services and pays all fees and expenses of the officers of the Fund. As
indicated under "Portfolio Transactions -- Brokerage and Research Services," the
Fund's portfolio transactions may be placed with brokers which furnish the
Investment Adviser, without cost, certain research, statistical and quotation
services of value to it or its affiliates in advising the Fund or their other
clients. In so doing, the Fund may incur greater brokerage commissions than it
might otherwise pay.
The Investment Advisory Agreement has been approved by the Trustees of
the Fund. By its terms, the Investment Advisory Agreement has an initial term of
two years and will continue in force thereafter from year to year, but only so
long as its continuance is approved at least annually by the Trustees at a
meeting called for that purpose or by the vote of a majority of the outstanding
shares of the Fund. The Investment Advisory Agreement automatically terminates
on assignment, and is terminable upon notice by the Fund. In addition, the
Investment Advisory Agreement may be terminated on not more than 60 days' notice
by the Investment Adviser to the Fund.
The Investment Adviser will charge an annual investment advisory fee of
one percent per annum of the Fund's average daily net asset value paid
quarterly. The Investment Adviser will also charge an annual management fee of
one percent which will be used by the Investment Adviser to pay the fees of the
Fund's custodian, administrator, transfer agent and Investment Company Institute
membership. With the exception of extraordinary non-recurring expenses, the
Investment Adviser will pay for any of the foregoing fees that exceed one
percent in the aggregate of the Fund's net asset value in a given year. To the
extent the foregoing fees are less than one percent in a given year, the
Investment Adviser will refund the unapplied amount to the Fund for that year.
The Fund pays, in addition to the investment advisory and management
fees described above, all other expenses not borne by the Investment Adviser,
including, without limitation, expenses of the Trustees, interest charges,
taxes, securities brokerage commissions, securities clearing fees, auditing and
legal expenses, the costs of reports to shareholders, expenses of meetings of
shareholders, expenses of printing and mailing Prospectus, proxy statements and
proxies to existing shareholders, and fidelity insurance premiums. The Fund is
also responsible for such non-recurring expenses as may arise, including
litigation in which the Fund may be a party, and other expenses as determined by
the Trustees. The Fund may have an obligation to indemnify its officers and
Trustees with respect to such litigation.
The Investment Advisory Agreement provides that the Investment Adviser
shall not be subject to any liability in connection with the performance of its
services thereunder in the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.
The Investment Adviser is a Florida corporation organized on June 14,
1999. All of the outstanding voting shares of the Investment Adviser are owned
by Matthew M. Zuckerman. The Investment Adviser managed aggregate assets as of
March 31, 2000 of approximately $8,758,499.00.
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<PAGE> 20
DISTRIBUTIONS
DISTRIBUTIONS FROM NET INVESTMENT INCOME. The Fund will pay out
substantially all of its net investment income, (I.E., dividends, interest it
receives from its investments, and short-term gains). It is the present policy
of the Fund to declare and pay distributions from net investment income
semi-annually.
DISTRIBUTIONS OF CAPITAL GAINS. The Fund's policy is to distribute
annually substantially all of the net realized capital gain, if any, after
giving effect to any available capital loss carryover. Net realized capital gain
is the excess of net realized long-term capital gain over net realized
short-term capital loss.
BROKERAGE SERVICES
Transactions on stock exchanges and other agency transactions involve
the payment by the Fund of negotiated brokerage commissions. Such commissions
vary among different brokers. Also, a particular broker may charge different
commissions according to such factors as the difficulty and size of the
transaction. There is generally no stated commission in the case of securities
traded in the over-the-counter markets but the price paid by the Fund usually
includes a dealer commission or mark-up. It is anticipated that most purchases
and sales of short-term portfolio securities will be with the issuer or with
major dealers in money market instruments acting as principals. In underwritten
offerings, the price paid includes a disclosed, fixed commission or discount
retained by the underwriter or dealer.
When the Investment Adviser places orders for the purchase and sale of
portfolio securities for the Fund and buys and sells securities for the Fund, it
is anticipated that such transactions will be effected through a number of
brokers and dealers. In so doing, the Investment Adviser intends to use its best
efforts to obtain for the Fund the most favorable price and execution available,
except to the extent that it may be permitted to pay higher brokerage
commissions as described below. In seeking the most favorable price and
execution, the Investment Adviser considers all factors it deems relevant,
including, by way of illustration, price, the size of the transaction, the
nature of the market for the security, the amount of commission, the timing of
the transaction taking into account market prices and trends, the reputation,
experience and financial stability of the broker/dealer involved and the quality
of service rendered by the broker/dealer in other transactions.
It has for many years been a common practice in the investment advisory
business for advisors of investment companies and other institutional investors
to receive research, statistical and quotation services from brokers which
execute portfolio transactions for the clients of such advisors. Consistent with
this practice, the Investment Adviser may receive research, statistical and
quotation services from brokers with which the Fund's portfolio transactions are
placed. These services, which in some instances could also be purchased for
cash, include such matters as general economic and security market reviews,
industry and company reviews, evaluations of securities and recommendations as
to the purchase and sale of securities. Some of these services may be of value
to the Investment Adviser in advising several of its clients (including the
Fund), although not all of these services are necessarily useful and of value in
managing the Fund. The fees paid to the Investment Adviser are not reduced
because it receives such services.
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<PAGE> 21
As permitted by Section 28(e) of the Securities Exchange Act of 1934
(the "1934 Act") and the Investment Advisory Agreement, the Investment Adviser
may cause the Fund to pay a broker which provides "brokerage and research
services" (as defined in the 1934 Act) to the Investment Adviser an amount of
disclosed commission for effecting a securities transaction for the Fund in
excess of the commission which another broker would have charged for effecting
that transaction. The authority of the Investment Adviser to cause the Fund to
pay any such greater commissions is subject to such policies as the Trustees may
adopt from time to time.
FISCAL YEAR
The Fund's fiscal year ends on December 31 of each year.
REDEMPTION OF SHARES AND DETERMINATION OF NET ASSET VALUE
HOW TO REDEEM SHARES
The procedures for redemption of Fund shares are summarized in the text
of the Prospectus following the caption "How to Redeem." Redemption requests
must be in good order, as defined in the Prospectus. Upon receipt of a
redemption request in good order, the Shareholder will receive a check equal to
the net asset value of the redeemed shares next determined after the redemption
request has been received. The proceeds of redemption may be more or less than
the shareholder's investment and thus may involve a capital gain or loss for tax
purposes. If the shares to be redeemed represent an investment made by check,
the Fund reserves the right not to forward the proceeds of the redemption until
the check has been collected. Mutual Shareholder Services LLC ("Administrator")
serves as Transfer Agent for the Fund.
The Fund may suspend the right of redemption and may postpone payment
only when the New York Stock Exchange (the "NYSE") is closed for other than
customary weekends and holidays, or if permitted by the rules of the Securities
and Exchange Commission during periods when trading on the Exchange is
restricted or during any emergency which makes it impracticable for the Fund to
dispose of its securities or for the Administrator to determine fairly the value
of the Fund's net assets, or during any other period permitted by order of the
Securities and Exchange Commission.
It is currently the Fund's policy usually to pay all redemptions in
cash. The Board of Trustees retains the right, however, to provide for
redemptions in whole or in part by a distribution in-kind of securities held by
the Fund in lieu of cash. Shareholders may incur brokerage charges on the sale
of any such securities so received in payment of redemptions.
The Fund reserves the right to redeem shares and mail the proceeds to
the shareholder if at any time the net asset value of the shares in the
shareholder's account in the Fund falls below a specified level, currently set
at $5,000. Shareholders will be notified and will have 30 days to bring the
account up to the required level before any redemption action will be taken by
the Fund. The Fund also reserves the right to redeem shares in a shareholder's
account in excess of an amount set from time to time by the Trustees. No such
limit is presently in effect, but such a
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<PAGE> 22
limit could be established at any time and could be applicable to existing as
well as future shareholders.
HOW NET ASSET VALUE IS DETERMINED
The net asset value per share of the Fund is determined once on each
day on which the NYSE is open, at the Fund's close of business. The Fund expects
that the days, other than weekend days, that the Exchange will not be open are
New Year's Day, Martin Luther King, Jr. Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The Fund's portfolio securities for which market quotations are readily
available are valued at market value, which is determined by using the last
reported sale price, or, if no sales are reported -- and in the case of certain
securities traded over-the-counter -- the last reported bid price.
Certain securities and assets of the Fund may be valued at fair value
as determined in good faith by the Trustees or by persons acting at their
direction pursuant to guidelines established by the Trustees. Such valuations
and procedures are reviewed periodically by the Trustees. The fair value of such
securities is generally determined as the amount which the Fund could reasonably
expect to realize from an orderly disposition of such securities over a
reasonable period of time. The valuation procedures applied in any specific
instance are likely to vary from case to case. However, consideration is
generally given to the financial position of the issuer and other fundamental
analytical data relating to the investment and to the nature of the restrictions
on disposition of the securities (including any registration expenses that might
be borne by the Fund in connection with such disposition). In addition, such
specific factors are also generally considered as the cost of the investment,
the market value of any unrestricted securities of the same class (both at the
time of purchase and at the time of valuation), the size of the holding, the
prices of any recent transactions or offers with respect to such securities and
any available analysts' reports regarding the issuer.
The Administrator will calculate the Fund's daily net asset value of
the shares of the Fund and maintain accurate records of such valuation for the
Fund.
TAXES
The Fund intends to qualify under Subchapter M of the Internal Revenue
Code of 1986, as amended, for tax treatment as a regulated investment company.
In order to qualify as a regulated investment company, the Fund must satisfy
certain requirements relating to the source of its income, diversification of
its assets, and distributions of its income. First, the Fund must derive at
least 90% of its annual gross income (including tax-exempt interest) from
dividends, interest, payments with respect to securities loans, gains from the
sale of or other disposition of stock or securities, or certain other income
derived with respect to its business of investing in such stock or securities
(the "90% gross income test"). Second, the Fund must diversify its holdings so
that, at the close of each quarter of its taxable year, (i) at least 50% of the
value of its total assets is comprised of cash, cash items, United States
Government securities, securities of other regulated investment companies and
other securities limited in respect of any one issuer to an amount not greater
in value than 5% of the value of the Fund's total assets and to not more than
10% of the outstanding voting securities of such issuer, and (ii) not more than
25% of the
8
<PAGE> 23
value of the total assets is invested in the securities of any one issuer (other
than United States Government securities and securities of other regulated
investment companies) or two or more issuers controlled by the Fund and engaged
in the same, similar or related trades or businesses.
As a regulated investment company, the Fund will not be subject to
federal income tax in any taxable year for which it distributes at least 90% of
the sum of (i) its "investment company taxable income" (which includes
dividends, taxable interest, taxable original issue discount and market discount
income, income from securities lending, net short-term capital gain in excess of
long-term capital loss, and any other taxable income other than "net capital
gain" (as defined below) and is reduced by deductible expenses) and (ii) its net
tax-exempt interest (the excess of its gross tax-exempt interest income over
certain disallowed deductions). The Fund may retain for investment its net
capital gain (which consists of the excess of its net long-term capital gain
over its net short-term capital loss). However, if the Fund retains any net
capital gain or any investment company taxable income, it will generally be
subject to tax at regular corporate rates on the amount retained.
Distributions of investment company taxable income will be taxable to
you as ordinary income, regardless of whether such distributions are paid in
cash or are reinvested in additional shares, to the extent of the Fund's
earnings and profits. The Fund anticipates that it will distribute substantially
all of its investment company taxable income for each taxable year.
The Fund may either retain or distribute to you its net capital gains.
If such gains are distributed as a capital gains distribution, they are taxable
to you at a maximum rate of 20%, regardless of the length of time you have held
shares.
The Fund will provide a statement annually to you as to the federal tax
status of distributions paid (or deemed to be paid) by the Fund during the year.
Generally, gain or loss on the sale of shares will be capital gain or
loss that will be long-term if the shares have been held for more than twelve
months and otherwise will be short-term. For individuals, long-term capital
gains are currently taxed at a maximum rate of 20% and short-term capital gains
are currently taxed at ordinary income tax rates. However, if you realize a loss
on the sale or redemption of shares held for six months or less and have
previously received a capital gains distribution with respect to the shares (or
any undistributed net capital gains of the Fund with respect to such shares are
included in determining your long-term capital gains), you must treat the loss
as a long-term capital loss to the extent of the amount of the prior capital
gains distribution (or any undistributed net capital gains of the Fund that have
been included in determining your long-term capital gains). In addition, any
loss realized on a sale or other disposition of shares will be disallowed to the
extent you repurchase (or enter into a contract or option to repurchase) shares
within a period of 61 days (beginning 30 days before and ending 30 days after
the disposition of the shares).
If the Fund fails to qualify for any taxable year as a regulated
investment company, all of its taxable income will be subject to tax at regular
corporate income tax rate (without any deduction for distributions). In such
event, all distributions made by the Fund (whether or not derived from
tax-exempt interest) would be taxable to you as dividends to the extent of the
Fund's earnings and profits.
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<PAGE> 24
The foregoing relates only to federal income taxation. You may also be
subject to state and local taxes in connection with your investment in the Fund.
PART C: OTHER INFORMATION
Item 23. Exhibits:
(a) Certificate and Declaration of Trust of Registrant, dated
April 12, 2000, was filed with the initial filing.
(b) By-Laws of Registrant, are filed herewith.
(c) Not Applicable
(d) Investment Advisory Agreement between the Registrant and
Zuckerman Management Associates, Inc., is filed herewith.
(e) Not Applicable
(f) Not Applicable
(g) Custody Agreement between the Registrant and UMB Bank, N.A.,
is filed herewith.
(h)(1) Accounting Services Agreement between the Registrant and
Mutual Shareholder Services, LLC, is filed herewith.
(h)(2) Transfer Agent Agreement between the Registrant and Mutual
Shareholder Services, LLC, is filed herewith.
(i) Not Applicable
(j) Not Applicable
(k) Not Applicable
(l) Not Applicable
(m) Not Applicable
(n) Not Applicable
(o) Not Applicable
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<PAGE> 25
(p) Code of Ethics, is filed herewith.
Item 24. Persons Controlled by or under Common Control with the Fund
Not Applicable
ITEM 25. INDEMNIFICATION
The Registrant is organized as a Delaware business trust and is operated
pursuant to a Declaration of Trust that permits the Registrant to indemnify its
trustees and officers under certain circumstances. Such indemnification,
however, is subject to the limitations imposed by the Investment Company Act of
1940, as amended. The Declaration of Trust of the Registrant provides that
officers and trustees of the Trust shall be indemnified by the Trust against
liabilities and expenses of defense in proceedings against them by reason of the
fact that they each serve as an officer or trustee of the Trust or as an officer
or trustee of another entity at the request of the entity. This indemnification
is subject to the following conditions:
(a) no trustee or officer of the Trust is indemnified against any
liability to the Trust or its security holders which was the
result of any willful misfeasance, bad faith, gross
negligence, or reckless disregard of his duties;
(b) officers and trustees of the Trust are indemnified only for
actions taken in good faith which the officers and trustees
believed were in or not opposed to the best interests of the
Trust; and
(c) expenses of any suit or proceeding will be paid in advance
only if the persons who will benefit by such advance undertake
to repay the expenses unless it subsequently is determined
that such persons are entitled to indemnification.
The Declaration of Trust of the Registrant provides that if indemnification is
not ordered by a court, indemnification may be authorized upon determination by
shareholders, or by a majority vote of a quorum of the trustees who were not
parties to the proceedings or, if this quorum is not obtainable, if directed by
a quorum of disinterested trustees, or by independent legal counsel in a written
opinion, that the persons to be indemnified have met the applicable standard.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
The Investment Adviser provides advisory services to the Registrant and other
clients. Matthew M. Zuckerman, the President of the Investment Adviser, is a
member of the board of directors of Beth Israel Congregation in Miami Beach,
Florida. He is also a senior attending physician at Mount Sinai Hospital, as
well as an adjunct professor at the University of Miami's School of Medicine. In
May 1999, Mr. Zuckerman retired from his dentistry practice, Matthew M.
Zuckerman, D.D.S. and Bruce M. Shaw, D.D.S., P.A.
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<PAGE> 26
Nancy Markovitch, the Secretary and Treasurer of the Investment Adviser, is a
member of the executive board of directors of the Hillel Day School of Boca
Raton (the "School"), as well as the Chairman of the School's Building Committee
and Annual Fund Raising Committee. Ms. Markovitch is also a member of the
Security Committee for the Palm Beach County Jewish Federation, which focuses on
the safety issues surrounding the members of the Federation.
ITEM 27. PRINCIPAL UNDERWRITERS
Not Applicable
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books, and records required to be maintained and preserved by Section
31(a) of the Investment Company Act of 1940, as amended, and Rules 31a-1 and
31a-2 thereunder, are maintained as follows:
UMB Bank, N.A.
928 Grand Boulevard, 10th Floor
Attn: Bonnie Johnson
Kansas City, MO 64106
Mutual Shareholder Services, LLC
1301 East Ninth Street, Suite 1005
Cleveland, OH 44114
Zuckerman Management Associates, Inc.
1111 Lincoln Road, #740
Miami Beach, FL 33139
(records relating to its function as Investment Adviser)
Mutual Shareholder Services, LLC
1301 East Ninth Street, Suite 1005
Cleveland, OH 44114
ITEM 29. MANAGEMENT SERVICES
Not Applicable
ITEM 30. UNDERTAKINGS
None
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<PAGE> 27
Signatures
Pursuant to the requirements of the Investment Company Act of 1940, as amended,
the Registrant has duly caused this Amendment No. 1 to the Registration
Statement to be signed on its behalf by the undersigned, duly authorized in the
City of Miami, and State of Florida on the 24th day of July, 2000.
THE PRAIRIE FUND
By: /s/ Matthew M. Zuckerman
------------------------------
Name: Matthew M. Zuckerman
Title: President
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<PAGE> 28
EXHIBIT INDEX
<TABLE>
<CAPTION>
Name Exhibit #
---- ---------
<S> <C>
Certificate and Declaration of Trust of Registrant, dated April 12,
2000, was filed with the original filing. Ex-99.a
By-Laws of Registrant, dated April 12, 2000, are filed herewith. Ex-99.b
Not Applicable Ex-99.c
Investment Advisory Agreement between the Registrant and Zuckerman
Management Associates, Inc., is filed herewith. Ex-99.d
Not Applicable Ex-99.e
Not Applicable Ex-99.f
Custody Agreement between the Registrant and UMB Bank, N.A., is filed herewith. Ex-99.g
Accounting Services Agreement between the Registrant and Mutual
Shareholder Services, LLC, is filed herewith. Ex-99.h(1)
Transfer Agent Agreement between the Registrant and Mutual
Shareholder Services, LLC, is filed herewith. Ex-99.h(2)
Not Applicable Ex-99.i
Not Applicable Ex-99.j
Not Applicable Ex-99.k
Not Applicable Ex-99.l
Not Applicable Ex-99.m
Not Applicable Ex-99.n
Not Applicable Ex-99.o
Code of Ethics, is filed herewith. Ex-99.p
</TABLE>
14
