Securities Act Registration No. 333-36028
Investment Company Act Reg. No. 811-9925
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 1 [X]
(Check appropriate box or boxes.)
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GOLDEN GATE FUND, INC.
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(Exact Name of Registrant as Specified in Charter)
100 Larkspur Landing Circle
Suite 102
Larkspur, California 94939
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(Address of Principal Executive Offices) (Zip Code)
(415) 925-4000
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(Registrant's Telephone Number, including Area Code)
Copy to:
Bruce J. Raabe
Collins & Company, LLC Richard L. Teigen
100 Larkspur Landing Circle Foley & Lardner
Suite 102 777 East Wisconsin Avenue
Larkspur, California 94939 Milwaukee, Wisconsin 53202
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(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after the
Registration Statement becomes effective.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to Section 8(a), may determine.
<PAGE>
PRELIMINARY PROSPECTUS
Subject to completion, dated June 8, 2000.
The information in this Prospectus is not complete and may be changed. We may
not sell these securities until the Registration Statement filed with the
Securities and Exchange Commission is effective. This Prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
P R O S P E C T U S
June 14, 2000
Golden Gate Fund
A Mutual Fund Investing in Great Bay Area Companies
Golden Gate Fund is a no load mutual fund seeking long-term capital
appreciation by investing in common stocks of United States companies
headquartered in the greater San Francisco Bay Area.
Please read this Prospectus and keep it for future reference. It contains
important information, including information on how Golden Gate Fund invests and
the services it offers to shareholders.
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The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this Prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
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TABLE OF CONTENTS
Questions Every Investor Should Ask Before
Golden Gate Investing in Golden Gate Fund............. 2
Fund, Inc. Fees and Expenses........................... 4
100 Larkspur Landing Circle Investment Objective and Strategies......... 5
Suite 102 Management of the Fund...................... 5
Larkspur, California 94939 Distribution Plan........................... 6
(877) 785-5443 The Fund's Share Price ..................... 6
www.goldengatefund.com Purchasing Shares........................... 6
Redeeming Shares............................ 10
Dividends, Distributions and Taxes.......... 14
Share Purchase Application..................n/a
<PAGE>
QUESTIONS EVERY INVESTOR SHOULD ASK BEFORE
INVESTING IN GOLDEN GATE FUND
1. What are the Fund's Goals?
Golden Gate Fund seeks long-term capital appreciation.
2. What are the Fund's Principal Investment Strategies?
The Fund invests in common stocks of United States companies headquartered
in the greater San Francisco Bay Area. The greater San Francisco Bay Area
includes the following counties:
Alameda San Francisco Solano
Contra Costa San Mateo Sonoma
Marin Santa Clara
Napa Santa Cruz
The Fund follows no single investment selection criteria. The Fund invests
in companies of all sizes and in any industry. At any time the Fund may
hold both "growth" stocks and "value" stocks. The Fund's investment adviser
generally will invest more of the Fund's assets in large and mid cap
companies than in smaller companies. The Fund invests in stocks the Fund's
investment adviser believes will appreciate significantly over a one to two
year period. The Fund's investment adviser bases investment decisions on
company specific factors, not general economic conditions.
The companies in which the Fund invests have some or all of the following
characteristics:
o Market leadership in industries with significant barriers to entry
o Attractive valuation in relation to current and expected changes in
revenue growth.
o Consistent earnings growth combined with a relatively low
price/earnings ratio
o Sufficient operating cash flow after capital investment relative to
enterprise value
o Strong brand recognition relative to peers
o High level of capital utilization or return on invested capital
o Healthy and consistent operating margins
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o Low volatility in revenues, cash flow and earnings
o Strong management and corporate culture
o Low dependence on external financing
o Commitment to research and development
The Fund will sell companies if they no longer meet its investment
criteria, or if better investment opportunities are available. From
time to time companies held by the Fund may cease to be headquartered
in the greater San Francisco Bay Area. The Fund will sell such
companies within a year after the event resulting in the change of
principal office.
3. What are the Principal Risks in Investing in the Fund?
Investors in the Fund may lose money. There are risks associated with the
types of securities in which the Fund invests. These risks include:
o Manager Risk: Fund management affects Fund performance. The Fund may
lose money if the Fund managers' investment strategy does not achieve
the Fund's objective or the managers do not implement the strategy
properly.
o Market Risk: Stocks may decline significantly in price over short or
extended periods of time. Price changes may occur in the market as a
whole, or they may occur in only a particular company, industry or
sector of the market.
o Regional Concentration Risk: The Fund's policy of concentrating its
common stock investments in a geographic region means that it may be
subject to adverse economic, political or other developments in the
region. Many companies in the greater San Francisco Bay Area are
technology companies. Technology companies may be subject to greater
business risks and more sensitive to changes in economic conditions
than companies in other industries. Company earnings in the technology
sector may fluctuate more than those of other companies because of
short product cycles (technological obsolescence) and competitive
pricing. Investors' enthusiasm for technology stocks can also change
dramatically with the result that their stock prices may fluctuate
sharply.
o Risk Related to Growth Stocks: Growth stocks tend to be more volatile
than slower-growing value stocks because they usually reinvest a high
proportion of their earnings in their own businesses and they may lack
the dividends often associated with value stocks that could cushion
their decline in a falling market. Also, because investors buy growth
stocks because of their expected superior earnings growth, earnings
disappointments often result in sharp price declines.
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Because of these risks the Fund is a suitable investment only for those
investors who have long-term investment goals. Prospective investors who
are uncomfortable with an investment that will fluctuate in value should
not invest in the Fund.
4. How has the Fund Performed?
The Fund is newly organized and therefore has no performance history. The
Fund's performance will vary from year to year.
FEES AND EXPENSES
The table below describes the fees and expenses that you may pay if
you buy and hold shares of the Fund:
SHAREHOLDER FEES (fees paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases (as a
Percentage of Offering Price)................ No Sales Charge
Maximum Deferred Sales Charge (Load).............. No Deferred Sales Charge
Maximum Sales Charge (Load)
Imposed on Reinvested Dividends
and Distributions............................ No Sales Charge
Redemption Fee.................................... None*
Exchange Fee...................................... None
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
Management Fees................................... 1.00%
Distribution and/or Service (12b-1) Fees.......... 0.25%
Other Expenses.................................... 0.70%
Total Annual Fund Operating Expenses.............. 1.95%
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* Our transfer agent charges a fee of $12.00 for each wire redemption.
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.
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The Example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of these
periods. The Example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years
$198 $612
INVESTMENT OBJECTIVE AND STRATEGIES
As discussed above, the Fund seeks long-term capital appreciation by
investing in common stocks of United States companies headquartered in the
greater San Francisco Bay Area. Although we have no intention of doing so, the
Fund may change its investment objective without obtaining shareholder approval.
Please remember that an investment objective is not a guarantee. An investment
in the Fund might not appreciate and investors could lose money.
The Fund may, in response to adverse market, economic, political or
other conditions, take temporary defensive positions. In such circumstances the
Fund may invest in money market instruments (like U.S. Treasury Bills,
commercial paper or repurchase agreements). The Fund will not be able to achieve
its investment objective of long-term capital appreciation to the extent that it
invests in money market instruments since these securities do not appreciate in
value. When the Fund is not taking a temporary defensive position, it still will
hold some cash and money market instruments so that it can pay its expenses,
satisfy redemption requests or take advantage of investment opportunities.
Our portfolio managers are patient investors. The Fund does not
attempt to achieve its investment objective by active and frequent trading of
common stocks.
MANAGEMENT OF THE FUND
Collins & Company, LLC (the "Adviser") manages the Fund's investments.
The Adviser's address is: 100 Larkspur Landing Circle
Suite 102
Larkspur, California 94939
The Adviser has been in business since 1962. The Adviser's principal
activities include equity and fixed income portfolio management, as well as
brokerage and investment research. The Adviser has over $500 million in assets
under management. As the investment adviser to the Fund, the Adviser manages the
investment portfolio for the Fund. It makes the decisions as to which securities
to buy and which securities to sell. The Fund pays the Adviser an annual
investment advisory fee equal to 1.00% of its average net assets.
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Bruce J. Raabe and Brian L. Eisenbarth are responsible for the
day-to-day management of the Fund's portfolio. They are our portfolio managers.
Both Messrs. Raabe and Eisenbarth are chartered Financial Analysts. Mr. Raabe
joined the Adviser in 1992 as an Account Executive (1992-94) and a Municipal
Securities Principal (1992-present). Since then, Mr. Raabe has served as a
Portfolio Manager (1993-94), General Securities Principal (1993-94) and Senior
Portfolio Manager (1994-99). Mr. Eisenbarth joined the Adviser in 1993 as a
portfolio manager. Their current positions with the Adviser are:
Bruce J. Raabe, CFA Member and Chief Investment Officer
Brian L. Eisenbarth, CFA Portfolio Manager
Mr. Raabe is primarily responsible for the Adviser's day-to-day operations, and,
in addition to the above positions, currently serves as Compliance Official
(1997-present), Branch Office Manager (1996-present), Options Principal
(1994-present), Municipal Securities Principal and NYSE Supervisory Analyst
(1995-present) for the Adviser.
DISTRIBUTION PLAN
The Fund has adopted a distribution plan in accordance with Rule 12b-1
under the Investment Company Act of 1940. Under the plan the Fund may pay
distribution and service fees for the sale of its shares and for services
provided to its shareholders at an annual rate of up to 0.25% of the Fund's
average net assets. Since 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 investments
and may cost you more than paying other types of sales charges.
THE FUND'S SHARE PRICE
The price at which investors purchase shares of the Fund and at which
shareholders redeem shares of the Fund is called its net asset value. The Fund
calculates its net asset value as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m. Eastern Time) on each day the New York
Stock Exchange is open for trading. The Fund calculates its net asset value
based on the market prices of the securities (other than money market
instruments) it holds. It values most money market instruments it holds at their
amortized cost. The Fund will process purchase orders that it receives and
redemption orders that it receives prior to the close of regular trading on a
day in which the New York Stock Exchange is open at the net asset value
determined later that day. It will process purchase orders that it receives and
accepts and redemption orders that it receives after the close of regular
trading at the net asset value determined at the close of regular trading on the
next day the New York Stock Exchange is open.
PURCHASING SHARES
How to Purchase Shares from the Fund
1. Read this Prospectus carefully
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2. Determine how much you want to invest keeping in mind the following
minimums:
a. New accounts
o All Accounts (except Education IRA) $ 2,000
o Education IRA $ 500
b. Existing accounts
o Dividend reinvestment No Minimum
o Automatic Investment Plan $ 50
o All other accounts $ 100
3. Complete the Purchase Application included in this Prospectus,
carefully following the instructions. For additional investments,
complete the remittance form attached to your individual account
statements. (The Fund has additional Purchase Applications and
remittance forms if you need them.) If you have any questions, please
call Firstar Mutual Fund Services, LLC, the Fund's transfer agent, at
1-877-785-5443.
4. Make your check payable to "Golden Gate Fund, Inc." All checks must be
drawn on U.S. banks. The Fund will not accept cash or third party
checks. Firstar Mutual Fund Services, LLC will charge a $25 fee
against a shareholder's account for any payment check returned for
insufficient funds. The shareholder will also be responsible for any
losses suffered by the Fund as a result.
5. Send the application and check to:
BY FIRST CLASS MAIL
Golden Gate Fund, Inc.
c/o Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
BY OVERNIGHT DELIVERY SERVICE OR REGISTERED MAIL
Golden Gate Fund, Inc.
c/o Firstar Mutual Fund Services, LLC
615 East Michigan Street, 3rd Floor
Milwaukee, WI 53202-5207
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Please do not mail letters by overnight delivery service or registered
mail to the Post Office Box address.
6. If you wish to open an account by wire, please call Firstar Mutual
Fund Services, LLC at 1-877-785-5443 prior to wiring funds in order to
obtain a confirmation number and to ensure prompt and accurate
handling of funds. You should wire funds to:
Firstar Bank, N.A.
777 East Wisconsin Avenue
Milwaukee, WI 53202
ABA #075000022
Credit:
Firstar Mutual Fund Services, LLC
Account #112-952-137
Further Credit:
Golden Gate Fund, Inc.
(shareholder registration)
(shareholder account number)
You should then send a properly signed Purchase Application marked
"FOLLOW-UP" to either of the addresses listed above. Please remember that
Firstar Bank, N.A. must receive your wired funds prior to the close of regular
trading on the New York Stock Exchange for you to receive same day pricing. The
Fund and Firstar Bank, N.A. are not responsible for the consequences of delays
resulting from the banking or Federal Reserve Wire system, or from incomplete
wiring instructions.
Purchasing Shares from Broker-dealers, Financial Institutions and Others
Some broker-dealers may sell shares of the Fund. These broker-dealers
may charge investors a fee either at the time of purchase or redemption. The
fee, if charged, is retained by the broker-dealer and not remitted to the Fund
or the Adviser. Some broker-dealers may purchase and redeem shares on a
three-day settlement basis.
The Fund may enter into agreements with broker-dealers, financial
institutions or other service providers (collectively, "Servicing Agents" and
each a "Servicing Agent") that may include the Fund as an investment alternative
in the programs they offer or administer. Servicing Agents may:
o Become shareholders of record of the Fund. This means all
requests to purchase additional shares and all redemption
requests must be sent through the Servicing Agents. This also
means that purchases made through Servicing Agents are not
subject to the Fund's minimum purchase requirement.
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o Use procedures and impose restrictions that may be in addition
to, or different from, those applicable to investors purchasing
shares directly from the Fund.
o Charge fees to their customers for the services they provide
them. Also, the Fund and/or the Adviser may pay fees to Servicing
Agents to compensate them for the services they provide their
customers.
o Be allowed to purchase shares by telephone with payment to follow
the next day. If the telephone purchase is made prior to the
close of regular trading on the New York Stock Exchange, it will
receive same day pricing.
o Be authorized to accept purchase orders on the Fund's behalf.
This means that the Fund will process the purchase order at the
net asset value which is determined following the Servicing
Agent's acceptance of the customer's order.
If you decide to purchase shares through Servicing Agents, please
carefully review the program materials provided to you by the Servicing Agent.
When you purchase shares of the Fund through a Servicing Agent, it is the
responsibility of the Servicing Agent to place your order with the Fund on a
timely basis. If the Servicing Agent does not, or if it does not pay the
purchase price to the Fund within the period specified in its agreement with the
Fund, it may be held liable for any resulting fees or losses.
Other Information about Purchasing Shares of the Fund
The Fund may reject any Purchase Application for any reason. The Fund
will not accept purchase orders made by telephone, unless they are from a
Servicing Agent which has an agreement with the Fund.
The Fund will not issue certificates evidencing shares. The Fund will
send investors a written confirmation for all purchases of shares.
The Fund offers an automatic investment plan allowing shareholders to
make purchases on a regular and convenient basis. The Fund also offers the
following retirement plans:
o Traditional IRA
o Roth IRA
o Education IRA
o SEP-IRA
o Simple IRA
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Investors can obtain further information about the automatic
investment plan and the retirement plans by calling the Fund's transfer agent at
1-877-785-5443. The Fund recommends that investors consult with a competent
financial and tax advisor regarding the retirement plans before investing
through them.
REDEEMING SHARES
How to Redeem (Sell) Shares by Mail
1. Prepare a letter of instruction containing:
o account number(s)
o the amount of money or number of shares being redeemed
o the name(s) on the account
o daytime phone number
o additional information that the Fund may require for redemptions
by corporations, executors, administrators, trustees, guardians,
or others who hold shares in a fiduciary or representative
capacity. Please contact the Fund's transfer agent, in advance,
at 1-877-785-5443 if you have any questions.
2. Sign the letter of instruction exactly as the shares are registered.
Joint ownership accounts must be signed by all owners.
3. Have the signatures guaranteed by a commercial bank or trust company
in the United States, a member firm of the New York Stock Exchange or
other eligible guarantor institution in the following situations:
o The redemption proceeds are to be sent to a person other than the
person in whose name the shares are registered
o The redemption proceeds are to be sent to an address other than
the address of record
A notarized signature is not an acceptable substitute for a signature
guarantee.
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4. Send the letter of instruction to:
BY FIRST CLASS MAIL
Golden Gate Fund, Inc.
c/o Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
BY OVERNIGHT DELIVERY SERVICE OR REGISTERED MAIL
Golden Gate Fund, Inc.
c/o Firstar Mutual Fund Services, LLC
615 East Michigan Street, 3rd Floor
Milwaukee, WI 53202-5207
Please do not mail letters by overnight delivery service or
registered mail to the Post Office Box address.
How to Redeem (Sell) Shares by Telephone
1. Instruct Firstar Mutual Fund Services, LLC that you want the option of
redeeming shares by telephone. This can be done by completing the
appropriate section on the Purchase Application. If you have already
opened an account, you may write to Firstar Mutual Fund Services, LLC
requesting this option. When you do so, please sign the request
exactly as your account is registered and have the signatures
guaranteed. Shares held in retirement plans cannot be redeemed by
telephone.
2. Assemble the same information that you would include in the letter of
instruction for a written redemption request.
3. Call Firstar Mutual Fund Services, LLC at 1-877-785-5443 or
1-414-765-4124. Please do not call the Fund or the Adviser.
4. Telephone redemptions must be in amounts of $1,000 or more.
How to Redeem (Sell) Shares through Servicing Agents
If your shares are held by a Servicing Agent, you must redeem your
shares through the Servicing Agent. Contact the Servicing Agent for instructions
on how to do so.
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Redemption Price
The redemption price per share you receive for redemption requests is
the next determined net asset value after:
o Firstar Mutual Fund Services, LLC receives your written request
in proper form with all required information.
o Firstar Mutual Fund Services, LLC receives your authorized
telephone request with all required information.
o A Servicing Agent that has been authorized to accept redemption
requests on behalf of the Fund receives your request in
accordance with its procedures.
Payment of Redemption Proceeds
o For those shareholders who redeem shares by mail, Firstar Mutual
Fund Services, LLC will mail a check in the amount of the
redemption proceeds no later than the seventh day after it
receives the redemption request in proper form with all required
information.
o For those shareholders who redeem by telephone, Firstar Mutual
Fund Services, LLC will either mail a check in the amount of the
redemption proceeds no later than the seventh day after it
receives the redemption request, or transfer the redemption
proceeds to your designated bank account if you have elected to
receive redemption proceeds by either Electronic Funds Transfer
or wire. An Electronic Funds Transfer generally takes up to 3
business days to reach the shareholder's account whereas Firstar
Mutual Fund Services, LLC generally wires redemption proceeds on
the business day following the calculation of the redemption
price. However, the Fund may direct Firstar Mutual Fund Services,
LLC to pay the proceeds of a telephone redemption on a date no
later than the seventh day after the redemption request.
o For those shareholders who redeem shares through Servicing
Agents, the Servicing Agent will transmit the redemption proceeds
in accordance with its redemption procedures.
Other Redemption Considerations
When redeeming shares of the Fund, shareholders should consider the
following:
o The redemption may result in a taxable gain.
o Shareholders who redeem shares held in an IRA must indicate on
their redemption request whether or not to withhold federal
income taxes. If
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not, these redemptions, as well as redemptions of other
retirement plans not involving a direct rollover to an eligible
plan, will be subject to federal income tax withholding.
o The Fund may delay the payment of redemption proceeds for up to
seven days in all cases.
o If you purchased shares by check, the Fund may delay the payment
of redemption proceeds until it is reasonably satisfied the check
has cleared (which may take up to 15 days from the date of
purchase).
o Firstar Mutual Fund Services, LLC will send the proceeds of
telephone redemptions to an address or account other than that
shown on its records only if the shareholder has sent in a
written request with signatures guaranteed.
o The Fund reserves the right to refuse a telephone redemption
request if it believes it is advisable to do so. The Fund and
Firstar Mutual Fund Services, LLC may modify or terminate their
procedures for telephone redemptions at any time. The Fund and
Firstar Mutual Fund Services, LLC will not be liable for
following instructions for telephone redemption transactions that
they reasonably believe to be genuine, provided they use
reasonable procedures to confirm the genuineness of the telephone
instructions. They may be liable for unauthorized transactions if
they fail to follow such procedures. These procedures include
requiring some form of personal identification prior to acting
upon the telephone instructions and recording all telephone
calls. During periods of substantial economic or market change,
you may find telephone redemptions difficult to implement. If a
shareholder cannot contact Firstar Mutual Fund Services, LLC by
telephone, he or she should make a redemption request in writing
in the manner described earlier.
o Firstar Mutual Fund Services, LLC currently charges a fee of $12
when transferring redemption proceeds to your designated bank
account by wire but does not charge a fee when transferring
redemption proceeds by Electronic Funds Transfer.
o If your account balance falls below $1,000 because you redeem
shares, you will be given 60 days to make additional investments
so that your account balance is $1,000 or more. If you do not,
the Fund may close your account and mail the redemption proceeds
to you.
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o The Fund may pay redemption requests "in kind." This means that
the Fund may pay redemption requests entirely or partially with
securities rather than cash.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund distributes substantially all of its net investment income
and substantially all of its capital gains annually. You have four distribution
options:
o All Reinvestment Option - Both dividend and capital gains
distributions will be reinvested in additional Fund shares.
o Partial Reinvestment Option - Dividends will be paid in cash and
capital gains distributions will be reinvested in additional Fund
shares.
o Partial Reinvestment Option - Dividends will be reinvested in
additional Fund shares and capital gains distributions will be
paid in cash.
o All Cash Option - Both dividend and capital gains distributions
will be paid in cash.
You may make this election on the Purchase Application. You may change your
election by writing to Firstar Mutual Fund Services, LLC or by calling Firstar
Mutual Fund Services, LLC at 1-877-785-5443.
The Fund's distributions, whether received in cash or additional
shares of the Fund, may be subject to federal and state income tax. These
distributions may be taxed as ordinary income and capital gains (which may be
taxed at different rates depending on the length of time the Fund holds the
assets generating the capital gains). The Fund expects that its distributions
generally will consist primarily of long-term capital gains.
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To learn more about Golden Gate Fund, you may want to read Golden Gate
Fund's Statement of Additional Information (or "SAI"), which contains additional
information about the Fund. Golden Gate Fund has incorporated by reference the
SAI into the Prospectus. This means that you should consider the contents of the
SAI to be part of the Prospectus.
The SAI is available to shareholders and prospective investors without
charge, simply by calling Firstar Mutual Fund Services, LLC at 1-877-785-5443.
Prospective investors and shareholders who have questions about Golden
Gate Fund may also call the following number or write to the following address:
Golden Gate Fund
100 Larkspur Landing Circle
Suite 102
Larkspur, California 94939
1-877-785-5443
The general public can review and copy information about Golden Gate
Fund (including the SAI) at the Securities and Exchange Commission's Public
Reference Room in Washington, D.C. (Please call (202) 942-8090 for information
on the operations of the Public Reference Room.) Reports and other information
about Golden Gate Fund are also available at the Securities and Exchange
Commission's Internet site at http://www.sec.gov and copies of this information
may be obtained, upon payment of a duplicating fee, by electronic request at the
following e-mail address: [email protected], or by writing to:
Public Reference Section
Securities and Exchange Commission
Washington, D.C. 20549-6009
Please refer to Golden Gate Fund's Investment Company Act File No.
811-9925 when seeking information about the Fund from the Securities and
Exchange Commission.
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PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION June 14, 2000
-----------------------------------------------
Subject to completion, dated June 8, 2000
The information in this Statement of Additional Information is not complete and
may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
statement of additional information is not an offer to sell these securities and
is not soliciting an offer to buy these securities in any state where the offer
or sale is not permitted.
GOLDEN GATE FUND, INC.
100 Larkspur Landing Circle
Suite 102
Larkspur, California 94939
This Statement of Additional Information is not a prospectus and
should be read in conjunction with the Prospectus of Golden Gate Fund, dated
June 14, 2000. Requests for copies of the Prospectus should be made by writing
to Golden Gate Fund, Inc. at 100 Larkspur Landing Circle, Suite 102, Larkspur,
California 94939, Attention: Corporate Secretary or by calling Firstar Mutual
Fund Services, LLC at 1-877-785-5443.
<PAGE>
GOLDEN GATE FUND, INC.
Table of Contents
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Page No.
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FUND HISTORY AND CLASSIFICATION ........................................... 1
INVESTMENT RESTRICTIONS ................................................... 1
INVESTMENT CONSIDERATIONS ................................................. 3
DIRECTORS AND OFFICERS OF THE CORPORATION ................................. 4
PRINCIPAL SHAREHOLDERS .................................................... 8
INVESTMENT ADVISER AND ADMINISTRATOR ...................................... 8
DETERMINATION OF NET ASSET VALUE AND PERFORMANCE ..........................10
DISTRIBUTION OF SHARES ....................................................12
RETIREMENT PLANS ..........................................................13
AUTOMATIC INVESTMENT PLAN .................................................15
REDEMPTION OF SHARES ......................................................16
SYSTEMATIC WITHDRAWAL PLAN ................................................16
ALLOCATION OF PORTFOLIO BROKERAGE .........................................17
CUSTODIAN .................................................................18
TAXES .....................................................................18
SHAREHOLDER MEETINGS ......................................................19
CAPITAL STRUCTURE .........................................................20
DESCRIPTION OF SECURITIES RATINGS .........................................20
INDEPENDENT ACCOUNTANTS ...................................................22
FINANCIAL STATEMENTS ......................................................22
No person has been authorized to give any information or to make any
representations other than those contained in this Statement of Additional
Information and the Prospectus, dated June 14, 2000, and, if given or made, such
information or representations may not be relied upon as having been authorized
by Golden Gate Fund, Inc.
This Statement of Additional Information does not constitute an offer
to sell securities.
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FUND HISTORY AND CLASSIFICATION
Golden Gate Fund, Inc., a Maryland corporation incorporated on April
25, 2000 (the "Corporation"), is an open-end management investment company
consisting of one diversified portfolio, Golden Gate Fund (the "Fund"). The
Corporation is registered under the Investment Company Act of 1940 (the "Act").
INVESTMENT RESTRICTIONS
The Fund has adopted the following investment restrictions which are
matters of fundamental policy and cannot be changed without approval of the
holders of the lesser of: (i) sixty-seven percent (67%) of the Fund's shares
present or represented at a shareholders meeting at which the holders of more
than fifty percent (50%) of such shares are present or represented; or (ii) more
than fifty percent (50%) of the outstanding shares of the Fund:
1. The Fund will not purchase securities on margin (except for such
short-term credits as are necessary for the clearance of transactions);
provided, however, that the Fund may borrow money to the extent set forth in
investment restriction no. 4.
2. The Fund may sell securities short to the extent permitted by the
Act.
3. The Fund may write put and call options to the extent permitted by
the Act.
4. The Fund will not borrow money or issue senior securities, except
for temporary bank borrowings (not in excess of ten percent (10%) of the value
of the Fund's net assets) or for emergency or extraordinary purposes.
5. The Fund may pledge or hypothecate its assets to secure its
borrowings.
6. The Fund will not lend money (except by purchasing publicly
distributed debt securities, purchasing securities of a type normally acquired
by institutional investors or entering into repurchase agreements) and will not
lend its portfolio securities, unless such loans are secured continuously by
collateral at least equal to the market value of the securities loaned in the
form of cash and/or securities issued or guaranteed by the United States
government, its agencies or instrumentalities, and provided that no such loan
will be made if upon making of such loan more than thirty percent (30%) of the
value of the Fund's total assets would be subject to such loans.
7. The Fund will not make investments for the purpose of exercising
control or management of any company.
8. The Fund will not purchase securities of any issuer (other than the
United States or an instrumentality of the United States) if, as a result of
such purchase, the Fund would hold more than ten percent (10%) of any class of
securities, including voting securities, of such issuer or more than five
percent (5%) of the Fund's total assets, taken at current value, would be
invested in securities of such issuer, except that up to twenty-five percent
(25%) of the Fund's total assets may be invested without regard to these
limitations.
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9. The Fund will not invest twenty-five percent (25%) or more of the
value of its total assets, determined at the time an investment is made,
exclusive of United States government securities, in securities issued by
companies primarily engaged in the same industry. In determining industry
classifications the Fund will use the current Directory of Companies Filing
Annual Reports with the Securities and Exchange Commission except to the extent
permitted by the Act.
10. The Fund will not act as an underwriter or distributor of
securities other than shares of the Fund (except to the extent that the Fund may
be deemed to be an underwriter within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"), in the disposition of restricted securities).
11. The Fund will not purchase or sell real estate or real estate
mortgage loans or real estate limited partnerships.
12. The Fund will not purchase or sell commodities or commodity
contracts, except that the Fund may invest in futures contracts and options on
futures contracts.
The Fund has adopted certain other investment restrictions which are
not fundamental policies and which may be changed by the Corporation's Board of
Directors without shareholder approval. These additional restrictions are as
follows:
1. The Fund will not invest more than fifteen percent (15%) of the
value of its net assets in illiquid securities.
2. The Fund will not purchase the securities of other investment
companies except: (a) as part of a plan of merger, consolidation or
reorganization approved by the shareholders of the Fund; (b) securities of
registered open-end investment companies that invest exclusively in high
quality, short-term debt securities; or (c) securities of registered closed-end
investment companies on the open market where no commission results, other than
the usual and customary broker's commission. No purchases described in (b) and
(c) will be made if as a result of such purchases (i) the Fund and its
affiliated persons would hold more than three percent (3%) of any class of
securities, including voting securities, of any registered investment company;
(ii) more than five percent (5%) of the Fund's net assets would be invested in
shares of any one registered investment company; and (iii) more than ten percent
(10%) of the Fund's net assets would be invested in shares of registered
investment companies.
3. The Fund will not acquire or retain any security issued by a
company, an officer or director of which is an officer or director of the Fund
or an officer, director or other affiliated person of its investment adviser,
without authorization of the Corporation's Board of Directors.
4. The Fund will not purchase any interest in any oil, gas or other
mineral leases or any interest in any oil, gas or any other mineral exploration
or development program.
The aforementioned percentage restrictions on investment or
utilization of assets refer to the percentage at the time an investment is made.
If these restrictions (other than those relating to borrowing of money or
issuing senior securities) are adhered to at the time an
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investment is made, and such percentage subsequently changes as a result of
changing market values or some similar event, no violation of the Fund's
fundamental restrictions will be deemed to have occurred. Any changes in the
Fund's investment restrictions made by the Board of Directors will be
communicated to shareholders prior to their implementation.
INVESTMENT CONSIDERATIONS
The Fund's Prospectus describes its principal investment strategies
and risks. This section expands upon that discussion and also discusses
non-principal investment strategies and risks.
The Fund invests in common stocks of United States companies
headquartered in the greater San Francisco Bay Area. The greater San Francisco
Bay Area includes the following counties:
Alameda San Francisco Solano
Contra Costa San Mateo Sonoma
Marin Santa Clara
Napa Santa Cruz
In response to adverse market, economic, political or other
conditions, the Fund may take temporary defensive positions. In such
circumstances, the Fund may invest in money market instruments. The money market
instruments in which the Fund may invest include conservative fixed-income
securities, such as United States Treasury Bills, certificates of deposit of
United States banks (provided that the bank has capital, surplus and undivided
profits, as of the date of its most recently published annual financial
statements, with a value in excess of One Hundred Million Dollars ($100,000,000)
at the date of investment), commercial paper rated A-1 by Standard & Poor's
Corporation or Prime 1 by Moody's Investors Service, Inc., commercial paper
master notes and repurchase agreements. A description of the foregoing ratings
is set forth in "Description of Securities Ratings." Commercial paper master
notes are unsecured promissory notes issued by corporations to finance
short-term credit needs. They permit a series of short-term borrowings under a
single note. Borrowings under commercial paper master notes are payable in whole
or in part at any time upon demand, may be prepaid in whole or in part at any
time, and bear interest at rates which are fixed to known lending rates and
automatically adjusted when such known lending rates change. There is no
secondary market for commercial paper master notes. The Adviser will monitor the
creditworthiness of the issuer of the commercial paper master notes while any
borrowings are outstanding.
Repurchase agreements are agreements under which the seller of a
security agrees at the time of sale to repurchase the security at an agreed time
and price. The Fund will not enter into repurchase agreements with entities
other than banks or invest over five percent (5%) of its net assets in
repurchase agreements with maturities of more than seven (7) days. If a seller
of a repurchase agreement defaults and does not repurchase the security subject
to the agreement, the Fund will look to the collateral security underlying the
seller's repurchase agreement, including the securities subject to the
repurchase agreement, for satisfaction of the seller's obligation to the Fund.
In such event, the Fund might incur disposition costs in liquidating the
collateral and might suffer a loss if the value of the collateral declines. In
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addition, if bankruptcy proceedings are instituted against a seller of a
repurchase agreement, realization upon the collateral may be delayed or limited.
The percentage limitations set forth in this section are not
fundamental policies and may be changed without shareholder approval.
The Fund does not trade actively for short-term profits. However, if
the objective of the Fund would be better served, short-term profits on losses
may be realized from time to time. The annual portfolio turnover rate indicates
changes in the Fund's portfolio and is calculated by dividing the lesser of
purchases or sales of portfolio securities (excluding securities having
maturities at acquisition of one (1) year or less) for the fiscal year by the
monthly average of the value of the portfolio securities (excluding securities
having maturities at acquisition of one (1) year or less) owned by the Fund
during the fiscal year. The annual portfolio turnover rate may vary widely from
year to year depending upon market conditions and prospects. Increased portfolio
turnover necessarily results in corresponding higher transaction costs (such as
brokerage commissions or mark-ups or mark-downs) that the Fund must pay and
increased realized gains (or losses) to investors. Distributions to shareholders
of realized gains, to the extent they consist of net short-terms capital gains,
will be considered ordinary income for federal tax purposes.
DIRECTORS AND OFFICERS OF THE CORPORATION
As a Maryland corporation, the business and affairs of the Corporation
are managed by its officers under the direction of its Board of Directors. The
name, address and principal occupations during the past five years and other
information with respect to each of the directors and officers of the
Corporation are as follows:
Bruce J. Raabe* Age 34
c/o Collins & Company, LLC
100 Larkspur Landing Circle
Suite 102
Larkspur, California 94939
(PRESIDENT AND A DIRECTOR OF THE FUND)
Mr. Raabe has been employed by Collins & Company, LLC, the Adviser,
since January of 1992, and is a Member of Collins & Company, LLC. Mr. Raabe
currently serves as a Senior Portfolio Manager, a Compliance Officer and the
Chief Investment Officer of Collins & Company, LLC.
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* Messrs. Raabe, Eisenbarth, Burt, Comparet and Ms. Longfellow are
"interested persons" of the Fund as that term is defined in the Act.
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Brian L. Eisenbarth* Age 32
c/o Collins & Company, LLC
100 Larkspur Landing Circle
Suite 102
Larkspur, California 94939
(VICE PRESIDENT AND A DIRECTOR OF THE FUND)
Mr. Eisenbarth has been employed by Collins & Company, LLC, the
Adviser, since July of 1993 as a Portfolio Manager.
Camille F. Wildes Age 47
c/o Fiduciary Management, Inc.
225 East Mason Street
Milwaukee, Wisconsin 53202
(VICE PRESIDENT OF COMPLIANCE OF THE FUND)
Ms. Wildes is a Vice President of Fiduciary Management, Inc., the
Fund's Administrator, and has been employed by such Company in various
capacities since December 1982.
David C. Cuneo Age 40
c/o Calegari & Morris
354 Pine Street
3rd Floor
San Francisco, California 94104
(A DIRECTOR OF THE FUND)
Mr. Cuneo has been employed by Calegari & Morris, an accounting firm,
since July of 1994 as an accountant. Mr. Cuneo is also a shareholder and the
Vice President of Calegari & Morris.
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* Messrs. Raabe, Eisenbarth, Burt, Comparet and Ms. Longfellow are
"interested persons" of the Fund as that term is defined in the Act.
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Johanna L. Longfellow* Age 64
c/o Collins & Company, LLC
100 Larkspur Landing Circle
Suite 102
Larkspur, California 94939
(TREASURER AND A DIRECTOR OF THE FUND)
Ms. Longfellow has been employed by Collins & Company, LLC, the
Adviser, since November of 1975. Ms. Longfellow currently serves as the Office
Manager and Executive Secretary of Collins & Company, LLC.
Judd C. Iversen Age 55
c/o University of San Francisco
2130 Fulton Street
San Francisco, California
94117-1080 (A DIRECTOR OF THE FUND)
Since February of 1995, Mr. Iversen has been employed as a Program
Director and Administrator at the University of San Francisco. Also, since 1971,
Mr. Iversen has been an Attorney at Law and Professor.
Justin D. Burt* Age 25
c/o Collins & Company, LLC
100 Larkspur Landing Circle
Suite 102
Larkspur, California 94939
(SECRETARY)
From 1992 to 1997, Mr. Burt attended college at Utah State University.
From October 1997 to March 1999, Mr. Burt was employed by Fidelity Investments
as an Investment Specialist. Since March of 1999, Mr. Burt has been employed by
Collins & Company, LLC, the Adviser, as a Portfolio Assistant. Mr. Eisenbarth is
Mr. Burt's uncle.
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* Messrs. Raabe, Eisenbarth, Burt, Comparet and Ms. Longfellow are
"interested persons" of the Fund as that term is defined in the Act.
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Melinda Van der Reis Age 30
c/o Kelly Law Registry
530 Davis Street
San Francisco, California 94111
(A DIRECTOR OF THE FUND)
Ms. Reis was employed by the Law Offices of William Veen as an
Associate Attorney from September of 1994 to October of 1997. Since October
1997, Ms. Reis has been employed by Kelly Law Registry as a Recruiting Director.
Thomas M. Comparet* Age 66
962 Hilgard, #203
Los Angeles, California 90024
(A DIRECTOR OF THE FUND)
Mr. Comparet has been self-employed as an Attorney at Law since 1994.
Mr. Comparet acts as legal counsel to Collins & Company, LLC.
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* Messrs. Raabe, Eisenbarth, Burt, Comparet and Ms. Longfellow are
"interested persons" of the Fund as that term is defined in the Act.
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The Fund is newly organized and has not paid any compensation to any
director or officer. For the fiscal year ending June 30, 2001 the Corporation's
standard method of compensating directors is to pay each director who is not an
officer of the Corporation a fee of $250 for each meeting of the Board of
Directors attended. The aggregate compensation to be paid by the Fund to each of
the directors during the Fund's fiscal period ending June 30, 2000 (estimating
future payments based upon existing arrangements) is set forth below:
<TABLE>
<CAPTION>
Total
Aggregate Pension or Retirement Estimated Annual Compensation
Name of Compensation Benefits Accrued As Benefits Upon from Company
Person from Company Part of Fund Expenses Retirement Paid to Directors
---------- ------------ --------------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Bruce J. Raabe $0 $0 $0 $0
Brian L. Eisenbarth $0 $0 $0 $0
David C. Cuneo $0 $0 $0 $0
Johanna L. Longfellow $0 $0 $0 $0
Judd C. Iversen $0 $0 $0 $0
Melinda Van der Reis $0 $0 $0 $0
Thomas M. Comparet $0 $0 $0 $0
</TABLE>
The Fund and the Adviser have adopted a code of ethics pursuant to
Rule 17j-l under the Act. The code of ethics permits personnel subject thereto
to invest in securities, including securities that may be purchased or held by
the Fund. The code of ethics generally prohibits, among other things, persons
subject thereto from purchasing or selling securities if they know at the time
of such purchase or sale that the security is being considered for purchase or
sale by the Fund or is being purchased or sold by the Fund.
PRINCIPAL SHAREHOLDERS
As of the date hereof, the Adviser owns one hundred percent (100%) of
the Fund's outstanding shares. As of such date it controls the Fund and the
Corporation and owns sufficient shares of the Fund to approve or disapprove all
matters brought before shareholders of the Corporation, including the election
of directors of the Corporation. The Corporation does not control any person.
INVESTMENT ADVISER AND ADMINISTRATOR
Investment Adviser
The investment adviser to the Fund is Collins & Company, LLC. Pursuant
to an investment advisory agreement between the Fund and the Adviser (the
"Advisory Agreement") the Adviser furnishes continuous investment advisory
services and management to the Fund. The Adviser is controlled by John P.
Collins, Jr., the Managing Member of the Adviser.
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Under the Advisory Agreement, the Adviser, at its own expense and
without reimbursement from the Fund, will furnish office space and all necessary
office facilities, equipment and executive personnel for making the investment
decisions necessary for managing the Fund and maintaining its organization, will
pay the salaries and fees of all officers and directors of the Fund (except the
fees paid to disinterested directors) and will bear all sales and promotional
expenses of the Fund, other than distribution expenses paid by the Fund pursuant
to the Fund's Service and Distribution Plan, if any. For the foregoing, the
Adviser will receive a monthly fee of 1/12 of 1% (1.0% per annum) of the daily
net assets of the Fund.
The Fund will pay all of its expenses not assumed by the Adviser
including, but not limited to, the professional costs of preparing and the cost
of printing its registration statements required under the Securities Act and
the Act and any amendments thereto, the expenses of registering its shares with
the Securities and Exchange Commission and in the various states, the printing
and distribution cost of prospectuses, the cost of trustee and officer liability
insurance, reports to shareholders, reports to government authorities and proxy
statements, interest charges, brokerage commissions, and expenses incurred in
connection with portfolio transactions. The Fund will also pay salaries of
administrative and clerical personnel, association membership dues, auditing and
accounting services, fees and expenses of any custodian or trustees having
custody of Fund assets, expenses of calculating the net asset value and
repurchasing and redeeming shares, and charges and expenses of dividend
disbursing agents, registrars, and share transfer agents, including the cost of
keeping all necessary shareholder records and accounts and handling any problems
relating thereto.
The Adviser has undertaken to reimburse the Fund to the extent that
the aggregate annual operating expenses, including the investment advisory fee
and the administration fee but excluding interest, reimbursement payments to
securities lenders for dividend and interest payments on securities sold short,
taxes, brokerage commissions and extraordinary items, in any year, exceed 1.95%
of the average net assets of the Fund for such year, as determined by valuations
made as of the close of each business day of the year. The Fund monitors its
expense ratio at least on a monthly basis. If the accrued amount of the expenses
of the Fund exceeds the expense limitation, the Fund creates an account
receivable from the Adviser for the amount of such excess. In such a situation
the monthly payment of the Adviser's fee will be reduced by the amount of such
excess, subject to adjustment month by month during the balance of the Fund's
fiscal year if accrued expenses thereafter fall below this limit.
The Fund is newly organized and has not paid any fees to the Adviser.
The Advisory Agreement will remain in effect for two (2) years and
thereafter shall continue in effect for as long as its continuance is
specifically approved at least annually, by (i) the Board of Directors of the
Corporation, or by the vote of a majority (as defined in the Act) of the
outstanding shares of the Fund, and (ii) by the vote of a majority of the
directors of the Corporation who are not parties to the Advisory Agreement or
interested persons of the Adviser, cast in person at a meeting called for the
purpose of voting on such approval. The Advisory Agreement provides that it may
be terminated at any time without the payment of any penalty, by the Board of
Directors of the Corporation or by vote of a majority of the Fund's
shareholders, on sixty (60) calendar days written notice to the Adviser, and by
the Adviser on the same notice to the Corporation and that it shall be
automatically terminated if it is assigned.
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Administrator
The administrator to the Fund is Fiduciary Management, Inc. (the
"Administrator"), 225 East Mason Street, Milwaukee, Wisconsin 53202. Under the
administration agreement entered into between the Fund and the Administrator
(the "Administration Agreement"), the Administrator prepares and maintains the
books, accounts and other documents required by the Act, calculates the Fund's
net asset value, responds to shareholder inquiries, prepares the Fund's
financial statements and tax returns, prepares certain reports and filings with
the Securities and Exchange Commission and with state Blue Sky authorities,
furnishes statistical and research data, clerical, accounting and bookkeeping
services and stationery and office supplies, keeps and maintains the Fund's
financial and accounting records and generally assists in all aspects of the
Fund's operations. The Administrator, at its own expense and without
reimbursement from the Fund, furnishes office space and all necessary office
facilities, equipment and executive personnel for performing the services
required to be performed by it under the Administration Agreement. For the
foregoing, the Administrator receives from the Fund a monthly fee of 1/12 of
0.2% (0.2% per annum) of the first Thirty Million Dollars ($30,000,000) of the
Fund's average daily net assets and 1/12 of 0.10% (0.10% per annum) of the
average daily net assets of the Fund in excess of Thirty Million Dollars
($30,000,000), subject to a fiscal year minimum of Twenty Thousand Dollars
($20,000). In addition to the above fees, the Fund will pay to the Administrator
annually a fee of One Hundred Dollars ($100) for each state in which shares of
the Fund are qualified for sale, a fee of Eighty Dollars ($80) for each state in
which the Fund is registered as an issuer-dealer and a fee of Forty Dollars
($40) for each agent registration maintained on behalf of the Fund, and these
fees will not be reduced if registrations are maintained for less than an entire
fiscal year. The Administration Agreement will remain in effect until terminated
by either party. The Administration Agreement may be terminated at any time,
without the payment of any penalty, by the Board of Directors of the Corporation
upon the giving of ninety (90) calendar days written notice to the
Administrator, or by the Administrator upon the giving of ninety (90) calendar
days written notice to the Fund.
The Fund is newly organized and has not paid any fees to the
Administrator.
The Advisory Agreement and the Administration Agreement provide that
the Adviser and the Administrator, as the case may be, shall not be liable to
the Fund or its shareholders for anything other than willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations or duties. The
Advisory Agreement and the Administration Agreement also provide that the
Adviser and the Administrator, as the case may be, and their officers, directors
and employees may engage in other businesses, devote time and attention to any
other business whether of a similar or dissimilar nature, and render investment
advisory services and administrative services, as the case may be, to others.
DETERMINATION OF NET ASSET VALUE AND PERFORMANCE
The net asset value of the Fund will be determined as of the close of
regular trading (4:00 P.M. Eastern Time) on each day the New York Stock Exchange
is open for trading. The New York Stock Exchange is open for trading Monday
through Friday except New Year's Day, Dr. Martin Luther King Jr. Day,
President's Day, Good Friday, Memorial
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Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Additionally, if any of the aforementioned holidays falls on a Saturday, the New
York Stock Exchange will not be open for trading on the preceding Friday and
when any such holiday falls on a Sunday, the New York Stock Exchange will not be
open for trading on the succeeding Monday, unless unusual business conditions
exist, such as the ending of a monthly or the yearly accounting period.
The Fund's net asset value per share is determined by dividing the
total value of its investments and other assets, less any liabilities, by the
number of its outstanding shares. Common stocks that are listed on any national
stock exchange or quoted on the Nasdaq Stock Market are valued at the last sale
price on the date of valuation is made. Price information on listed securities
is taken from the exchange where the security is primarily traded. Common stocks
which are listed on any national stock exchange or quoted on the Nasdaq Stock
Market but which are not traded on the valuation date are valued at the most
recent bid price. Unlisted equity securities for which market quotations are
readily available are valued at the most recent bid price. Debt securities are
valued at the latest bid prices furnished by independent pricing services. Any
securities for which there are no readily available market quotations and other
assets are valued at their fair value as determined by the Adviser in accordance
with procedures approved by the Board of Directors. Short-term instruments
(those with remaining maturities of sixty (60) days or less) are valued at
amortized cost, which approximates market.
The Fund may provide from time to time in advertisements, reports to
shareholders and other communications with shareholders its average annual total
return. An average annual total return refers to the rate of return which, if
applied to an initial investment in the Fund at the beginning of a stated period
and compounded over the period, would result in the redeemable value of the
investment in the Fund at the end of the stated period assuming reinvestment of
all dividends and distributions and reflecting the effect of all recurring fees.
The Fund may also provide "aggregate" total return information for various
periods, representing the cumulative change in value of an investment in the
Fund for a specific period (again reflecting changes in share price and assuming
reinvestment of dividends and distributions).
Any total rate of return quotation for the Fund will be for a period
of three (3) or more months and will assume the reinvestment of all dividends
and capital gains distributions which were made by the Fund during that period.
Any period total rate of return quotation of the Fund will be calculated by
dividing the net change in value of a hypothetical shareholder account
established by an initial payment of Ten Thousand Dollars ($10,000) at the
beginning of the period by ten thousand (10,000). The net change in the value of
a shareholder account is determined by subtracting Ten Thousand Dollars
($10,000) from the product obtained by multiplying the net asset value per share
at the end of the period by the sum obtained by adding (A) the number of shares
purchased at the beginning of the period plus (B) the number of shares purchased
during the period with reinvested dividends and distributions. Any average
annual compounded total rate of return quotation of the Fund will be calculated
by dividing the redeemable value at the end of the period (i.e., the product
referred to in the preceding sentence) by Ten Thousand Dollars ($10,000). A root
equal to the period, measured in years, in question is then determined and one
(1) is subtracted from such root to determine the average annual compounded
total rate of return.
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The foregoing computation may also be expressed by the following
formula:
P(1 + T)n = ERV
P = a hypothetical initial payment of Ten Thousand Dollars ($10,000)
T = average annual total return
n = number of years
ERV = ending redeemable value of a
hypothetical Ten Thousand Dollar ($10,000) payment made at
the beginning of the stated period
at the end of the stated period
An investment in the Fund will fluctuate in value and at redemption
its value may be more or less than the initial investment. The Fund may compare
its performance to other mutual funds with similar investment objectives and to
the industry as a whole, as reported by Lipper Analytical Services, Inc., Money,
Forbes, Business Week and Barron's magazines and The Wall Street Journal.
(Lipper Analytical Services, Inc. is an independent service that ranks over one
thousand (1,000) mutual funds based upon total return performance.) The Fund may
also compare its performance to the Dow Jones Industrial Average, Nasdaq
Composite Index, Nasdaq Industrials Index, Value Line Composite Index, the
Standard & Poor's 500 Stock Index, Russell 2000 Index, and the Consumer Price
Index. Such comparisons may be made in advertisements, shareholder reports or
other communications to shareholders.
DISTRIBUTION OF SHARES
The Fund has adopted a Service and Distribution Plan (the "Plan") in
anticipation that the Fund will benefit from the Plan through increased sales of
shares, thereby reducing the Fund's expense ratio and providing the Adviser with
greater flexibility in management. The Plan authorizes payments by the Fund in
connection with the distribution of its shares at an annual rate, as determined
from time to time by the Board of Directors, of up to one-quarter of a percent
(0.25%) of the Fund's average daily net assets. Payments made pursuant to the
Plan may only be used to pay distribution expenses in the year incurred. Amounts
paid under the Plan by the Fund may be spent by the Fund on any activities or
expenses primarily intended to result in the sale of shares of the Fund,
including but not limited to, advertising, compensation for sales and marketing
activities of financial institutions and others such as dealers and
distributors, shareholder account servicing, the printing and mailing of
prospectuses to other than current shareholders and the printing and mailing of
sales literature. The Plan permits the Fund to employ a distributor of its
shares, in which event payments under the Plan will be made to the distributor
and may be spent by the distributor on any activities or expenses primarily
intended to result in the sale of shares of the Fund, including but not limited
to, compensation to, and expenses (including overhead and telephone expenses)
of, employees of the distributor who engage in or support distribution of the
Fund's shares, printing of prospectuses and reports for other than existing
shareholders, advertising and preparation and distribution of sales literature.
Allocation of overhead (rent, utilities, etc.) and salaries will be based on the
percentage of utilization in, and time devoted to, distribution activities. If a
distributor is employed by the Fund, the distributor will directly bear all
sales and promotional expenses of the Fund, other than expenses incurred in
complying with laws regulating the issue or sale of
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securities. (In such event, the Fund will indirectly bear sales and promotional
expenses to the extent it makes payments under the Plan.) The Fund has no
present plans to employ a distributor. Pending the employment of a distributor,
the Fund's distribution expenses will be authorized by the officers of the
Corporation. To the extent any activity is one which the Fund may finance
without a plan pursuant to Rule 12b-1 under the Act, the Fund may also make
payments to finance such activity outside of the Plan and not subject to its
limitations.
The Plan may be terminated by the Fund at any time by a vote of the
directors of the Corporation who are not interested persons of the Corporation
and who have no direct or indirect financial interest in the Plan or any
agreement related thereto (the "Rule 12b-1 Directors") or by a vote of a
majority of the outstanding shares of the Fund. Dave Cuneo, Judd Iversen and
Melinda Van der Reis are currently the Rule 12b-1 Directors. Any change in the
Plan that would materially increase the distribution expenses of the Fund
provided for in the Plan requires approval of the shareholders of the Fund and
the Board of Directors, including the Rule 12b-1 Directors.
While the Plan is in effect, the selection and nomination of directors
who are not interested persons of the Corporation will be committed to the
discretion of the directors of the Corporation who are not interested persons of
the Corporation. The Board of Directors of the Corporation must review the
amount and purposes of expenditures pursuant to the Plan quarterly as reported
to it by a distributor, if any, or officers of the Corporation. The Plan will
continue in effect for as long as its continuance is specifically approved at
least annually by the Board of Directors, including the Rule 12b-1 Directors.
The Fund has not incurred any distribution costs as of the date of this
Statement of Additional Information.
RETIREMENT PLANS
The Fund offers the following retirement plans that may be funded with
purchases of shares of the Fund and may allow investors to reduce their income
taxes:
Individual Retirement Accounts
Individual shareholders may establish their own Individual Retirement
Account ("IRA"). The Fund currently offers a Traditional IRA, a Roth IRA and an
Education IRA, that can be adopted by executing the appropriate Internal Revenue
Service ("IRS") Form.
Traditional IRA. In a Traditional IRA, amounts contributed to the IRA
may be tax deductible at the time of contribution depending on whether the
shareholder is an "active participant" in an employer-sponsored retirement plan
and the shareholder's income. Distributions from a Traditional IRA will be taxed
at distribution except to the extent that the distribution represents a return
of the shareholder's own contributions for which the shareholder did not claim
(or was not eligible to claim) a deduction. Distributions prior to age 59-1/2
may be subject to an additional ten percent (10%) tax applicable to certain
premature distributions. Distributions must commence by April 1 following the
calendar year in which the shareholder attains age 70-l/2. Failure to begin
distributions by this date (or distributions that do not equal certain minimum
thresholds) may result in adverse tax consequences.
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<PAGE>
Roth IRA. In a Roth IRA, amounts contributed to the IRA are taxed at
the time of contribution, but distributions from the IRA are not subject to tax
if the shareholder has held the IRA for certain minimum periods of time
(generally, until age 59-1/2). Shareholders whose incomes exceed certain limits
are ineligible to contribute to a Roth IRA. Distributions that do not satisfy
the requirements for tax-free withdrawal are subject to income taxes (and
possibly penalty taxes) to the extent that the distribution exceeds the
shareholder's contributions to the IRA. The minimum distribution rules
applicable to Traditional IRAs do not apply during the lifetime of the
shareholder. Following the death of the shareholder, certain minimum
distribution rules apply.
For Traditional and Roth IRAs, the maximum annual contribution
generally is equal to the lesser of Two Thousand Dollars ($2,000) or one hundred
percent (100%) of the shareholder's compensation (earned income). An individual
may also contribute to a Traditional IRA or Roth IRA on behalf of his or her
spouse provided that the individual has sufficient compensation (earned income).
Contributions to a Traditional IRA reduce the allowable contribution under a
Roth IRA, and contributions to a Roth IRA reduce the allowable contribution to a
Traditional IRA.
Education IRA. In an Education IRA, contributions are made to an IRA
maintained on behalf of a beneficiary under age 18. The maximum annual
contribution is Five Hundred Dollars ($500) per beneficiary. The contributions
are not tax deductible when made. However, if amounts are used for certain
educational purposes, neither the contributor nor the beneficiary of the IRA are
taxed upon distribution. The beneficiary is subject to income (and possibly
penalty taxes) on amounts withdrawn from an Education IRA that are not used for
qualified educational purposes. Shareholders whose income exceeds certain limits
are ineligible to contribute to an Education IRA.
Under current IRS regulations, an IRA applicant must be furnished a
disclosure statement containing information specified by the IRS. The applicant
generally has the right to revoke his account within seven (7) days after
receiving the disclosure statement and obtain a full refund of his
contributions. The custodian may, in its discretion, hold the initial
contribution uninvested until the expiration of the seven-day revocation period.
The custodian does not anticipate that it will exercise its discretion but
reserves the right to do so.
Simplified Employee Pension Plan
A Traditional IRA may also be used in conjunction with a Simplified
Employee Pension Plan ("SEP-IRA"). A SEP-IRA is established through execution of
Form 5305-SEP together with a Traditional IRA established for each eligible
employee. Generally, a SEP-IRA allows an employer (including a self-employed
individual) to purchase shares with tax deductible contributions, not exceeding
annually for any one participant, fifteen percent (15%) of compensation
(disregarding for this purpose compensation in excess of One Hundred Seventy
Thousand Dollars ($170,000) per year). The One Hundred Seventy Thousand Dollar
($170,000) compensation limit applies for 2000 and is adjusted periodically for
cost of living increases. A number of special rules apply to SEP-IRA Plans,
including a requirement that contributions generally be made on behalf of all
employees of the employer (including for this purpose a sole proprietorship or
partnership) who satisfy certain minimum participation requirements.
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<PAGE>
SIMPLE IRA
An IRA may also be used in connection with a SIMPLE Plan established
by the shareholder's employer (or by a self-employed individual). When this is
done, the IRA is known as a "SIMPLE IRA," although it is similar to a
Traditional IRA with the exceptions described below. Under a SIMPLE Plan, the
shareholder may elect to have his or her employer make salary reduction
contributions of up to Six Thousand Dollars ($6,000) per year to the SIMPLE IRA.
The Six Thousand Dollar ($6,000) limit applies for 2000 and is adjusted
periodically for cost of living increases. In addition, the employer will
contribute certain amounts to the shareholder's SIMPLE IRA, either as a matching
contribution to those participants who make salary reduction contributions or as
a non-elective contribution to all eligible participants whether or not making
salary reduction contributions. A number of special rules apply to SIMPLE Plans,
including (1) a SIMPLE Plan generally is available only to employers with fewer
than one hundred (100) employees; (2) contributions must be made on behalf of
all employees of the employer (other than bargaining unit employees) who satisfy
certain minimum participation requirements; (3) contributions are made to a
special SIMPLE IRA that is separate and apart from the other IRAs of employees;
(4) the distribution excise tax (if otherwise applicable) is increased to
twenty-five percent (25%) on withdrawals during the first two (2) years of
participation in a SIMPLE IRA; and (5) amounts withdrawn during the first two
(2) years of participation may be rolled over tax-free only into another SIMPLE
IRA (and not to a Traditional IRA or to a Roth IRA). A SIMPLE IRA is established
by executing Form 5304-SIMPLE together with an IRA established for each eligible
employee.
Retirement Plan Fees
Firstar Bank, N.A., Milwaukee, Wisconsin, serves as trustee or
custodian of the retirement plans. Firstar Bank, N.A. invests all cash
contributions, dividends and capital gains distributions in shares of the Fund.
For such services, the following fees are charged against the accounts of
participants; $12.50 annual maintenance fee per participant account; $15 for
transferring to a successor trustee or custodian; $15 for distribution(s) to a
participant; and $15 for refunding any contribution in excess of the deductible
limit. The fee schedule of Firstar Bank, N.A. may be changed upon written
notice.
Requests for information and forms concerning the retirement plans
should be directed to the Corporation. Because a retirement program may involve
commitments covering future years, it is important that the investment objective
of the Fund be consistent with the participant's retirement objectives.
Premature withdrawal from a retirement plan will result in adverse tax
consequences. Consultation with a competent financial and tax adviser regarding
the retirement plans is recommended.
AUTOMATIC INVESTMENT PLAN
Shareholders wishing to invest fixed dollar amounts in the Fund
monthly or quarterly can make automatic purchases in amounts of $50 or more on
any day they choose by using the Corporation's Automatic Investment Plan. If
such day is a weekend or holiday, such purchase shall be made on the next
business day. There is no service fee for participating in this Plan. To use
this service, the shareholder must authorize the transfer of funds from their
15
<PAGE>
checking account or savings account by completing the Automatic Investment Plan
application included as part of the share purchase application. Additional
application forms may be obtained by calling the Corporation's office at (415)
925-4000. The Automatic Investment Plan must be implemented with a financial
institution that is a member of the Automated Clearing House. The Corporation
reserves the right to suspend, modify or terminate the Automatic Investment Plan
without notice.
The Automatic Investment Plan is designed to be a method to implement
dollar cost averaging. Dollar cost averaging is an investment approach providing
for the investment of a specific dollar amount on a regular basis thereby
precluding emotions dictating investment decisions. Dollar cost averaging does
not insure a profit nor protect against a loss.
REDEMPTION OF SHARES
The right to redeem shares of the Fund will be suspended for any
period during which the New York Stock Exchange is closed because of financial
conditions or any other extraordinary reason and may be suspended for any period
during which (a) trading on the New York Stock Exchange is restricted pursuant
to rules and regulations of the Securities and Exchange Commission, (b) the
Securities and Exchange Commission has by order permitted such suspension, or
(c) an emergency, as defined by rules and regulations of the Securities and
Exchange Commission, exists as a result of which it is not reasonably
practicable for the Fund to dispose of its securities or to determine fairly the
value of its net assets.
SYSTEMATIC WITHDRAWAL PLAN
The Corporation has available to shareholders a Systematic Withdrawal
Plan, pursuant to which a shareholder who owns shares of the Fund worth at least
Ten Thousand Dollars ($10,000) at current net asset value may provide that a
fixed sum will be distributed to him or her at regular intervals. To participate
in the Systematic Withdrawal Plan, a shareholder deposits his or her shares with
the Corporation and appoints it as his or her agent to effect redemptions of
shares held in his or her account for the purpose of making monthly or quarterly
withdrawal payments of a fixed amount to him or her out of the account. To
utilize the Systematic Withdrawal Plan, the shares cannot be held in certificate
form. The Systematic Withdrawal Plan does not apply to shares of the Fund held
in Individual Retirement Accounts or retirement plans. An application for
participation in the Systematic Withdrawal Plan is included as part of the share
purchase application. Additional application forms may be obtained by calling
the Corporation's office at (415) 925-4000.
The minimum amount of a withdrawal payment is One Hundred Dollars
($100). These payments will be made from the proceeds of periodic redemption of
Fund shares in the account at net asset value. Redemptions will be made on such
day (no more than monthly) as a shareholder chooses or, if that day is a weekend
or holiday, on the next business day. Participation in the Systematic Withdrawal
Plan constitutes an election by the shareholder to reinvest in additional Fund
shares, at net asset value, all income dividends and capital gains distributions
payable by the Corporation on shares held in such account, and shares so
acquired will be added to such account. The shareholder may deposit additional
shares in his or her account at any time.
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<PAGE>
Withdrawal payments cannot be considered as yield or income on the
shareholder's investment, since portions of each payment will normally consist
of a return of capital. Depending on the size or the frequency of the
disbursements requested, and the fluctuation in the value of the Fund's
portfolio, redemptions for the purpose of making such disbursements may reduce
or even exhaust the shareholder's account.
The shareholder may vary the amount or frequency of withdrawal
payments, temporarily discontinue them, or change the designated payee or
payee's address, by notifying Firstar Mutual Fund Services, LLC, the Fund's
transfer agent.
ALLOCATION OF PORTFOLIO BROKERAGE
Decisions to buy and sell securities for the Fund are made by the
Adviser subject to review by the Corporation's Board of Directors. In placing
purchase and sale orders for portfolio securities for the Fund, it is the policy
of the Adviser to seek the best execution of orders at the most favorable price
in light of the overall quality of brokerage and research services provided, as
described in this and the following paragraph. In selecting brokers to effect
portfolio transactions, the determination of what is expected to result in best
execution at the most favorable price involves a number of largely judgmental
considerations. Among these are the Adviser's evaluation of the broker's
efficiency in executing and clearing transactions, block trading capability
(including the broker's willingness to position securities and the broker's
financial strength and stability). The most favorable price to the Fund means
the best net price without regard to the mix between purchase or sale price and
commission, if any. Over-the-counter securities are generally purchased and sold
directly with principal market makers who retain the difference in their cost in
the security and its selling price (i.e. "markups" when the market maker sells a
security and "markdowns" when the market maker purchases a security). In some
instances, the Adviser feels that better prices are available from non-principal
market makers who are paid commissions directly. The Fund may place portfolio
orders with broker-dealers who recommend the purchase of Fund shares to clients
if the Adviser believes the commissions and transaction quality are comparable
to that available from other brokers and may allocate portfolio brokerage on
that basis.
In allocating brokerage business for the Fund, the Adviser also takes
into consideration the research, analytical, statistical and other information
and services provided by the broker, such as general economic reports and
information, reports or analyses of particular companies or industry groups,
market timing and technical information, and the availability of the brokerage
firm's analysts for consultation. While the Adviser believes these services have
substantial value, they are considered supplemental to the Adviser's own efforts
in the performance of its duties under the Advisory Agreement. Other clients of
the Adviser may indirectly benefit from the availability of these services to
the Adviser, and the Fund may indirectly benefit from services available to the
Adviser as a result of transactions for other clients. The Advisory Agreement
provides that the Adviser may cause the Fund to pay a broker which provides
brokerage and research services to the Adviser a commission for effecting a
securities transaction in excess of the amount another broker would have charged
for effecting the transaction, if the Adviser determines in good faith that such
amount of commission is reasonable in relation to the value of brokerage and
research services provided by the executing broker viewed in terms of either the
particular transaction or the Adviser's overall
17
<PAGE>
responsibilities with respect to the Fund and the other accounts as to which it
exercises investment discretion.
CUSTODIAN
Firstar Bank, N.A., 615 East Michigan Street, Milwaukee, Wisconsin
53202, acts as custodian for the Fund. As such, Firstar Bank, N.A. holds all
securities and cash of the Fund, delivers and receives payment for securities
sold, receives and pays for securities purchased, collects income from
investments and performs other duties, all as directed by officers of the Fund.
Firstar Bank, N.A. does not exercise any supervisory function over the
management of the Fund, the purchase and sale of securities or the payment of
distributions to shareholders. Firstar Mutual Fund Services, LLC, an affiliate
of Firstar Bank, N.A., acts as the Fund's transfer agent and dividend disbursing
agent.
TAXES
The Fund intends to qualify annually for and elect tax treatment
applicable to a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended. If the Fund fails to qualify as a regulated
investment company under Subchapter M in any fiscal year, it will be treated as
a corporation for federal income tax purposes. As such the Fund would be
required to pay income taxes on its net investment income and net realized
capital gains, if any, at the rates generally applicable to corporations.
Shareholders of the Fund would not be liable for income tax on the Fund's net
investment income or net realized capital gains in their individual capacities.
Distributions to shareholders, whether from the Fund's net investment income or
net realized capital gains, would be treated as taxable dividends to the extent
of current or accumulated earnings and profits of the Fund.
The Fund intends to distribute substantially all of its net investment
income and net capital gain each fiscal year. Dividends from net investment
income and short-term capital gains are taxable to investors as ordinary income,
while distributions of net long-term capital gains are taxable as long-term
capital gain regardless of the shareholder's holding period for the shares.
Distributions from the Fund are taxable to investors, whether received in cash
or in additional shares of the Fund. A portion of the Fund's income
distributions may be eligible for the seventy percent (70%) dividends-received
deduction for domestic corporate shareholders.
Any dividend or capital gain distribution paid shortly after a
purchase of shares of the Fund, will have the effect of reducing the per share
net asset value of such shares by the amount of the dividend or distribution.
Furthermore, if the net asset value of the shares of the Fund immediately after
a dividend or distribution is less than the cost of such shares to the
shareholder, the dividend or distribution will be taxable to the shareholder
even though it results in a return of capital to him.
The redemption of shares will generally result in a capital gain or
loss for income tax purposes. Such capital gain or loss will be long term or
short term, depending upon the holding period. However, if a loss is realized on
shares held for six (6) months or less, and the investor received a capital gain
distribution during that period, then such loss is treated as a long-term
capital loss to the extent of the capital gain distribution received.
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<PAGE>
The Fund may be required to withhold federal income tax at a rate of
thirty-one percent (31%) ("backup withholding") from dividend payments and
redemption proceeds if a shareholder fails to furnish the Fund with his social
security or other tax identification number and certify under penalty of perjury
that such number is correct and that he is not subject to backup withholding due
to the under reporting of income. The certification form is included as part of
the share purchase application and should be completed when the account is
opened.
This section is not intended to be a complete discussion of present or
proposed federal income tax laws and the effect of such laws on an investor.
Investors are urged to consult with their respective tax advisers for a complete
review of the tax ramifications of an investment in the Fund.
SHAREHOLDER MEETINGS
The Maryland Business Corporation Law permits registered investment
companies, such as the Corporation, to operate without an annual meeting of
shareholders under specified circumstances if an annual meeting is not required
by the Act. The Corporation has adopted the appropriate provisions in its bylaws
and may, at its discretion, not hold an annual meeting in any year in which the
election of directors is not required to be acted upon by the shareholders under
the Act.
The Corporation's bylaws also contain procedures for the removal of
directors by its shareholders. At any meeting of shareholders, duly called and
at which a quorum is present, the shareholders may, by the affirmative vote of
the holders of a majority of the votes entitled to be cast thereon, remove any
director or directors from office and may elect a successor or successors to
fill any resulting vacancies for the unexpired terms of removed directors.
Upon the written request of the holders of shares entitled to not less
than ten percent (10%) of all the votes entitled to be cast at such meeting, the
Secretary of the Corporation shall promptly call a special meeting of
shareholders for the purpose of voting upon the question of removal of any
director. Whenever ten (10) or more shareholders of record who have been such
for at least six (6) months preceding the date of application, and who hold in
the aggregate either shares having a net asset value of at least Twenty-Five
Thousand Dollars ($25,000) or at least one percent (1%) of the total outstanding
shares, whichever is less, shall apply to the Corporation's Secretary in
writing, stating that they wish to communicate with other shareholders with a
view to obtaining signatures to a request for a meeting as described above and
accompanied by a form of communication and request which they wish to transmit,
the Secretary shall within five (5) business days after such application either:
(1) afford to such applicants access to a list of the names and addresses of all
shareholders as recorded on the books of the Corporation; or (2) inform such
applicants as to the approximate number of shareholders of record and the
approximate cost of mailing to them the proposed communication and form of
request.
If the Secretary elects to follow the course specified in clause (2)
of the last sentence of the preceding paragraph, the Secretary, upon the written
request of such applicants, accompanied by a tender of the material to be mailed
and of the reasonable expenses of mailing, shall, with reasonable promptness,
mail such material to all shareholders of record at their
19
<PAGE>
addresses as recorded on the books unless within five (5) business days after
such tender the Secretary shall mail to such applicants and file with the
Securities and Exchange Commission, together with a copy of the material to be
mailed, a written statement signed by at least a majority of the Board of
Directors to the effect that in their opinion either such material contains
untrue statements of fact or omits to state facts necessary to make the
statements contained therein not misleading, or would be in violation of
applicable law, and specifying the basis of such opinion.
After opportunity for hearing upon the objections specified in the
written statement so filed, the Securities and Exchange Commission may, and if
demanded by the Board of Directors or by such applicants shall, enter an order
either sustaining one or more of such objections or refusing to sustain any of
them. If the Securities and Exchange Commission shall enter an order refusing to
sustain any of such objections, or if, after the entry of an order sustaining
one or more of such objections, the Securities and Exchange Commission shall
find, after notice and opportunity for hearing, that all objections so sustained
have been met, and shall enter an order so declaring, the Secretary shall mail
copies of such material to all shareholders with reasonable promptness after the
entry of such order and the renewal of such tender.
CAPITAL STRUCTURE
The Corporation's Articles of Incorporation permit the Board of
Directors to issue One Billion (1,000,000,000) shares of common stock. The Board
of Directors has the power to designate one or more classes ("series") of shares
of common stock and to classify or reclassify any unissued shares with respect
to such series. Currently the shares of the Fund are the only class of shares
being offered by the Corporation. Shareholders are entitled: (i) to one vote per
full share; (ii) to such distributions as may be declared by the Corporation's
Board of Directors out of funds legally available; and (iii) upon liquidation,
to participate ratably in the assets available for distribution. There are no
conversion or sinking fund provisions applicable to the shares, and the holders
have no preemptive rights and may not cumulate their votes in the election of
directors. Consequently the holders of more than fifty percent (50%) of the
shares of the Fund voting for the election of directors can elect the entire
Board of Directors and in such event the holders of the remaining shares voting
for the election of directors will not be able to elect any person or persons to
the Board of Directors.
The shares are redeemable and are transferable. All shares issued and
sold by the Fund will be fully paid and nonassessable. Fractional shares entitle
the holder to the same rights as whole shares. The Fund will not issue
certificates evidencing shares. Instead the shareholder's account will be
credited with the number of shares purchased, relieving shareholders of
responsibility for safekeeping of certificates and the need to deliver them upon
redemption. Written confirmations are issued for all purchases of shares.
DESCRIPTION OF SECURITIES RATINGS
As described above, the Fund may invest in commercial paper and
commercial paper master notes assigned ratings of A-1 by Standard & Poor's
Corporation or Prime-1 by
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Moody's Investors Service, Inc.. A brief description of the ratings symbols and
their meanings follows:
Standard & Poor's Commercial Paper Ratings. A Standard & Poor's
commercial paper rating is a current assessment of the likelihood of timely
payment of debt considered short-term in the relevant market. Ratings are graded
into several categories, ranging from A-1 for the highest quality obligations to
D for the lowest. The categories rated A-3 or higher are as follows:
A-1. This highest category indicates that the degree of safety
regarding timely payment is strong. Those issuers 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
issuers designed "A-1."
A-3. Issues carrying this designation have adequate capacity for
timely payment. They are, however, more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designation.
Moody's Short-Term Debt Ratings. Moody's short-term debt ratings are
opinions of the ability of issuers to repay punctually senior debt obligations
which have an original maturity not exceeding one year. Obligations relying upon
support mechanisms such as letters-of-credit and bonds of indemnity are excluded
unless explicitly rated.
Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment ability of rated issuers:
Prime-1. Issuers rated Prime-1 (or supporting institutions) have a
superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate reliance on
debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.
- Well-established access to a range of financial markets and
assured sources of alternate liquidity.
Prime-2. Issuers rated Prime-2 (or supporting institutions) have a
strong ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage
21
<PAGE>
ratios, while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
Prime-3. Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 100 East Wisconsin Avenue, Suite 1500,
Milwaukee, Wisconsin 53202 has been selected as the independent accountants for
the Fund. As such PricewaterhouseCoopers LLP performs an audit of the Fund's
financial statement and considers the Fund's internal control structure.
FINANCIAL STATEMENTS
The following financial statements for the Fund are attached hereto:
- Report of Independent Accountants
- Statement of Assets and Liabilities
- Notes to the Financial Statement
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<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of
Directors of Golden Gate Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of Golden Gate Fund
(the "Fund"), a series of Golden Gate Fund, Inc. at June 6, 2000 in conformity
with accounting principles generally accepted in the United States. This
financial statement is the responsibility of the Fund's management; our
responsibility is to express an opinion on this financial statement based on our
audit. We conducted our audit of this financial statement in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statement is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statement, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
June 8, 2000
<PAGE>
GOLDEN GATE FUND, INC.
GOLDEN GATE FUND
Statement of Assets and Liabilities
June 6, 2000
ASSETS
Cash $100,005
--------
Total Assets 100,005
LIABILITIES
Total Liabilities 0
-
NET ASSETS:
Common Stock, $0.0001 par value; $100,005
1,000,000,000 shares authorized; 6,667 shares ========
outstanding
Offering and redemption price/net asset value $15.00
per share (based on 6,667 shares of common ======
stock issued and outstanding)
The accompanying notes to the financial statement are an integral part of this
statement.
<PAGE>
GOLDEN GATE FUND, INC.
GOLDEN GATE FUND
NOTES TO FINANCIAL STATEMENT
1. Golden Gate Fund, Inc. (the "Company") was incorporated under the laws of
the state of Maryland on April 25, 2000 and has had no operations to date
other than those relating to organizational matters and the sale of 6,667
shares of its common stock to its original shareholders, Bruce J. Raabe,
Brian L. Eisenbarth and John P. Collins, Jr. The Company is an open-end
diversified management investment company registered under the Investment
Company Act of 1940 (the "1940 Act").
2. The Company, which consists solely of Golden Gate Fund (the "Fund"), has an
agreement with Collins & Company, LLC (the "Adviser"), with whom certain
officers and directors of the Company are affiliated, to furnish investment
advisory services to the Fund. Under the terms of this agreement, the Fund
will pay the Adviser a monthly fee based on the Fund's average daily net
assets at the annual rate of 1.00%.
Under the investment advisory agreement, if the aggregate annual operating
expenses (including the investment advisory fee and the administration fee
but excluding interest, taxes, brokerage commissions and other costs
incurred in connection with the purchase or sale of portfolio securities
and extraordinary items) exceed 1.95%, the Adviser will reimburse the Fund
for the amount of such excess.
3. Pursuant to Rule 12b-1 under the 1940 Act, the Fund has adopted a Service
and Distribution Plan (the "Plan"). Under the Plan, the Fund is authorized
to pay expenses incurred for the purpose of financing activities intended
to result in the sale of shares of the Fund at an annual rate of up to
0.25% of the Fund's average daily net assets.
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits
--------
(a) Registrant's Articles of Incorporation.(1)
(b) Registrant's Bylaws.(1)
(c) See relevant portions of Articles of Incorporation and Bylaws.
(d) Investment Advisory Agreement with Collins & Company, LLC.(1)
(e) None.
(f) None.
(g) Custodian Agreement with Firstar Bank, N.A.(1)
(h) (i) Administration Agreement with Fiduciary Management, Inc.(1)
(h) (ii) Transfer Agent Servicing Agreement with Firstar Mutual Fund
Services, LLC.(1)
(i) Opinion of Foley & Lardner, counsel for Registrant.
(j) Consent of PricewaterhouseCoopers LLP.
(k) None.
(l) Form of Subscription Agreement.(1)
(m) Service and Distribution Plan.(1)
(n) None.
(p) Code of Ethics of Registrant and Collins & Company, LLC.
---------------
(1) Previously filed as an exhibit to the Registration Statement and
incorporated by reference thereto. The Registration Statement was filed on May
1, 2000 and its accession number is 0000897069-00-000267.
Item 24. Persons Controlled by or under Common Control with Registrant
-------------------------------------------------------------
Registrant is controlled by its initial shareholders. Registrant
neither controls any person nor is any person under common control with
Registrant.
S-1
<PAGE>
Item 25. Indemnification
---------------
Pursuant to the authority of the Maryland General Corporation Law,
particularly Section 2-418 thereof, Registrant's Board of Directors has adopted
the following bylaw which is in full force and effect and has not been modified
or cancelled:
Article VII
GENERAL PROVISIONS
Section 7. Indemnification.
--------- ---------------
A. The corporation shall indemnify all of its corporate
representatives against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and
reasonably incurred by them in connection with the defense of any
action, suit or proceeding, or threat or claim of such action, suit or
proceeding, whether civil, criminal, administrative, or legislative,
no matter by whom brought, or in any appeal in which they or any of
them are made parties or a party by reason of being or having been a
corporate representative, if the corporate representative acted in
good faith and in a manner reasonably believed to be in or not opposed
to the best interests of the corporation and with respect to any
criminal proceeding, if he had no reasonable cause to believe his
conduct was unlawful provided that the corporation shall not indemnify
corporate representatives in relation to matters as to which any such
corporate representative shall be adjudged in such action, suit or
proceeding to be liable for gross negligence, willful misfeasance, bad
faith, reckless disregard of the duties and obligations involved in
the conduct of his office, or when indemnification is otherwise not
permitted by the Maryland General Corporation Law.
B. In the absence of an adjudication which expressly
absolves the corporate representative, or in the event of a
settlement, each corporate representative shall be indemnified
hereunder only if there has been a reasonable determination based on a
review of the facts that indemnification of the corporate
representative is proper because he has met the applicable standard of
conduct set forth in paragraph A. Such determination shall be made:
(i) by the board of directors, by a majority vote of a quorum which
consists of directors who were not parties to the action, suit or
proceeding, or if such a quorum cannot be obtained, then by a majority
vote of a committee of the board consisting solely of two or more
directors, not, at the time, parties to the action, suit or proceeding
and who were duly designated to act in the matter by the full board in
which the designated directors who are parties to the action, suit or
proceeding may participate; or (ii) by special legal counsel selected
by the board of directors or a committee of the board by vote as set
forth in (i) of this paragraph, or, if the requisite quorum of the
full board cannot be obtained therefor and the committee cannot be
established, by a majority vote of the full
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<PAGE>
board in which directors who are parties to the action, suit or
proceeding may participate.
C. The termination of any action, suit or proceeding by
judgment, order or settlement does not create a presumption that the
person was guilty of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties and obligations involved in the
conduct of his or her office. The termination of any action, suit or
proceeding by conviction, or upon a plea of nolo contendere or its
equivalent, or an entry of an order of probation prior to judgment
shall create a rebuttable presumption that the person was guilty of
willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties and obligations involved in the conduct of his or her
office, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
D. Expenses, including attorneys' fees, incurred in the
preparation of and/or presentation of the defense of a civil or
criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding as
authorized in the manner provided in Section 2-418(F) of the Maryland
General Corporation Law upon receipt of: (i) an undertaking by or on
behalf of the corporate representative to repay such amount unless it
shall ultimately be determined that he or she is entitled to be
indemnified by the corporation as authorized in this bylaw; and (ii) a
written affirmation by the corporate representative of the corporate
representative's good faith belief that the standard of conduct
necessary for indemnification by the corporation has been met.
E. The indemnification provided by this bylaw shall not
be deemed exclusive of any other rights to which those indemnified may
be entitled under these bylaws, any agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his or her
official capacity and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such a person subject to
the limitations imposed from time to time by the Investment Company
Act of 1940, as amended.
F. This corporation shall have power to purchase and
maintain insurance on behalf of any corporate representative against
any liability asserted against him or her and incurred by him or her
in such capacity or arising out of his or her status as such, whether
or not the corporation would have the power to indemnify him or her
against such liability under this bylaw provided that no insurance may
be purchased or maintained to protect any corporate representative
against liability for gross negligence, willful misfeasance, bad faith
or reckless disregard of the duties and obligations involved in the
conduct of his or her office.
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<PAGE>
G. "Corporate Representative" means an individual who
is or was a director, officer, agent or employee of the corporation or
who serves or served another corporation, partnership, joint venture,
trust or other enterprise in one of these capacities at the request of
the corporation and who, by reason of his or her position, is, was, or
is threatened to be made, a party to a proceeding described herein.
Insofar as indemnification for and with respect to liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of Registrant pursuant to the foregoing provisions or
otherwise, 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 of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by Registrant of expenses incurred or paid by a director, officer or
controlling person or Registrant in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, 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 of whether such
indemnification is against public policy as expressed in the Securities Act of
1933 and will be governed by the final adjudication of such issue.
Item 26. Business and Other Connections of Investment Adviser
----------------------------------------------------
Incorporated by reference to pages 4 through 8 of the Statement of
Additional Information pursuant to Rule 411 under the Securities Act of 1933.
Item 27. Principal Underwriters
----------------------
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 physical possession of Registrant's
Treasurer, Johanna Longfellow, at Registrant's corporate offices, 100 Larkspur
Landing Circle, Suite 102, Larkspur, California 94939.
Item 29. Management Services
-------------------
All management-related service contracts entered into by Registrant
are discussed in Parts A and B of this Registration Statement.
Item 30. Undertakings
------------
Registrant undertakes to provide its Annual Report to shareholders
upon request without charge to any recipient of a Prospectus.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Registrant has duly caused this Amended
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Larkspur and State of California on the 1st day
of June, 2000.
GOLDEN GATE FUND, INC.
(Registrant)
By:/s/ Bruce J. Raabe
-----------------------------------
Bruce J. Raabe, President
Pursuant to the requirements of the Securities Act of 1933, this
Amended Registration Statement has been signed below by the following persons in
the capacities and on the date(s) indicated.
Name Title Date
---- ----- ----
/s/ Bruce J. Raabe June 1, 2000
------------------------- (Principal Executive, Financial and
Bruce J. Raabe Accounting Officer) and a Director
/s/ Brian L. Eisenbarth
------------------------- Director June 1, 2000
Brian L. Eisenbarth
/s/ Johanna Longfellow
------------------------- Director June 1, 2000
Johanna Longfellow
/s/ Melinda Van der Reis
------------------------- Director June 1, 2000
Melinda Van der Reis
/s/ Dave Cuneo
------------------------- Director June 1, 2000
Dave Cuneo
/s/ Judd Iversen
------------------------- Director June 1, 2000
Judd Iversen
/s/ Thomas Comparet
------------------------- Director June 1, 2000
Thomas Comparet
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<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Exhibit
----------- -------
(a) Registrant's Articles of Incorporation.*
(b) Registrant's Bylaws. *
(c) See relevant portions of Articles of Incorporation and Bylaws.
(d) Investment Advisory Agreement with Collins & Company, LLC. *
(e) None.
(f) None.
(g) Custodian Agreement with Firstar Bank, N.A. *
(h) (i) Administration Agreement with Fiduciary Management, Inc. *
(h) (ii) Transfer Agent Servicing Agreement with Firstar Mutual Fund
Services, LLC. *
(i) Opinion of Foley & Lardner, counsel for Registrant.
(j) Consent of PricewaterhouseCoopers LLP.
(k) None.
(l) Form of Subscription Agreement. *
(m) Service and Distribution Plan. *
(n) None.
(p) Code of Ethics of Registrant and Collins & Company, LLC.
-----------------
*Incorporated by reference.
