Securities Act Registration No. 333-_____
Investment Company Act Reg. No. 811-_____
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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. [ ]
Post-Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. ________ [ ]
(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.
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PRELIMINARY PROSPECTUS
Subject to completion, dated April 28, 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
_____________________, 2000
Golden Gate Fund
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
Golden Gate Questions Every Investor Should Ask Before
Fund, Inc. Investing in Golden Gate Fund............... 2
100 Larkspur Landing Circle Fees and Expenses............................. 4
Suite 102 Investment Objective and Strategies........... 5
Larkspur, California 94939 Management of the Fund........................ 5
(877) 785-5443 The Fund's Share Price ....................... 6
Purchasing Shares............................. 6
Redeeming Shares.............................. 10
Dividends, Distributions and Taxes............ 14
Share Purchase Application.................... _
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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, but usually
more "growth" stocks than "value" stocks. The Fund's investment
adviser generally will invest more of the Fund's assets in large cap
companies (i.e., greater than $2.0 billion) than in smaller companies.
The companies in which the Fund invests are generally industry leaders
or companies that the Fund's investment adviser believes have the
potential to become industry leaders. 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
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o Financial flexibility due to adequate levels of free cash flow
o Healthy and consistent operating margins
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 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 exhibit faster than
average gains in earnings and are expected to continue profit
growth at a high level. They 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 increase
and decrease 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. As a shareholder,
you may lose or make money on your investment.
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.
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
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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.
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
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and Eisenbarth are chartered Financial Analysts. Mr. Raabe joined the Adviser in
1992 and is primarily responsible for the Adviser's day-to-day operations. 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
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
accepts 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
2. Determine how much you want to invest keeping in mind the following
minimums:
a. New accounts
o All Accounts $ 1,000
b. Existing accounts
o Dividend reinvestment No Minimum
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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
1-800-___-____.
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
Please do not mail letters by overnight delivery service or registered
mail to the Post Office Box address.
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6. If you wish to open an account by wire, please call Firstar Mutual
Fund Services, LLC at 1-800-___-____ 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
1-800-___-____. 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 1-800-___-____ 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 1-800-___-____ or
1-414-___-____. 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.
Redemption Price
The redemption price per share you receive for redemption requests is
the next determined net asset value after:
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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 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 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 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.
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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.
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.
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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 1-800-___-____.
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 1-800-___-____.
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 1-800-SEC-0330 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.
____________ when seeking information about the Fund from the Securities and
Exchange Commission.
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PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION ____________, 2000
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Subject to completion, dated April 28, 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
____________, 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 1-800-___-____.
<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 ........................................................7
INVESTMENT ADVISER AND ADMINISTRATOR ..........................................7
DETERMINATION OF NET ASSET VALUE AND PERFORMANCE ..............................9
DISTRIBUTION OF SHARES .......................................................11
RETIREMENT PLANS .............................................................12
AUTOMATIC INVESTMENT PLAN ....................................................14
REDEMPTION OF SHARES .........................................................14
SYSTEMATIC WITHDRAWAL PLAN ...................................................15
ALLOCATION OF PORTFOLIO BROKERAGE ............................................15
CUSTODIAN ....................................................................16
TAXES ........................................................................16
SHAREHOLDER MEETINGS .........................................................17
CAPITAL STRUCTURE ............................................................19
DESCRIPTION OF SECURITIES RATINGS ............................................19
INDEPENDENT ACCOUNTANTS ......................................................21
FINANCIAL STATEMENTS .........................................................21
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 ____________, 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
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those relating to borrowing of money or issuing senior securities) are adhered
to at the time an 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
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<PAGE>
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 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.
- --------------------
* Messrs. Raabe, Eisenbarth, Burt, Comparet and Ms. Longfellow are "interested
persons" of the Fund as that term is defined in the Act.
4
<PAGE>
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.
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.
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.
- --------------------
* Messrs. Raabe, Eisenbarth, Burt, Comparet and Ms. Longfellow are "interested
persons" of the Fund as that term is defined in the Act.
5
<PAGE>
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.
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.
- --------------------
* Messrs. Raabe, Eisenbarth, Burt, Comparet and Ms. Longfellow are "interested
persons" of the Fund as that term is defined in the Act.
The Fund is newly organized and has not paid any compensation to any
director or officer. For the fiscal year ending ____________, 2000 the
Corporation's standard method of compensating directors is to pay each director
who is not an officer of the Corporation a fee of $___ for each meeting of the
Board of Directors attended.
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.
6
<PAGE>
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.
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,
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
7
<PAGE>
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.
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,
8
<PAGE>
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 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.
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
9
<PAGE>
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.
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.
10
<PAGE>
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 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
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<PAGE>
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.
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.
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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.
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
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<PAGE>
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
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
14
<PAGE>
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.
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
15
<PAGE>
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 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 Code. If
the Fund fails to qualify as
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<PAGE>
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.
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
17
<PAGE>
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 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
18
<PAGE>
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 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.
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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 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.
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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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REPORT OF INDEPENDENT ACCOUNTANT
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 ____________, 2000 in
conformity with generally accepted accounting principles. 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 generally
accepted auditing standards 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
_____________, 2000
<PAGE>
GOLDEN GATE FUND, INC.
GOLDEN GATE FUND
Statement of Assets and Liabilities
____________, 2000
Golden Gate Fund
----------------
ASSETS
Cash $100,005
Total Assets $100,005
========
LIABILITIES
Total Liabilities $0
==
NET ASSETS
Capital Stock, $0.0001 par value; 1,000,000,000 $100,005
shares authorized; 6,667 shares outstanding ========
Offering and redemption price/net asset value $15.00
per share (based on 6,667 shares of capital 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 _____________, 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 shareholder, Collins &
Company, LLC. 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.
(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 (submitted in draft
form).
(j) Consent of PricewaterhouseCoopers LLP (to be filed by amendment).
(k) None.
(l) Form of Subscription Agreement.
(m) Service and Distribution Plan.
(n) None.
(p) Code of Ethics of Registrant and Collins & Company, LLC (to be filed
by amendment).
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
S-2
<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.
S-3
<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.
S-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Registrant has duly caused this 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 28th day of
April, 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
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 (Principal Executive, Financial April 28, 2000
- ------------------------------ and Accounting Officer) and a
Bruce J. Raabe Director
/s/ Brian L. Eisenbarth Director April 28, 2000
- ------------------------------
Brian L. Eisenbarth
/s/ Johanna Longfellow Director April 28, 2000
- ------------------------------
Johanna Longfellow
/s/ Melinda Van der Reis Director April 28, 2000
- ------------------------------
Melinda Van der Reis
/s/ Dave Cuneo Director April 28, 2000
- ------------------------------
Dave Cuneo
/s/ Judd Iversen Director April 28, 2000
- ------------------------------
Judd Iversen
/s/ Thomas Comparet Director April 28, 2000
- ------------------------------
Thomas Comparet
S-5
<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
(submitted in draft form).
(j) Consent of PricewaterhouseCoopers LLP (to be filed
by amendment).
(k) None.
(l) Form of Subscription Agreement.
(m) Service and Distribution Plan.
(n) None.
(p) Code of Ethics of Registrant and Collins &
Company, LLC (to be filed by amendment).
ARTICLES OF INCORPORATION
OF
GOLDEN GATE FUND, INC.
The undersigned sole incorporator, being at least eighteen years of
age, hereby adopts the following Articles of Incorporation for the purpose of
forming a Maryland corporation under the general laws of the State of Maryland:
ARTICLE I
---------
The name of the corporation (hereinafter called "Corporation") is:
GOLDEN GATE FUND, INC.
ARTICLE II
----------
The period of existence shall be perpetual.
ARTICLE III
-----------
The purposes for which the Corporation is formed are to engage in any
lawful business for which corporations may be organized under the Maryland
General Corporation Law.
ARTICLE IV
----------
A. The aggregate number of shares of capital stock which the
Corporation shall have authority to issue is One Billion (1,000,000,000) shares,
all with a par value of One Hundredth of a Cent ($0.0001) per share, to be known
and designated as "Common Stock." The aggregate par value of the authorized
shares of the Corporation is One Hundred Thousand Dollars ($100,000). The Board
of Directors of the Corporation may increase or decrease the aggregate number of
authorized shares of Common Stock pursuant to Section 2-105 of the Maryland
General Corporation Law or any successor provision thereto. The Board of
Directors of the Corporation may classify or reclassify any unissued shares of
Common Stock and may designate or redesignate the name of any class of
outstanding Common Stock. The Board of Directors may divide the shares of each
class into one or more series. For purposes of the Corporation's filings with
the Securities and Exchange Commission under the federal securities laws,
including the Investment Company Act of 1940, the Corporation may refer to
"classes" of the Corporation's Common Stock that mean "series" as used in these
Articles of Incorporation and the Maryland General Corporation Law and may refer
to "series" that mean "classes" as used in these Articles of Incorporation and
the Maryland General Corporation Law. The Board of Directors may fix the number
of shares of Common Stock in any such class or series and, except as
specifically set forth in these Articles of Incorporation, may set or change the
preferences, conversion or other rights, voting powers, restrictions,
limitations
<PAGE>
as to dividends, qualifications and terms or conditions of redemption of any
class or series of unissued shares of Common Stock. A total of Two Hundred Fifty
Million (250,000,000) shares of Common Stock shall initially be classified as
"Class A Common Stock" (the "Golden Gate Fund" or such other name designated by
the Corporation's Board of Directors).
B. Notwithstanding the authority granted to the Board of Directors of
the Corporation with respect to the designation, classification and
reclassification of the unissued shares of Common Stock of the Corporation, each
class and series of Common Stock shall have the following preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms or conditions of redemption:
1. Each holder of shares of Common Stock of the Corporation,
irrespective of the class or series, shall be entitled to one (1) vote for
each full share (and a fractional vote for each fractional share) then
standing in his or her name on the books of the Corporation; provided,
however, that shares of any class or series of Common Stock owned, other
than in a fiduciary capacity, by the Corporation or by another corporation
in which the Corporation owns shares entitled to cast a majority of all the
votes entitled to be cast by all shares outstanding and entitled to vote of
such corporation, shall not be voted at any meeting of stockholders. On any
matter submitted to a vote of stockholders all shares of the Corporation's
Common Stock then issued and outstanding and entitled to vote, irrespective
of the class or series, shall be voted in the aggregate and not by class or
series, except that: (a) when otherwise expressly provided by the Maryland
General Corporation Law, the Investment Company Act of 1940 and the
regulations thereunder, or other applicable law, shares shall be voted by
individual class or series; and (b) when the matter to be acted upon does
not affect any interest of a particular class or series of the
Corporation's Common Stock, then only shares of the affected class or
series shall be entitled to vote thereon. At all elections of directors of
the Corporation, each stockholder shall be entitled to vote the shares
owned of record by him or her for as many persons as there are directors to
be elected, but shall not be entitled to exercise any right of cumulative
voting.
2. All consideration received by the Corporation for the issue or sale
of shares of any class of the Corporation's Common Stock, together with all
assets in which such consideration is invested and reinvested, income,
earnings, profits and proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation thereof, and any such funds or payments
derived from any reinvestment of such proceeds in whatever form the same
may be, shall irrevocably belong to the class of the Corporation's Common
Stock with respect to which such assets, payments or funds were received by
the Corporation for all purposes, subject only to the rights of creditors,
and shall be so handled upon the books of account of the Corporation. The
consideration, assets, income, earnings, profits and proceeds thereof of
each series within a class shall be determined separately and, accordingly,
the net asset value of shares may vary
2
<PAGE>
from series to series within a class. Such consideration, assets, income,
earnings, profits and proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation thereof, and any assets derived from any
reinvestment of such proceeds in whatever form, are herein referred to as
"assets belonging to" such class or series. Any assets, income, earnings,
profits and proceeds thereof, funds or payments which are not readily
attributable to any particular class or series of the Corporation's Common
Stock shall be allocable among any one or more of the classes or series of
the Corporation's Common Stock in such manner and on such basis as the
Board of Directors, in its sole discretion, shall deem fair and equitable.
The power to make such allocations may be delegated by the Board of
Directors from time to time to one or more of the officers of the
Corporation.
3. The assets belonging to any class or series of the Corporation's
Common Stock shall be charged with the liabilities in respect of such class
or series of the Corporation's Common Stock, and shall also be charged with
the share of the general liabilities of the Corporation allocated to such
class or series determined as hereinafter provided. The determination of
the Board of Directors shall be conclusive as to: (a) the amount of such
liabilities, including the amount of accrued expenses and reserves; (b) any
allocation of the same to a given class or series; and (c) whether the same
are allocable to one or more classes or series. The liabilities so
allocated to a class or series are herein referred to as "liabilities
belonging to" such class or series. Any liabilities which are not readily
attributable to any particular class or series of the Corporation's Common
Stock shall be allocable among any one or more of the classes or series of
the Corporation's Common Stock in such manner and on such basis as the
Board of Directors, in its sole discretion, shall deem fair and equitable.
The power to make such allocations may be delegated by the Board of
Directors from time to time to one or more of the officers of the
Corporation.
4. Shares of each class or series of the Corporation's Common Stock
shall be entitled to such dividends and distributions, in stock or in cash
or both, as may be declared from time to time by the Board of Directors,
acting in its sole discretion, with respect to such class or series;
provided, however, that dividends and distributions on shares of a class or
series of the Corporation's Common Stock shall be paid only out of the
lawfully available "assets belonging to" such class or series as such
phrase is defined in this Article IV.
5. In the event of the liquidation or dissolution of the Corporation,
stockholders of a class or series of the Corporation's Common Stock shall
be entitled to receive, as a class or series, out of the assets of the
Corporation available for distribution to stockholders, but other than
general assets not belonging to any particular class or series, the assets
belonging to such class or series, and the assets so distributable to the
holders of any class or series of the Corporation's Common Stock shall be
distributed among such holders in
3
<PAGE>
proportion to the number of shares of such class or series of the
Corporation's Common Stock held by them and recorded on the books of the
Corporation. In the event that there are any general assets not belonging
to any particular class or series of the Corporation's Common Stock and
available for distribution, such distribution shall be made to the holders
of all classes or series of the Corporation's Common Stock in proportion to
the net asset value of the respective class or series of the Corporation's
Common Stock determined as set forth in the Bylaws of the Corporation.
6. Each share of each class or series of Common Stock of the
Corporation now or hereafter issued shall be subject to redemption by the
stockholders of the Corporation and, subject to the suspension of such
right of redemption as provided in the Bylaws, each holder of shares of any
class or series of Common Stock of the Corporation, upon request to the
Corporation accompanied by surrender of the appropriate stock certificate
or certificates, if any, in proper form for transfer and after complying
with any other redemption procedures established by the Board of Directors,
shall be entitled to require the Corporation to redeem all or any part of
the shares of such class or series of Common Stock standing in the name of
such holder on the books of the Corporation at the net asset value of such
shares. In the event that no certificates have been issued to the holder,
the Board of Directors may require the submission of a stock power with an
appropriate signature guarantee. All shares of any class or series of its
Common Stock redeemed by the Corporation shall be deemed to be cancelled
and restored to the status of authorized but unissued shares. The method of
computing the net asset value of shares of each class or series of Common
Stock of the Corporation for purposes of the issuance and sale, or
redemption, thereof, as well as the time as of which such net asset value
shall be computed, shall be as set forth in the Bylaws. Payment of the net
asset value of each share of each class or series of Common Stock of the
Corporation surrendered to it for redemption shall be made by the
Corporation within seven (7) days after surrender of such stock to the
Corporation for such purpose, or within such other reasonable period as may
be determined from time to time by the Board of Directors. The Board of
Directors of the Corporation may, upon reasonable notice to the
stockholders of the Corporation, impose a fee for the privilege of
redeeming shares, such fee to be not in excess of two percent (2.0%) of the
proceeds of any such redemption. The Board shall have discretionary
authority to rescind the imposition of any such fee and to reimpose the
redemption fee from time to time upon reasonable notice. Any fee so imposed
shall be uniform as to all stockholders to the extent required by the
Investment Company Act of 1940.
7. If, at any time when a request for transfer or redemption of the
shares of any class or series of Common Stock is received by the
Corporation or its agent, the value (computed as set forth in the Bylaws)
of the shares of such class or series in a stockholder's account is less
than such amount as may be
4
<PAGE>
determined by the Board of Directors after giving effect to such transfer
or redemption, the Corporation may cause the remaining shares of such class
or series in such stockholder's account to be redeemed in accordance with
such procedures as the Board of Directors shall adopt. The Corporation may
redeem shares of stock held by any stockholder to the extent permitted by
Section 2-310.1 of the Maryland General Corporation Law or any successor
provision thereto.
8. No holder of shares of any class or series of Common Stock of the
Corporation shall, as such holder, have any right to purchase or subscribe
for any shares of any class or series of the Common Stock of the
Corporation which it may issue or sell (whether out of the number of shares
authorized by these Articles of Incorporation, or out of any shares of any
class or series of Common Stock of the Corporation acquired by it after the
issue thereof, or otherwise) other than such right, if any, as the Board of
Directors, in its discretion, may determine.
ARTICLE V
---------
The number of directors constituting the Board of Directors shall
initially be seven (7), and the names of the initial directors are Bruce J.
Raabe, Brian L. Eisenbarth, Johanna Longfellow, Melinda Van der Reis, Dave
Cuneo, Judd Iversen and Thomas Comparet. Thereafter, the number of directors
shall be such number as is fixed from time to time by the Bylaws.
ARTICLE VI
----------
The Corporation reserves the right to enter into, from time to time,
investment advisory and administration agreements providing for the management
and supervision of the investments of the Corporation, the furnishing of advice
to the Corporation with respect to the desirability of investing in, purchasing
or selling securities or other property and the furnishing of clerical and
administrative services to the Corporation. Such agreements shall contain such
other terms, provisions and conditions as the Board of Directors of the
Corporation may deem advisable and as are permitted by the Investment Company
Act of 1940.
The Corporation may designate custodians, transfer agents, registrars
and/or disbursing agents for the stock and assets of the Corporation and employ
and fix the powers, rights, duties, responsibilities and compensation of each
such custodian, transfer agent, registrar and/or disbursing agent.
5
<PAGE>
ARTICLE VII
-----------
The following provisions define, limit and regulate the powers of the
Corporation, the Board of Directors and the stockholders:
A. The Corporation may issue and sell shares of any class or series of
its own Common Stock in such amounts and on such terms and conditions, for such
purposes and for such amount or kind of consideration now or hereafter permitted
by the laws of the State of Maryland, the Bylaws and these Articles of
Incorporation, as its Board of Directors may determine; provided, however, that
the consideration per share to be received by the Corporation upon the sale of
any shares of any class or series of its Common Stock shall not be less than the
net asset value per share of such class or series of Common Stock outstanding at
the time as of which the computation of said net asset value shall be made.
B. The Board of Directors may, in its sole and absolute discretion,
reject in whole or in part orders for the purchase of shares of any class or
series of Common Stock and may, in addition, require such orders to be in such
minimum amounts as it shall determine.
C. The holders of any fractional shares of any class or series of
Common Stock shall be entitled to the payment of dividends on such fractional
shares, to receive the net asset value thereof upon redemption, to share in the
assets of the Corporation upon liquidation and to exercise voting rights with
respect thereto.
D. The Board of Directors shall have full power in accordance with
good accounting practice: (a) to determine what receipts of the Corporation
shall constitute income available for payment of dividends and what receipts
shall constitute principal and to make such allocation of any particular receipt
between principal and income as it may deem proper; and (b) from time to time,
in its discretion (i) to determine whether any and all expenses and other
outlays paid or incurred (including any and all taxes, assessments or
governmental charges which the Corporation may be required to pay or hold under
any present or future law of the United States of America or of any other taxing
authority therein) shall be charged to or paid from principal or income or both,
and (ii) to apportion any and all of said expenses and outlays, including taxes,
between principal and income.
E. The Board of Directors shall have the power to determine from time
to time whether and to what extent and at what time and places and under what
conditions and regulations the books, accounts and documents of the Corporation
or any of them, shall be open to the inspection of stockholders, except as
otherwise provided by applicable law; and except as so provided, no stockholder
shall have any right to inspect any book, account or document of the Corporation
unless authorized to do so by resolution of the Board of Directors.
6
<PAGE>
ARTICLE VIII
------------
The address of the principal office of the Corporation in Maryland is
c/o The Corporation Trust Incorporated, 32 South Street, Baltimore, Maryland
21202.
ARTICLE IX
----------
The address of the initial registered office is c/o The Corporation
Trust Incorporated, 32 South Street, Baltimore, Maryland 21202.
ARTICLE X
---------
The name of the initial registered agent at such address is The
Corporation Trust, Incorporated, a Maryland corporation.
ARTICLE XI
----------
The name and address of the sole incorporator is:
Name Address
---- -------
Richard L. Teigen c/o Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, WI 53202
IN WITNESS WHEREOF, the undersigned incorporator who executed the
foregoing Articles of Incorporation hereby acknowledges the same to be his act
and further acknowledges that, to the best of his knowledge, the matters and
facts set forth therein are true in all material respects under the penalties of
perjury.
Dated this 21st day of April, 2000.
/s/ Richard L. Teigen
---------------------------
Richard L. Teigen
Sole Incorporator
7
BYLAWS
OF
GOLDEN GATE FUND, INC.
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. Place of Meetings. All meetings of stockholders shall be held at such
location as the board of directors shall direct.
Section 2 Annual Meeting.
(a) The annual meeting of stockholders for the election of directors
and the transaction of such other business as may properly come before it, if
the annual meeting shall be held, shall be held at such date and time as shall
be fixed by the board of directors and stated in the notice of such meeting, but
in no event more than one hundred twenty (120) days after the occurrence of the
event requiring the meeting to elect directors. Any business of the corporation
may be transacted at the annual meeting without being specifically designated in
the notice, except such business as is specifically required by statute to be
stated in the notice.
(b) The corporation shall not be required to hold an annual meeting in
any year in which the election of directors is not required to be acted on by
stockholders under the Investment Company Act of 1940.
Section 3. Special Meeting. Special meetings of the stockholders may be called
by the board of directors, the president, any vice president, or the secretary,
and shall be called by the secretary 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; provided that such holders prepay the costs to the
corporation of preparing and mailing the notice of the meeting. The business
transacted at any special meeting of stockholders shall be limited to the
purposes stated in the notice.
Section 4. Notice of Meeting. Not less than ten (10) days nor more than ninety
(90) days before the date of every stockholders' meeting, the secretary shall
give to each stockholder entitled to vote at such meeting and to each other
stockholder entitled to notice of such meeting under applicable law, written or
printed notice stating the time and place of the meeting, and in the case of a
special meeting (or where required by applicable law) the purpose or purposes
for which the meeting is called, either by mail, by presenting it to him
personally or by leaving it at his residence or usual place of business. If
mailed, such notice shall be deemed to be given when deposited in the United
States mail addressed to the stockholder at his post office address as it
appears on the records of the corporation, with postage thereon prepaid.
<PAGE>
Section 5. Quorum. At any meeting of stockholders the presence in person or by
proxy of stockholders entitled to cast a majority of the votes thereat shall
constitute a quorum; but this section shall not affect any requirement under
statute or under the charter for the vote necessary for the adoption of any
measure. If at any meeting a quorum is not present or represented, the chairman
of the meeting or the holders of a majority of the stock present or represented
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum is present or represented. At such
adjourned meeting at which a quorum is present or represented, any business may
be transacted which might have been transacted at the meeting as originally
called.
Section 6. Stock Entitled to Vote. Each issued share of each class or series of
stock shall be entitled to vote at any meeting of stockholders except shares
owned, other than in a fiduciary capacity, by the corporation or by another
corporation in which the corporation owns shares entitled to cast a majority of
all the votes entitled to be cast by all shares outstanding and entitled to vote
of such corporation.
Section 7. Voting. Each outstanding share of each class or series of stock
entitled to vote at a meeting of stockholders shall be entitled to one vote on
each matter submitted to a vote. In all elections for directors every
stockholder shall have the right to vote the shares of each class or series
owned of record by him for as many persons as there are directors to be elected,
but shall not be entitled to exercise any right of cumulative voting. A
stockholder may vote the shares owned of record by him either in person or by
proxy executed in writing by the stockholder or by his authorized
attorney-in-fact. No proxy shall be valid after eleven (11) months from its date
unless otherwise provided in the proxy. At all meetings of stockholders, unless
the voting is conducted by inspectors, all questions relating to the
qualification of voters, the validity of proxies and the acceptance or rejection
of votes shall be decided by the chairman of the meeting. A majority of the
votes cast at a meeting of stockholders, duly called and at which a quorum is
present, shall be sufficient to take or authorize any action which may properly
come before the meeting, unless a greater number is required by statute or by
the charter. Notwithstanding the foregoing a plurality of all the votes cast at
a meeting of stockholders, duly called and at which a quorum is present, shall
be sufficient to elect a director.
Section 8. Informal Action. Any action required or permitted to be taken at any
meeting of stockholders may be taken without a meeting, if a consent in writing,
setting forth such action, is signed by all the stockholders entitled to vote on
the subject matter thereof and such consent is filed with the records of the
corporation.
ARTICLE II
DIRECTORS
Section 1. Number. The initial number of directors of the corporation shall be
seven (7). By vote of a majority of the entire board of directors, the number of
directors fixed by the charter or by these bylaws may be increased or decreased
from time to time to not more than
2
<PAGE>
fifteen (15) nor less than three (3), but the tenure of office of a director
shall not be affected by any decrease in the number of directors so made by the
board.
Section 2. Election and Qualification. Until the first annual meeting of
stockholders and until successors are duly elected and qualified, the board of
directors shall consist of the persons named as such in the charter and such
additional director(s) as the board may appoint pursuant to Article II, Section
3 of these Bylaws. At the first annual meeting of stockholders, the stockholders
shall elect directors to hold office until their successors are elected and
qualify. A director need not be a stockholder of the corporation, but must be
eligible to serve as a director of a registered investment company under the
Investment Company Act of 1940.
Section 3. Vacancies. Any vacancy on the board of directors occurring between
stockholders' meetings called for the purpose of electing directors may be
filled, if immediately after filling any such vacancy at least two-thirds of the
directors then holding office shall have been elected to such office at an
annual or special meeting of stockholders, in the following manner: (i) for a
vacancy occurring other than by reason of an increase in directors, by a
majority of the remaining members of the board, although such majority is less
than a quorum; and (ii) for a vacancy occurring by reason of an increase in the
number of directors, by action of a majority of the entire board. A director
elected by the board to fill a vacancy shall be elected to hold office until the
next annual meeting of stockholders or until his successor is elected and
qualifies. If by reason of the death, disqualification or bona fide resignation
of any director or directors, more than sixty percent (60%) of the members of
the board of directors are interested persons of the corporation, as defined in
the Investment Company Act of 1940, such vacancy shall be filled within thirty
(30) days if it may be filled by the board, or within sixty (60) days if a vote
of stockholders is required to fill such vacancy; provided that such vacancy may
be filled within such longer period as the Securities and Exchange Commission
may prescribe by rules and regulations, upon its own motion or by order upon
application. In the event that at any time less than a majority of the directors
were elected by the stockholders, the board or proper officer shall forthwith
cause to be held as promptly as possible, and in any event within sixty (60)
days, a meeting of the stockholders for the purpose of electing directors to
fill any existing vacancies in the board, unless the Securities and Exchange
Commission shall by order extend such period.
Section 4. Powers. The business and affairs of the corporation shall be managed
under the direction of the board of directors, which may exercise all of the
powers of the corporation, except such as are by law or by the charter or by
these bylaws conferred upon or reserved to the stockholders.
Section 5. Removal.
(a) At any meeting of stockholders, duly called and at which a quorum
is present, the stockholders 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.
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(b) Notwithstanding any other provisions of these bylaws, the
secretary of the corporation shall promptly call a special meeting of
stockholders for the purpose of voting upon the question of removal of any
director 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.
(c) Whenever ten (10) or more stockholders of record who have been
such for at least six months preceding the date of application, and who hold in
the aggregate either shares having a net asset value of at least $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 stockholders with a view to obtaining signatures to a
request for a meeting pursuant to subsection (b) 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 stockholders as
recorded on the books of the corporation; or (2) inform such applicants as to
the approximate number of stockholders of record and the approximate cost of
mailing to them the proposed communication and form of request.
(d) If the secretary elects to follow the course specified in clause
(2) of subsection (c) above, 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 stockholders of record at their 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.
(e) 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.
Section 6. Place of Meetings. Meetings of the board of directors, regular or
special, may be held at any place in or out of the State of Maryland as the
board may from time to time determine or as may be specified in the notice of
meeting.
Section 7. First Meeting of Newly Elected board. The first meeting of each newly
elected board of directors shall be held without notice immediately after and at
the same general place
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as the annual meeting of the stockholders, for the purpose of organizing the
board, electing officers and transacting any other business that may properly
come before the meeting.
Section 8. Regular Meetings. Regular meetings of the board of directors may be
held without notice at such time and place as shall from time to time be
determined by the board.
Section 9. Special Meetings. Special meetings of the board of directors may be
called at any time either by the board, the president, a vice president or a
majority of the directors in writing with or without a meeting. Notice of
special meetings shall either be mailed by the secretary to each director at
least three (3) days before the meeting or shall be given personally or
telegraphed to each director at least one (1) day before the meeting. Such
notice shall set forth the time and place of such meeting but need not, unless
otherwise required by law, state the purposes of the meeting.
Section 10. Quorum and Vote Required for Action. At all meetings of the board of
directors a majority of the entire board shall constitute a quorum for the
transaction of business, and the action of a majority of the directors present
at any meetings at which a quorum is present shall be the action of the board of
directors unless the concurrence of a greater proportion is required for such
action by statute, the articles of incorporation or these bylaws. If at any
meeting a quorum is not present, a majority of the directors present may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum is present. Members of the board of directors or a
committee of the board may participate in a meeting by means of a conference
telephone or similar communications equipment if all persons participating in
the meeting can hear each other at the same time; provided, however, that a
director may not participate in a meeting by means of a conference telephone or
similar communications equipment if the purpose of the meeting is to approve the
corporation's investment advisory agreement and/or to approve the selection of
the corporation's auditors, or if participation in such a manner would otherwise
violate the Investment Company Act of 1940 or other applicable laws. Except as
set forth in the preceding sentence, participation in a meeting by these means
constitutes presence in person at the meeting.
Section 11. Executive and Other Committees. The board of directors may appoint
from among its members an executive and other committees composed of two (2) or
more directors. The board may delegate to such committees in the intervals
between meetings of the board any of the powers of the board to manage the
business and affairs of the corporation, except the power to: (i) declare
dividends or distributions upon the stock of the corporation; (ii) issue stock
of the corporation; (iii) recommend to the stockholders any action which
requires stockholder approval; (iv) amend the bylaws; (v) approve any merger or
share exchange which does not require stockholder approval; or (vi) take any
action required by the Investment Company Act of 1940 to be taken by the
independent directors of the corporation or by the full board of directors.
Section 12. Informal Action. Except as set forth in the following sentence, any
action required or permitted to be taken at any meeting of the board of
directors or of a committee of
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the board may be taken without a meeting, if a written consent to such action is
signed by all members of the board or the committee, as the case may be, and
such written consent is filed with the minutes of proceedings of the board or
committee. Notwithstanding the preceding sentence, no action may be taken by the
board of directors pursuant to a written consent with respect to the approval of
the corporation's investment advisory agreement, the approval of the selection
of the corporation's auditors, or any action required by the Investment Company
Act of 1940 or other applicable law to be taken at a meeting of the board of
directors to be held in person.
ARTICLE III
OFFICERS AND EMPLOYEES
Section 1. Election and Qualification. At the first meeting of each newly
elected board of directors there shall be elected a president, one or more vice
presidents, a secretary and a treasurer. The board may also elect one or more
assistant secretaries and assistant treasurers. No officer need be a director.
Any two or more offices, except the offices of president and vice president, may
be held by the same person but no officer shall execute, acknowledge or verify
any instrument in more than one capacity, if such instrument is required by law,
charter or these bylaws to be executed, acknowledged or verified by two or more
officers. Each officer must be eligible to serve as an officer of a registered
investment company under the Investment Company Act of 1940. Nothing herein
shall preclude the employment of other employees or agents by the corporation
from time to time without action by the board.
Section 2. Term, Removal and Vacancies. The officers shall be elected to serve
until the next first meeting of a newly elected board of directors and until
their successors are elected and qualify. Any officer may be removed by the
board, with or without cause, whenever in its judgment the best interests of the
corporation will be served thereby, but such removal shall be without prejudice
to the contractual rights, if any, of the person so removed. A vacancy in any
office shall be filled by the board for the unexpired term.
Section 3. Bonding. Each officer and employee of the corporation who singly or
jointly with others has access to securities or funds of the corporation, either
directly or through authority to draw upon such funds, or to direct generally
the disposition of such securities shall be bonded against larceny and
embezzlement by a reputable fidelity insurance company. Each such bond, which
may be in the form of an individual bond, a schedule or blanket bond covering
the corporation's officers and employees and the officers and employees of the
investment adviser to the corporation and other corporations to which said
investment adviser also acts as investment adviser, shall be in such form and
for such amount (determined at least annually) as the board of directors shall
determine in compliance with the requirements of Section 17(g) of the Investment
Company Act of 1940, as amended from time to time, and the rules, regulations or
orders of the Securities and Exchange Commission thereunder.
Section 4. President. The president shall be the principal executive officer of
the corporation. The president shall preside at all meetings of the stockholders
and directors, have general and active management of the business of the
corporation, see that all orders and
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resolutions of the board of directors are carried into effect, and execute in
the name of the corporation all authorized instruments of the corporation,
except where the signing shall be expressly delegated by the board to some other
officer or agent of the corporation.
Section 5. Vice Presidents. The vice president, or if there be more than one,
the vice presidents in the order determined by the board of directors, shall, in
the absence or disability of the president, perform the duties and exercise the
powers of the president, and shall have such other duties and powers as the
board may from time to time prescribe or the president delegate.
Section 6. Secretary and Assistant Secretaries. The secretary shall give notice
of, attend and record the minutes of meetings of stockholders and directors,
keep the corporate seal and, when authorized by the board, affix the same to any
instrument requiring it, attesting to the same by his signature, and shall have
such further duties and powers as are incident to his office or as the board may
from time to time prescribe. The assistant secretary, if any, or, if there be
more than one, the assistant secretaries in the order determined by the board,
shall in the absence or disability of the secretary, perform the duties and
exercise the powers of the secretary, and shall have such other duties and
powers as the board may from time to time prescribe or the secretary delegate.
Section 7. Treasurer and Assistant Treasurers. The treasurer shall be the
principal financial and accounting officer of the corporation. The treasurer
shall be responsible for the custody and supervision of the corporation's books
of account and subsidiary accounting records, and shall have such further duties
and powers as are incident to his office or as the board of directors may from
time to time prescribe. The assistant treasurer, if any, or, if there be more
than one, the assistant treasurers in the order determined by the board, shall
in the absence or disability of the treasurer, perform all duties and exercise
the powers of the treasurer, and shall have such other duties and powers as the
board may from time to time prescribe or the treasurer delegate.
ARTICLE IV
RESTRICTIONS ON COMPENSATION, TRANSACTIONS AND INVESTMENTS
Section 1. Salary and Expenses. Directors and executive officers as such shall
not receive any salary for their services or reimbursement for expenses from the
corporation; provided that the corporation may pay fees in such amounts and at
such times as the board of directors shall determine to directors who are not
interested persons of the corporation for attendance at meetings of the board of
directors. Clerical employees shall receive compensation for their services from
the corporation in such amounts as are determined by the board of directors.
Section 2. Compensation and Profit from Purchase and Sales. No affiliated person
of the corporation, as defined in the Investment Company Act of 1940, or
affiliated person of such person, shall, except as permitted by Section 17(e) of
the Act, or the rules, regulations or orders of the Securities and Exchange
Commission thereunder, (i) acting as agent, accept from any source any
compensation for the purchase or sale of any property or securities to or for
the
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corporation or any controlled company of the corporation, as defined in such
Act, or (ii) acting as a broker, in connection with the sale of securities to or
by the corporation or any controlled company of the corporation, receive from
any source a commission, fee or other remuneration for effecting such
transaction.
Section 3. Transactions with Affiliated Person. No affiliated person of the
corporation, as defined in the Investment Company Act of 1940, or affiliated
person of such person shall knowingly (i) sell any security or other property to
the corporation or to any company controlled by the corporation, as defined in
the Act, except shares of stock of the corporation or securities of which such
person is the issuer and which are part of a general offering to the holders of
a class of its securities, (ii) purchase from the corporation or any such
controlled company any security or property except shares of stock of the
corporation or securities of which such person is the issuer, (iii) borrow money
or other property from the corporation or any such controlled company, or (iv)
acting as a principal effect any transaction in which the corporation or
controlled company is a joint or joint and several participant with such person;
provided, however, that this section shall not apply to any transaction
permitted by Sections 17(a), (b), (c), (d) or 21(b) of the Investment Company
Act of 1940 or the rules, regulations or orders of the Securities and Exchange
Commission thereunder, and shall not prohibit the joint participation by the
corporation and an affiliate in a fidelity bond arrangement.
Section 4. Investment Adviser. The corporation shall employ one or more
investment advisers, the employment of which shall be pursuant to written
agreements in accordance with Section 15 of the Investment Company Act of 1940,
as amended from time to time.
ARTICLE V
STOCK CERTIFICATES AND TRANSFER BOOKS
Section 1. Certificates. The shares of each class or series of stock of the
corporation shall be issued without certificates.
Section 2. Stock Ledger. The corporation shall maintain at its office or at the
office of its principal transfer agent, if any, an original or duplicate stock
ledger containing the names and addresses of all stockholders and the number of
shares of each class or series of stock held by each stockholder.
Section 3. Registered Stockholders. The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as such, as
the owner of shares for all purposes, and shall not be bound to recognize any
equitable or other claim to or interest in such shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
other provided by the laws of Maryland.
Section 4. Transfer Agent and Registrar. The corporation may maintain one or
more transfer offices or agencies, each in charge of a transfer agent designated
by the board of directors, where the shares of each class or series of stock of
the corporation shall be transferable. The corporation may also maintain one or
more registry offices, each in charge
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of a registrar designated by the board, where the shares of such classes or
series of stock shall be registered.
Section 5. Fixing of Record Dates and Closing of Transfer Books. The board of
directors may fix, in advance, a date as the record date for the purpose of
determining stockholders entitled to notice of, or to vote at, any meeting of
stockholders, or stockholders entitled to receive payment of any dividend or the
allotment of any rights, or in order to make a determination of stockholders for
any other proper purpose. Such date, in any case, shall be not more than ninety
(90) days, and in case of a meeting of stockholders not less than ten (10) days,
prior to the date on which the particular action requiring such determination of
stockholders is to be taken. In lieu of fixing a record date, the board may
provide that the stock transfer books shall be closed for a stated period but
not to exceed, in any case, twenty (20) days. If the stock transfer books are
closed or a record date is fixed for the purpose of determining stockholders
entitled to vote at a meeting of stockholders, such books shall be closed for at
least ten (10) days immediately preceding such action.
ARTICLE VI
ACCOUNTS, REPORTS, CUSTODIAN AND INVESTMENT ADVISER
Section 1. Inspection of Books. The board of directors shall determine from time
to time whether, and, if allowed, when and under what conditions and regulations
the accounts and books of the corporation (except such as may by statute be
specifically open to inspection) or any of them, shall be open to the inspection
of the stockholders, and the stockholders' rights in this respect are and shall
be limited accordingly.
Section 2. Reliance on Records. Each director and officer shall, in the
performance of his duties, be fully protected in relying in good faith on the
books of account or reports made to the corporation by any of its officials or
by an independent public accountant.
Section 3. Preparation and Maintenance of Accounts, Records and Statements. The
president, a vice president or the treasurer shall prepare or cause to be
prepared annually, a full and correct statement of the affairs of the
corporation, including a balance sheet or statement of financial condition and a
financial statement of operations for the preceding fiscal year, which shall be
submitted at the annual meeting of the stockholders and filed within twenty (20)
days thereafter at the principal office of the corporation. If the corporation
is not required to hold an annual meeting of stockholders, the statement of
affairs shall be placed on file at the corporation's principal office within one
hundred twenty (120) days after the end of the fiscal year. The proper officers
of the corporation shall also prepare, maintain and preserve or cause to be
prepared, maintained and preserved the accounts, books and other documents
required by Section 2-111 of the Maryland General Corporation Law and Section 31
of the Investment Company Act of 1940 and shall prepare and file or cause to be
prepared and filed the reports required by Section 30 of such Act. No financial
statement shall be filed with the Securities and Exchange Commission unless the
officers or employees who prepared or participated in the preparation of such
financial statement have been specifically designated for such purpose by the
board of directors.
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Section 4. Auditors. No independent public accountant shall be retained or
employed by the corporation to examine, certify or report on its financial
statements for any fiscal year unless such selection shall be made in accordance
with the requirements of Section 32 of the Investment Company Act of 1940.
Section 5. Custodianship. All securities owned by the corporation and all cash,
including, without limiting the generality of the foregoing, the proceeds from
sales of securities owned by the corporation and from the issuance of shares of
the capital stock of the corporation, payments of principal upon securities
owned by the corporation, and distributions in respect of securities owned by
the corporation which at the time of payment are represented by the distributing
corporation to be capital distributions, shall be held by a custodian or
custodians which shall be a bank, as that term is defined in the Investment
Company Act of 1940, having capital, surplus and undivided profits aggregating
not less than $2,000,000. The terms of custody of such securities and cash shall
include provisions to the effect that the custodian shall deliver securities
owned by the corporation only (a) upon sales of such securities for the account
of the corporation and receipt by the custodian of payment therefor, (b) when
such securities are called, redeemed or retired or otherwise become payable, (c)
for examination by any broker selling any such securities in accordance with
"street delivery" custom, (d) in exchange for or upon conversion into other
securities alone or other securities and cash whether pursuant to any plan of
merger, consolidation, reorganization, recapitalization or readjustment, or
otherwise, (e) upon conversion of such securities pursuant to their terms into
other securities, (f) upon exercise of subscription, purchase or other similar
rights represented by such securities, (g) for the purpose of exchanging interim
receipts or temporary securities for definitive securities, (h) for the purpose
of redeeming in kind shares of the capital stock of the corporation, or (i) for
other proper corporate purposes. Such terms of custody shall also include
provisions to the effect that the custodian shall hold the securities and funds
of the corporation in a separate account or accounts and shall have sole power
to release and deliver any such securities and draw upon any such account, any
of the securities or funds of the corporation only on receipt by such custodian
of written instruction from one or more persons authorized by the board of
directors to give such instructions on behalf of the corporation, and that the
custodian shall deliver cash of the corporation required by this Section 5 to be
deposited with the custodian only upon the purchase of securities for the
portfolio of the corporation and the delivery of such securities to the
custodian, for the purchase or redemption of shares of the capital stock of the
corporation, for the payment of interest, dividends, taxes, management or
supervisory fees or operating expenses, for payments in connection with the
conversion, exchange or surrender of securities owned by the corporation, or for
other proper corporate purposes. Upon the resignation or inability to serve of
any such custodian the corporation shall (a) use its best efforts to obtain a
successor custodian, (b) require the cash and securities of the corporation held
by the custodian to be delivered directly to the successor custodian, and (c) in
the event that no successor custodian can be found, submit to the stockholders
of the corporation, before permitting delivery of such cash and securities to
anyone other than a successor custodian, the question whether the corporation
shall be dissolved or shall function without a custodian; provided, however,
that nothing herein contained shall prevent the termination of any agreement
between the corporation and any such custodian by the affirmative vote of the
holders of a majority of all the shares of the capital
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stock of the corporation at the time outstanding and entitled to vote. Upon its
resignation or inability to serve, the custodian may deliver any assets of the
corporation held by it to a qualified bank or trust company selected by it, such
assets to be held subject to the terms of custody which governed such retiring
custodian, pending action by the corporation as set forth in this Section 5.
Section 6. Termination of Custodian Agreement. Any employment agreement with a
custodian shall be terminable on not more than sixty (60) days' notice in
writing by the board of directors or the custodian and upon any such termination
the custodian shall turn over only to the succeeding custodian designated by the
board of directors all funds, securities and property and documents of the
corporation in its possession.
Section 7. Checks and Requisitions. Except as otherwise authorized by the board
of directors, all checks and drafts for the payment of money shall be signed in
the name of the corporation by a custodian, and all requisitions or orders for
the payment of money by a custodian or for the issue of checks and drafts
therefore, all promissory notes, all assignments of stock or securities standing
in the name of the corporation, and all requisitions or orders for the
assignment of stock or securities standing in the name of a custodian or its
nominee, or for the execution of powers to transfer the same, shall be signed in
the name of the corporation by not less than two persons (who shall be among
those persons designated for this purpose by the board of directors) at least
one of which shall be an officer. Promissory notes, checks or drafts payable to
the corporation may be endorsed only to the order of a custodian or its nominee
by the treasurer or president or by such other person or persons as shall be
thereto authorized by the board of directors.
Section 8. Investment Advisory Contract. Any investment advisory contract in
effect after the first annual meeting of stockholders of the corporation, to
which the corporation is or shall become a party, whereby, subject to the
control of the board of directors of the corporation, the investment portfolio
with respect to any class of Common Stock of the corporation shall be managed or
supervised by the other party to such contract, shall be effective and binding
only upon the affirmative vote of a majority of the outstanding voting
securities of such class of Common Stock of the corporation (as defined in the
Investment Company Act of 1940), and the investment advisory contract currently
in effect with respect to any class of Common Stock shall be submitted to the
holders of shares of such class of Common Stock for ratification by the
affirmative vote of such majority. Any investment advisory contract to which the
corporation shall be a party whereby, subject to the control of the board of
directors of the corporation, the investment portfolio with respect to any class
of Common Stock of the corporation shall be managed or supervised by the other
party to such contract, shall provide, among other things, that such contract
cannot be assigned. Such investment advisory contract shall prohibit the other
party thereto from making short sales of shares of capital stock of the
corporation; and such investment advisory contract shall prohibit such other
party from purchasing shares otherwise than for investment. Unless any such
contract shall expressly otherwise provide, any provisions therein for the
termination thereof by action of the board of directors of the corporation shall
be construed to require that such termination can be accomplished only upon the
vote of a majority of the entire board.
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ARTICLE VII
GENERAL PROVISIONS
Section 1. Offices. The registered office of the corporation in the State of
Maryland shall be in the City of Baltimore. The corporation shall also have an
office in Larkspur, California. The corporation may also have offices at such
other places within and without the State of Maryland as the board of directors
may from time to time determine. Except as otherwise required by statute, the
books and records of the corporation may be kept outside the State of Maryland.
Section 2. Seal. The corporate seal shall have inscribed thereon the name of the
corporation, and the words "Corporate Seal" and "Maryland". The seal may be used
by causing it or a facsimile thereof to be impressed, affixed, reproduced or
otherwise.
Section 3. Fiscal Year. The fiscal year of the corporation shall be fixed by the
board of directors.
Section 4. Notice of Waiver of Notice. Whenever any notice of the time, place or
purpose of any meeting of stockholders or directors is required to be given
under the statute, the charter or these bylaws, a waiver thereof in writing,
signed by the person or persons entitled to such notice and filed with the
records of the meeting, either before or after the holding thereof, or actual
attendance at the meeting of stockholders in person or by proxy or at the
meeting of directors in person, shall be deemed equivalent to the giving of such
notice to such person. No notice need be given to any person with whom
communication is made unlawful by any law of the United States or any rule,
regulation, proclamation or executive order issued by any such law.
Section 5. Voting of Stock. Unless otherwise ordered by the board of directors,
the president shall have full power and authority, in the name and on behalf of
the corporation, (i) to attend, act and vote at any meeting of stockholders of
any company in which the corporation may own shares of stock of record,
beneficially (as the proxy or attorney-in-fact of the record holder) or of
record and beneficially, and (ii) to give voting directions to the record
stockholder of any such stock beneficially owned. At any such meeting, he shall
possess and may exercise any and all rights and powers incident to the ownership
of such shares which, as the holder or beneficial owner and proxy of the holder
thereof, the corporation might possess and exercise if personally present, and
may delegate such power and authority to any officer, agent or employee of the
corporation.
Section 6. Dividends. Dividends upon any class or series of stock of the
corporation, subject to the provisions of the charter, if any, may be declared
by the board of directors in any lawful manner. The source of each dividend
payment shall be disclosed to the stockholders receiving such dividend, to the
extent required by the laws of the State of Maryland and by Section 19 of the
Investment Company Act of 1940 and the rules and regulations of the Securities
and Exchange Commission thereunder.
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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 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
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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.
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.
Section 8. Amendments.
A. These bylaws may be altered, amended or repealed and new bylaws may
be adopted by the stockholders by affirmative vote of not less than a majority
of the shares of all classes and series of stock present or represented at any
annual or special meeting of the stockholders at which a quorum is in
attendance.
B. These bylaws may also be altered, amended or repealed and new
bylaws may be adopted by the board of directors by affirmative vote of a
majority of the number of directors present at any meeting at which a quorum is
in attendance; but no bylaw adopted by the stockholders shall be amended or
repealed by the board of directors if the bylaws so adopted so provides.
C. Any action taken or authorized by the stockholders or by the board
of directors, which would be inconsistent with the bylaws then in effect but is
taken or authorized by affirmative vote of not less than the number of shares or
the number of directors required to
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<PAGE>
amend the bylaws so that the bylaws would be consistent with such action, shall
be given the same effect as though the bylaws had been temporarily amended or
suspended so far, but only so far, as was necessary to permit the specific
action so taken or authorized.
Section 9. Reports to Stockholders. The books of account of the corporation
shall be examined by an independent firm of public accountants at the close of
each annual fiscal period of the corporation and at such other times, if any, as
may be directed by the board of directors of the corporation. A report to the
stockholders based upon each such examination shall be mailed to each
stockholder of the corporation of record on such date with respect to each
report as may be determined by the board of directors at his address as the same
appears on the books of the corporation. Each such report shall include the
financial information required to be transmitted to stockholders by rules or
regulations of the Securities and Exchange Commission under the Investment
Company Act of 1940 and shall be in such form as the board of directors shall
determine pursuant to rules and regulations of the Securities and Exchange
Commission.
ARTICLE VIII
SALES, REDEMPTION AND NET ASSET VALUE OF SHARES
Section 1. Sales of Shares. Shares of any class or series of Common Stock of the
corporation shall be sold by it for the net asset value per share of such class
or series of Common Stock outstanding at the time as of which the computation of
said net asset value shall be made as hereinafter provided in these bylaws.
Section 2. Periodic Investment and Dividend Reinvestment Plans. The corporation
acting by and through the board of directors shall have the right to adopt and
to offer to the holders of each class or series of stock and to the public a
periodic investment plan and an automatic reinvestment of dividend plan subject
to the limitations and restrictions imposed thereon and as set forth in the
Investment Company Act of 1940 and any rule or regulation adopted or issued
thereunder.
Section 3. Shares Issued for Securities. In the case of shares of any class or
series of stock of the corporation issued in whole or in part in exchange for
securities, there may, at the discretion of the board of directors of the
corporation, be included in the value of said securities, for the purpose of
determining the number of shares of such class or series of stock of the
corporation issuable in exchange therefor, the amount, if any, of brokerage
commissions (not exceeding an amount equal to the rates payable in connection
with the purchase of comparable securities on the New York Stock Exchange) or
other similar costs of acquisition of such securities paid by the holder of said
securities in acquiring the same.
Section 4. Redemption of Shares. Each share of each class or series of Common
Stock of the corporation now or hereafter issued shall be subject to redemption,
as provided in the Articles of Incorporation of the corporation.
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Section 5. Suspension of Right of Redemption. The board of directors of the
corporation may suspend the right of the holders of any class or series of
Common Stock of the corporation to require the corporation to redeem shares of
such class or series:
(1) for any period (a) during which the New York Stock Exchange
is closed other than customary weekend and holiday closings, or (b)
during which trading on the New York Stock Exchange is restricted;
(2) for any period during which an emergency, as defined by rules
of the Securities and Exchange Commission or any successor thereto,
exists as a result of which (a) disposal by the corporation of
securities owned by it is not reasonably practicable, or (b) it is not
reasonably practicable for the corporation fairly to determine the
value of its net assets; or
(3) for such other periods as the Securities and Exchange
Commission or any successor thereto may by order permit for the
protection of security holders of the corporation.
Section 6. Computation of Net Asset Value. For purposes of these bylaws, the
following rules shall apply:
A. The net asset value of each share of each class or series of Common
Stock of the corporation shall be determined at such time or times as may
be disclosed in the then currently effective Prospectus relating to such
class or series of Common Stock of this corporation. The board of directors
may also, from time to time by resolution, designate a time or times
intermediate of the opening and closing of trading on the New York Stock
Exchange on each day that said Exchange is open for trading as of which the
net asset value of each share of each class or series of Common Stock of
the corporation shall be determined or estimated.
Any determination or estimation of net asset value as provided in
this subparagraph A shall be effective at the time as of which such
determination or estimation is made.
The net asset value of each share of each class or series of
Common Stock of the corporation for purposes of the issue of such class or
series of Common Stock shall be the net asset value which becomes effective
as provided in this Subparagraph A, next succeeding receipt of the
subscription to such share of such class or series of Common Stock. The net
asset value of each share of each class or series of Common Stock of the
corporation tendered for redemption shall be the net asset value which
becomes effective as provided in this Subparagraph A, next succeeding the
tender of such share of such class or series of Common Stock for
redemption.
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B. The net asset value of each share of each class or series of Common
Stock of the corporation, as of the close of business on any day, shall be
the quotient obtained by dividing the value at such close of the net assets
belonging to such class or series (meaning the assets belonging to such
class or series and any other assets allocated to such class or series less
the liabilities belonging to such class or series and any other liabilities
allocated to such class or series excluding capital and surplus) of the
corporation by the total number of shares of such class or series
outstanding at such close.
(i) The assets belonging to any class or series of Common Stock
shall be that portion of the total assets of the corporation as
determined in accordance with the provisions of Article IV of the
Articles of Incorporation of the corporation. The assets of the
corporation shall be deemed to include (a) all cash on hand, on
deposit, or on call, (b) all bills and notes and accounts receivable,
(c) all shares of stock and subscription rights and other securities
owned or contracted for by the corporation, other than its own common
stock, (d) all stock and cash dividends and cash distributions, to be
received by the corporation, and not yet received by it but declared
to stockholders of record on a date on or before the date as of which
the net asset value is being determined, (e) all interest accrued on
any interest-bearing securities owned by the corporation, and (f) all
other property of every kind and nature including prepaid expenses;
the value of such assets to be determined in accordance with the
corporation's registration statement filed with the Securities and
Exchange Commission.
(ii) The liabilities belonging to any class or series of Common
Stock shall be that portion of the total liabilities of the
corporation as determined in accordance with the provisions of Article
IV of the Articles of Incorporation of the corporation. The
liabilities of the corporation shall be deemed to include (a) all
bills and notes and accounts payable, (b) all administration expenses
payable and/or accrued (including investment advisory fees), (c) all
contractual obligations for the payment of money or property including
the amount of any unpaid dividend declared upon the corporation's
stock and payable to stockholders of record on or before the day as of
which the value of the corporation's stock is being determined, (d)
all reserves, if any, authorized or approved by the board of directors
for taxes, including reserves for taxes at current rates based on any
unrealized appreciation in the value of the assets of the corporation,
and (e) all other liabilities of the corporation of
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whatever kind and nature except liabilities represented by outstanding
capital stock and surplus of the corporation.
(iii) For the purposes hereof: (a) shares of each class or series
of Common Stock subscribed for shall be deemed to be outstanding as of
the time of acceptance of any subscription and the entry thereof on
the books of the corporation and the net price thereof shall be deemed
to be an asset belonging to such class or series; and (b) shares of
each class or series of Common Stock surrendered for redemption by the
corporation shall be deemed to be outstanding until the time as of
which the net asset value for purposes of such redemption is
determined or estimated.
C. The net asset value of each share of each class or series of Common
Stock of the corporation, as of any time other than the close of business
on any day, may be determined by applying to the net asset value as of the
close of business on the preceding business day, computed as provided in
Paragraph B of this Section of these bylaws, such adjustments as are
authorized by or pursuant to the direction of the board of directors and
designed reasonably to reflect any material changes in the market value of
securities and other assets held and any other material changes in the
assets or liabilities of the corporation and in the number of its
outstanding shares which shall have taken place since the close of business
on such preceding business day.
D. In addition to the foregoing, the board of directors is empowered,
in its absolute discretion, to establish other bases or times, or both, for
determining the net asset value of each share of each class or series of
the Common Stock of the corporation.
18
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT (this "Agreement") is made this
_____ day of __________, 2000 between Golden Gate Fund, Inc., a Maryland
corporation (the "Company"), and Collins & Company, LLC, a California limited
liability company (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Company is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940 (the "Act") as an open-end
management investment company consisting of one series, Golden Gate Fund (the
"Fund"); and
WHEREAS, the Company desires to retain the Adviser, which is an
investment adviser registered under the Investment Advisers Act of 1940, as the
investment adviser for the Fund.
NOW, THEREFORE, the Company and the Adviser do mutually promise and
agree as follows:
1. Employment. The Company hereby employs the Adviser to manage the
investment and reinvestment of the assets of the Fund for the period and on the
terms set forth in this Agreement. The Adviser hereby accepts such employment
for the compensation herein provided and agrees during such period to render the
services and to assume the obligations herein set forth.
2. Authority of the Adviser. The Adviser shall supervise and manage
the investment portfolio of the Fund, and, subject to such policies as the Board
of Directors of the Company may determine, direct the purchase and sale of
investment securities in the day to day management of the Fund. The Adviser
shall for all purposes herein be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no authority to
act for or represent the Company in any way or otherwise be deemed an agent of
the Company. However, one or more members, officers or employees of the Adviser
may serve as directors and/or officers of the Company, but without compensation
or reimbursement of expenses for such services from the Company. Nothing herein
contained shall be deemed to require the Company to take any action contrary to
its Articles of Incorporation, as amended or supplemented, or any applicable
statute or regulation, or to relieve or deprive the Board of Directors of the
Company of its responsibility for and control of the affairs of the Company.
3. Expenses. The Adviser, at its own expense and without reimbursement
from the Company, shall furnish office space, and all necessary office
facilities, equipment and executive personnel for managing the investments of
the Fund. The Adviser shall not be required to pay any expenses of the Fund
except as provided herein if the total expenses borne by the Fund, including the
Adviser's fee and the fees paid to the Fund's administrator, but excluding all
federal, state and local taxes, interest, reimbursement payments to securities
<PAGE>
lenders for dividend and interest payments on securities sold short, brokerage
commissions and extraordinary items, in any year exceed that percentage of the
average net asset value of the Fund for such year, as determined by valuations
made as of the close of each business day, which is the most restrictive
percentage provided by the state laws of the various states in which the Fund's
shares are qualified for sale or, if the states in which the Fund's shares are
qualified for sale impose no such restrictions, 1.95%. The expenses of the
Fund's operations borne by the Fund include by way of illustration and not
limitation, directors fees paid to those directors who are not officers of the
Company, the costs of preparing and printing registration statements required
under the Securities Act of 1933 and the Act (and amendments thereto), the
expense of registering its shares with the Securities and Exchange Commission
and in the various states, payments made pursuant to the Fund's Service and
Distribution Plan (pursuant to Rule 12b-1 under the Act), the printing and
distribution cost of prospectuses mailed to existing shareholders, the cost of
stock certificates (if any), director and officer liability insurance, reports
to shareholders, reports to government authorities and proxy statements,
interest charges, reimbursement payments to securities lenders for dividend and
interest payments on securities sold short, taxes, legal expenses, salaries of
administrative and clerical personnel, association membership dues, auditing and
accounting services, insurance premiums, brokerage and other expenses connected
with the execution of portfolio securities transactions, fees and expenses of
the custodian of the Fund's assets, expenses of calculating the net asset value
and repurchasing and redeeming shares, printing and mailing expenses, charges
and expenses of dividend disbursing agents, registrars and stock transfer agents
and the cost of keeping all necessary shareholder records and accounts.
The Company shall monitor the Fund's expense ratio on a monthly basis.
If the accrued amount of the expenses of the Fund exceeds the expense limitation
established herein, the Fund shall create an account receivable from the Adviser
in 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 Company's fiscal year if
accrued expenses thereafter fall below the expense limitation.
4. Compensation of the Adviser. For the services to be rendered by the
Adviser hereunder, the Company through the Fund shall pay to the Adviser an
advisory fee, paid monthly, based on the average net assets of the Fund, as
determined by valuations made as of the close of each business day of the month.
The advisory fee shall be 1/12 of 1% (1.0% per annum) of such average net
assets. For any month in which this Agreement is not in effect for the entire
month, such fee shall be reduced proportionately on the basis of the number of
calendar days during which it is in effect and the fee computed upon the average
net assets of the business days during which it is so in effect.
5. Ownership of Shares of the Fund. Except in connection with the
initial capitalization of the Company, the Adviser shall not take an ownership
position in the Fund, and shall not permit any of its members, officers or
employees to take a long or short position in the shares of the Fund, except for
the purchase of shares of the Fund for investment purposes at the same price as
that available to the public at the time of purchase.
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<PAGE>
6. Exclusivity. The services of the Adviser to the Fund hereunder are
not to be deemed exclusive and the Adviser shall be free to furnish similar
services to others as long as the services hereunder are not impaired thereby.
Although the Adviser has agreed to permit the Fund and the Company to use the
name "Golden Gate", if they so desire, it is understood and agreed that the
Adviser reserves the right to use and to permit other persons, firms or
corporations, including investment companies, to use such name, and that the
Fund and the Company will not use such name if the Adviser ceases to be the
Fund's sole investment adviser. During the period that this Agreement is in
effect, the Adviser shall be the Fund's sole investment adviser.
7. Liability. In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties hereunder on the part
of the Adviser, the Adviser shall not be subject to liability to the Fund or to
any shareholder of the Fund for any act or omission in the course of, or
connected with, rendering services hereunder, or for any losses that may be
sustained in the purchase, holding or sale of any security.
8. Brokerage Commissions. The Adviser may cause the Fund to pay a
broker-dealer which provides brokerage and research services, as such services
are defined in Section 28(e) of the Securities Exchange Act of 1934 (the
"Exchange Act"), to the Adviser a commission for effecting a securities
transaction in excess of the amount another broker-dealer would have charged for
effecting such 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-dealer viewed in terms of
either that particular transaction or his overall responsibilities with respect
to the accounts as to which he exercises investment discretion (as defined in
Section 3(a)(35) of the Exchange Act).
9. Amendments. This Agreement may be amended by the mutual consent of
the parties; provided, however, that in no event may it be amended without the
approval of the Board of Directors of the Company in the manner required by the
Act, and, if required by the Act, by the vote of the majority of the outstanding
voting securities of the Fund, as defined in the Act.
10. Termination. This Agreement may be terminated at any time, without
the payment of any penalty, by the Board of Directors of the Company or by a
vote of the majority of the outstanding voting securities of the Fund, as
defined in the Act, upon giving written notice sixty (60) calendar days in
advance to the Adviser. This Agreement may be terminated by the Adviser at any
time upon giving written notice sixty (60) calendar days in advance to the
Company. This Agreement shall terminate automatically in the event of its
assignment (as defined in Section 2(a)(4) of the Act). Subject to prior
termination as hereinbefore provided, this Agreement shall continue in effect
for two (2) years from the date hereof and indefinitely thereafter, but only so
long as the continuance after such two (2) year period is specifically approved
annually by (i) the Board of Directors of the Company or by the vote of the
majority of the outstanding voting securities of the Fund (as defined in the
Act) and (ii) the Board of Directors of the Company in the manner required by
the Act, provided that any such approval may be made effective not more than
sixty (60) calendar days thereafter.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Investment
Advisory Agreement to be executed on the day first above written.
COLLINS & COMPANY, LLC
(the "Adviser")
By:____________________________________
Name:_______________________________
Title:______________________________
GOLDEN GATE FUND, INC.
(the "Company")
By:____________________________________
Name:_______________________________
President
4
CUSTODIAN AGREEMENT
-------------------
THIS CUSTODIAN AGREEMENT (this "Agreement") is made on ___________,
2000, between GOLDEN GATE FUND, INC., a Maryland corporation (the Company"), on
behalf of Golden Gate Fund (the "Fund"), and FIRSTAR BANK, N.A., a national
banking association ("Custodian").
W I T N E S S E T H:
WHEREAS, the Company desires that the Fund's Securities (as herein
defined) and cash shall be hereafter held and administered by Custodian pursuant
to the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Company and Custodian agree as follows:
1. Definitions
-----------
The word "Securities" as used herein includes stocks, shares, bonds,
debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive, purchase
or subscribe for the same, or evidencing or representing any other rights or
interests therein, or in any property or assets.
The words "Officers' Certificate" shall mean a request or direction or
certification in writing signed in the name of the Company on behalf of the Fund
by any two of the President, a Vice President, the Secretary and the Treasurer
of the Fund, or any other persons duly authorized to sign by the Board of
Directors of the Company.
The word "Board" shall mean the Board of Directors of the Company.
2. Names, Titles and Signatures of the Company's Officers
------------------------------------------------------
An officer of the Company will certify to Custodian the names and
signatures of those persons authorized to sign an Officers' Certificate
described in Section 1 hereof, and the names of the members of the Board,
together with any changes which may occur from time to time.
3. Receipt and Disbursement of Money
---------------------------------
A. Custodian shall open and maintain a separate account or accounts in
the name of the Fund, subject only to draft or order by Custodian acting
pursuant to the terms of this Agreement. Custodian shall hold in such account or
accounts, subject to the provisions hereof, all cash received by it from or for
the account of the Fund. Custodian shall make payments of cash to, or for the
account of, the Fund from such cash only:
(a) for the purchase of Securities for the portfolio of the Fund upon
the delivery of such Securities to Custodian, registered in the name of the
Fund
<PAGE>
or of the nominee of Custodian referred to in Section 7 or in proper form
for transfer;
(b) for the purchase or redemption of shares of the Fund upon delivery
thereof to Custodian, or upon proper instructions from the Company;
(c) for the payment of interest, dividends, taxes, investment
adviser's fees or operating expenses (including, without limitation
thereto, fees for legal, accounting, auditing and custodian services and
expenses for printing and postage);
(d) for payments in connection with the conversion, exchange or
surrender of Securities owned or subscribed to by the Fund held by or to be
delivered to Custodian; or
(e) for other proper corporate purposes certified by resolution of the
Board.
Before making any such payment, Custodian shall receive (and may rely
upon) an Officers' Certificate requesting such payment and stating that it is
for a purpose permitted under the terms of items (a), (b), (c), or (d) of this
Subsection A, and also, in respect of item (e), upon receipt of an Officers'
Certificate specifying the amount of such payment, setting forth the purpose for
which such payment is to be made, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom such payment is to
be made, provided, however, that an Officers' Certificate need not precede the
disbursement of cash for the purpose of purchasing a money market instrument, or
any other security with same or next-day settlement, if the President, a Vice
President, the Secretary or the Treasurer of the Company issues appropriate oral
or facsimile instructions to Custodian and an appropriate Officers' Certificate
is received by Custodian within two business days thereafter.
B. Custodian is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received by Custodian for the
account of the Fund.
C. Custodian shall, upon receipt of proper instructions, make federal
funds available to the Fund as of specified times agreed upon from time to time
by the Fund and Custodian in the amount of checks received in payment for shares
of the Fund which are deposited into the Fund's account.
4. Segregated Accounts
-------------------
Upon receipt of proper instructions, Custodian shall establish and
maintain a segregated account(s) for and on behalf of the portfolio, into which
account(s) may be transferred cash and/or Securities.
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<PAGE>
5. Transfer, Exchange, Redelivery, etc. of Securities
--------------------------------------------------
Custodian shall have sole power to release or deliver any Securities
of the Fund held by it pursuant to this Agreement. Custodian agrees to transfer,
exchange or deliver Securities held by it hereunder only:
(a) for sales of such Securities for the account of the Fund upon
receipt by Custodian of payment therefore;
(b) when such Securities are called, redeemed or retired or otherwise
become payable;
(c) for examination by any broker selling any such Securities in
accordance with "street delivery" custom;
(d) in exchange for, or upon conversion into, other Securities alone
or other Securities and cash whether pursuant to any plan of merger,
consolidation, reorganization, recapitalization or readjustment, or
otherwise;
(e) upon conversion of such Securities pursuant to their terms into
other Securities;
(f) upon exercise of subscription, purchase or other similar rights
represented by such Securities;
(g) for the purpose of exchanging interim receipts or temporary
Securities for definitive Securities;
(h) for the purpose of redeeming in kind shares of common stock of the
Fund upon delivery thereof to Custodian; or
(i) for other proper corporate purposes.
As to any deliveries made by Custodian pursuant to items (a), (b),
(d), (e), (f), and (g), Securities or cash receivable in exchange therefore
shall be deliverable to Custodian.
Before making any such transfer, exchange or delivery, Custodian shall
receive (and may rely upon) an Officers' Certificate requesting such transfer,
exchange or delivery, and stating that it is for a purpose permitted under the
terms of items (a), (b), (c), (d), (e), (f), (g), or (h) of this Section 5 and
also, in respect of item (i), upon receipt of an Officers' Certificate
specifying the Securities to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such Securities
shall be made, provided, however, that an Officers' Certificate need not precede
any such transfer, exchange or delivery of a money market instrument, or any
other security with same or next-day settlement, if the President, a Vice
President, the Secretary or the Treasurer of the Fund issues appropriate oral
3
<PAGE>
or facsimile instructions to Custodian and an appropriate Officers' Certificate
is received by Custodian within two business days thereafter.
6. Custodian's Acts Without Instructions
-------------------------------------
Unless and until Custodian receives an Officers' Certificate to the
contrary, Custodian shall: (a) present for payment all coupons and other income
items held by it for the account of the Fund, which call for payment upon
presentation and hold the cash received by it upon such payment for the account
of the Fund; (b) collect interest and cash dividends received, with notice to
the Fund, for the account of the Fund; (c) hold for the account of the Fund
hereunder all stock dividends, rights and similar Securities issued with respect
to any Securities held by it hereunder; and (d) execute, as agent on behalf of
the Fund, all necessary ownership certificates required by the Internal Revenue
Code or the Income Tax Regulations of the United States Treasury Department or
under the laws of any state now or hereafter in effect, inserting the Fund's
name on such certificates as the owner of the Securities covered thereby, to the
extent it may lawfully do so.
7. Registration of Securities
--------------------------
Except as otherwise directed by an Officers' Certificate, Custodian
shall register all Securities, except such as are in bearer form, in the name of
a registered nominee of Custodian as defined in the Internal Revenue Code and
any Regulations of the Treasury Department issued thereunder or in any provision
of any subsequent federal tax law exempting such transaction from liability for
stock transfer taxes, and shall execute and deliver all such certificates in
connection therewith as may be required by such laws or regulations or under the
laws of any state. Custodian shall use its best efforts to the end that the
specific Securities held by it hereunder shall be at all times identifiable in
its records.
The Fund shall from time to time furnish to Custodian appropriate
instruments to enable Custodian to hold or deliver in proper form for transfer,
or to register in the name of its registered nominee, any Securities which it
may hold for the account of the Fund and which may from time to time be
registered in the name of the Fund.
8. Voting and Other Action
-----------------------
Neither Custodian nor any nominee of Custodian shall vote any of the
Securities held hereunder by or for the account of the Fund, except in
accordance with the instructions contained in an Officers' Certificate.
Custodian shall deliver, or cause to be executed and delivered, to the Company
all notices, proxies and proxy soliciting materials with relation to such
Securities, such proxies to be executed by the registered holder of such
Securities (if registered otherwise than in the name of the Fund), but without
indicating the manner in which such proxies are to be voted.
4
<PAGE>
9. Transfer Tax and Other Disbursements
------------------------------------
The Fund shall pay or reimburse Custodian from time to time for any
transfer taxes payable upon transfers of Securities made hereunder, and for all
other necessary and proper disbursements and expenses made or incurred by
Custodian in the performance of this Agreement.
Custodian shall execute and deliver such certificates in connection
with Securities delivered to it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, or under the laws of any state, to exempt
from taxation any exemptible transfers and/or deliveries of any such Securities.
10. Custodian
---------
Custodian shall be paid as compensation for its services pursuant to
this Agreement such compensation as may from time to time be agreed upon in
writing between the two parties. Until modified in writing, such compensation
shall be as set forth in Exhibit A attached hereto.
Custodian shall not be liable for any action taken in good faith upon
any Officers' Certificate or certified copy of any resolution of the Board, and
may rely on the genuineness of any such document which it may in good faith
believe to have been validly executed.
The Company agrees to indemnify and hold harmless Custodian and its
nominee from all taxes, charges, expenses, assessments, claims and liabilities
(including counsel fees) incurred or assessed against it or by its nominee in
connection with the performance of this Agreement, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct. Custodian is authorized to charge any account of the Fund for such
items. In the event of any advance of cash for any purpose made by Custodian
resulting from orders or instructions of the Fund, or in the event that
Custodian or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the performance
of this Agreement, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any property
at any time held for the account of the Fund shall be security therefore.
11. Subcustodians
-------------
Custodian is hereby authorized to engage another bank or trust company
as a subcustodian for all or any part of the Fund's assets, so long as any such
bank or trust company is a bank or trust company organized under the laws of any
state of the United States, having an aggregate capital, surplus and undivided
profit, as shown by its last published report, of not less than Two Million
Dollars ($2,000,000) and provided further that, if Custodian utilizes the
services of a subcustodian, Custodian shall remain fully liable and
5
<PAGE>
responsible for any losses caused to the Fund by the subcustodian as fully as if
Custodian was directly responsible for any such losses under the terms of this
Agreement.
Notwithstanding anything contained herein, if the Fund requires
Custodian to engage specific subcustodians for the safekeeping and/or clearing
of assets, the Fund agrees to indemnify and hold harmless Custodian from all
claims, expenses and liabilities incurred or assessed against it in connection
with the use of such subcustodian in regard to the Fund's assets, except as may
arise from its own negligent action, negligent failure to act or willful
misconduct.
12. Reports by Custodian
--------------------
Custodian shall furnish the Company periodically as agreed upon with a
statement summarizing all transactions and entries for the account of the Fund.
Custodian shall furnish to the Company, at the end of every month, a list of the
portfolio Securities showing the aggregate cost of each issue. The books and
records of Custodian pertaining to its actions under this Agreement shall be
open to inspection and audit at reasonable times by officers of, and of auditors
employed by, the Company.
13. Termination or Assignment
-------------------------
This Agreement may be terminated by the Company, or by Custodian, on
ninety (90) days notice, given in writing and sent by registered mail to
Custodian at P.O. Box 2054, Milwaukee, Wisconsin 53201, or to the Company at 100
Larkspur Landing Circle, Suite 102, Larkspur, California 94939, as the case may
be. Upon any termination of this Agreement, pending appointment of a successor
to Custodian or a vote of the shareholders of the Fund to dissolve or to
function without a custodian of its cash, Securities and other property,
Custodian shall not deliver cash, Securities or other property of the Fund to
the Fund, but may deliver them to a bank or trust company of its own selection,
having an aggregate capital, surplus and undivided profits, as shown by its last
published report of not less than Two Million Dollars ($2,000,000) as a
custodian for the Fund to be held under terms similar to those of this
Agreement, provided, however, that Custodian shall not be required to make any
such delivery or payment until full payment shall have been made by the Fund of
all liabilities constituting a charge on or against the properties then held by
Custodian or on or against Custodian, and until full payment shall have been
made to Custodian of all its fees, compensation, costs and expenses, subject to
the provisions of Section 10 of this Agreement.
This Agreement may not be assigned by Custodian without the consent of
the Company, authorized or approved by a resolution of the Board.
14. Deposits of Securities in Securities Depositories
-------------------------------------------------
No provision of this Agreement shall be deemed to prevent the use by
Custodian of a Central Securities Clearing Agency or Securities Depository,
provided, however, that Custodian and the Central Securities Clearing Agency or
Securities Depository meet all
6
<PAGE>
applicable federal and state laws and regulations, and the Board approves by
resolution the use of such Central Securities Clearing Agency or Securities
Depository.
15. Records
-------
To the extent that Custodian in any capacity prepares or maintains any
records required to be maintained and preserved by the Fund pursuant to the
provisions of the Investment Company Act of 1940, as amended, or the rules and
regulations promulgated thereunder, Custodian agrees to make any such records
available to the Fund upon request and to preserve such records for the periods
prescribed in Rule 31a-2 under the Investment Company Act of 1940, as amended.
IN WITNESS WHEREOF, the parties hereto have caused this Custodian
Agreement to be executed and their respective corporate seals to be affixed
hereto as of the date first above-written by their respective officers thereunto
duly authorized.
Executed in several counterparts, each of which is an original.
FIRSTAR BANK, N.A.
By:____________________________________
Name:__________________________________
Title:_________________________________
GOLDEN GATE FUND, INC.
By:____________________________________
Name:__________________________________
Title:_________________________________
7
ADMINISTRATION AGREEMENT
THIS ADMINISTRATION AGREEMENT (this "Agreement") is made this ____ day
of ________________________, 2000, between Golden Gate Fund, Inc., a Maryland
corporation (the "Company"), and Fiduciary Management, Inc., a Wisconsin
corporation (the "Administrator").
W I T N E S S E T H:
WHEREAS, the Company is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940 (the "Act") as an open-end
management investment company consisting of one series, Golden Gate Fund (the
"Fund"); and
WHEREAS, the Company desires to retain the Administrator to perform
the management-related services set forth in this Agreement for the Fund, and
the Administrator desires to perform such services for the Fund.
NOW, THEREFORE, the Company and the Administrator do mutually promise
and agree as follows:
1. Employment. The Company hereby employs the Administrator to be the
Fund's administrator for the period and on the terms set forth in this
Agreement. The Administrator hereby accepts such employment for the compensation
herein provided and agrees during such period to render the services and to
assume the obligations herein set forth.
2. Authority and Duties of the Administrator. The Administrator shall
perform the following management-related services for the Fund:
(a) Prepare and maintain the books, accounts and other documents
specified in Rule 31a-1 under the Act, in accordance with the requirements of
Rule 31a-1 and Rule 31a-2 under the Act;
(b) Calculate the Fund's net asset value in accordance with the
provisions of the Company's Articles of Incorporation, the Company's Bylaws and
the Company's Registration Statement;
(c) Respond to stockholder inquiries forwarded to it by the Company;
(d) Prepare the financial statements contained in reports to
stockholders of the Fund;
(e) Prepare for execution by the Company and file all of the Company's
federal and state tax returns;
(f) Prepare reports to and filings with the Securities and Exchange
Commission (other than the Company's Registration Statement on Form N-1A);
<PAGE>
(g) Prepare reports to and filings with state Blue Sky authorities;
(h) Furnish statistical and research data, clerical, accounting and
bookkeeping services and stationery and office supplies; and
(i) Keep and maintain the Fund's financial accounts and records, and
generally assist in all aspects of the Fund's operations to the extent agreed to
by the Administrator and the Company.
The Administrator shall not act, and shall not be required to act, as
an investment adviser to the Fund and shall not have any authority to supervise
the investment or reinvestment of the cash, securities or other property
comprising the Fund's assets or to determine what securities or other property
may be purchased or sold by the Fund. The Administrator shall for all purposes
herein be deemed to be an independent contractor and shall, unless otherwise
expressly provided or authorized, have no authority to act for or represent the
Company in any way or otherwise be deemed an agent of the Company.
3. Expenses. The Administrator, at its own expense and without
reimbursement from the Company, shall furnish office space, and all necessary
office facilities, equipment and executive personnel for performing the services
required to be performed by it under this Agreement. The Administrator shall not
be required to pay any expenses of the Fund. The expenses of the Fund's
operations borne by the Fund include by way of illustration and not limitation,
directors fees paid to those directors who are not "interested persons" of the
Company (as defined in the Act), the professional costs of preparing and the
costs of printing registration statements required under the Securities Act of
1933 and the Act (and amendments thereto), the expense of registering its shares
with the Securities and Exchange Commission and in the various states, payments
made pursuant to the Fund's Service and Distribution Plan (pursuant to Rule
12b-1 under the Act), the printing and distribution cost of prospectuses mailed
to existing shareholders, the cost of stock certificates (if any), director and
officer liability insurance, the printing and distribution costs of reports to
stockholders, reports to government authorities and proxy statements, interest
charges, taxes, legal expenses, association membership dues, auditing services,
insurance premiums, brokerage and other expenses connected with the execution of
portfolio securities transactions, fees and expenses of the custodian of the
Fund's assets, printing and mailing expenses and charges and expenses of
dividend disbursing agents, registrars and stock transfer agents.
4. Compensation of the Administrator. For the services to be rendered
by the Administrator hereunder, the Company through the Fund shall pay to the
Administrator an administration fee, paid monthly, based on the average daily
net assets, as determined by valuations made as of the close of each business
day of the month. The administration fee shall be 1/12 of 0.2% (0.2% per annum)
of the Fund's average daily net assets up to and including Thirty Million
Dollars ($30,000,000) 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). In no
event shall the aggregate administration fee paid to the Administrator pursuant
to this Section 4 for any full fiscal year be less than Twenty Thousand Dollars
($20,000). For any month in which this Agreement is not in effect for the entire
month, such fee shall be reduced
-2-
<PAGE>
proportionately on the basis of the number of calendar days during which it is
in effect and the fee computed upon the average net asset value of the business
days during which it is so in effect.
In addition to the above fees, the Fund shall pay to the Administrator
annually a fee of $100 for each state in which shares of the Fund are qualified
for sale, a fee of $80 for each state in which the Fund is registered as an
issuer-dealer and a fee of $40 for each agent registration maintained on behalf
of the Fund, none of which fees shall be reduced if registrations are maintained
for less than an entire fiscal year.
5. Exclusivity. The services of the Administrator to the Fund
hereunder are not to be deemed exclusive and the Administrator shall be free to
furnish similar services to others as long as the services hereunder are not
impaired thereby. During the period that this Agreement is in effect, the
Administrator shall be the Fund's sole administrator.
6. Liability. In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties hereunder on the part
of the Administrator, the Administrator shall not be subject to liability to the
Fund or to any shareholder of the Fund for any act or omission in the course of,
or connected with, rendering services hereunder, or for any losses that may be
sustained in the purchase, holding or sale of any security.
7. Amendments and Termination. This Agreement may be amended by the
mutual consent of the parties. This Agreement may be terminated at any time,
without the payment of any penalty, by the Board of Directors of the Company
upon the giving of written notice ninety (90) calendar days in advance to the
Administrator. This Agreement may be terminated by the Administrator at any time
upon the giving of written notice ninety (90) calendar days in advance to the
Company. Upon termination of this Agreement the Administrator shall deliver to
the Company all books, accounts and other documents then maintained by it
pursuant to Section 2 hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Administration
Agreement to be executed on the day first above written.
FIDUCIARY MANAGEMENT, INC. GOLDEN GATE FUND, INC.
(the "Administrator") (the "Company")
By:_________________________________ By:__________________________________
Name:____________________________ Name:_____________________________
President President
-3-
<PAGE>
_________, 2000
Fiduciary Management, Inc.
225 East Mason Street
Milwaukee, WI 53202
Gentlemen:
Pursuant to Section 2(i) of the Administration Agreement dated
__________, 2000, you are hereby authorized to perform the following ministerial
services in connection with Golden Gate Fund's (the "Fund") investment in
commercial paper master notes and repurchase agreements purchased through
Firstar Bank, N.A. Prior to 10:30 a.m. on each day the New York Stock Exchange
is open for trading you will review the activity account statement for the Fund
for the previous business day provided to you by Firstar Bank, N.A. and a list
of the securities transactions to be settled by the Fund on such date. Such list
of securities transactions will be compiled by you from information supplied to
you by the Fund's investment adviser.
After reviewing such list and statement you will subtract [the sum
obtained by adding (the purchase price and related commissions and expenses to
be paid by the Fund in connection with all purchases of securities by the Fund
to be settled on such date) to (the amounts to be paid to honor redemption
requests, if any, received by Firstar Mutual Fund Services, LLC on the previous
business day)] from [the sum obtained by adding (the proceeds to be received
from all sales of securities of the Fund to be settled on such date) to (the
amounts received pursuant to all purchase orders, if any, received by Firstar
Mutual Fund Services, LLC on the previous business day)].
The Fund's investment adviser has determined that if the result of
such subtraction is a positive number, the remainder shall be invested to the
extent allowed by the Fund's prospectus in the commercial paper master notes or
repurchase agreements then offered by Firstar Bank, N.A. bearing the highest
rates of interest. In the event that one or more commercial paper master notes
bear the same rate of interest, the order of preference in investing shall be
based on the assets of the issuers, with the issuer having the most assets being
given the highest preference. Investments in the commercial paper master notes
of any issuer may not exceed 5% of the Fund's total assets on the date of
purchase.
The Fund's investment adviser has determined that if the result of
such subtractions is a negative number, the deficiency shall be obtained by
selling the commercial paper master notes or repurchase agreement then held by
the Fund bearing the lowest rates of interest. In the event that one or more
commercial paper master notes bear the same rate of interest, the order of
preference in selling shall be the inverse of the order set forth in the
preceding paragraph.
<PAGE>
You are instructed to notify Firstar Bank, N.A. each day prior to
10:30 a.m. of the commercial paper master notes or repurchase agreement to be
purchased and sold by the Fund as determined above.
If the amount to be invested exceeds the amount which can be invested
as provided above, you will so inform the Fund's investment adviser who will
tell you how the excess should be invested.
These instructions will remain in effect unless and until you are
notified by the Fund's investment adviser to the contrary.
Very truly yours,
GOLDEN GATE FUND, INC.
By:____________________________________
Name:__________________________________
Title:_________________________________
Accepted and agreed to
_____________________________
FIDUCIARY MANAGEMENT, INC.
By:____________________________________
Name:__________________________________
Title:_________________________________
-2-
TRANSFER AGENT SERVICING AGREEMENT
THIS TRANSFER AGENT SERVICING AGREEMENT (this "Agreement") is made and
entered into as of this _____ day of _______, 2000, by and between Golden Gate
Fund, Inc., a corporation organized under the laws of the State of Maryland (the
"Company") and Firstar Mutual Fund Services, LLC, a limited liability company
organized under the laws of the State of Wisconsin ("FMFS").
WHEREAS, the Company is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Company is authorized to create separate series, each
with its own separate investment portfolio; and
WHEREAS, FMFS is in the business of providing, among other things,
transfer agent and dividend disbursing agent services to investment companies;
and
WHEREAS, the Company desires to retain FMFS to provide transfer agent
services the portfolio of the Company, Golden Gate Fund (the "Fund").
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Company and FMFS agree as follows:
1. Appointment of Transfer Agent
The Company hereby appoints FMFS as transfer agent of the Company on
the terms and conditions set forth in this Agreement, and FMFS hereby accepts
such appointment and agrees to perform the services and duties set forth in this
Agreement in consideration of the compensation provided for herein.
2. Duties and Responsibilities of FMFS
FMFS shall perform all of the customary services of a transfer agent
and dividend disbursing agent, and as relevant, agent in connection with
accumulation, open account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but not
limited to:
A. Receive orders for the purchase of shares;
B. Process purchase orders with prompt delivery, where appropriate,
of payment and supporting documentation to the Company's
custodian, and issue the appropriate number of uncertificated
shares with such uncertificated shares being held in the
appropriate shareholder account;
C. Arrange for issuance of shares obtained through transfers of
funds from shareholders' accounts at financial institutions and
arrange for the
<PAGE>
exchange of shares for shares of other eligible investment
companies, when permitted by Prospectus;
D. Process redemption requests received in good order and, where
relevant, deliver appropriate documentation to the Company's
custodian;
E. Pay monies upon receipt from the Company's custodian, where
relevant, in accordance with the instructions of redeeming
shareholders;
F. Process transfers of shares in accordance with the shareholder's
instructions;
G. Process exchanges between funds and/or classes of shares of
funds;
H. Prepare and transmit payments for dividends and distributions
declared by the Company with respect to the Fund, after deducting
any amount required to be withheld by any applicable laws, rules
and regulations and in accordance with shareholder instructions;
I. Make changes to shareholder records, including, but not limited
to, address changes in plans (i.e., systematic withdrawal,
automatic investment, dividend reinvestment, etc.);
J. Record the issuance of shares of the Fund and maintain, pursuant
to Rule 17ad-10(e) promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), a record of the total
number of shares of the Fund which are authorized, issued and
outstanding;
K. Prepare shareholder meeting lists and, if applicable, mail,
receive and tabulate proxies;
L. Mail shareholder reports and prospectuses to current
shareholders;
M. Prepare and file U.S. Treasury Department Forms 1099 and other
appropriate information returns required with respect to
dividends and distributions for all shareholders;
N. Provide shareholder account information upon request and prepare
and mail confirmations and statements of account to shareholders
for all purchases, redemption's and other confirmable
transactions as agreed upon with the Company;
O. Mail requests for shareholders' certifications under penalties of
perjury and pay on a timely basis to the appropriate federal
authorities any taxes to be withheld on dividends and
distributions paid by the Company, all as required by applicable
federal tax laws and regulations;
2
<PAGE>
P. Provide a Blue Sky System, which will enable the Company to
monitor the total number of shares of the Fund, sold in each
state. In addition, the Company or its agent, including FMFS,
shall identify to FMFS in writing those transactions and assets
to be treated as exempt from the Blue Sky reporting for each
state. The responsibility of FMFS for the Company's Blue Sky
state registration status is solely limited to the initial
compliance by the Company and the reporting of such transactions
to the Company or its agent;
Q. Answer correspondence from shareholders, securities brokers and
others relating to FMFS's duties hereunder and such other
correspondence as may from time to time be mutually agreed upon
between FMFS and the Company.
Reimburse the Fund each month for all material losses resulting from
"as of" processing errors for which FMFS is responsible in accordance with the
"as of" processing guidelines set forth in the attached Exhibit B.
3. Compensation
FMFS shall be compensated for providing the services set forth in this
Agreement in accordance with the Fee Schedule attached hereto as Exhibit A and
as mutually agreed upon and amended from time to time. The Company agrees to pay
all fees and reimbursable expenses within ten (10) business days following the
receipt of the billing notice.
4. Representations of FMFS
FMFS represents and warrants to the Company that:
A. It is a limited liability company duly organized, existing and in
good standing under the laws of Wisconsin;
B. It is a registered transfer agent under the Exchange Act;
C. It is duly qualified to carry on its business in the State of
Wisconsin;
D. It is empowered under applicable laws and by its charter and
bylaws to enter into and perform this Agreement;
E. All requisite corporate proceedings have been taken to authorize
it to enter and perform this Agreement;
F. It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement; and
3
<PAGE>
G. It will comply with all applicable requirements of the Securities
Act of 1933, as amended (the "Securities Act"), the Exchange Act,
the 1940 Act, and any laws, rules, and regulations of
governmental authorities having jurisdiction.
5. Representations of the Company
The Company represents and warrants to FMFS that:
A. The Company is an open-end investment company under the 1940 Act;
B. The Company is organized, existing, and in good standing under
the laws of Maryland;
C. The Company is empowered under applicable laws and by its
Articles of Incorporation and Bylaws to enter into and perform
this Agreement;
D. All necessary proceedings required by the Articles of
Incorporation have been taken to authorize it to enter into and
perform this Agreement;
E. The Company will comply with all applicable requirements of the
Securities Act, the Exchange Act, the 1940 Act, and any laws,
rules and regulations of governmental authorities having
jurisdiction; and
F. A registration statement under the Securities Act will be made
effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be
made, with respect to all shares of the Company being offered for
sale.
6. Performance of Service; Limitation of Liability
FMFS shall exercise reasonable care in the performance of its duties
under this Agreement. FMFS shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Company in connection with
matters to which this Agreement relates, including losses resulting from
mechanical breakdowns or the failure of communication or power supplies beyond
FMFS's control, except a loss arising out of or relating to FMFS' refusal or
failure to comply with the terms of this Agreement or from bad faith,
negligence, or willful misconduct on its part in the performance of its duties
under this Agreement. Notwithstanding any other provision of this Agreement, if
FMFS has exercised reasonable care in the performance of its duties under this
Agreement, the Company shall indemnify and hold harmless FMFS from and against
any and all claims, demands, losses, expenses, and liabilities (whether with or
without basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which FMFS may sustain or incur or which may be asserted
against FMFS by any person arising out of any action taken or omitted to be
taken by it in performing the services hereunder, except for any and all claims,
demands, losses expenses, and liabilities arising out of or relating to FMFS's
refusal or failure to comply with the terms of this
4
<PAGE>
Agreement or from bad faith, negligence or from willful misconduct on its part
in performance of its duties under this Agreement, (i) in accordance with the
foregoing standards, or (ii) in reliance upon any written or oral instruction
provided to FMFS by any duly authorized officer of the Company, such duly
authorized officer to be included in a list of authorized officers furnished to
FMFS and as amended from time to time in writing by resolution of the Board of
Directors of the Company.
FMFS shall indemnify and hold the Company harmless from and against
any and all claims, demands, losses, expenses, and liabilities (whether with or
without basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which the Company may sustain or incur or which may be asserted
against the Company by any person arising out of any action taken or omitted to
be taken by FMFS as a result of FMFS's refusal or failure to comply with the
terms of this Agreement, its bad faith, negligence, or willful misconduct.
In the event of a mechanical breakdown or failure of communication or
power supplies beyond its control, FMFS shall take all reasonable steps to
minimize service interruptions for any period that such interruption continues
beyond FMFS's control. FMFS will make every reasonable effort to restore any
lost or damaged data and correct any errors resulting from such a breakdown at
the expense of FMFS. FMFS agrees that it shall, at all times, have reasonable
contingency plans with appropriate parties, making reasonable provision for
emergency use of electrical data processing equipment to the extent appropriate
equipment is available. Representatives of the Company shall be entitled to
inspect FMFS's premises and operating capabilities at any time during regular
business hours of FMFS, upon reasonable notice to FMFS.
Regardless of the above, FMFS reserves the right to reprocess and
correct administrative errors at its own expense.
In order that the indemnification provisions contained in this section
shall apply, it is understood that if in any case the indemnitor may be asked to
indemnify or hold the indemnitee harmless, the indemnitor shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the indemnitee will use all reasonable care to
notify the indemnitor promptly concerning any situation which presents or
appears likely to present the probability of a claim for indemnification. The
indemnitor shall have the option to defend the indemnitee against any claim,
which may be the subject of this indemnification. In the event that the
indemnitor so elects, it will so notify the indemnitee and thereupon the
indemnitor shall take over complete defense of the claim, and the indemnitee
shall in such situation initiate no further legal or other expenses for which it
shall seek indemnification under this section. The indemnitee shall in no case
confess any claim or make any compromise in any case in which the indemnitor
will be asked to indemnify the indemnitee except with the indemnitor's prior
written consent.
7. Proprietary and Confidential Information
FMFS agrees on behalf of itself and its directors, officers, and
employees to treat confidentially and as proprietary information of the Company
all records and other
5
<PAGE>
information relative to the Company and prior, present, or potential
shareholders (and clients of said shareholders) and not to use such records and
information for any purpose other than the performance of its responsibilities
and duties hereunder, except after prior notification to and approval in writing
by the Company, which approval shall not be unreasonably withheld and may not be
withheld where FMFS may be exposed to civil or criminal contempt proceedings for
failure to comply after being requested to divulge such information by duly
constituted authorities, or when so requested by the Company.
8. Term of Agreement
This Agreement shall become effective as of the date hereof and,
unless sooner terminated as provided herein, shall continue automatically in
effect for successive annual periods. This Agreement may be terminated by either
party upon giving ninety (90) days prior written notice to the other party or
such shorter period as is mutually agreed upon by the parties. However, this
Agreement may be amended by mutual written consent of the parties.
9. Records
FMFS shall keep records relating to the services to be performed
hereunder, in the form and manner, and for such period as it may deem advisable
and is agreeable to the Company but not inconsistent with the rules and
regulations of appropriate government authorities, in particular, Section 31 of
the 1940 Act and the rules thereunder. FMFS agrees that all such records
prepared or maintained by FMFS relating to the services to be performed by FMFS
hereunder are the property of the Company and will be preserved, maintained, and
made available with such section and rules of the 1940 Act and will be promptly
surrendered to the Company on and in accordance with its request.
10. Governing Law
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Wisconsin.
However, nothing herein shall be construed in a manner inconsistent with the
1940 Act or any rule or regulation promulgated by the Securities and Exchange
Commission thereunder.
11. Duties in the Event of Termination
In the event that, in connection with termination, a successor to any
of FMFS's duties or responsibilities hereunder is designated by the Company by
written notice to FMFS, FMFS will promptly, upon such termination and at the
expense of the Company, transfer to such successor all relevant books, records,
correspondence, and other data established or maintained by FMFS under this
Agreement in a form reasonably acceptable to the Company (if such form differs
from the form in which FMFS has maintained, the Company shall pay any expenses
associated with transferring the data to such form), and will cooperate in the
transfer of such duties and responsibilities, including provision for assistance
from FMFS's personnel in the establishment of books, records, and other data by
such successor.
6
<PAGE>
12. Notices
Notices of any kind to be given by either party to the other party
shall be in writing and shall be duly given if mailed or delivered as follows:
Notice to FMFS shall be sent to:
Ms. Gail Zess
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
and notice to the Company shall be sent to:
Mr. Bruce J. Raabe
Collins & Company
100 Larkspur Landing Circle, Suite 102
Larkspur, CA 94939
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by a duly authorized officer or one or more counterparts as of the
day and year first written above.
GOLDEN GATE FUND, INC. FIRSTAR MUTUAL FUND SERVICES,
LLC
By:_________________________________ By:___________________________________
Attest:_____________________________ Attest:_______________________________
7
<PAGE>
Transfer Agent and Shareholder Servicing
Annual Fee Schedule
Exhibit A
Name of Series Date Added
-------------- ----------
Golden Gate Fund, Inc.
Shareholder Account Fee (Subject to Minimum)
No-Load - $15.00 per account
Load Fund - $16.00 per account
Money Market $21.00 per account
Annual Minimum - $24,000 first no-load fund, $28,000 first load or money market
fund.
Each Additional Fund/Class - $15,000 per year
Plus .5 basis point per year. (Waived for first 6 months for first fund)
File Transfer - $160 per month plus $.01/record.
Extraordinary services quoted separately.
Activity Charges
Telephone Call - $1.00 per call
Draft Check Processing - $1.00 per draft
Daily Valuation Trades - $6.75 per trade
ACH Shareholder Services
$125.00 per month per fund group
$ .50 per ACH item, setup and/or change
$5.00 per correction, reversal, return item
Plus Out-of-Pocket Expenses, including but not limited to:
Telephone - toll free lines Proxies
Postage Retention of records
Programming Microfilm/fiche of records
Special reports Stationery/envelopes
ACH fees NSCC charges
Insurance All other out-of-pocket expenses
Qualified Plan Fees (Billed to Investors)*
Annual maintenance fee per account $12.50/acct.(Cap at $25.00 per SSN)
Education IRA $ 5.00/acct.(Cap at $25.00/per SSN)
Transfer to successor trustee $15.00/trans.
Distribution to participant $15.00/trans. (Exclusive of SWP)
Refund of excess contribution $15.00/trans.
Additional Shareholder Fees (Billed to Investors)
Any outgoing wire transfer $12.00/wire
Telephone Exchange $ 5.00/exchange transaction
Return check fee $25.00/item
Stop payment $20.00/stop
(Liquidation, dividend, draft check)
Research fee $ 5.00/item
(For requested items of the second calendar year [or previous] to the
request)(Cap at $25.00)
8
<PAGE>
EXHIBIT B
Firstar Mutual Fund Services, LLC As Of Processing Policy
Firstar Mutual Fund Services, LLC (FMFS) will reimburse the Fund(s)
for any net material loss that may exist on the Fund(s) books and for which FMFS
is responsible, at the end of each calendar month. "Net Material Loss" shall be
defined as any remaining loss, after netting losses against any gains, which
impacts a Fund's net asset value per share by more than 1/2 cent. Gains and
losses will be reflected on the Fund's daily share sheet, and the Fund will be
reimbursed for any net material loss on a monthly basis. FMFS will reset the as
of ledger each calendar month so that any losses which do not exceed the
materiality threshold of 1/2 cent will not be carried forward to the next
succeeding month. FMFS will notify the advisor to the Fund(s) on the daily share
sheet of any losses for which the advisor may be held accountable.
9
<PAGE>
Sample
Out-of-Pocket Charges
Forms Costs
Statement Paper $ .038/item
#9, #10 Envelopes $ .043/item
Check/Statement Paper $ .25/item
Certificate $ 1.00/item
Wire Order Confirm (non-NSCC) $ .22/item
Firstar Fulfillment Envelope $ .25/item
Presort Postage (one ounce) $ .34/item
Shareholder System Select Request $ 200.00/request
Systems Development/Programming $ 150.00/hour
Fund Group Addition $2,000.00/fund group
Fund Additions $1,000.00/fund or class
Fund Group Restore $1,000.00/occurrence
Lost Shareholder Search (Keane Tracers) $ 3.00/search
DAZL ($5,000 Setup) $1,000.00/monthly
Price record transmission $ .015/price record
Other record $ .025/other record
NSCC Setup (Fund/SERV, Networking Exchanges, ACATS, MF
Profile, DCCS, TORA) $5,000.00/fund group
NSCC Commission Settlement $5,000.00/fund group
Fees and out-of-pocket expenses are billed to the Company monthly.
10
FOLEY & LARDNER
ATTORNEYS AT LAW
CHICAGO FIRSTAR CENTER SACRAMENTO
DENVER 777 EAST WISCONSIN AVENUE SAN DIEGO
JACKSONVILLE MILWAUKEE, WISCONSIN 53202-5367 SAN FRANCISCO
LOS ANGELES TELEPHONE (414) 271-2400 TALLAHASSEE
MADISON FACSIMILE (414) 297-4900 TAMPA
MILWAUKEE WASHINGTON, D.C.
ORLANDO WEST PALM BEACH
CLIENT/MATTER NUMBER
065407/0101
_____________, 2000
Golden Gate Fund, Inc.
100 Larkspur Landing Circle
Suite 102
Larkspur, California 94939-1703
Gentlemen:
We have acted as counsel for Golden Gate Fund, Inc. in connection with
the preparation of a Registration Statement on Form N-1A relating to the sale by
you of an indefinite amount of shares of common stock, par value $0.0001 per
share of Golden Gate Fund, Inc. (such common stock being hereinafter referred to
as the "Stock"), in the manner set forth in the Registration Statement to which
reference is made. In this connection we have examined: (a) the Registration
Statement on Form N-1A; (b) your Articles of Incorporation and Bylaws, as
amended to date; (c) corporate proceedings relative to the authorization for
issuance of the Stock; and (d) such other proceedings, documents and records as
we have deemed necessary to enable us to render this opinion.
Based upon the foregoing, we are of the opinion that the shares of the
Stock when sold as contemplated in the Registration Statement will be legally
issued, fully paid and nonassessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement on Form N-1A. In giving this consent, we do not admit
that we are experts within the meaning of Section 11 of the Securities Act of
1933, as amended, or within the category of persons whose consent is required by
Section 7 of said Act.
Very truly yours,
Foley & Lardner
SUBSCRIPTION AGREEMENT
Golden Gate Fund, Inc.
100 Larkspur Landing Circle
Suite 102
Larkspur, California 94939
Ladies and Gentlemen:
The undersigned hereby subscribes to ______________ (___) shares (the "Shares")
of common stock, par value $0.0001 per share, of Golden Gate Fund, Inc. (the
"Fund"), representing shares in the Fund's series, Golden Gate Fund. In
consideration for which the undersigned agrees to transfer to the Fund upon
demand cash in the amount of ______________ ($_______).
It is understood that upon acceptance hereof by the Fund that the Shares shall
be issued to the undersigned and shall be deemed to be fully paid and
nonassessable. The undersigned represents that the Shares are being purchased
for investment with no present intention of reselling or redeeming the Shares.
Dated and effective as of this ___day of __________, 2000.
_______________________________________
Name:__________________________
ACCEPTANCE
The foregoing subscription is hereby accepted. Dated and effective as of this
_____ day of ____________, 2000.
GOLDEN GATE FUND, INC.
By:____________________________________
Name:__________________________________
Title:_________________________________
SERVICE AND DISTRIBUTION PLAN
OF
GOLDEN GATE FUND, INC.
WHEREAS, Golden Gate Fund, Inc. (the "Fund") is registered with the
Securities and Exchange Commission as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Fund intends to act as a distributor (as defined in Rule
12b-1 under the Act) of shares of its common stock, par value $.0001 per share
(the "Common Stock"), and desires to adopt a distribution plan pursuant to Rule
12b-1 under the Act, and the Board of Directors of the Fund has determined that
there is a reasonable likelihood that adoption of this Service and Distribution
Plan will benefit the Fund and the shareholders of the Common Stock
(collectively, the "Shareholders" and singularly "Shareholder"); and
WHEREAS, the Fund may enter into agreements with dealers and other
financial service organizations to obtain various distribution-related and/or
shareholder services for the Fund, all as permitted and contemplated by Rule
12b-1 under the Act; it being understood that to the extent any activity is one
in 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 such plan
and not subject to its limitations.
NOW, THEREFORE, the Fund hereby adopts this Service and Distribution
Plan (the "Plan") in accordance with Rule 12b-1 under the Act on the following
terms and conditions:
1. Distribution and Service Fee. The Fund may charge a distribution
expense and service fee on an annualized basis of one-quarter of a percent
(0.25%) of the average daily net assets of the Fund. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of
Directors of the Fund shall determine, subject to any applicable restriction
imposed by rules of the National Association of Securities Dealers, Inc.
2. Permitted Expenditures. The amount set forth in paragraph 1 of this
Plan shall be paid for services or expenses primarily intended to result in the
sale of the Common Stock. The Fund may pay all or a portion of this fee to any
securities dealer, financial institution or any other person (the "Shareholder
Organization(s)") who renders personal service to the Shareholders, assists in
the maintenance of Shareholder accounts or who renders assistance in
distributing or promoting the sale of the Common Stock pursuant to a written
agreement approved by the Board of Directors of the Fund (a "Related
Agreement"). To the extent such fee is not paid to such persons, the Fund may
use the fee for its expenses of distribution of the Common Stock including, but
not limited to, payment by the Fund of the cost of preparing, printing and
distributing Prospectuses and Statements of Additional Information to
prospective
<PAGE>
investors and of implementing and operating the Plan, as well as payment of
capital or other expenses of associated equipment, rent, salaries, bonuses,
interest and other overhead costs.
3. Effective Date of the Plan. This Plan shall not take effect until
it has been approved by votes of a majority of both (i) the Board of Directors
of the Fund and (ii) those Directors of the Fund who are not "interested
persons" of the Fund (as defined in the Act) and have no direct or indirect
financial interest in the operation of this Plan or any Related Agreement (the
"Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called for
the purpose of voting on this Plan and any Related Agreement.
4. Continuance. Unless otherwise terminated pursuant to paragraph 6
below, this Plan shall continue in effect for as long as such continuance is
specifically approved at least annually in the manner provided for approval of
this Plan in paragraph 3.
5. Reports. Any person authorized to direct the disposition of monies
paid or payable by the Fund pursuant to this Plan or any Related Agreement shall
provide to the Fund's Board of Directors and the Board of Directors shall
review, at least quarterly, a written report of the amounts so expended and the
purposes for which such expenditures were made.
6. Termination. This Plan may be terminated at any time by vote of a
majority of the Rule 12b-1 Directors, or by vote of a majority of the
outstanding shares of the Common Stock.
7. Amendments. This Plan may not be amended to increase materially the
amount of payments provided for in paragraph 1 hereof unless such amendment is
approved in the manner provided for initial approval in paragraph 3 hereof and
by a vote of at least a majority (as defined in the Act) of the outstanding
shares of the Common Stock. No other amendment to the Plan may be made unless
approved in the manner provided for approval of this Plan in paragraph 3.
8. Selection of Directors. While this Plan is in effect, the selection
and nomination of Directors who are not interested persons (as defined in the
Act) of the Fund shall be committed to the discretion of the Directors who are
not interested persons.
9. Records. The Fund shall preserve copies of this Plan and any
Related Agreement and all reports made pursuant to paragraph 5 hereof, for a
period of not less than six (6) years from the date of this Plan, or such
Related Agreement or such report, as the case may be, the first two (2) years in
an easily accessible place.
2
