-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BkHHMP/7YfeHproDFZuX60H6XJkVHe5MPx90tOHmyLzQBDR2gEyIBDQY6PKjqWOn FTd6oCrSqiefWraZSt1wtQ== 0000948221-97-000179.txt : 19970912 0000948221-97-000179.hdr.sgml : 19970912 ACCESSION NUMBER: 0000948221-97-000179 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970903 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BURRIDGE FUNDS CENTRAL INDEX KEY: 0001022100 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07801 FILM NUMBER: 97674645 BUSINESS ADDRESS: STREET 1: 115 SOUTH LASALLE STREET CITY: CHICAGO STATE: IL ZIP: 60603 BUSINESS PHONE: 3122877434 N-30D 1 ANNUAL REPORT BURRIDGE CAPITAL DEVELOPMENT FUND JUNE 30, 1997 ANNUAL REPORT (LOGO) BURRIDGE FUNDS TABLE OF CONTENTS Page SHAREHOLDER LETTER 1 MID CAPITALIZATION INVESTING 2 AFTER TAX INVESTING 3 BURRIDGE CAPITAL DEVELOPMENT FUND Performance 4 Sector Allocation 4 Top Ten Holdings 5 Portfolio Characteristics 5 SCHEDULE OF INVESTMENTS 6 STATEMENT OF ASSETS AND LIABILITIES 7 STATEMENT OF OPERATIONS 8 STATEMENT OF CHANGES IN NET ASSETS 9 FINANCIAL HIGHLIGHTS 10 NOTES TO FINANCIAL STATEMENTS 11, 12 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 13 DEAR SHAREHOLDER, August, 1997 Since inception of the BURRIDGE CAPITAL DEVELOPMENT FUND on December 27, 1996, the net asset value has grown 6.9% as compared to a total return of 11.1% for the Russell Midcap Index. The underperformance over the first six months and three days of the Fund's existence reflects, among other things: 1) the fact that mid and small capitalization issues, which represent 71% of the Fund, have lagged the general market; 2) Mercury Finance, one of our initial investments, was involved in a fraud which resulted in earnings being substantially overstated and caused an 85% decline in the price of the stock; and 3) sharply reduced earnings expectations for two other issues, Boston Chicken and Informix. As long-term investors, we have been patient with the disappointing results of the latter two companies in the belief that they both have the potential for correcting the problems that have developed in the last several months. We have also had our share of winners in this market with the prices of Elan, Dollar General, Novellus Systems and Franklin Resources up 39.1%, 43.9%, 44.7% and 61.8%, respectively, from our initial purchase price. In terms of overall diversification, we continue to emphasize technology and related companies, consumer discretionary and financial services companies. These three sectors represent 60.6% of the total assets on June 30, 1997. While the Fund is off to a slow start, we are more convinced than ever that mid cap issues can provide superior returns over the next several years. By keeping tax liabilities to a minimum, we also expect most of this growth to be preserved in net asset values. We are especially encouraged by our results in May and June. Not only is the performance better than our benchmarks, but we are experiencing days when we substantially outperform the market during strong rallies, and, equally important, we are also experiencing some days when we substantially outperform when the market is especially weak. This is the reverse of what our experience had been earlier in the year. Hopefully this is just the first sign of a major shift in investor preferences for mid cap stocks which, based on past history, might last for several years. Sincerely, /s/ Richard M. Burridge /s/ Kenneth M. Arenberg Richard M. Burridge, CFA Kenneth M. Arenberg Chairman President Past performance is no guarantee of future results. The principal value and return on your investment will fluctuate and on redemption may be worth more or less than your original cost. References to individual securities are the views of the Advisor at the date of this report and may change. References are not a recommendation to buy or sell a security. MID CAPITALIZATION INVESTING - ------------------------------------------------------------------------------- Historically, mid cap stocks, as defined by the Russell Midcap Index, have outperformed large cap stocks, as defined by the Russell Top 200 Index, and small cap stocks, as defined by the Russell 2000 Index. The accompanying chart shows that the Russell Midcap Index has outperformed the Russell Top 200 Index by an average of 0.8% per year, and the Russell 2000 Index by an average of 1.7% per year from January 1, 1979 through June 30, 1997. The Burridge Group LLC, Advisor to the Fund, believes mid cap stocks offer the potential for greater capital appreciation versus both large cap stocks and small cap stocks over long time periods, and therefore has committed most of the Fund's investment in this capitalization range. In particular, the Fund's Advisor believes mid cap stocks are well positioned to outperform large cap stocks over the next few years due to favorable fundamentals and an analysis of historical leadership cycles. As of June 30, 1997, stocks in the Russell Midcap Index were trading at an average price/earnings ratio of 17.5 times versus 19.1 times for stocks in the Russell Top 200 Index, yet were projected to grow their earnings at a long term rate of 14.7% versus 13.6% for the large cap index. Stocks trading at lower price/earnings ratios with higher potential growth rates offer higher capital appreciation potential. As the charts below indicate, leadership (in terms of annualized rates of return) alternates between large cap, mid cap and small cap stocks through various cycles. Typically, these cycles last 3-5 years and usually change when stocks in the asset classes become significantly over or under valued. Given the underperformance of mid cap stocks for almost 4 years, as well as the valuations mentioned above, the Fund's Advisor is optimistic regarding their relative performance over the next few years. Annualized Returns January 1, 1979* through June 30, 1997 Russell Top 200 16.6% Russell Midcap 17.4% Russell 2000 15.7% 1/79*-6/83 7/83-9/90 10/90-9/93 10/93-6/97 Russell Top 200 17.2% 13.0% 16.8% 23.0% Russell Midcap 25.7% 9.0% 27.4% 16.8% Russell 2000 32.4% 2.4% 28.2% 14.8% Source: Frank Russell Company *Inception date of indices AFTER TAX INVESTING - ------------------------------------------------------------------------------- The BURRIDGE CAPITAL DEVELOPMENT FUND invests for long-term capital appreciation and is managed in a tax-sensitive manner. The Adviser attempts to maximize long- term capital gains and unrealized capital gains, and minimize short-term capital gains and ordinary income, as components of the Fund's investment returns. The Fund purchases mid capitalization, growth-oriented common stocks believed to have superior earnings growth potential. It is a no-load fund; there are no sales or redemption charges, and no "12b-1" fees. Significant differences in after-tax portfolio values occur among different portfolio turnover rates. The best strategy for after-tax wealth creation involves investing in a portfolio of high quality companies and keeping portfolio turnover relatively low. AFTER-TAX GROWTH OF A DOLLAR 10 Year Holding Period* Growth Equity Style** Annualized Annualized Pre Tax Return After Tax Return -------------- ---------------- 10% Turnover 15% 12% 50% Turnover 15% 10% 100% Turnover 15% 9% 2 Years 4 Years 6 Years 8 Years 10 Years 10% Turnover 124,456 154,894 192,775 239,921 $298,597 50% Turnover 121,374 147,317 178,805 217,024 $263,411 100% Turnover 118,984 141,573 168,450 200,429 $238,480 *Assumes total liquidation of portfolio after 10 years. **Growth Style Return of 15% assumes 14% capital appreciation and 1% dividend yield This is a hypothetical representation and is not intended to predict the performance of the Burridge Capital Development Fund and does not included any fees or costs. It is used to demonstrate the difference that turnover rates can have on after-tax portfolio returns. PERFORMANCE Burridge Capital Development Fund vs. Russell Midcap Index - ------------------------------------------------------------------------------- Dec 27 1996* Dec 31 1997 Mar 31 1997 Jun 30 1997 Burridge Capital Development Fund 10,000 9,880 9,580 $10,690 Russell Midcap Index 10,000 9,783 9,703 $11,110 For the period ending Cumulative % June 30, 1997 Since Inception - ------------------------------------------------ Burridge Capital Development Fund 6.90% Source: Frank Russell Company *Inception of Fund This chart assumes an initial investment of $10,000 made on December 27, 1996 (inception). Returns shown include the reinvestment of all dividends. Past performance is not predicative of future performance. Investment return and principal value will fluctuate, so that shares, when redeemed, may be worth more or less than the original cost. One cannot invest in an index. SECTOR ALLOCATION June 30, 1997 - ------------------------------------------------------------------------------- BURRIDGE CAPITAL DEVELOPMENT FUND ASSET ALLOCATION BURRIDGE CAPITAL SECTOR DEVELOPMENT FUND - ------------------------------------------------ Technology 20.8% Health Care 9.0% Consumer Discretionary 23.1% Consumer Staples 0.0% Producer Durables 14.0% Transportation 8.5% Financial Services 16.7% Cash 7.9% Sector allocation of Burridge Capital Development Fund is subject to change TOP TEN HOLDINGS June 30, 1997 - ------------------------------------------------------------------------------- MARKET PERCENTAGE COMPANY SECTOR VALUE OF FUND ------- ------ ------ ---------- Elan Corp. PLC Health Care $ 18,553 5.6% Molex Inc.-Class A Producer Durables $ 18,309 5.5% Solectron Corp. Producer Durables $ 18,216 5.5% Dollar General Corporation Producer Durables $ 16,875 5.1% Franklin Resources Inc. Financial Services $ 16,689 5.0% Nokia Corp. Technology $ 16,225 4.9% Manpower Inc. Consumer Discretionary $ 16,020 4.8% Magna International Inc. Transportation $ 15,649 4.7% MBNA Corporation Financial Services $ 15,016 4.5% Southwest Airlines Co. Transportation $ 15,008 4.5% -------- ----- $166,560 50.1% PORTFOLIO CHARACTERISTICS June 30, 1997 - ------------------------------------------------------------------------------- BURRIDGE CAPITAL DEVELOPMENT FUND ---------------- Projected Long-Term Earnings Growth Rate* 20.3% Price/Earnings Ratio 18.8% Past 5 Year Average Earnings Growth 34.6% Dividend Yield 0.4% Return on Equity - Past 5 Year Average 22.9% Market Cap (dollar-weighted average per company included in portfolio) $5.8 bil Source: Frank Russell Company (as of June 30, 1997) *5 year average SCHEDULE OF INVESTMENTS June 30, 1997 - ------------------------------------------------------------------------------- SHARES MARKET VALUE COMMON STOCKS 92.1% CONSUMER DISCRETIONARY 23.1% 360 Boston Chicken, Inc.* $ 5,040 380 Circus Circus Enterprises* 9,357 450 Dollar General Corporation 16,875 360 Manpower Inc. 16,020 170 Nike, Inc. - Class B 9,924 370 Pep Boys - Manny, Moe & Jack 12,603 350 Starbucks Corporation* 13,628 ----------- 83,447 ----------- FINANCIAL SERVICES 16.7% 450 Equitable Companies, Inc. 14,963 230 Franklin Resources, Inc. 16,689 380 Green Tree Financial Corp. 13,538 410 MBNA Corporation 15,016 ----------- 60,206 ----------- HEALTH CARE 9.0% 410 Elan Corp. PLC - ADR* 18,552 260 Shared Medical Systems 14,040 ----------- 32,592 ----------- PRODUCER DURABLES 14.0% 525 Molex, Inc. - Class A 18,309 160 Novellus Systems, Inc.* 13,840 260 Solectron Corp.* 18,216 ----------- 50,365 ----------- TECHNOLOGY 20.8% 375 Andrew Corp.* 10,547 340 EMC Corp.* 13,260 790 Informix Corp.* 7,110 220 Nokia Corp. Class A - ADR* 16,225 405 Symbol Technologies, Inc.* 13,618 170 Texas Instruments, Inc. 14,291 ----------- 75,051 ----------- SHARES MARKET VALUE TRANSPORTATION 8.5% 260 Magna International, Inc. $ 15,649 580 Southwest Airlines Co. 15,008 ----------- 30,657 ----------- Total Common Stocks (Cost $318,060) 332,318 ----------- PRINCIPAL MARKET VALUE SHORT-TERM INVESTMENTS 14.2% VARIABLE RATE DEMAND NOTES 14.2% $16,000 American Family, 5.26%, due upon demand $ 16,000 18,003 Johnson Controls, 5.28%, due upon demand 18,003 6,242 Pitney Bowes, 5.26%, due upon demand 6,242 10,866 Wisconsin Electric, 5.30%, due upon demand 10,866 ----------- Total Short-Term Investments (Cost $51,111) 51,111 ----------- TOTAL INVESTMENTS 106.3% (COST $369,171) 383,429 ----------- LIABILITIES, LESS OTHER ASSETS (6.3)% (22,643) ----------- TOTAL NET ASSETS 100.0% $360,786 =========== *non-income producing The accompanying notes to financial statements are an integral part of this schedule. STATEMENT OF ASSETS AND LIABILITIES June 30, 1997 - ------------------------------------------------------------------------------- ASSETS Investments, at market value (cost: $369,171) $383,429 Prepaid expenses 14,258 Receivables 501 Deferred organization costs 65,622 ---------- Total assets 463,810 ---------- LIABILITIES Payable to Adviser 79,938 Accrued expenses and liabilities 23,086 ---------- Total liabilities 103,024 ---------- NET ASSETS $360,786 ========== NET ASSETS CONSIST OF: Shares of beneficial interest (no par value, unlimited amount of shares authorized, 33,764 shares issued and outstanding, and paid-in capital) $344,130 Accumulated undistributed net investment income 5,818 Accumulated undistributed net realized (loss) (3,420) Net unrealized appreciation on investments 14,258 ---------- Total net assets $360,786 ========== Net asset value per share $10.69 ====== The accompanying notes to financial statements are an integral part of this statement. STATEMENT OF OPERATIONS - ------------------------------------------------------------------------------- DEC. 27, 1996 THROUGH JUNE 30, 1997 INCOME Dividend $ 807 Interest 1,135 ------- 1,942 ------- EXPENSES Investment advisory fee 1,330 Administration Fees 12,994 Registration fees 11,700 Shareholder servicing fees 10,370 Legal and audit fees 14,292 Printing expense 1,529 Accounting fee 10,548 Custodian fees 2,853 Amortization of deferred costs 7,314 Trustees' fees and expenses 3,567 Other operating expenses 3,145 ------- Total expenses before waiver 79,642 Less: reimbursement from adviser (77,648) ------- Net expenses 1,994 ------- Net investment income (loss) (52) ------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized (loss) on investments (3,420) Net change in unrealized appreciation on investments 14,258 ------- Net gain on investments 10,838 ------- NET INCREASE IN ASSETS RESULTING FROM OPERATIONS $10,786 ======= Commencement of operations. The accompanying notes to financial statements are an integral part of this statement. STATEMENT OF CHANGES IN NET ASSETS - ------------------------------------------------------------------------------- DEC. 27, 1996 THROUGH JUNE 30, 1997 OPERATIONS: Net investment income (loss) $ (52) Net realized (loss) on investments (3,420) Net change in unrealized appreciation on investments 14,258 ------- Net increase in net assets resulting from operations 10,786 ------- DISTRIBUTIONS TO SHAREHOLDERS: Distributions from net investment income - Distributions from net realized capital gains - ------- Total distributions - ------- CAPITAL SHARE TRANSACTIONS: Proceeds from shares issued (33,764 shares) 350,000 Increase in shares issued in reinvested distributions - Cost of shares redeemed - ------- Net increase in assets derived from capital share transactions 350,000 ------- Net increase in net assets 360,786 ------- NET ASSETS: Beginning of period - ------- End of period (including accumulated net investment income of $5,818) $360,786 ======= Commencement of operations. The accompanying notes to financial statements are an integral part of this statement. FINANCIAL HIGHLIGHTS - ------------------------------------------------------------------------------- Selected per-share data (for a share outstanding throughout the period), ratios and supplemental data: DEC. 27, 1996 THROUGH JUNE 30, 1997 Net asset value at beginning of period $10.00 Income from investment operations: Net investment income 0.17 Net realized and unrealized gain on securities 0.52 ------ Total from investment operations 0.69 ------ Less distributions: Dividends from net investment income 0.00 Distributions from realized gains on securities 0.00 ------ Total distributions 0.00 ------ Net asset value at end of period $10.69 ====== Total return 6.90% Ratios and Supplemental data: Net assets at end of period $360,786 Ratio of net expenses to average net assets 1.50% Net investment income to average net assets (0.04)% Portfolio turnover rate 0.27% Average commission rate per share $0.0400 Commencement of operations. Not annualized. Annualized. Without expenses reimbursements of $77,648 for the period December 27, 1996 through June 30, 1997, the annualized ratio of expenses to average net assets would have been 59.90% and the annualized ratio of net investment income to average net assets would have been (58.44)%. The accompanying notes to financial statements are an integral part of this statement. NOTES TO THE FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- 1) ORGANIZATION Burridge Funds (the "Trust") was created on August 30, 1996 as a Massachusetts business trust under the laws of the Commonwealth of Massachusetts. Burridge Capital Development Fund (the "Fund") is the sole series issued by the Trust, which is an open-end management investment company registered under the Investment Company Act of 1940 (the "Act"), as amended. The Fund issued and sold 10,000 shares of beneficial interest at $10 per share on November 18, 1996. The Fund commenced operations on December 27, 1996. The objective of the Fund is long-term capital appreciation. The costs incurred in connection with the organization, initial registration and public offering of shares, aggregating $72,937, were advanced to the Fund and are payable to the Adviser. These costs are being amortized over the period of benefit, but not to exceed sixty months from the Fund's commencement of operations. The Fund's initial shareholders have agreed that if any of the initial shares are redeemed during the first sixty months of the Fund's operations by any holder thereof, the proceeds of the redemption will be reduced by the pro rata share of the unamortized organization expenses as of the date of the redemption. The pro rata share by which the redemption proceeds shall redeemed shall be derived by dividing the number of original shares redeemed by the total number of original shares outstanding at the time of redemption. 2) SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund. These policies are in conformity with generally accepted accounting principles. A) INVESTMENT VALUATION - Securities which are traded on a securities exchange (including options on indexes so traded) or securities listed on the Nasdaq National Market are valued at the last sale price on the exchange or market where primarily traded or listed or, if there is no recent sale price available, at the mean between the most recent bid and asked prices. Securities not so traded or listed are valued at the mean between the most recent bid and asked prices if market quotations are available. Money market instruments maturing in 60 days or less are normally valued at amortized cost. Securities or other assets for which market quotations are not readily available will be valued at a fair value as determined in good faith by the Trust's Board of Trustees. B) FEDERAL INCOME TAXES - No provision for federal income taxes or excise taxes has been made since the Fund intends to elect to be taxed as a "regulated investment company" and intends to distribute substantially all taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. C) DISTRIBUTIONS TO SHAREHOLDERS - Dividends from net investment income and distributions of net realized capital gains, if any, are declared and paid at least annually. D) USE OF ESTIMATES - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. E) OTHER - Investment and shareholder transactions are recorded on a trade date basis. The Fund determines the gain or loss realized from the investment transactions by comparing the original cost of the security lot sold with the net sales proceeds. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Generally accepted accounting principles require that permanent differences between financial and tax reporting be reclassified to capital stock. 3) CAPITAL SHARE TRANSACTIONS Transactions in shares of the Fund were as follows: DECEMBER 27, 1996 TO JUNE 30, 1997 --------------------- AMOUNT SHARES --------------------- Shares sold $350,000 33,764 Shares issued to owners in reinvestment of dividends - - Shares redeemed - - -------- ------ Net increase $350,000 33,764 ======== ====== NOTES TO THE FINANCIAL STATEMENTS Continued - ------------------------------------------------------------------------------- 4) INVESTMENT TRANSACTIONS The aggregate purchases and sales of securities, excluding short-term investments, for the Fund for the period December 27, 1996 through June 30, 1997, were as follows: PURCHASES SALES --------- ----- U.S. Government - - Other $322,107 $627 At June 30, 1997, gross unrealized appreciation and depreciation of investments for federal income tax purposes was as follows: Appreciation $39,150 (Depreciation) (24,892) ------- Net unrealized appreciation on investments $14,258 ======= At June 30, 1997, the cost of investments for federal income tax purposes was $369,171. 5) INVESTMENT ADVISORY AND OTHER AGREEMENTS The Fund has entered into an investment advisory agreement with The Burridge Group LLC (the "Adviser"). Pursuant to its Advisory Agreement with the Fund, the Adviser is entitled to receive a fee, calculated daily and payable monthly, at the annual rate of 1.00% on the first $500 million of average daily net assets, 0.85% on the next $500 million of average daily net assets, and 0.75% on the average daily net assets over $1 billion. The Adviser has voluntarily undertaken to limit the Fund's expenses (including the advisory fee but excluding extraordinary costs or expenses not incurred in the ordinary course of the Fund's operations) to 1.50% of the Fund's average daily net assets. For the period ended June 30, 1997, the Adviser reimbursed $77,648 in expenses. Firstar Trust Company, a subsidiary of Firstar Corporation, a publicly held bank holding company, serves as custodian, transfer agent, administrator and accounting services agent for the Fund. 6) RELATED PARTIES Officers and Trustees of the Trust held 33,764 or 100.0% of the outstanding shares of the Fund as of June 30, 1997. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS - ------------------------------------------------------------------------------- TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF BURRIDGE FUNDS: We have audited the accompanying statement of assets and liabilities of The Burridge Funds (a Massachusetts business trust, comprising the Burridge Capital Development Fund), including the schedule of investments, as of June 30, 1997, and the related statements of operations, changes in net assets, and the financial highlights for the period indicated thereon. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 1997, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Burridge Capital Development Fund as of June 30, 1997, the results of its operations, the changes in its net assets, and its financial highlights for the period indicated thereon, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Chicago, Illinois August 1, 1997 SHAREHOLDER SERVICES: Burridge Funds c/o Firstar Trust Company P.O. Box 701 Milwaukee, WI 53201 (888) BURRIDGE (1-888-287-7434) INVESTMENT ADVISER: The Burridge Group LLC Chicago, IL DISTRIBUTOR: Funds Distributor Inc. Boston, MA CUSTODIAN, ADMINISTRATOR AND TRANSFER AGENT: Firstar Trust Company Milwaukee, WI INDEPENDENT AUDITORS: Arthur Andersen LLP Chicago, IL LEGAL COUNSEL: Bell, Boyd & Lloyd Chicago, IL This report is submitted for the information of the shareholders of the Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. -----END PRIVACY-ENHANCED MESSAGE-----