SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 1 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT / /
OF 1940
Amendment No. 2 /X/
(Check appropriate box or boxes.)
AmeriPrime Funds - File Nos. 33-96826 and 811-9096
1793 Kingswood Drive, Suite 200, Southlake, Texas 76092
(Address of Principal Executive Offices) Zip Code
Registrant's Telephone Number, including Area Code: (817) 431-2197
Kenneth Trumpfheller, 1793 Kingswood Drive, Suite 200, Southlake, Texas 76092
(Name and Address of Agent for Service)
With copy to:
Donald S. Mendelsohn, Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, Cincinnati, Ohio 45202
Release Date: , 1995
It is proposed that this filing will become effective:
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/X/ 75 days after filing pursuant to paragraph (a)
/ / on (date) pursuant to paragraph (a) of Rule 485
Registrant continues its election made by the filing of its
Registration Statement, effective November 6, 1995, to register an indefinite
number and amount of its securities under Rule 24f-2 of the Investment Company
Act. Registrant anticipates that it will file, pursuant to paragraph b(1) of
Rule 24f-2, a 24f-2 Notice for the fiscal year ending October 31, 1996 on or
before December 31, 1996.
TOTAL NUMBER OF PAGES -
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AmeriPrime Funds
CROSS REFERENCE SHEET
FORM N-1A
FOR THE XYZ CONTRARIAN FUND
ITEM SECTION IN EACH PROSPECTUS
1.............................. Cover Page
2.............................. Summary of Fund Expenses
3.............................. None
4.............................. The Fund, Investment Objective and
Strategies, Investment Policies and
Techniques and Risk Considerations,
Operation of the Fund, General
Information
5.............................. Operation of the Fund
5A............................. None
6.............................. Cover Page, Dividends and
Distributions, Taxes, Operation of
the Fund, General Information
7.............................. Cover Page, How to Invest in the
Fund, Share Price Calculation,
Operation of the Fund, Distribution
Plan
8.............................. How to Redeem Shares
9.............................. None
13.............................. General Information
15.............................. General Information
16.............................. Distribution Plan
SECTION IN STATEMENT OF
ITEM ADDITIONAL INFORMATION
10....... ...................... Cover Page
11.............................. Table of Contents
12.............................. None
13.............................. Additional Information About Fund
Investments and Risk Considerations,
Investment Limitations
14.............................. Trustees and Officers
15.............................. None
16.............................. The Investment Adviser, Distribution
Plan, Custodian, Transfer Agent,
Accountants
17.............................. Portfolio Transactions and Brokerage
18.............................. Description of the Trust
19.............................. Determination of Share Price
20.............................. None
21.............................. Distributor
22.............................. Investment Performance
23.............................. None
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THE XYZ CONTRARIAN FUND
PROSPECTUS __________, 1996
707 Skokie Boulevard, Suite 200
Northbrook, Illinois 60062
For Information, Shareholder Services and Requests:
(800) 957-4386
The XYZ Contrarian Fund (the "Fund") is a no-load mutual fund whose
investment objective is to provide maximum long term growth. The Fund seeks
to achieve its objective by aggressively investing world-wide in securities
of growing companies which its Advisor, Newport Advisory Company, Inc.
believes are attractively priced and offer investment value.
The Fund is "no-load," which means there are no sales charges or
commissions. The Fund is one of the mutual funds comprising AmeriPrime Funds, an
open-end management investment company, and is distributed by AmeriPrime
Financial Securities, Inc.
This Prospectus provides the information a prospective investor ought
to know before investing and should be retained for future reference. A
Statement of Additional Information has been filed with the Securities and
Exchange Commission dated _________, 1996, which is incorporated herein by
reference and can be obtained without charge by calling the Fund at the phone
number listed above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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SUMMARY OF FUND EXPENSES
The tables below are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
the Fund. The expense information is based on estimated amounts for the current
fiscal year. The expenses are expressed as a percentage of average net assets.
The Example should not be considered a representation of future Fund performance
or expenses, both of which may vary.
Shareholders should be aware that the Fund is a no-load fund and,
accordingly, a shareholder does not pay any sales charge or commission upon
purchase or redemption of shares of the Fund. Unlike most other mutual funds,
the Fund does not pay directly for transfer agency, pricing, custodial, auditing
or legal services, nor does it pay directly any general administrative or other
significant operating expenses (except for 12b-1 fees). The Advisor pays all of
the expenses of the Fund except 12b-1 fees, brokerage, taxes, interest, fees and
expenses of non-interested person trustees and extraordinary expenses.
Shareholder Transaction Expenses
Sales Load Imposed on Purchases...........................................NONE
Sales Load Imposed on Reinvested Dividends................................NONE
Deferred Sales Load.......................................................NONE
Redemption Fees...........................................................NONE
Exchange Fees.............................................................NONE
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees......................................................... 2.50%
12b-1 Fees1..............................................................0.25%
Other Expenses2..........................................................0.00%
Total Fund Operating Expenses............................................2.75%
1 The Fund incurs 12b-1 fees of .25% of average net assets. Long-term
shareholders may pay more than the economic equivalent of the maximum front-end
sales loads permitted by the National Association of Securities Dealers.
2 The Fund estimates that other expenses (fees and expenses of the trustees who
are not "interested persons" as defined in the Investment Company Act) will be
.00032 of 1% of average net assets for the first fiscal year.
The tables above are provided to assist an investor in understanding the direct
and indirect expenses that an investor may incur as a shareholder in the Fund.
Example
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
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1 Year 3 Years
------ -------
$25 $78
THE FUND
The XYZ Contrarian Fund (the "Fund") was organized as
a non-diversified series of AmeriPrime Funds, an Ohio business trust (the
"Trust"), on ___________, 1995, and commenced operations on ___________, 1996.
This prospectus offers shares of the Fund and each share represents an
undivided, proportionate interest in the Fund. The investment advisor to the
Fund is Newport Advisory Company, Inc. (the "Advisor").
INVESTMENT OBJECTIVE AND STRATEGIES
The investment objective of the Fund is to provide maximum long term
growth. The Fund seeks to achieve its objective by aggressively investing
world-wide in securities of growing companies which the Advisor believes are
attractively priced and offer investment value. Unlike many mutual funds with
this investment objective, the Fund will attempt to achieve its investment
objective in declining equity markets as well as in rising equity markets. The
Fund's aggressive investment approach may be appropriate for investors who seek
potentially high long term returns and are willing to accept the risks inherent
in that approach, including potentially significant fluctuations in the Fund's
share price.
The Fund focuses its investments primarily on equity securities of
domestic, multinational and foreign companies whose potential values generally
are not recognized by the investing public. Such companies include viable
businesses that have been overlooked by other investors, or that are unpopular
as a result of actual or anticipated unfavorable developments or other factors
affecting the companies, their industries or markets in general. The Advisor may
choose smaller companies that it believes offer significant investment value,
even if they involve more risk. Dividend and interest income received from
portfolio securities is not a significant consideration.
The Advisor generally intends to stay fully invested (subject to
liquidity requirements and defensive purposes) in equity and debt securities of
U.S. and foreign companies. The Fund may invest in debt securities of all types
and qualities, including lower quality securities with more risk. The Fund may
also pursue investment opportunities by investing in indexed securities,
options, futures contracts and precious metals, and by using other aggressive
investment techniques involving leverage and other risks. In selecting
securities for inclusion in the Fund's portfolio, the Advisor may analyze
issuers of all sizes, industries, and geographical markets, including restricted
securities of companies issued in private placements.
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, the Fund cannot give any assurance that its investment objective
will be achieved. In addition, the aggressive investment techniques of the Fund
may entail risks not encountered by the average mutual fund. See "Investment
Policies, Techniques and Risk Considerations" for a more detailed discussion of
the Fund's investment practices. Investors should also be aware that the Advisor
has limited prior experience, and the person primarily responsible for the day-
to-day management of the portfolio of the Fund has no prior experience, in
acting as an investment advisor to a mutual fund, and that the Fund has no
operating history.
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HOW TO INVEST IN THE FUND
Shares of the Fund are sold on a continuous basis, and you may invest
any amount you choose, as often as you wish, subject to a minimum initial
investment of $2,500 ($1,000 for IRA retirement accounts) and minimum subsequent
investments of $500 ($100 for IRA retirement accounts). The Fund's minimum
initial investment has been waived for the three month period immediately
following the Fund's commencement of operations.
Initial Purchase
By Mail - You may purchase shares of the Fund by completing and signing
the investment application form which accompanies this Prospectus and mailing
it, in proper form, together with a check (subject to the above minimum amounts)
made payable to The XYZ Contrarian Fund, and sent to the P.O. Box listed below.
If you prefer overnight delivery, use the overnight address listed below.
U.S. mail: The XYZ Contrarian Fund Overnight: The XYZ Contrarian Fund
c/o Star Bank, N.A. c/o Star Bank, N.A.
P.O. Box ______________ Mutual Fund Custody Dept.
Cincinnati, Ohio 45264 425 Walnut St. M.L. 6118
Cincinnati, Ohio 45202
Your purchase of shares of the Fund will be effected at the next share price
calculated after receipt of your investment.
By Wire - You may also purchase shares of the Fund by wiring federal
funds from your bank, which may charge you a fee for doing so. If money is to be
wired, you must call the Transfer Agent at 800-___-____ to set up your account
and obtain an account number. You should be prepared at that time to provide the
information on the application. Then, you should provide your bank with the
following information for purposes of wiring your investment:
Star Bank, N.A. Cinti/Trust
ABA #0420-0001-3
Attn: The XYZ Contrarian Fund
D.D.A. # ________________
Account Name _________________ (write in shareholder name)
For the Account # ______________ (write in account number)
You are required to mail a signed application to the Custodian at the
above address in order to complete your initial wire purchase. Wire orders will
be accepted only on a day on which the Fund, Custodian and Transfer Agent are
open for business. A wire purchase will not be considered made until the wired
money is received and the purchase is accepted by the Fund. Any delays which may
occur in wiring money, including delays which may occur in processing by the
banks, are not the responsibility of the Fund or the Transfer Agent. There is
presently no fee for the receipt of wired funds, but the right to charge
shareholders for this service is reserved by the Fund.
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Additional Investments
You may purchase additional shares of the Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail purchase request must contain your name, the name of your
account(s), your account number(s), and the name of the Fund. Checks should be
made payable to The XYZ Contrarian Fund and should be sent to
the Custodian's address. A bank wire should be sent as outlined above.
Tax Sheltered Retirement Plans
Since the Fund is oriented to longer term investments, shares of the
Fund may be an appropriate investment medium for tax sheltered retirement plans,
including: individual retirement accounts (IRAs); simplified employee pensions
(SEPs); 401(k) plans; qualified corporate pension and profit sharing plans (for
employees); 403(b)(7) tax deferred retirement plans (for employees of public
school systems and certain types of charitable organizations); and other
qualified retirement plans. You should contact the Transfer Agent for the
procedure to open an IRA or SEP plan, as well as more specific information
regarding these retirement plan options. Consultation with an attorney or tax
adviser regarding these plans is advisable. Custodial fees for an IRA will be
paid by the shareholder by redemption of sufficient shares of the Fund from the
IRA unless the fees are paid directly to the IRA custodian. You can obtain
information about the IRA custodial fees from the Transfer Agent.
Other Purchase Information
Dividends begin to accrue after you become a shareholder. The Fund does
not issue share certificates. All shares are held in non-certificate form
registered on the books of the Fund and the Fund's Transfer Agent for the
account of the shareholder. The rights to limit the amount of purchases and to
refuse to sell to any person are reserved by the Fund. If your check or wire
does not clear, you will be responsible for any loss incurred by the Fund. If
you are already a shareholder, the Fund can redeem shares from any identically
registered account in the Fund as reimbursement for any loss incurred. You may
be prohibited or restricted from making future purchases in the Fund.
HOW TO REDEEM SHARES
All redemptions will be made at the net asset value determined after
the redemption request has been received by the Transfer Agent in proper order.
Shareholders may receive redemption payments in the form of a check or federal
wire transfer. The proceeds of the redemption may be more or less than the
purchase price of your shares, depending on the market value of the Fund's
securities at the time of your redemption. Presently there is no charge for wire
redemptions; however, the Fund reserves the right to charge for this service.
Any charges for wire redemptions will be deducted from the shareholder's Fund
account by redemption of shares.
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By Mail - You may redeem any part of your account in the Fund at no
charge by mail. Your request should be addressed to:
The XYZ Contrarian Fund
c/o American Data Services, Inc.
24 W. Carver Street
Huntington, New York 11743
"Proper order" means your request for a redemption must include your
letter of instruction, including the Fund name, account number, account name(s),
the address and the dollar amount or number of shares you wish to redeem. This
request must be signed by all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered. For all redemptions, the Fund
requires that signatures be guaranteed by a bank or member firm of a national
securities exchange. Signature guarantees are for the protection of
shareholders. At the discretion of the Fund or American Data Services, Inc., a
shareholder, prior to redemption, may be required to furnish additional legal
documents to insure proper authorization.
By Telephone - You may redeem any part of your account in the Fund by
calling the Transfer Agent at (800) ___-____. You must first complete the
Optional Telephone Redemption and Exchange section of the investment application
to institute this option. The Fund, the Transfer Agent and the Custodian are not
liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.
The telephone redemption and exchange procedures may be terminated at
any time by the Fund or the Transfer Agent. During periods of extreme market
activity it is possible that shareholders may encounter some difficulty in
telephoning the Fund, although neither the Fund nor the Transfer Agent has ever
experienced difficulties in receiving and in a timely fashion responding to
telephone requests for redemptions or exchanges. If you are unable to reach the
Fund by telephone, you may request a redemption or exchange by mail.
Additional Information - If you are not certain of the requirements for
a redemption please call the Transfer Agent at (800) ___-____. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen days. Also, when the New York Stock Exchange is
closed (or when trading is restricted) for any reason other than its customary
weekend or holiday closing or under any emergency circumstances, as determined
by the Securities and Exchange Commission, the Fund may suspend redemptions or
postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund reserves the right to require any shareholder to redeem all
of his or her shares in the Fund on 30 days' written notice if the value of his
or her shares in the Fund is less than $1,000 due to
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redemption, or such other minimum amount as the Fund may determine from time to
time. An involuntary redemption constitutes a sale. You should consult your tax
adviser concerning the tax consequences of involuntary redemptions. A
shareholder may increase the value of his or her shares in the Fund to the
minimum amount within the 30 day period. Each share of the Fund is subject to
redemption at any time if the Board of Trustees determines in its sole
discretion that failure to so redeem may have materially adverse consequences to
all or any of the shareholders of the Fund. After the initial three months of
the Fund's operations, any account opened during the initial three month period
will be subject to the redemption provisions described above.
SHARE PRICE CALCULATION
The value of an individual share in the Fund (the net asset value) is
calculated by dividing the total value of the Fund's investments and other
assets (including accrued income), less any liabilities (including estimated
accrued expenses), by the number of shares outstanding, rounded to the nearest
cent. Net asset value per share is determined as of the close of the New York
Stock Exchange (4:00 p.m., Eastern time) on each day that the exchange is open
for business, and on any other day the Fund is open for business on which there
is sufficient trading in the Fund's securities to materially affect the net
asset value. The net asset value per share of the Fund will fluctuate.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Advisor's opinion, the last bid price does not accurately reflect the current
value of the security. All other securities for which over-the-counter market
quotations are readily available are valued at their last bid price. When market
quotations are not readily available, when the Advisor determines the last bid
price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Advisor, subject to review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Advisor believes such prices accurately reflect the fair market
value of such securities. A pricing service utilizes electronic data processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Advisor, subject to review of the Board of Trustees. Short
term investments in fixed income securities with maturities of less than 60 days
when acquired, or which subsequently are within 60 days of maturity, are valued
by using the amortized cost method of valuation, which the Board has determined
will represent fair value.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute substantially all of its net investment
income as dividends to its shareholders on an annual basis, and intends to
distribute its net long term capital gains and its net short term capital gains
at least once a year.
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Income dividends and capital gain distributions are automatically
reinvested in additional shares at the net asset value per share on the
distribution date. An election to receive a cash payment of dividends and/or
capital gain distributions may be made in the application to purchase shares or
by separate written notice to the Transfer Agent. Shareholders will receive a
confirmation statement reflecting the payment and reinvestment of dividends and
summarizing all other transactions. If cash payment is requested, a check
normally will be mailed within five business days after the payable date. If you
withdraw your entire account, all dividends accrued to the time of withdrawal,
including the day of withdrawal, will be paid at that time. You may elect to
have distributions on shares held in IRAs and 403(b) plans paid in cash only if
you are 59 1/2 years old or permanently and totally disabled or if you otherwise
qualify under the applicable plan.
TAXES
The Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended. By so qualifying,
the Fund will not be subject to federal income taxes to the extent that it
distributes substantially all of its net investment income and any realized
capital gains.
For federal income tax purposes, dividends paid by the Fund from
ordinary income are taxable to shareholders as ordinary income, but may be
eligible in part for the dividends received deduction for corporations. Pursuant
to the Tax Reform Act of 1986 (the "Tax Reform Act"), all distributions of net
short term capital gains to individuals are taxed at the same rate as ordinary
income. All distributions of net capital gains to corporations are taxed at
regular corporate rates. Any distributions designated as being made from net
realized long term capital gains are taxable to shareholders as long term
capital gains regardless of the holding period of the shareholder.
The Fund will mail to each shareholder after the close of the calendar
year a statement setting forth the federal income tax status of distributions
made during the year. Dividends and capital gains distributions may also be
subject to state and local taxes. Shareholders are urged to consult their own
tax advisers regarding specific questions as to federal, state or local taxes
and the tax effect of distributions and withdrawals from the Fund.
On the application or other appropriate form, the Fund will request the
shareholder's certified taxpayer identification number (social security number
for individuals) and a certification that the shareholder is not subject to
backup withholding. Unless the shareholder provides this information, the Fund
will be required to withhold and remit to the U.S. Treasury 31% of the
dividends, distributions and redemption proceeds payable to the shareholder.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, the Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed with respect to a specific account in any year, the Fund may
make a corresponding charge against the account.
OPERATION OF THE FUND
The Fund is a non-diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on
August 8, 1995. The Board of
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Trustees supervises the business activities of the Fund. Like other mutual
funds, the Fund retains various organizations to perform specialized services.
The Fund retains Newport Advisory Company, Inc., 707 Skokie Boulevard,
Suite 200, Northbrook, Illinois 60062 (the "Advisor") to manage the Fund's
investments. The Advisor, an Illinois corporation, is an independent investment
adviser that was founded in 1994. Kenneth Holeski, Richard Sacks, Mark Gordon
and Jerry Karel are the controlling shareholders of the Advisor. Mr. Holeski,
President of the Advisor, is primarily responsible for the day-to-day
management of the portfolio of the Fund. Mr. Holeski provides investment
management services to taxable and tax-exempt clients through Newport Investment
Advisors, Inc., a separate investment adviser which he founded in 1989.
Newport Investment Advisors, Inc. currently manages approximately $250 million
in assets.
The Fund is authorized to pay the Advisor a fee equal to an annual
average rate of 2.50% of its average daily net assets. The Advisor pays all of
the operating expenses of the Fund except 12b-1 fees, brokerage, taxes,
interest, fees and expenses of non-interested person trustees and extraordinary
expenses. The rate of the advisory fees paid by most investment companies to
their investment advisers is lower than the rate of the advisory fees paid by
the Fund. In this regard, it should be noted that most mutual funds pay their
own operating expenses directly, while the Fund's expenses, except those
specified above, are paid by the Advisor. The 12b-1 fees paid by the Fund are
described below under "Distribution Plan."
The Fund retains AmeriPrime Financial Services, Inc. (the
"Administrator") to manage the Fund's business affairs and provide the Fund with
administrative services, including all regulatory reporting and necessary office
equipment, personnel and facilities. The Administrator receives a monthly fee
from the Advisor equal to an annual average rate of 0.10% of the Fund's average
daily net assets up to fifty million dollars, 0.075% of the Fund's average daily
net assets from fifty to one hundred million dollars and 0.050% of the Fund's
average daily net assets over one hundred million dollars (subject to a minimum
annual payment of $30,000). In addition, the Advisor will reimburse the
Administrator for organizational expenses advanced by the Administrator. The
Fund retains American Data Services, Inc., 24 West Carver Street, Huntington,
New York 11743 (the "Transfer Agent") to serve as transfer agent, dividend
paying agent and shareholder service agent. The Trust retains AmeriPrime
Financial Securities, Inc., 1793 Kingswood Drive, Suite 200, Southlake, Texas
76092 (the "Distributor") to act as the principal distributor of the Fund's
shares. Kenneth D. Trumpfheller, officer and sole shareholder of the
Administrator and the Distributor, is an officer and trustee of the Trust. The
services of the Administrator, Transfer Agent and Distributor are operating
expenses paid by the Advisor.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its obligation of seeking best
qualitative execution, the Advisor may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions.
DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (the "Plan") under which the Fund pays the
Advisor an amount which is
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accrued daily and paid monthly, at an annual rate of 0.25% of the average daily
net assets of the Fund. Amounts paid under the Plan by the Fund are in addition
to the advisory fee described above and are paid to the Advisor for services it
provides and the expenses it bears in the distribution of the Fund's shares,
including overhead and telephone expenses; printing and distribution of
prospectuses and reports used in connection with the offering of the Fund's
shares to prospective investors; and preparation, printing and distribution of
sales literature and advertising materials. In addition, payments to the Advisor
under the Plan may reimburse the Advisor for payments it makes to selected
dealers and administrators which have entered into Service Agreements with the
Advisor for services provided to shareholders of the Fund. The services provided
by selected dealers pursuant to the Plan are primarily designed to promote the
sale of shares of the Fund and include the furnishing of office space and
equipment, telephone facilities, personnel and assistance to the Fund in
servicing such shareholders. The service provided by administrators pursuant to
the Plan are designed to provide support services to the Fund and include
establishing and maintaining shareholders' accounts and records, processing
purchase and redemption transactions, answering routine client inquiries
regarding the Fund, and providing such other services to the Fund as the Fund
may reasonably request. The Advisor may also compensate such dealers and
administrators out of its own assets.
INVESTMENT POLICIES, TECHNIQUES AND RISK CONSIDERATIONS
The Fund may invest in the following portfolio securities, may engage
in the following practices and will be subject to the following risks and
limitations:
Equity Securities. The Fund emphasizes investments in common stocks,
which represent an equity (ownership) interest in a corporation. The Fund also
may buy securities such as convertible debt, preferred stock, warrants, or other
securities exchangeable for shares of common stock and other equity securities,
including publicly-traded partnership interests. In selecting equity investments
for the Fund, the Advisor considers the fundamental value of the issuing company
as well as market and economic factors that affect securities prices.
Debt Securities. The Fund may invest up to 35% of its assets in debt
securities, including lower quality, high yielding debt securities if it
believes that doing so will result in capital appreciation or will earn income
on idle cash. The Fund may buy debt securities of all types and qualities issued
by both domestic and foreign issuers, including government securities, corporate
bonds and debentures, commercial paper, and certificates of deposit.
Lower quality debt securities (commonly called "junk bonds") often are
considered to be speculative and involve greater risk of default or price change
due to changes in the issuer's creditworthiness or changes in economic
conditions. The market prices of these securities will fluctuate over time, may
fluctuate more than higher quality securities and may decline significantly in
periods of general economic difficulty, which may follow periods of rising
interest rates. The market for lower quality securities may be less liquid than
the market for securities of higher quality. Furthermore, the liquidity of lower
quality securities may be affected by the market's perception of their credit
quality. Therefore, judgment may at times play a greater role in valuing these
securities than in the case of higher quality securities, and it also may be
more difficult during certain adverse market conditions to sell lower quality
securities at their fair value to meet redemption requests or to respond to
changes in the market.
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Foreign Securities. Foreign debt and equity securities, and securities
denominated in or indexed to foreign currencies may be affected by the strength
of those currencies relative to the U.S. dollar, or by political or economic
developments in foreign countries. These developments could include restrictions
on foreign currency transactions and rules of exchange, or changes in
administrations or monetary policies of foreign governments. Foreign securities
purchased using foreign currencies may incur currency conversion costs. Foreign
issuers and brokers may not be subject to accounting standards or governmental
supervision comparable to U.S. issuers and brokers, and there may be less public
information about their operations. In addition, foreign markets may be less
liquid or more volatile than U.S. markets, and may offer less protection to
investors.
The Fund may enter into forward contracts (agreements to exchange one
currency for another at a future date) to manage currency risks and to
facilitate transactions in foreign securities. Although currency forward
contracts can be used to protect the Fund from adverse exchange rate changes,
the Fund may incur a loss if the Advisor incorrectly predicts foreign currency
values.
There is no limitation on the amount of the Fund's assets that may be
invested in foreign securities or in any one country or currency, except that no
more than 35% of the Fund's assets may be invested in companies operating
exclusively in one foreign country.
Indexed Securities. The Fund may invest in indexed securities whose
value is linked to currencies, interest rates, commodities, indices, or other
financial indicators (the "reference index"). Most indexed securities are short
to intermediate term fixed-income securities whose values at maturity or
interest rates rise or fall according to the change in one or more specified
underlying instruments. Indexed securities may be positively or negatively
indexed (i.e., their value may increase or decrease if the underlying instrument
appreciates), and may have return characteristics similar to direct investments
in the underlying instrument or to one or more options on the underlying
instrument. Indexed securities may be more volatile than the underlying
instrument itself. Because their performance is tied to a reference index, a
fund investing in indexed securities bears the risk of changes in the reference
index in addition to being exposed to the credit risk of the issuer of the
security.
Repurchase Agreements. In a repurchase agreement, the Fund buys a
security at one price and simultaneously agrees to sell it back later at a
higher price. The repurchase date is usually within seven days of the original
purchase. If the other party to a repurchase agreement becomes bankrupt or
otherwise defaults on its obligation to repurchase the security, the Fund may
experience delays in recovering its cash. To the extent that the value of the
security purchased has decreased in the meantime, the Fund could experience a
loss. The Fund's repurchase agreements are fully collateralized.
When Issued Securities and Forward Commitments. The Fund may buy and
sell securities on a when-issued or delayed delivery basis, with payment and
delivery taking place at a future date. The price and interest rate that will
be received on the securities are each fixed at the time the buyer enters into
the commitment. The Fund may enter into such forward commitments if it holds,
and maintains until the settlement date in a separate account at the Fund's
Custodian, cash or U.S. government securities in an amount sufficient to meet
the purchase price. Forward
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<PAGE>
commitments involve a risk of loss if the value of the security to be purchased
declines prior to the settlement date. Any change in value could increase
fluctuations in the Fund's share price and yield. Although the Fund will
generally enter into forward commitments with the intention of acquiring
securities for its portfolio, the Fund may dispose of a commitment prior to the
settlement if the Advisor deems it appropriate to do so.
Borrowing and Leverage; Reverse Repurchase Agreements. The Fund may
borrow from banks up to one third of its total assets, and the Fund may pledge
assets in connection with such borrowings. The Fund also may engage in reverse
repurchase agreements in which the Fund sells a security to another party, such
as a bank, broker-dealer or other financial institution, and simultaneously
agrees to buy it back later at a higher price. While a reverse repurchase
agreement is outstanding, the Fund generally will direct its custodian to
segregate cash and appropriate liquid assets to cover it obligations under the
agreement. The Fund will enter into reverse repurchase agreements only with
parties whose creditworthiness has been reviewed and deemed satisfactory by the
Advisor. Except for reverse repurchase agreements that it fully collateralizes,
the Fund aggregates reverse repurchase agreements with its bank borrowings for
purposes of limiting borrowings to one third of its total assets.
If the Fund makes additional investments while borrowings are
outstanding, this may be construed as a form of leverage. The Fund's objective
would be to pursue investment opportunities with yields that exceed the cost of
the borrowings. This leverage may exaggerate changes in the Fund's share value
and the gains and losses on the Fund's investment. Leverage also creates
interest expenses that may exceed the return on investments made with the
borrowings.
Lending. The Fund may lend securities to broker-dealers and other
institutions as a means of earning additional income. Under the lending policy
authorized by the Board of Trustees and implemented by the Advisor in response
to requests of broker-dealers or institutional investors which the Advisor deems
qualified, the borrower must agree to maintain collateral, in the form of cash
or U.S. government obligations, with the Fund at least equal to 100% of the
current market value of the loaned securities. The Fund will continue to receive
dividends or interest on the loaned securities and may terminate such loans at
any time or reacquire such securities in time to vote on any matter when the
Board of Trustees determines voting to be in the Fund's interest. If the
borrower becomes bankrupt or otherwise defaults on its obligations, the Fund
could experience delays in recovering its securities. To the extent that, in the
meantime, the value of securities loaned had increased, the Fund could
experience a loss if the borrower had not maintained sufficient collateral.
Loans, in the aggregate, may not exceed one third of the Fund's total assets.
Short Sales. If the Fund anticipates that the price of a security will
decline, it may sell the security short. When the Fund engages in a short sale,
it sells a security it does not own and, to complete the sale, borrows the same
security from a broker or other institution. The Fund must replace the borrowed
security by purchasing it at the market price at the time the Fund chooses to
close the short sale, or at the time it is required to do so by the lender,
whichever is earlier. The Fund may make a profit or loss depending upon whether
the market price of the security decreases or increases between the date of the
short sale and the date on which the Fund must replace the borrowed security.
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<PAGE>
The Fund's short sales must be fully collateralized, and the Fund will
not sell short securities whose underlying value exceeds 25% of its total
assets. The Fund limits short sales of any one issuer's securities to 2% of the
Fund's total assets and to 2% of any one class of the issuer's securities.
Options, Futures Contracts and Precious Metals. The Fund may buy and
sell options and futures contracts to manage its exposure to changing interest
rates, security prices, currency exchange rates and precious metal prices. Some
options and futures strategies, including selling futures, buying puts, and
writing calls, hedge the Fund's investment against price fluctuations. Other
strategies, including buying futures, writing puts, and buying calls, tend to
increase market exposure. Options and futures may be combined with each other or
with forward contracts in order to adjust the risk and return characteristics of
the overall strategy. The Fund may invest in options and futures based on any
type of security, index, or currency related to its investments, including
options and futures traded on foreign exchanges and options not traded on
exchanges. The Fund also may invest in gold, silver, platinum or other precious
metals and precious metal options and futures.
Options, futures and precious metals can be volatile investments, and
involve certain risks. If the Advisor applies a hedge at an inappropriate time
or judges market conditions incorrectly, options and futures strategies may
lower the Fund's return. Options and futures traded on foreign exchanges
generally are not regulated by U.S. authorities, and may offer less liquidity
and less protection to the Fund if the other party to the contract defaults. The
Fund also could experience losses if the prices of its options and futures
positions were poorly correlated with its other investments, or if it could not
close out its positions because of an illiquid secondary market.
The Fund will not hedge more than 25% of its total assets by selling
futures or writing calls under normal conditions. In general, the Fund also will
not write put options if its settlement obligations would exceed 25% of its
total assets. In addition, the Fund will not buy futures, put options or call
options for other than hedging purposes with an aggregate value exceeding 5% of
its total assets. The Fund will not invest more than 5% of its total assets in
precious metals.
Zero Coupon Debt Securities and Pay-in-Kind Securities. The Fund may
invest in zero coupon securities and pay-in-kind securities. Zero coupon debt
securities do not make interest payments; instead, they are sold at a discount
from face value and are redeemed at face value when they mature. Pay-in-kind
securities pay all or a portion of their interest or dividends in the form of
additional securities. Both these types of bonds allow an issuer to avoid the
need to generate cash to meet current interest payments and, accordingly, may
involve greater credit risks than debt securities that make regular interest
payments. Because these securities do not pay current income, their prices can
be very volatile when interest rates change. In calculating its daily dividend,
the Fund takes into account as income a portion of the difference between the
bond's purchase price and its face value. Although zero coupon bonds and
pay-in-kind bonds pay no interest to holders prior to maturity, interest on
these securities is reported as income to the Fund and included with dividends
paid to the Fund's shareholders, if any. These dividends must be made from the
Fund's cash assets or, if necessary, from the proceeds of sales of portfolio
securities. The Fund will not be able to purchase additional income-producing
securities with cash used to pay such dividends, and its current income
ultimately may be reduced as a result.
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<PAGE>
Illiquid Investments. Under the supervision of and pursuant to the
guidelines adopted by the Board of Trustees, the Advisor determines which of the
Fund's investments are classified as illiquid. Illiquid securities generally
include securities which cannot be disposed of promptly and in the ordinary
course of business without taking a reduced price. Securities may be illiquid
due to contractual or legal restrictions on resale or lack of a ready market.
The absence of a trading market can make it difficult to ascertain a market
value for illiquid investments. Disposing of illiquid investments may involve
time-consuming negotiation and legal expenses, and it may be difficult or
impossible for the Fund to sell them promptly at an acceptable price. The Fund
may not invest more than 15% of its assets in illiquid investments.
Non-Diversification and Concentration. Diversifying a fund's investment
portfolio can reduce, to some extent, the risks of investing. This may include
limiting the amount of money invested in any one company or, on a broader scale,
limiting the amount invested in any one industry.
To retain investment flexibility, the Fund may be non-diversified to
some extent. To the extent that the Fund invests a significant portion of its
assets in a few issuers' securities, the performance of the Fund could be
significantly affected by the performance of those issuers. However, with
respect to 50% of its assets, the Fund will not invest more than 5% of its total
assets in any one issuer, and may not invest more than 25% of its assets in any
one industry.
These limitations do not apply to U.S. Government securities.
Defensive Investments. The Fund may invest temporarily up to 100% of
its assets in cash and investment grade debt securities for defensive purposes.
Investment Risks
The aggressive investment techniques of the Fund may entail risks not
encountered by the average mutual fund. Some techniques, such as short sales,
use of put and call options and futures, investments in foreign securities,
leverage and short term trading, may be considered speculative and could result
in higher operating expenses.
GENERAL INFORMATION
Fundamental Policies. The investment limitations set forth in the
Statement of Additional Information as fundamental policies may not be changed
without the affirmative vote of the majority of the outstanding shares of the
Fund. The investment objective of the Fund may be changed without the
affirmative vote of a majority of the outstanding shares of the Fund. Any such
change may result in the Fund having an investment objective different from the
objective which the shareholders considered appropriate at the time of
investment in the Fund.
Portfolio Turnover. The Fund does not intend to purchase or sell
securities for short term trading purposes. The Fund will, however, sell any
portfolio security (without regard to the length of time it has been held) when
the Advisor believes that market conditions, creditworthiness factors or general
economic conditions warrant such action. It is anticipated that the Fund will
have a portfolio turnover rate of less than 100%.
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<PAGE>
Shareholder Rights. Any Trustee of the Trust may be removed by vote of
the shareholders holding not less than two-thirds of the outstanding shares of
the Trust. The Trust does not hold an annual meeting of shareholders. When
matters are submitted to shareholders for a vote, each shareholder is entitled
to one vote for each whole share he owns and fractional votes for fractional
shares he owns. All shares of the Fund have equal voting rights and liquidation
rights. Prior to the offering made by this Prospectus, AmeriPrime Financial
Securities, Inc. purchased for investment all of the outstanding shares of the
Fund and as a result AmeriPrime Financial Securities, Inc. and its controlling
shareholder Kenneth D. Trumpfheller may be deemed to control the Fund.
PERFORMANCE INFORMATION
The Fund may periodically advertise "average annual total return." The
"average annual total return" of the Fund refers to the average annual
compounded rate of return over the stated period that would equate an initial
amount invested at the beginning of a stated period to the ending redeemable
value of the investment. The calculation of "average annual total return"
assumes the reinvestment of all dividends and distributions.
The Fund may also periodically advertise its total return over various
periods in addition to the value of a $10,000 investment (made on the date of
the initial public offering of the Fund's shares) as of the end of a specified
period. The "total return" for the Fund refers to the percentage change in the
value of an account between the beginning and end of the stated period, assuming
no activity in the account other than reinvestment of dividends and capital
gains distributions.
The Fund may also include in advertisements data comparing performance
with other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. In addition, Fund performance may be
compared to well-known indices of market performance including the Standard &
Poor's (S&P) 500 Index or the Dow Jones Industrial Average.
The advertised performance data of the Fund is based on historical
performance and is not intended to indicate future performance. Rates of total
return quoted by the Fund may be higher or lower than past quotations, and there
can be no assurance that any rate of total return will be maintained. The
principal value of an investment in the Fund will fluctuate so that a
shareholder's shares, when redeemed, may be worth more or less than the
shareholder's original investment.
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<PAGE>
Investment Advisor Administrator
Newport Advisory Company, Inc. AmeriPrime Financial Services, Inc.
707 Skokie Boulevard, Suite 200 1793 Kingswood Drive, Suite 200
Northbrook, IL 60062 Southlake, Texas 76092
Custodian
(all initial and subsequent purchases) Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
P.O. Box 641082 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45264 Southlake, Texas 76092
Transfer Agent (all redemption requests) Auditors
American Data Services, Inc. McCurdy & Associates CPA's, Inc.
24 West Carver Street 27955 Clemens Road
Huntington, New York 11743 Westlake, Ohio 44145
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell its
shares in any state to any person to whom it is unlawful to make such offer in
such state.
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<PAGE>
TABLE OF CONTENTS
Page #
SUMMARY OF FUND EXPENSES................................................... 2
Shareholder Transaction Expenses.................................. 2
Annual Fund Operating Expenses.................................... 2
THE FUND .................................................................. 3
INVESTMENT OBJECTIVE AND STRATEGIES........................................ 3
HOW TO INVEST IN THE FUND.................................................. 4
Initial Purchase.................................................. 4
By Mail ................................................ 4
By Wire ................................................ 4
Additional Investments............................................ 5
Tax Sheltered Retirement Plans.................................... 5
Other Purchase Information........................................ 5
HOW TO REDEEM SHARES....................................................... 5
By Mail ......................................................... 6
By Telephone...................................................... 6
Additional Information............................................ 6
SHARE PRICE CALCULATION.................................................... 7
DIVIDENDS AND DISTRIBUTIONS................................................ 7
TAXES .................................................................. 8
OPERATION OF THE FUND...................................................... 8
DISTRIBUTION PLAN.......................................................... 9
INVESTMENT POLICIES, TECHNIQUES AND RISK CONSIDERATIONS.................... 10
Equity Securities............................................... 10
Debt Securities................................................. 10
Foreign Securities.............................................. 11
Indexed Securities.............................................. 11
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<PAGE>
Repurchase Agreements........................................... 11
When Issued Securities and Forward Commitments.................. 11
Borrowing and Leverage; Reverse Repurchase Agreements........... 12
Lending ....................................................... 12
Short Sales..................................................... 12
Options, Futures Contracts and Precious Metals.................. 13
Zero Coupon Debt Securities and Pay-in-Kind Securities.......... 13
Illiquid Investments............................................ 14
Non-Diversification and Concentration........................... 14
Defensive Investments........................................... 14
Investment Risks.................................................. 14
GENERAL INFORMATION........................................................ 14
Fundamental Policies.............................................. 14
Portfolio Turnover................................................ 14
Shareholder Rights................................................ 15
PERFORMANCE INFORMATION.................................................... 15
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<PAGE>
THE XYZ CONTRARIAN FUND
STATEMENT OF ADDITIONAL INFORMATION
_________________, 1996
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of The XYZ Contrarian Fund
dated ____________________, 1996. A copy of the Prospectus can be obtained by
writing the Transfer Agent at 24 W. Carver Street, Huntington, New York 11743,
or by calling 1-800-957-4386.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUST................................................... 1
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS.......................................................... 1
INVESTMENT LIMITATIONS..................................................... 13
THE INVESTMENT ADVISOR..................................................... 16
DISTRIBUTION PLAN.......................................................... 16
TRUSTEES AND OFFICERS...................................................... 17
PORTFOLIO TRANSACTIONS AND BROKERAGE....................................... 18
DETERMINATION OF SHARE PRICE............................................... 19
INVESTMENT PERFORMANCE..................................................... 19
CUSTODIAN.................................................................. 20
TRANSFER AGENT............................................................. 20
ACCOUNTANTS................................................................ 20
DISTRIBUTOR................................................................ 20
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<PAGE>
DESCRIPTION OF THE TRUST
The XYZ Contrarian Fund (the "Fund") was organized as a series of
AmeriPrime Funds (the "Trust"). The Trust is an open-end investment company
established under the laws of Ohio by an Agreement and Declaration of Trust
dated August 8, 1995 (the "Trust Agreement"). The Trust Agreement permits
the Trustees to issue an unlimited number of shares of beneficial interest of
separate series without par value. The Fund is one of five series currently
authorized by the Trustees.
Each share of a series represents an equal proportionate interest in
the assets and liabilities belonging to that series with each other share of
that series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
the rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will be entitled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by or under the
direction of the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.
For information concerning the purchase and redemption of shares of the
Fund, see "How to Invest in the Fund" and "How to Redeem Shares" in the Fund's
Prospectus. For a description of the methods used to determine the share price
and value of the Fund's assets, see "Share Price Calculation" in the Fund's
Prospectus.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS
This section contains a more detailed discussion of some of the
investments the Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objectives and Strategies" and
"Investment Policies and Techniques and Risk Considerations").
A. Equity Securities. Equity securities include common stock, preferred
stock and common stock equivalents (such as convertible preferred stock, rights
and warrants). Convertible preferred stock is preferred stock that can be
converted into common stock pursuant to its terms. Warrants are options to
purchase equity securities at a specified price valid for a specific time
period. Rights are similar to warrants, but normally have a short duration and
are distributed by the issuer to its shareholders.
B. Lower Quality Debt Securities. The Fund may purchase lower quality
debt securities, or unrated debt securities, that have poor protection of
payment of principal and interest. These securities often are considered to be
speculative and involve greater risk of default of price changes due to changes
in the issuer's creditworthiness. Market prices of these securities may
fluctuate more than higher quality debt securities and may decline significantly
in periods of general economic
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<PAGE>
difficulty which may follow periods of rising rates. While the market for high
yield corporate debt securities has been in existence for many years and has
weathered previous economic downturns, the market in recent years has
experienced a dramatic increase in the large-scale use of such securities to
fund highly leveraged corporate acquisitions and restructurings. Accordingly,
past experience may not provide an accurate indication of future performance of
the high yield bond market, especially during periods of economic recession. The
Fund may invest in securities which are of lower quality or are unrated if the
Advisor determines that the securities provide the opportunity of meeting the
Fund's objective without presenting excessive risk. The Advisor will consider
all factors which it deems appropriate, including ratings, in making investment
decisions for the Fund and will attempt to minimize investment risks through
diversification, investment analysis and monitoring of general economic
conditions and trends. To the extend the Fund invests in lower quality
securities, achievement of its investment objective may be more dependent on the
Advisor's credit analyses than is the case for higher quality bonds. While the
Advisor may refer to ratings, it does not rely exclusively on ratings, but makes
its own independent and ongoing review of credit quality.
The market for lower quality securities may be thinner and less active
than that for higher quality securities, which can adversely affect the prices
at which these securities can be sold. If there is not established retail
secondary market and market quotations are not available, these securities are
valued in accordance with procedures established by the Board of Trustees,
including the use of outside pricing services. Judgment plays a greater role in
valuing high yield corporate debt securities than is the case for securities for
which external sources for quotations and last-sale information are available.
Adverse publicity and changing investor perceptions may affect the ability of
outside pricing services used by the Fund to value as portfolio securities, and
the Fund's ability to dispose of these lower quality debt securities.
Lower quality securities present risks based on payment expectations.
For example, high yield bonds may contain redemption or call provisions. If an
issuer exercises the provisions in a declining interest rate market, the Fund
would have to replace the security with a lower yielding security, resulting in
a decreased return for investors. Conversely, a high yield bond's value will
decrease in a rising interest rate market, as will the value of the Fund's
assets. If the Fund experiences unexpected net redemptions, this may force it to
sell its high yield bonds, without regard to their investment merits, thereby
decreasing the asset base upon which the Fund's expenses can be spread and
possibly reducing the Fund's rate of return.
Since the risk of default is higher for lower quality securities and
sometimes increases with the age of these securities, the Advisor's research and
credit analysis are an integral part of managing any securities of this type
held by the Fund. In considering investments for the Fund, the Advisor attempts
to identify those issuers of high-yielding securities whose financial condition
is adequate to meet future obligations, has improved or is expected to improve
in the future. The Advisor's analysis focuses on relative values based on such
factors as interest or dividend coverage, asset coverage, earning prospects, and
the experience and managerial strength of the issuer.
The Fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise exercise its rights as security holder to seek to
protect the interests of security holders if it determines this to be in the
best interests of the Fund shareholders.
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<PAGE>
C. Repurchase Agreements. The Fund may enter into repurchase
agreements. In a repurchase agreement, the Fund purchases a security and
simultaneously commits to resell that security to the seller at an agreed upon
price on an agreed upon date within a number of days (usually not more than
seven) from the date of purchase. The resale price reflects the purchase price
plus an agreed upon incremental amount which is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement involves the
obligation of the seller to pay the agreed upon price, which obligation is, in
effect, secured by the value (at least equal to the amount of the agreed upon
resale price and marked to market daily) of the underlying security. The Fund
may engage in a repurchase agreement with respect to any security in which it is
authorized to invest. Any repurchase transaction in which the Fund engages will
require collateralization equal to at least 102% of the Seller's obligation
during the entire term of the repurchase agreement. While it does not presently
appear possible to eliminate all risks from these transactions (particularly the
possibility of a decline in the market value of the underlying securities, as
well as delays and costs to the Fund in connection with bankruptcy proceedings),
it is the Fund's current policy to limit repurchase agreement transactions to
those parties whose creditworthiness has been reviewed and deemed satisfactory
by the Advisor.
D. Securities Lending. The Fund may lend securities to parties such as
broker-dealers, banks, or institutional investors. Securities lending allows the
Fund to retain ownership of the securities loaned and, at the same time, to earn
additional income. Since there may be delays in the recovery of loaned
securities, or even a loss of rights in collateral supplied, should the borrower
fail financially, loans will be made only to parties whose creditworthiness has
been reviewed and deemed satisfactory by the Advisor. Furthermore, they will
only be made if, in the judgment of the Advisor, the consideration to be earned
from such loans would justify the risk.
The Advisor understands that it is the current view of the staff of the
Securities and Exchange Commission ("SEC") that the Fund may engage in loan
transactions only under the following conditions: (1) a Fund must receive 100%
collateral in the form of cash, cash equivalents (e.g., U.S. Treasury bills or
notes) or other high grade liquid debt instruments from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of the
collateral; (3) after giving notice, the Fund must be able to terminate the loan
at any time; (4) the Fund must receive reasonable interest on the loan or a flat
fee from the borrower, as well as amounts equivalent to any dividends, interest,
or other distributions on the securities loaned and to any increase in market
value; (5) the Fund may pay only reasonable custodian fees in connection with
the loan; and (6) the Board of Trustees must be able to vote proxies on the
securities loaned, either by terminating the loan or by entering into an
alternative arrangement with the borrower.
Cash received through loan transactions may be invested in any security
in which the Fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
E. Foreign Investments. Subject to the limitations described in
the prospectus, the Fund may invest in foreign securities. Foreign investments
can involve significant risks in addition to the risks inherent in U.S.
investments. The value of securities denominated in or indexed to foreign
currencies, and of dividends and interest from such securities, can change
significantly when foreign currencies strengthen or weaken relative to the
U.S. dollar. Foreign securities markets generally
- 3 -
<PAGE>
have less trading volume and less liquidity than U.S. markets, and prices on
some foreign markets can be highly volatile. Many foreign countries lack uniform
accounting and disclosure standards comparable to those applicable to U.S.
companies, and it may be more difficult to obtain reliable information regarding
an issuer's financial condition and operations. In addition, the costs of
foreign investing, including withholding taxes, brokerage commissions, and
custodial costs, generally are higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S.
markets. Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign security trading practices, including those
involving the release of assets in advance of payment, may invoke increased
risks in the event of a failed trade or the insolvency of a broker-dealer, and
may involve substantial delays. It also may be difficult to enforce legal rights
in foreign countries.
Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments adverse to
the interests of U.S. investors, including the possibility of expropriation or
nationalization of assets, confiscatory taxation, restrictions on U.S.
investment or on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. There may be a greater possibility of
default by foreign governments or foreign government-sponsored enterprises.
Investments in foreign countries also involve a risk of local political,
economic or social instability, military action or unrest, or adverse diplomatic
developments. There is no assurance that an Advisor will be able to anticipate
or counter these potential events and their impacts on the Fund's share price.
The considerations noted above generally are intensified for
investments in developing countries. Developing countries may have relatively
unstable governments, economies based on only a few industries, and securities
markets that trade a small number of securities.
The Fund may invest in foreign securities that impose restrictions on
transfer within the U.S. or to U.S. persons. Although securities subject to
transfer restrictions may be marketable abroad, they may be less liquid than
foreign securities of the same class that are not subject to such restrictions.
American Depositary Receipts and European Depositary Receipts ("ADRs"
and "EDRs") are certificates evidencing ownership of shares of a foreign-based
issuer held in trust by a bank or similar financial institution. Designed for
use in U.S. and European securities markets, respectively, ADRs and EDRs are
alternatives to the purchase of the underlying securities in their national
market and currencies.
F. Foreign Currency Transactions. The Fund may hold foreign currency
deposits from time to time, and may convert dollars and foreign currencies in
the foreign exchange markets. Currency conversion involves dealer spreads and
other costs, although commissions usually are not charged. Currencies may be
exchanged on a spot (i.e., cash) basis, or by entering into forward contracts to
purchase or sell foreign currencies at a future date and price. Forward
contracts generally are traded in an interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. The
parties to a forward contract may agree to offset or terminate the contract
before its maturity, or may hold the contract to maturity and complete the
contemplated currency exchange.
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<PAGE>
The Fund may use currency forward contracts to manage currency risks
and to facilitate transactions in foreign securities. The following discussion
summarizes the principal currency management strategies involving forward
contracts that could be used by the Fund.
In connection with purchases and sales of securities denominated in
foreign currencies, the fund may enter into currency forward contracts to fix a
definite price for the purchase or sale in advance of the trade's settlement
date. This technique is sometimes referred to as a "settlement hedge" or
"transaction hedge." The Advisor expects to enter into settlement hedges in the
normal course of managing the Fund's foreign investments. The Fund also could
enter into forward contracts to purchase or sell a foreign currency in
anticipation of future purchases or sales of securities denominated in foreign
currency, even if the specific investments have not yet been selected by the
Advisor.
The Fund also may use forward contracts to hedge against a decline in
the value of existing investments denominated in foreign currency. For example,
if the Fund owned securities denominated in Deutschemarks, it could enter into a
forward contract to sell Deutschemarks in return for U.S. dollars to hedge
against possible declines in the Deutschemark's value. Such a hedge (sometimes
referred to as a "position hedge") would tend to offset both positive and
negative currency fluctuations, but would not offset changes in security values
caused by other factors. The fund also could hedge the position by selling
another currency expected to perform similarly to the Deutschemark -- for
example, by entering into a forward contract to sell Deutschemarks or European
Currency Units in return for U.S. dollars. This type of hedge, sometimes
referred to as a "proxy hedge," could offer advantages in terms of cost, yield,
or efficiency, but generally will not hedge currency exposure as effectively as
a simple hedge into U.S. dollars. Proxy hedges may result in losses if the
currency used to hedge does not perform similarly to the currency in which the
hedge securities are denominated.
Under certain conditions, SEC guidelines require mutual funds to
segregate cash and appropriate liquid assets to cover currency forward
contracts. As required by SEC guidelines, the Fund will segregate assets to
cover currency forward contracts, if any, whose purpose is essentially
speculative. The Fund will not segregate assets to cover forward contracts
entered into for hedging purposes, including settlement hedges, position hedges,
and proxy hedges. In segregating assets, the Fund's custodian or a designated
subcustodian either places such assets in a segregated account or separately
identifies such assets and renders them unavailable for investment by the Fund.
Successful use of forward currency contracts will depend on the
Advisor's skill in analyzing and predicting currency values. Forward contracts
may change the Fund's currency exchange rates substantially, and could result in
losses to the Fund if currencies do not perform as the Advisor anticipates. For
example, if a currency's value rose at a time when the Advisor had hedged the
Fund by selling currency in exchange for dollars, the Fund would be unable to
participate in the currency's appreciation. If the Advisor hedges currency
exposure through proxy hedges, the Fund could realize currency losses from the
hedge and the security position at the same time if the two currencies do not
move in tandem. Similarly, if the Advisor increases the Fund's exposure to a
foreign currency, and that currency's value declines, the Fund will realize a
loss. There is no assurance that the Advisor's use of forward currency contracts
will be advantageous to the Fund or that the Advisor will hedge at an
appropriate time.
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G. Short Sales. The Fund may seek to hedge investments or realize
additional gains through short sales. The Fund may make short sales, which are
transactions in which the Fund sells a security it does not own, in anticipation
of a decline in the market value of that security. To complete such a
transaction, the Fund must borrow the security to make delivery to the buyer.
The Fund than is obligated to replace the security borrowed by purchasing it at
the market price at or prior to the time of replacement. The price at such time
may be more or less than the price at which the security was sold by the Fund.
Until the security is replaced, the Fund is required to repay the lender any
dividends or interest that accrue during the period of the loan. To borrow the
security, the Fund also may be required to pay a premium, which would increase
the cost of the security sold. The net proceeds of the short sale will be
retained by the broker, to the extent necessary to meet margin requirements,
until the short position is closed out. The Fund also will incur transaction
costs in effecting short sales.
The fund will incur a loss as a result of the short sale if the price
of the security increases between the date of the short sale and the date on
which the Fund replaces the borrowed security. The Fund will realize a gain if
the security declines in price between those dates. The amount of any gain will
be decreased, and the amount of any loss increased by the amount of the premium,
dividends, interest, or expenses the Fund may be required to pay in connection
with a short sale.
No securities will be sold short if, after effect is given to any such
short sale, the total market value of all securities sold short would exceed 25%
of the value of the Fund's total assets. The Fund similarly will limit its short
sales of the securities of any single issuer if the market value of the
securities that have been sold short by the Fund would exceed two percent (2%)
of the value of the Fund's net equity or if such securities would constitute
more than two percent (2%) of any class of the issuer's securities.
Whenever the Fund engages in short sales, its custodian will segregate
an amount of cash or U.S. Government securities or other high-grade liquid debt
securities equal to the difference between (a) the market value of the
securities sold short at the time they were sold short and (b) any cash or U.S.
Government securities required to be deposited with the broker in connection
with the short sale (not including the proceeds from the short sale). The
segregated assets are marked to market daily, provided that at no time will the
amount deposited in it plus the amount deposited with the broker be less than
the market value of the securities at the time they were sold short.
In addition, the Fund may make short sales "against the box," i.e.,
when a security identical to one owned by the Fund is borrowed and sold short.
If the Fund enters into a short sale against the box, it is required to
segregate securities equivalent in kind and amount of the securities sold short
(or securities convertible or exchangeable into such securities) and is required
to hold such securities while the short sale is outstanding. The Fund will incur
transaction costs in connection with opening, maintaining and closing short
sales against the box.
H. Indexed Securities. The Fund may purchase securities whose prices
are indexed to the prices of other securities, securities indices, currencies,
precious metals or other commodities, or other financial indicators. Indexed
securities typically, but not always, are debt securities or deposits whose
value at maturity or coupon rate is determined by reference to a specific
instrument or statistic. Gold-indexed securities, for example, typically provide
for a maturity value that depends on the price of gold, resulting in a security
whose price tends to rise and fall together with
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gold prices. Currency-indexed securities typically are short-term to
intermediate-term debt securities whose maturity values or interest rates are
determined by reference to the values of one or more specified foreign
currencies, and may offer higher yield than U.S. dollar-denominated securities
of equivalent issuers. Currency-indexed securities may be positively or
negatively indexed; that is, their maturity value may increase when the
specified currency value increases, resulting in a security whose price
characteristics are similar to a put on the underlying currency.
Currency-indexed securities also may have prices that depend on the values of a
number of different foreign currencies relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, commodity or other instrument to which
they are indexed, and also may be influenced by interest rate changes in the
U.S. and abroad. At the same time, indexed securities are subject to the credit
risks associated with the issuer of the security, and their values may decline
substantially if the issuer's creditworthiness deteriorates. Recent issuers of
indexed securities have included banks, corporations, and certain U.S.
Government agencies.
I. Forward Commitments and Reverse Repurchase Agreements. The Fund will
direct its Custodian to place cash or U.S. government obligations in a separate
account of the Trust in an amount equal to the commitments of the Fund to
purchase or repurchase securities as a result of its forward commitment or
reverse repurchase agreement obligations. With respect to forward commitments to
sell securities, the Trust will direct its Custodian to place the securities in
a separate account. The Fund will direct its Custodian to segregate such assets
for when, as and if issued commitments only when it determines that issuance of
the security is probable. When a separate account is maintained, the securities
deposited in the separate account will be valued daily at market for the purpose
of determining the adequacy of the securities in the account. To the extent
funds are in a separate account, they will not be available for new investment
or to meet redemptions.
Commitments to purchase securities on a when, as and if issued basis
will not be recognized in the portfolio of the Fund until the Advisor determines
that issuance of the security is probable. At such time, the Fund will record
the transaction and, in determining its net asset value, will reflect the value
of the security daily.
Securities purchased on a forward commitment basis and subject to
reverse repurchase agreements are subject to changes in market value based upon
the public's perception of the creditworthiness of the issuer and changes in the
level of interest rates (which will generally result in all of those securities
changing in value in the same way, i.e., all those securities experiencing
appreciation when interest rates decline and depreciation when interest rates
rise). Therefore, if in order to achieve a higher level of income, the Fund
remains substantially fully invested at the same time that it has purchased on a
forward commitment basis or entered into reverse repurchase transactions, there
will be a possibility that the market value of the Fund's assets will have
greater fluctuation.
J. Leveraging. Leveraging the Fund creates an opportunity for
increased net income but, at the same time, creates special risk considerations.
For example, leveraging may exaggerate changes in the net asset value of Fund
shares and in the yield on the Fund's portfolio. Although the principal of
such borrowings will be fixed, the Fund's assets may change in value during the
time the borrowing is outstanding. Leveraging will create interest expenses
for the Fund which can
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exceed the income from the assets retained. To the extent the income derived
from securities purchased with borrowed funds exceeds the interest the Fund will
have to pay, the Fund's net income will be greater than if leveraging were not
used. Conversely, if the income from the assets retained with borrowed funds is
not sufficient to cover the cost of leveraging, the net income of the Fund will
be less than if leveraging were not used, and therefore the amount available for
distribution to shareholders will be reduced.
K. Futures Contracts. When the Fund purchases a futures contract, it
agrees to purchase a specified underlying instrument or precious metal at a
specified future date. When the Fund sells a futures contract, it agrees to sell
the underlying instrument at a specified future date. The price at which the
purchase and sale will take place is fixed when the Fund enters into the
contract. Some currently available futures contracts are based on specific
securities, such as U.S. Treasury bonds or notes, and some are based on indices
of securities or precious metal prices, such as the Standard & Poor's 500
Composite Stock Price Index ("S&P 500") or gold. Futures can be held until their
delivery dates, or can be closed out before then if a liquid secondary market is
available.
The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument or precious metal. Therefore,
purchasing futures contracts will tends to increase a Fund's exposure to
positive and negative price fluctuations in the underlying instrument or
precious metal, much as if it had purchased the underlying instrument or
precious metal directly. When a Fund sells a futures contract, by contrast, the
value of its futures position will tend to move in a direction contrary to the
market. Selling futures contracts, therefore, will tend to offset both positive
and negative market price changes, much as if the underlying instrument or
precious metal had been sold.
Futures Margin Payments. The purchaser or seller of a futures
contract is not required to deliver or pay for the underlying instrument or
precious metal unless the contact is held until the delivery date. However, both
the purchaser and seller are required to deposit "initial margin" with futures
broker, known as a futures commission merchant ("FCM"), when the contract is
entered into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that party
will be required to make additional "variation margin" payments to settle the
change in value on a daily basis. The party that has a gain may be entitled to
receive all or a portion of this amount. Initial and variation margin payments
do not constitute purchasing securities on margin for purposes of the Fund's
investment limitations. In the event of the bankruptcy of the FCM that holds
margin on behalf of a Fund, the Fund may be entitled to return of margin owed to
it only in proportion to the amount received by the FCM's other customers,
potentially resulting in losses to the Fund.
L. Put and Call Options. The Fund may purchase put and call options.
Purchasing Options. By purchasing a put option, the Fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed "strike" price. In return for this right, the Fund pays
the current market price for the option (known as the option premium). Options
have various types of underlying instruments, including specific securities,
indices of securities prices, and futures contracts. The Fund may terminate its
position in a put option it has purchased by allowing it to expire or by
exercising the option. If the option is allowed to expire, the Fund will lose
the entire premium it paid. If the Fund exercises the option, it completes the
sale
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of the underlying instrument at the "strike" price. The Fund also may terminate
a put option position by closing it out in the secondary market at its current
price, if a liquid secondary market exists.
The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying instrument's
price does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium paid,
plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's "strike"
price. A call buyer typically attempts to participate in potential price
increases of the underlying instrument with risk limited to the cost of the
option if security prices fall. At the same time, the buyer can expect to suffer
a loss if the underlying prices do not rise sufficiently to offset the cost of
the option.
Writing Options. When the Fund writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In return for
receipt of the premium, the Fund assumes the obligation to pay the "strike"
price for the option's underlying instrument if the other party to the option
chooses to exercise it. When writing an option on a futures contract the Fund
will be required to make margin payments to the FCM described above for futures
contracts. The fund may seek to terminate its position in a put option it writes
before exercise by closing out the option in the secondary market at its current
price. If the secondary market is not liquid for a put option the Fund has
written, however, the Fund must continue to be prepared to pay the "strike"
price while the option is outstanding, regardless of price changes, and must
continue to segregate assets to cover its position.
If the underlying prices rise, a put writer would generally expect to
profit. Although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, the writer also may
profit, because it should be able to close out the option at a lower price. If
the underlying prices fall, the put writer would expect to suffer a loss. This
loss should be less than the loss from purchasing the underlying instrument
directly, however, because the premium received for writing the option should
mitigate the effects of the decline.
Writing a call option obligates the Fund to sell or deliver the
option's underlying instrument, in return for the "strike" price, upon exercise
of the option. The characteristics of writing call options are similar to those
of writing put options, except that writing calls generally is a profitable
strategy if the underlying prices remain the same or fall. Through receipt of
the option premium, a call writer mitigates the effects of a price decline. At
the same time, because a call writer must be prepared to deliver the underlying
instrument in return for the "strike" price, even if its current value is
greater, a call writer gives up some ability to participate in the underlying
price increases.
Combined Positions. A Fund may purchase and write options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the overall
position. For example, the Fund may purchase a put option and write a call
option on the same underlying instrument, in order to construct a combined
position whose risk and return characteristics are similar to selling a futures
contract. Another possible combined
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position would involve writing a call option at one "strike" price and buying a
call option at a lower price, in order to reduce the risk of the written call
option in the event of a substantial price increase. Because combined options
positions involve multiple trades, they result in higher transaction costs and
may be more difficult to open and close out.
M. Correlation of Price Changes. Because there are a limited number of
types of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match a Fund's current or anticipated
investments exactly. The Fund may invest in options and futures contracts based
on securities with different issuers, maturities, or other characteristics from
the securities in which it typically invests.
Options and futures prices also can diverge from the prices of their
underlying instruments or precious metals, even if the underlying instruments or
precious metals match the Fund's investment well. Options and futures prices are
affected by such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument or precious metal, and the
time remaining until expiration of the contract, which may not affect the
security or the precious metal prices the same way. Imperfect correlation also
may result from: differing levels of demand in the options and futures markets
and the securities or precious metal markets, structural differences in how
options and futures and securities or precious metal are traded, or imposition
of daily price fluctuation limits or trading halts. The Fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities or precious metal it wishes to hedge or intends to purchase in order
to attempt to compensate for differences in volatility between the contract and
the securities or precious metals, although this may not be successful in all
cases. If price changes in the Fund's options or futures positions are poorly
correlated with its other investments, the positions may fail to produce
anticipated gains or result in losses that are not offset by gains in other
investments.
N. Liquidity of Options and Futures Contracts. There is no assurance a
liquid secondary market will exist for any particular options or futures
contract at any particular time. Options may have relatively low trading volume
and liquidity if their "strike" prices are not close to the underlying
instrument or precious metal's current price. In addition, exchanges may
establish daily price fluctuation limits for options and futures contracts, and
may halt trading if a contract's price moves upward or downward more than the
limit in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for the Fund to
enter into new positions or close out existing positions. If the secondary
market for a contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable positions, and
potentially could require the Fund to continue to hold a position until delivery
or expiration regardless of changes in its value. As a result, the Fund's access
to other assets held to cover its options or futures positions also could be
impaired. In addition, one of the requirements for qualification as a regulated
investment company for tax purposes in that less than 30% of the Fund's gross
income be derived from gains from the sale or other disposition of securities
held for less than three months. Accordingly, the Fund may be restricted in
effecting closing transactions within three months after entering into an option
or futures contract.
O. OTC Options. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract size, and
"strike" price, the terms of over-the-counter options i.e., options not traded
on exchanges ("OTC options"), generally are established
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through negotiation with the other party to the option contract. While this type
of arrangement allows the Fund greater flexibility to tailor an option to its
needs, OTC options generally involve greater credit risk than exchange-traded
options, which are guaranteed by the clearing organization of the exchanges
where they are traded. The risk of illiquidity also is greater with OTC options,
since these options generally can be closed out only by negotiation with the
other party to the option.
P. Options and Futures Relating to Foreign Currencies. Currency futures
contracts are similar to forward currency exchange contracts, except that they
are traded on exchanges (and have margin requirements) and are standardized as
to contract size and delivery date. Most currency futures contracts call for
payment or delivery in U.S. dollars. The underlying instrument of a currency
option may be a foreign currency, which generally is purchased or delivered in
exchange for U.S. dollars, or may be a futures contract. The purchaser or a
currency call obtains the right to purchase the underlying currency, and the
purchaser of a currency put obtains the right to sell the underlying currency.
The uses and risks of currency options and futures are similar to
options and futures relating to securities or indices, as discussed above. The
Fund may purchase and sell currency futures and may purchase and write currency
options to increase or decrease its exposure to different foreign currencies.
The fund also may purchase and write currency options in conjunction with each
other or with currency futures or forward contracts. Currency futures and
options values can be expected to correlate with exchange rates, but may not
reflect other factors that affect the value of the Fund's investments. A
currency hedge, for example, should protect a Yen-denominated security from a
decline in the Yen, but will not protect a Fund against a price decline
resulting from deterioration in the issuer's creditworthiness. Because the value
of the Fund's foreign-denominated investments change in response to many factors
other than exchange rates, it may not be possible to match the amount of
currency options and futures to the value of the Fund's investments exactly over
time.
Q. Asset Coverage for Futures and Options Positions. The Fund will
comply with guidelines established by the Securities and Exchange Commission
with respect to coverage of options and futures by mutual funds, and if the
guidelines so require will segregate cash and appropriate liquid assets in the
amount prescribed. Segregated securities cannot be sold while the futures or
option strategy is outstanding, unless they are replaced with other suitable
assets. As a result, there is a possibility that segregation of a large
percentage of the Fund's assets could impede portfolio management or the Fund's
ability to meet redemption requests or other current obligations.
R. Limitations on Futures and Options Transactions. The Fund will file
a notice of eligibility for exclusion from the definition of the term "commodity
pool operator" with the Commodity Futures Trading Commission ("CFTC") and the
National Futures Association, which regulate trading in the futures markets
before the Fund engages in any purchases or sales of futures contracts, options
on futures contracts, or gold, silver, platinum or other precious metals futures
contracts or options thereon. The Fund intends to comply with Section 4.5 of the
regulations under the Commodity Exchange Act, which limits the extent to which
the Fund can commit assets to initial margin deposits and options premiums.
In addition, the Fund will not: (a) sell futures contracts (including
futures contracts for precious metals) or write call options (including options
on futures) if, as a result, more than 25%
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of the Fund's total assets would be hedged with such futures or options; or (b)
write put options (including options on futures) if, as a result, the Fund's
total obligations upon settlement of written put options would exceed 25% of its
total assets; or (c) purchase futures contracts or put or call options
(including options on futures) for other than hedging purposes if, as a result,
the aggregate value of margin for futures contracts and option premiums for
options purchased by the Fund would exceed 5% of the Fund's total assets, except
that aggregate value of initial margin deposits for futures and options premiums
for options on futures may not exceed 5% of the Fund's total assets (after
taking into account unrealized profits and unrealized losses on any such
positions) and that in the case of an option that is in-the-money at the time of
purchase, the in-the-money amount may be excluded from such 5%; or (d) purchase
futures, put or call options (including options on futures) for hedging purposes
if the aggregate value of the initial margin deposits for futures contracts
purchased would exceed 5% of a Fund's total assets and initial option premiums
for options purchased would exceed 20% of the Fund's net assets. These
limitations do not apply to options attached to or acquired or traded together
with their underlying securities, and do not apply to securities that
incorporate features similar to options.
The Fund currently intends to treat the value of any over-the-counter
option purchased as illiquid for the purposes of investment limits. Similarly,
for any over-the-counter option the Fund writes, the Fund will treat as illiquid
the value of the option's underlying instrument; however, if the Fund has a
guaranteed right to close out the option with a primary U.S. Government
securities dealer, only the maximum price of the closing transaction minus the
amount the option is in-the-money will be considered illiquid.
S. Precious Metals. In addition to its investments in securities, the
Fund may invest a portion of its assets in precious metals, such as gold,
silver, platinum, and palladium, and precious metal options and futures. The
prices of precious metals are affected by broad economic and political
conditions, but are less subject to local and company-specific factors than
securities of individual companies. As a result, precious metals and precious
metal options and futures may be more or less volatile in price than securities
of companies engaged in precious metals-related businesses. The Fund may
purchase precious metals in any form, including bullion and coins, provided that
the Advisor intends to purchase only those forms of precious metals that are
readily marketable and that can be stored in accordance with custody regulations
applicable to mutual funds. The Fund may incur higher custody and transaction
costs for precious metals than for securities. Also, precious metals investments
do not pay income.
The value of the Fund's investments may be affected by changes in the
price of gold and other precious metals. Gold has been subject to substantial
price fluctuations over short periods of time and may be affected by
unpredictable international monetary and other governmental policies, such as
currency devaluations or revaluations; economic and social conditions within a
country; trade imbalances; or trade or currency restrictions between countries.
Since much of the world's known gold reserves are located in South Africa,
political and social conditions there may pose certain risks to the Fund's
investments. For instance, social upheaval and related economic difficulties in
South Africa could cause a decrease in the share values of South African issues.
The fund is authorized to invest up to 5% of its total assets in
precious metals. As a further limit on precious metals investment, under current
federal tax law, gains from selling precious metals may not exceed 10% of the
Fund's annual gross income. This tax requirement could cause
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the fund to hold or sell precious metals, securities, options or futures when it
would not otherwise do so.
T. Illiquid Investments. Illiquid investments are investments that
cannot be sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued. Under the supervision of the
Board of Trustees, the Advisor determines the liquidity of the Fund's
investments and, through reports from the Advisor, the Board monitors trading
activity in illiquid investments. In determining the liquidity of the Fund's
investments, the Advisor may consider various factors, including (i) the
frequency of trades and quotations, (ii) the number of dealers and prospective
purchasers in the marketplace, (iii) dealer undertakings to make a market, (iv)
the nature of the security (including any demand or tender features), and (v)
the nature of the marketplace for trades (including the ability to assign or
offset the Fund's rights and obligations relating to the investment).
Investments currently considered by the Trust to be illiquid include repurchase
agreements not entitling the holder to payments of principal and interest within
seven days, over-the-counter options, and restricted securities. However, with
respect to OTC options which the Fund writes, all or a portion of the value of
the underlying instrument may be illiquid depending on the assets held to cover
the option and the nature and terms of any agreement the Fund may have to close
out the option before expiration. In the absence of market quotations, illiquid
investments are priced at fair value as determined in good faith by the Advisor,
subject to review of the Board of Trustees. If, through a change in values, net
assets or other circumstances, the Fund were in a position where more than 15%
of its net assets were invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
U. Restricted Securities. Restricted securities generally can be sold
in privately negotiated transactions, pursuant to an exemption from registration
under the Securities Act of 1933, or in a registered public offering. Where the
registration is required, the Fund holding restricted securities may be
obligated to pay all or part of the registration expense and a considerable
period may elapse between the time it decides to seek registration and the time
the Fund may be permitted to sell a security under an effective registration
statement. If, during such a period, adverse market conditions were to develop,
the Fund might obtain a less favorable price than prevailed when it decided to
seek registration of the security.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to the Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of the Fund. As used in the Prospectus and
this Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent permitted by applicable law, regulation or regulatory
policy are considered non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Fund will not borrow money, except (a) from
a bank, provided that immediately after such borrowing there is an asset
coverage of 300% for all
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borrowings of the Fund; or (b) from a bank or other persons for temporary
purposes only, provided that such temporary borrowings are in an amount not
exceeding 5% of the Fund's total assets at the time when the borrowing is made.
This limitation does not preclude the Fund from entering into reverse repurchase
transactions, provided that the Fund has an asset coverage of 300% for all
borrowings and repurchase commitments of the Fund pursuant to reverse repurchase
transactions which the Fund has not fully collateralized as described in the
Prospectus.
2. Senior Securities. The Fund will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is (a) consistent with or permitted by the
Investment Company Act of 1940, as amended (the "1940 Act"), the rules and
regulations promulgated thereunder or interpretations of the Securities and
Exchange Commission or its staff and (b) as described in the Prospectus and this
Statement of Additional Information.
3. Underwriting. The Fund will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent
that, in connection with the disposition of portfolio securities (including
restricted securities), the Fund may be deemed an underwriter under certain
federal securities laws.
4. Real Estate. The Fund will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
5. Commodities. Except for gold, silver, platinum, palladium or other
precious metals (and then not with respect to more than 5% of its net assets),
the Fund will not purchase or sell commodities unless acquired as a result of
ownership of securities or other investments. This limitation does not preclude
the Fund from purchasing or selling forward contracts, options or futures
contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. The Fund will not invest 25% or more of its total
assets in a particular industry. This limitation is not applicable to
investments in obligations issued or guaranteed by the U.S. government, its
agencies and instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any
- 14 -
<PAGE>
security or the action taken. This paragraph does not apply to the borrowing
policy set forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
Non-Fundamental. The following limitations have been adopted by the
Trust with respect to the Fund and are Non-Fundamental (see "Investment
Restrictions" above).
i. Pledging. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
ii. Borrowing. The Fund will not purchase any security while
borrowings (including reverse repurchase agreements) representing more than
one third of its total assets are outstanding.
iii. Margin Purchases. The Fund will not purchase securities or
evidences of interest thereon on "margin." This limitation is not applicable to
short term credit obtained by the Fund for the clearance of purchases and sales
or redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
iv. Illiquid Investments. The Fund will not invest more than 15% of
its net assets in securities for which there are legal or contractual
restrictions on resale and other illiquid securities.
Other Restrictions. To comply with the current state regulations, the
Fund presently intends to observe the following restrictions, which may be
changed by the Board of Trustees without shareholder approval.
Texas. The Fund's investments in warrants, valued at the lower of cost
or market, may not exceed 5% of its net assets. Of such 5%, no more than 2% of
the Fund's net assets may be invested in warrants which are not listed on either
the New York Stock Exchange or the American Stock Exchange. The Fund may not
invest in oil, gas or mineral leases. The Fund may not purchase or sell real
property including limited partnership interests, but excluding readily
marketable interests in real estate investment trusts or readily marketable
securities of companies which invest in real estate.
- 15 -
<PAGE>
THE INVESTMENT ADVISOR
The Fund's investment advisor is Newport Advisory Company, Inc., 707
Skokie Boulevard, Suite 200, Northbrook, Illinois 60062. Kenneth Holeski,
Richard Sacks, Marc Gordon and Jerold Karel may each be deemed to control the
Advisor due to their respective share of ownership of the Advisor.
Under the terms of the management agreement (the "Agreement"), the
Advisor manages the Fund's investments subject to approval of the Board of
Trustees and pays all of the expenses of the Fund except brokerage, taxes,
interest, fees and expenses of the non-interested person trustees and
extraordinary expenses. As compensation for its management services and
agreement to pay the Fund's expenses, the Fund is obligated to pay the Advisor a
fee computed and accrued daily and paid monthly at an annual rate of 2.50% of
the average daily net assets of the Fund. The Advisor may waive all or part of
its fee, at any time, and at its sole discretion, but such action shall not
obligate the Advisor to waive any fees in the future.
The Advisor retains the right to use the name "The XYZ Contrarian" in
connection with another investment company or business enterprise with which
the Advisor is or may become associated. The Trust's right to use the name
"The XYZ Contrarian" automatically ceases ninety days after termination of the
Agreement and may be withdrawn by the Advisor on ninety days written notice.
The Advisor may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Fund believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under
the 1940 Act (the "Plan") under which the Fund pays the Advisor an amount at an
annual rate of 0.25% of the average daily net assets of the Fund. For a
description of the Plan, see "Distribution Plan" in the Fund's Prospectus.
Kenneth Holeski, Richard Sacks, Marc Gordon and Jerold Karel, as controlling
shareholders of the Advisor, and other employees of the Advisor may indirectly
benefit from any payments made pursuant to the Plan.
- 16 -
<PAGE>
TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of the Trust are shown
below. Each Trustee who is an "interested person" of the Trust, a defined in the
Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<S> <C> <C>
Name, Age and Address Position Principal Occupations During Past 5 Years
Kenneth D. Trumpfheller President and Trustee President, Treasurer and Secretary of AmeriPrime
Age: 37 Financial Services, Inc., the Fund's administrator, and
1793 Kingswood Drive AmeriPrime Financial Securities, Inc., the Fund's
Suite 200 distributor. Prior to December, 1994, a senior client
Southlake, Texas 76092 executive with SEI Financial Services.
Kelli D. Shomaker, C.P.A. Secretary, Treasurer Manager of Compliance of AmeriPrime Financial
Age: 33 Services, Inc.; Vice President, Chief Accounting Officer,
1793 Kingswood Drive Treasurer and Controller of United Services Advisors,
Suite 200 Inc. and United Services Insurance Funds from 1994 to
Southlake, Texas 76092 1995; Vice President, Chief Accounting Officer,
Treasurer, and Controller of Accolade Funds and Pauze/Swanson
United Services Funds from 1993 to 1995;
Controller from 1987 to 1995 and Vice President,
Chief Accounting Officer and Treasurer from 1990
to 1995 of United Services Funds; Director of
Security Trust & Financial Company from 1993 to 1995.
Steve L. Cobb Trustee President of Clare Energy, Inc., oil and gas exploration
Age: 37 company; International Marketing Manager of Carbo
140 Mockingbird Lane Ceramics Inc., oil field manufacturing/supply company.
Coppell, Texas 76019
Gary E. Hippenstiel Trustee President and Director of Heritage Trust Company; Vice
Age: 48 President and Chief Investment Officer of Legacy Trust
600 Jefferson Street Company; Vice President and Manager of Investments of
Houston, Texas 70002 Kanaly Trust Company from 1988 to 1992.
</TABLE>
The compensation paid to the Trustees of the Trust is set forth in the
following table:
<TABLE>
<S> <C> <C> <C> <C>
Pension or
Aggregate Retirement Estimated Annual Total Compensation
Compensation Accrued As Part Benefits Upon from Trust (the Trust is
Name from Trust1 of Fund Expenses Retirement not in a Fund Complex)1
Kenneth D. Trumpfheller 0 0 0 0
Steve L. Cobb $4,000 0 0 $4,000
Gary E. Hippenstiel $4,000 0 0 $4,000
<FN>
1 Trustee fees are Trust expenses and each series of the Trust pays a portion of
the Trustee fees. The compensation is estimated for the first full year of the
Trust ending October 31, 1996.
</FN>
</TABLE>
- 17 -
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Advisor is responsible for the Fund's portfolio decisions and the placing of
the Fund's portfolio transactions. In placing portfolio transactions, the
Advisor seeks the best qualitative execution for the Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Advisor generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.
The Advisor is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Fund and/or the other
accounts over which the Advisor exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Advisor determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Advisor's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Fund effects securities
transactions may also be used by the Advisor in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Advisor in connection with its services to the
Fund. Although research services and other information are useful to the Fund
and the Advisor, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Advisor that the review and study of the research and other information will not
reduce the overall cost to the Advisor of performing its duties to the Fund
under the Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
To the extent that the Trust and another of the Advisor's clients seek
to acquire the same security at about the same time, the Trust may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Trust may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. On the other hand, if the same securities
are bought or sold at the same time by more than one client, the resulting
participation in volume transactions could produce better executions for the
Trust. In the event that more than one client wants to purchase or sell the same
security on a given date, the purchases and sales will normally be made by
random client selection.
- 18 -
<PAGE>
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of the Fund is determined as
of 4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas. For a description of the methods used to determine
the net asset value (share price), see "Share Price Calculation" in the
Prospectus.
INVESTMENT PERFORMANCE
"Average annual total return," as defined by the Securities and
Exchange Commission, is computed by finding the average annual compounded rates
of return (over the one and five year periods and the period from initial public
offering through the end of the Fund's most recent fiscal year) that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
P(1+T)n=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average.
In addition, the performance of the Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a
- 19 -
<PAGE>
group may not be the same as those of the Fund. Performance rankings and ratings
reported periodically in national financial publications such as Barron's and
Fortune also may be used.
CUSTODIAN
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is
Custodian of the Fund's investments. The Custodian acts as the Fund's
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Fund's request and
maintains records in connection with its duties.
TRANSFER AGENT
American Data Services, Inc., 24 W. Carver Street, Huntington, New York
11743, acts as the Fund's transfer agent and, in such capacity, maintains the
records of each shareholder's account, answers shareholders' inquiries
concerning their accounts, processes purchases and redemptions of the Fund's
shares, acts as dividend and distribution disbursing agent and performs other
accounting and shareholder service functions. In addition, American Data
Services, Inc. provides the Fund with certain monthly reports, record-keeping
and other management-related services.
ACCOUNTANTS
The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the Trust
for the fiscal year ending October 31, 1996. McCurdy & Associates performs an
annual audit of the Fund's financial statements and provides financial, tax and
accounting consulting services as requested.
DISTRIBUTOR
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the exclusive agent for distribution of shares of the
Fund. The Distributor is obligated to sell the shares of the Fund on a best
efforts basis only against purchase orders for the shares.
Shares of the Fund are offered to the public on a continuous basis.
- 20 -
<PAGE>
AmeriPrime Funds
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Included in Part A: None
Included in Part B: None
(b) Exhibits
(1) (i) Copy of Registrant's Declaration of Trust,
which was filed as an Exhibit to Registrant's
Registration Statement, is hereby
incorporated by reference.
(ii) Copy of Amendment No. 1 to Registrant's
Declaration of Trust is hereby incorporated by
reference.
(iii) Copy of Amendment No. 2 to Registrant's
Declaration of Trust is filed herewith.
(2) Copy of Registrant's By-Laws, which was
filed as an Exhibit to Registrant's
Registration Statement, is hereby
incorporated by reference.
(3) Voting Trust Agreements - None.
(4) Specimen of Share Certificates - None.
(5) (i) Copy of Registrant's Management Agreement with
Carl Domino Associates, L.P.,
Adviser to Carl Domino Equity Income
Fund is hereby incorporated by
reference.
(ii) Copy of Registrant's Management Agreement with
Jenswold, King & Associates, Adviser to
Fountainhead Value Fund is hereby incorporated
by reference.
(iii) Copy of Registrant's Management Agreement with
LBS Capital Management, Inc., Adviser to AIT
Vision U.S. Equity Portfolio is hereby
incorporated by reference.
(iv) Copy of Registrant's Management
Agreement with GLOBALT, Inc.,
Adviser to GLOBALT Growth Fund is
hereby incorporated by reference.
<PAGE>
(v) Copy of Registrant's Management Agreement with
Newport Advisory Company, Inc., Adviser to The
XYZ Contrarian Fund, is filed
herewith.
(6) Copy of Registrant's Underwriting Agreement with
AmeriPrime Financial Securities, Inc. is hereby
incorporated by reference.
(7) Bonus, Profit Sharing, Pension or Similar Contracts
for the benefit of Directors or Officers - None.
(8) Copy of Registrant's Agreement with the Custodian,
Star Bank, N.A., is hereby incorporated by
reference.
(9) Copy of Registrant's Agreement with the
Administrator, AmeriPrime Financial Services, Inc.
is hereby incorporated by reference.
(10) Opinion and Consent of Brown, Cummins & Brown Co.,
L.P.A. is filed herewith.
(11) Consent of independent public accountants is filed
herewith.
(12) Financial Statements Omitted from Item 23 - None.
(13) Copy of Letter of Initial Stockholders is hereby
incorporated by reference.
(14) Model Plan used in Establishment of any Retirement
Plan - None.
(15) (i) Copy of Registrant's Rule 12b-1 Distribution
Plan for The XYZ Contrarian Fund is filed herewith.
(ii) Copy of Registrant's Rule 12b-1 Service
AgreementS for The XYZ Contrarian Fund are filed
herewith.
(16) Schedule for Computation of Each Performance
Quotation - None.
(17) (i) Power of Attorney for Registrant and
Certificate with respect thereto are filed
herewith.
(ii) Powers of Attorney for Trustees and Officers
are filed herewith.
- 2 -
<PAGE>
Item 25. Persons Controlled by or Under Common Control with the
Registrant
The initial purchase of the Registrant's shares was made by
AmeriPrime Financial Securities, Inc. As a result of this purchase, the
Registrant may be controlled by or under common control with AmeriPrime
Financial Securities, Inc., the Registrant's underwriter, and
AmeriPrime Financial Services, Inc., the Registrant's Administrator
(both of which are Texas corporations controlled by Kenneth D.
Trumpfheller.)
Item 26. Number of Holders of Securities (as of November 30, 1995)
Title of Class Number of Record Holders
Carl Domino Equity Income Fund 1
Fountainhead Value Fund 1
AIT Vision U.S. Equity Portfolio 1
Globalt Growth Fund 1
The XYZ Contrarian Fund 0
Item 27. Indemnification
(a) Article VI of the Registrant's Declaration of Trust
provides for indemnification of officers and Trustees
as follows:
Section 6.4 Indemnification of Trustees, Officers,
etc. Subject to and except as otherwise provided in the
Securities Act of 1933, as amended, and the 1940 Act, the
Trust shall indemnify each of its Trustees and officers
(including persons who serve at the Trust's request as
directors, officers or trustees of another organization
in which the Trust has any interest as a shareholder,
creditor or otherwise (hereinafter referred to as a
"Covered Person") against all liabilities, including but
not limited to amounts paid in satisfaction of judgments,
in compromise or as fines and penalties, and expenses,
including reasonable accountants' and counsel fees,
incurred by any Covered Person in connection with the
defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court
or administrative or legislative body, in which such
Covered Person may be or may have been involved as a
party or otherwise or with which such person may be or
may have been threatened, while in office or thereafter,
by reason of being or having been such a Trustee or
officer, director or trustee, and except that no
Covered Person shall be indemnified against any liability
to the Trust or its Shareholders to which such Covered
Person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or
- 3 -
<PAGE>
reckless disregard of the duties involved in the
conduct of such Covered Person's office.
Section 6.5 Advances of Expenses. The Trust shall
advance attorneys' fees or other expenses incurred by a
Covered Person in defending a proceeding to the full
extent permitted by the Securities Act of 1933, as
amended, the 1940 Act, and Ohio Revised Code Chapter
1707, as amended. In the event any of these laws conflict
with Ohio Revised Code Section 1701.13(E), as amended,
these laws, and not Ohio Revised Code Section 1701.13(E),
shall govern.
Section 6.6 Indemnification Not Exclusive, etc. The
right of indemnification provided by this Article VI
shall not be exclusive of or affect any other rights to
which any such Covered Person may be entitled. As used in
this Article VI, "Covered Person" shall include such
person's heirs, executors and administrators. Nothing
contained in this article shall affect any rights to
indemnification to which personnel of the Trust, other
than Trustees and officers, and other persons may be
entitled by contract or otherwise under law, nor the
power of the Trust to purchase and maintain liability
insurance on behalf of any such person.
The Registrant may not pay for insurance which protects the
Trustees and officers against liabilities rising from action
involving willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of
their offices.
(b) The Registrant may maintain a standard mutual fund and
investment advisory professional and directors and
officers liability policy. The policy, if maintained,
would provide coverage to the Registrant, its Trustees
and officers, and could cover its Advisers, among
others. Coverage under the policy would include losses
by reason of any act, error, omission, misstatement,
misleading statement, neglect or breach of duty.
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
trustees, officers and controlling persons of the
Registrant pursuant to the provisions of Ohio law and
the Agreement and Declaration of the Registrant or the
By-Laws of the Registrant, or otherwise, the Registrant
has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against
public policy as expressed in the Act and is,
- 4 -
<PAGE>
therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other
than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling
person of the Trust in the successful defense of any
action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection
with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question
whether such indemnification by it is against public
policy as expressed in the Act and will be governed
by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
A. Carl Domino Associates, L.P., 580 Village Boulevard,
Suite 225, West Palm Beach, Florida 33409, ("CDA"),
adviser to the Carl Domino Equity Income Fund, is a
registered investment adviser.
(1) CDA has engaged in no other business during the
past two fiscal years.
(2) The following list sets forth other
substantial business activities of the
partners and officers of CDA during the past
two years.
(a) Penn Independent Corp., a partner in
CDA, is an insurance holding company
that operates a premium finance
company, a surplus lines insurance
company and a wholesale insurance
agency.
(b) James E. Heerin, Jr., an officer of CDA, is
vice president and general counsel of Penn
Independent Corp. and an officer and director
of Shrimp Culture II, Inc., both at 420 South
York Road, Hatboro, PA 19040. Shrimp
Culture II, Inc. raises and sells shrimp.
(c) Lawrence Katz, a partner in CDA, is an
orthopedic surgeon in private practice.
(d) Saltzman Partners, a partner in CDA, is a
limited partnership that invests in companies
and businesses.
(e) Cango Inversiones, SA, a partner in CDA, is a
foreign business entity that invests in U.S.
companies and businesses.
- 5 -
<PAGE>
B. Jenswold, King & Associates, Inc., 1980 Post Oak
Boulevard, Suite 2400, Houston, Texas 77056-3898
("JKA"), adviser to the Fountainhead Value Fund, is a
registered investment adviser.
(1) JKA has engaged in no other business during the
past two fiscal years.
(2) The following list sets forth other
substantial business activities of the
directors and officers of JKA during the
past two years.
(a) John Servis, a director of JKA, is a licensed
real estate broker.
C. LBS Capital Management, Inc., 311 Park Place Boulevard,
Suite 330, Clearwater, Florida 34619 ("LBS"), adviser
to AIT Vision U.S. Equity Portfolio, is a registered
investment adviser.
(1) LBS has engaged in no other business during the
past two fiscal years.
(2) The following list sets forth other
substantial business activities of the
directors and officers of LBS during the
past two fiscal years.
(a) John S. Vasen, a director of LBS, is the
president of the Pinnacle Companies, an
apartment rehabilitation and management
business located in Atlanta, Georgia.
D. GLOBALT, Inc., 3060 Peachtree Road, N.W., One
Buckhead Plaza, Suite 225, Atlanta, Georgia 30305
("GLOBALT"), adviser to GLOBALT Growth Fund, is a
registered investment adviser.
(1) GLOBALT has engaged in no other business during
the past two fiscal years.
(2) The following list sets forth other
substantial business activities of the
officers and directors of GLOBALT during the
past two years.
(a) Gregory S. Paulette, an officer of GLOBALT,
is the president of GLOBALT Capital
Management, a division of GLOBALT.
E. Newport Advisory Company, Inc., 707 Skokie Boulevard,
Suite 200, Northbrook, Illinois 60062 ("Newport"),
adviser to The XYZ Contrarian Fund, is a registered
investment adviser.
- 6 -
<PAGE>
(1) Newport has engaged in no other business during
the past two fiscal years.
(2) The following list sets forth other
substantial business activities of the
officers and directors of Newport during the
past two years.
(a) Marc Gordon, a director, secretary and
treasurer of Newport, is the vice president
of Karel & Associates, an administrative,
actuarial and pension consulting firm, 707
Skokie Boulevard, Northbrook, Illinois
60062, vice president of C.S.I., 707 Skokie
Boulevard, Northbrook, Illinois 60062, an
insurance brokerage company, and a registered
representative of Long Grove Trading Company,
Inc., 500 Park Boulevard, Suite 800, Itasca,
Illinois 60143, a registered broker/dealer.
(b) Kenneth Holeski, a director and president of
Newport, is the vice president of Newport
Evaluation Services, Inc., a fiduciary
consulting business, and president of Newport
Investment Advisers, Inc., a registered
investment adviser both at 20600 Chagrin
Boulevard, Shaker Heights, Ohio 44122, and a
registered representative of WRP Investments,
Inc., 4407 Belmont Avenue, Youngstown, Ohio
44505, a registered broker/dealer.
(c) Jerold Karel, vice president of
Newport, is president of Karel &
Associates, president of C.S.I., and
a registered representative of Long
Grove Trading Company, Inc.
(d) Richard Sacks, a director of
Newport, is an employee of Karel &
Associates, national marketing
director of C.S.I., and a registered
representative of Long Grove Trading
Company, Inc.
Item 29. Principal Underwriters
A. AmeriPrime Financial Securities, Inc., is the
Registrant's principle underwriter. Kenneth D.
Trumpfheller, 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the President, Secretary
and Treasurer of the underwriter and the President and
a Trustee of the Registrant.
- 7 -
<PAGE>
Item 30. Location of Accounts and Records
Accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder will be maintained by the
Registrant at 1793 Kingswood Drive, Suite 200, Southlake,
Texas 76092 and/or by the Registrant's Custodian, Star Bank,
N.A., 425 Walnut Street, Cincinnati, Ohio 45202, and/or
transfer and shareholder service agent, American Data
Services, Inc., 24 West Carver Street, Huntington, New York
11743.
Item 31. Management Services Not Discussed in Parts A or B
None.
Item 32. Undertakings
(a) Not Applicable.
(b) The Registrant hereby undertakes to file a
Post-Effective Amendment, using financial statements
which need not be certified, within four to six
months from the effective date of this registration.
(c) The Registrant hereby undertakes to furnish each
person to whom a prospectus is delivered with a copy
of the Registrant's latest annual report to
shareholders, upon request and without charge.
(d) The Registrant hereby undertakes to file a Post-
Effective Amendment, using financial statements which
need not be certified, within four to six months from
the effective date of The XYZ Contrarian Fund registration.
- 8 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Cincinnati, State of Ohio, on the _______ day of
December, 1995.
AmeriPrime Funds
By: /s/ Donald S. Mendelsohn
Donald S. Mendelsohn,
Attorney-in-Fact
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 dates indicated.
Kenneth D. Trumpfheller President and
Trustee By:/s/ Donald S. Mendelsohn
____________________________
Donald S. Mendelsohn,
Attorney-in-Fact
Steve L. Cobb Trustee December 20, 1995
Gary E. Hippenstiel Trustee
Kelli D. Shomaker Treasurer
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<PAGE>
EXHIBIT INDEX
PAGE
1. Amendment No. 2 to Declaration of Trust .............................
2. Management Agreement with Newport Advisory Company, Inc..............
3. Opinion of Brown, Cummins & Brown Co., L.P.A. .......................
4. Consent of McCurdy & Associates......................................
5. 12b-1 Distribution Plan..............................................
6. 12b-1 Service Agreements.............................................
7. Power of Attorney for Registrant and Certificate ....................
8. Powers of Attorney for Trustees and Officers ........................
- 10 -
AmeriPrime Funds Amendment No. 2
Agreement and Declaration of Trust
1. Pursuant to Sections 4.1 and 7.3 of the Agreement and Declaration
of Trust of AmeriPrime Funds and effective upon the execution of this document,
the undersigned, being a majority of the trustees of AmeriPrime Funds, hereby
establish a new series of shares of the Trust and designate such series "The
XYZ Contrarian Fund," and hereby change the name of the "Domino Equity Income
Fund" series to the "Carl Domino Equity Income Fund."
2. With the establishment of the new series, and the aforementioned
name change, the AmeriPrime Funds consists of five (5) series of shares
designated as follows; Carl Domino Equity Income Fund, AIT Vision U.S. Equity
Portfolio, GLOBALT Growth Fund, Fountainhead Value Fund and The XYZ
Contrarian Fund (the "Series").
2. The relative rights and preferences of each Series shall be those
rights and preferences set forth in Section 4.2 of the Agreement and Declaration
of Trust of AmeriPrime Funds.
3. This document shall have the status of an Amendment to said
Agreement and Declaration of Trust, and may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
/s/ Steve L. Cobb
_________________________________________
Steve L. Cobb
/s/ Gary E. Hippenstiel
_________________________________________
Gary E. Hippenstiel
/s/ Kenneth D. Trumpfheller
_________________________________________
Kenneth D. Trumpfheller
December 12, 1995
MANAGEMENT AGREEMENT
TO: Newport Advisory Company, Inc.
707 Skokie Boulevard, Suite 200
Northbrook, Illinois 60062
Dear Sirs:
AmeriPrime Funds (the "Trust") herewith confirms our agreement with
you.
The Trust has been organized to engage in the business of an investment
company. The Trust currently offers several series of shares to investors, one
of which is The XYZ Contrarian Fund (the "Fund").
You have been selected to act as the sole investment adviser of the
Fund and to provide certain other services, as more fully set forth below, and
you are willing to act as such investment adviser and to perform such services
under the terms and conditions hereinafter set forth. Accordingly, the Trust
agrees with you as follows upon the date of the execution of this Agreement.
1. ADVISORY SERVICES
You will regularly provide the Fund with such investment
advice as you in your discretion deem advisable and will furnish a continuous
investment program for the Fund consistent with the Fund's investment objectives
and policies. You will determine the securities to be purchased for the Fund,
the portfolio securities to be held or sold by the Fund and the portion of the
Fund's assets to be held uninvested, subject always to the Fund's investment
objectives, policies and restrictions, as each of the same shall be from time to
time in effect, and subject further to such policies and instructions as the
Board may from time to time establish. You will advise and assist the officers
of the Trust in taking such steps as are necessary or appropriate to carry out
the decisions of the Board and the appropriate committees of the Board regarding
the conduct of the business of the Fund.
2. ALLOCATION OF CHARGES AND EXPENSES
You will pay all organizational and operating expenses (other
than expenses which may be deemed to be related to the distribution of the
Fund's shares) of the Fund, including the compensation and expenses of any
employees of the Fund and of any other persons rendering any services to the
Fund; clerical and shareholder service staff salaries; office space and other
office expenses; fees and expenses incurred by the Fund in connection with
membership in investment company organizations; legal, auditing and accounting
expenses; expenses of registering shares under federal and state securities
laws, including expenses incurred by the Fund in connection with the
organization and initial registration of shares of the Fund; insurance expenses;
fees and expenses of the custodian, transfer agent, dividend disbursing agent,
shareholder service agent, plan agent, administrator, accounting and pricing
services agent and underwriter of the Fund; expenses, including clerical
expenses, of issue, sale, redemption or repurchase of shares of the Fund; the
cost of preparing and distributing reports and notices to shareholders, the cost
of printing or preparing prospectuses and statements of additional information
for delivery to the Fund's current shareholders; the cost of printing or
preparing stock certificates or any other documents, statements
<PAGE>
or reports to shareholders; expenses of shareholders' meetings and proxy
solicitations; and all other organizational and operating expenses not
specifically assumed by the Fund.
The Fund will pay all brokerage fees and commissions, taxes,
interest, fees and expenses of the non-interested person trustees and such
extraordinary or non-recurring expenses as may arise, including litigation to
which the Fund may be a party and indemnification of the Trust's trustees and
officers with respect thereto. You may obtain reimbursement from the Fund, at
such time or times as you may determine in your sole discretion, for any of the
expenses advanced by you, which the Fund is obligated to pay, and such
reimbursement shall not be considered to be part of your compensation pursuant
to this Agreement. The Fund will pay you a distribution fee pursuant to the
Fund's Rule 12b-1 Distribution Plan, and such distribution fee shall not be
considered to be part of your compensation pursuant to this Agreement. You will
not be reimbursed for distribution related expenses that you incur in excess of
the distribution fee.
3. COMPENSATION OF THE ADVISER
For all of the services to be rendered and payments to be made
as provided in this Agreement, as of the last business day of each month, the
Fund will pay you a fee at the annual rate of 2.50% of the average value of its
daily net assets.
The average value of the daily net assets of the Fund shall be
determined pursuant to the applicable provisions of the Declaration of Trust of
the Trust or a resolution of the Board, if required. If, pursuant to such
provisions, the determination of net asset value of the Fund is suspended for
any particular business day, then for the purposes of this paragraph, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of the net assets as of the close of the business day, or as of such other time
as the value of the Fund's net assets may lawfully be determined, on that day.
If the determination of the net asset value of the Fund has been suspended for a
period including such month, your compensation payable at the end of such month
shall be computed on the basis of the value of the net assets of the Fund as
last determined (whether during or prior to such month).
4. EXECUTION OF PURCHASE AND SALE ORDERS
In connection with purchases or sales of portfolio securities
for the account of the Fund, it is understood that you will arrange for the
placing of all orders for the purchase and sale of portfolio securities for the
account with brokers or dealers selected by you, subject to review of this
selection by the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and portfolio brokerage. In
the selection of such brokers or dealers and the placing of such orders, you are
directed at all times to seek for the Fund the best qualitative execution,
taking into account such factors as price (including the applicable brokerage
commission or dealer spread), the execution capability, financial responsibility
and responsiveness of the broker or dealer and the brokerage and research
services provided by the broker or dealer.
You should generally seek favorable prices and commission
rates that are reasonable in relation to the benefits received. In seeking best
qualitative execution, you are authorized to select brokers or dealers who also
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Fund and/or the other
accounts over which you exercise investment discretion. You are authorized to
pay a broker or
- 2 -
<PAGE>
dealer who provides such brokerage and research services a commission for
executing a Fund portfolio transaction which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if you determine in good faith that the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or your overall responsibilities with
respect to the Fund and to accounts over which you exercise investment
discretion. The Fund and you understand and acknowledge that, although the
information may be useful to the Fund and you, it is not possible to place a
dollar value on such information. The Board shall periodically review the
commissions paid by the Fund to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits to
the Fund.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking best qualitative
execution as described above, you may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute Fund
portfolio transactions.
Subject to the provisions of the Investment Company Act of
1940, as amended, and other applicable law, you, any of your affiliates or any
affiliates of your affiliates may retain compensation in connection with
effecting the Fund's portfolio transactions, including transactions effected
through others. If any occasion should arise in which you give any advice to
clients of yours concerning the shares of the Fund, you will act solely as
investment counsel for such client and not in any way on behalf of the Fund.
Your services to the Fund pursuant to this Agreement are not to be deemed to be
exclusive and it is understood that you may render investment advice, management
and other services to others, including other registered investment companies.
5. LIMITATION OF LIABILITY OF ADVISER
You may rely on information reasonably believed by you to be
accurate and reliable. Except as may otherwise be required by the Investment
Company Act of 1940 or the rules thereunder, neither you nor your officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under, or
payments made pursuant to, this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of your duties
under this Agreement, or by reason of reckless disregard by any of such persons
of your obligations and duties under this Agreement.
Any person, even though also a director, officer, employee or
agent of you, who may be or become an officer, director, trustee, employee or
agent of the Trust, shall be deemed, when rendering services to the Trust or
acting on any business of the Trust (other than services or business in
connection with your duties hereunder), to be rendering such services to or
acting solely for the Trust and not as a director, officer, employee or agent of
you, or one under your control or direction, even though paid by you.
- 3 -
<PAGE>
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall take effect on the date of its execution
by you, and shall remain in force for a period of two (2) years from the date of
its execution, and from year to year thereafter, subject to annual approval by
(i) the Board or (ii) a vote of a majority (as defined in the Investment Company
Act of 1940) of the outstanding voting securities of the Fund, provided that in
either event continuance is also approved by a majority of the trustees who are
not "interested persons," as defined in the Investment Company Act of 1940, of
you or the Trust, by a vote cast in person at a meeting called for the purpose
of voting such approval.
If the shareholders of the Fund fail to approve the Agreement
in the manner set forth above, upon request of the Board, you will continue to
serve or act in such capacity for the Fund for the period of time pending
required approval of the Agreement, of a new agreement with you or a different
adviser or other definitive action; provided that the compensation to be paid by
the Fund to you for your services to and payments on behalf of the Fund will be
equal to the lesser of your actual costs incurred in furnishing such services
and payments or the amount you would have received under this Agreement for
furnishing such services and payments.
This Agreement may, on sixty days written notice, be
terminated with respect to the Fund, at any time without the payment of any
penalty, by the Board, by a vote of a majority of the outstanding voting
securities of the Fund, or by you. This Agreement shall automatically terminate
in the event of its assignment.
7. USE OF NAME
The Trust and you acknowledge that all rights to the name "The XYZ
Contrarian" belongs to you, and that the Trust is being granted a limited
license to use such words in its Fund name or in any class name. In the event
you cease to be the adviser to the Fund, the Trust's right to the use of the
name "The XYZ Contrarian" shall automatically cease on the ninetieth day
following the termination of this Agreement. The right to the name may also be
withdrawn by you during the term of this Agreement upon ninety (90) days'
written notice by you to the Trust. Nothing contained herein shall impair or
diminish in any respect, your right to use the name "The XYZ Contrarian" in the
name of, or in connection with, any other business enterprises with which you
are or may become associated. There is no charge to the Trust for the right to
use these names.
8. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived,
discharged or terminated orally, and no amendment of this Agreement shall be
effective until approved by the Board, including a majority of the trustees who
are not interested persons of you or of the Trust, cast in person at a meeting
called for the purpose of voting on such approval, and (if required under
current interpretations of the Act by the Securities and Exchange Commission) by
vote of the holders of a majority of the outstanding voting securities of the
series to which the amendment relates.
- 4 -
<PAGE>
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
The term "AmeriPrime Funds" means and refers to the Trustees
from time to time serving under the Trust's Declaration of Trust as the same may
subsequently thereto have been, or subsequently hereto be, amended. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust personally, but bind only the trust property of the
Trust, as provided in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees and shareholders
of the Trust and signed by officers of the Trust, acting as such, and neither
such authorization by such trustees and shareholders nor such execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Declaration of
Trust. A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of the State of Ohio.
10. SEVERABILITY
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
(a) This Agreement shall be governed by the laws of the State
of Ohio.
(b) Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the Investment Company Act of 1940, as amended (the "Act") shall be
resolved by reference to such term or provision of the Act and to interpretation
thereof, if any, by the United States courts or in the absence of any
controlling decision of any such court, by rules, regulations or orders of the
Securities and Exchange Commission issued pursuant to said Act. In addition,
where the effect of a requirement of the Act, reflected in any provision of this
Agreement is revised by rule, regulation or order of the Securities and Exchange
Commission, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
12. NOTICES
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust is
1793 Kingswood Drive, Suite 200, Southlake, Texas 76092, and your address for
this purpose shall be 707 Skokie Boulevard, Suite 200, Northbrook, Illinois
60062.
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
- 5 -
<PAGE>
14. BINDING EFFECT
Each of the undersigned expressly warrants and represents that
he has the full power and authority to sign this Agreement on behalf of the
party indicated, and that his signature will operate to bind the party indicated
to the foregoing terms.
15. CAPTIONS
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
If you are in agreement with the foregoing, please sign the
form of acceptance on the accompanying counterpart of this letter and return
such counterpart to the Trust, whereupon this letter shall become a binding
contract upon the date thereof.
Yours very truly,
AmeriPrime Funds
By
Kenneth D. Trumpfheller, President
Dated: _________________, 1995
ACCEPTANCE
The foregoing Agreement is hereby accepted.
Newport Advisory Company, Inc.
By
Kenneth M. Holeski, President
Dated: _______________, 1995
- 6 -
December 20, 1995
AmeriPrime Funds
1793 Kingswood Drive, Suite 200
Southlake, Texas 76092
Gentlemen:
This letter is in response to your request for our opinion in
connection with the filing of Post-Effective Amendment No. 1 of AmeriPrime
Funds (the "Trust").
We have examined a copy of the Trust's Agreement and Declaration of
Trust, the Trust's By-Laws, the Trust's record of the various actions by the
Trustees thereof, and all such agreements, certificates of public officials,
certificates of officers and representatives of the Trust and others, and such
other documents, papers, statutes and authorities as we deem necessary to form
the basis of the opinion hereinafter expressed. We have assumed the genuineness
of the signatures and the conformity to original documents of the copies of such
documents supplied to us as original or photostat copies.
Based upon the foregoing, we are of the opinion that, after
registration is effective for purposes of federal and applicable state
securities laws, the shares of each series of the Trust, if issued in accordance
with the then current Prospectus and Statement of Additional Information of the
Trust, will be legally issued, fully paid and non-assessable.
We herewith give you our permission to file this opinion with the
Securities and Exchange Commission as an exhibit to Post-Effective Amendment
No. 1 referred to above.
Very truly yours,
/s/ Brown, Cummins & Brown Co., L.P.A.
BROWN, CUMMINS & BROWN CO., L.P.A.
BCB:jh
27955 Clemens Road
Westlake, Ohio 44145
Phone: (216) 835-8500
McCurdy & Associates CPA's, Inc. Fax: (216) 835-1093
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
Post-Effective Amendment Number 1 of all references to our firm included in or
made a part of this Post- Effective Amendment.
/s/ McCurdy & Associates CPA's, Inc.
McCurdy & Associates CPA's, Inc.
December 13, 1995
THE XYZ CONTRARIAN FUND
Rule 12b-1 Distribution Plan
This Distribution Plan (the "Plan") is adopted in accordance with Rule
12b-1 (the "Rule") under the Investment Company Act of 1940, as amended, (the
"Act") by The XYZ Contrarian Fund (the "Fund"), a series of AmeriPrime Funds
(the "Trust"), a registered open-end management investment company. The Plan has
been approved by a majority of the Trust's Board of Trustees, including a
majority of the Trustees who are not interested persons of the Trust or the Fund
and who have no direct or indirect financial interest in the operation of the
Plan (the "Disinterested Trustees"), cast in person at a meeting called for the
purpose of voting on the Plan.
In reviewing the Plan, the Board of Trustees considered the nature of
payments and terms of the proposed Management Agreement between the Trust on
behalf of the Fund and Newport Advisory Company, Inc. (the "Advisor"), and the
nature and amount of any other payments, fees, and commissions which may be paid
to the Advisor and its affiliates. The Board of Trustees, including the
Disinterested Trustees, concluded that the proposed overall compensation of the
Advisor and its affiliates was fair and not excessive.
In its considerations, the Board of Trustees also recognized that
uncertainty may exist from time to time with respect to whether payments to be
made by the Fund to the Advisor or other firms under agreements with respect to
the Fund, or by the Advisor to others, may be deemed to constitute impermissible
distribution expenses. As a general rule, an investment company may not finance
any activity primarily intended to result in the sale of its shares, except
pursuant to the Rule. Accordingly, the Board of Trustees determined that the
Plan also should provide that payments by the Fund and expenditures made by
others out of monies received from the Fund which are later deemed to be for the
financing of any activity primarily intended to result in the sale of Fund
shares shall be deemed to have been made pursuant to the Plan.
The Board of Trustees' approval included a determination that in the
exercise of the Trustees' reasonable business judgment and in light of their
fiduciary duties, there is a reasonable likelihood that the Plan will benefit
the Fund and its shareholders. The Plan also has been approved by a vote of at
least a majority of the Fund's outstanding voting securities, as defined in the
Act.
The provisions of the Plan are:
1. Appointment of Distributor. The Advisor is hereby
appointed as the Distributor for purposes of this Plan with the
understanding that another entity may at any time be substituted as
the Distributor with the approval of the Board of Trustees.
2. Annual Fee. The Fund will pay the Distributor an annual
fee for the Distributor's services in such capacity including its
expenses in connection with the promotion and distribution of the
Fund's shares (collectively, "Distribution Expenses"). The annual fee
paid to the Distributor under the Plan will be calculated daily and
paid monthly by the Fund on the first day of each month at an annual
rate of 0.25% of the Fund's average daily net assets.
<PAGE>
3. Distribution Expenses in Excess of or Less Than Amount of
Fee. All Distribution Expenses of the Distributor in excess of its
compensation hereunder shall be borne by the Distributor. The fees paid
by the Fund shall not be refundable in the event that in any given year
the fees are greater than the Distributor's Distribution Expenses for
that year.
4. Expenses Covered by the Plan. The fee paid to the
Distributor under the Plan may be used by the Distributor to pay for
any expenses for activities which may be deemed to be related to the
distribution of the Fund's shares, including, but not limited to: (a)
costs of payments, including incentive compensation, made to the
partners and employees of, agents for and consultants to the
Distributor, broker-dealers, and other third parties that engage in the
distribution of the Fund's shares, that hold shares for shareholders in
omnibus accounts or as shareholder of record, or that may be advising
shareholders regarding the purchase, sale or retention of shares; (b)
payments made to, and expenses of, persons who provide support services
in connection with the distribution of the Fund's shares or who render
shareholder support services not otherwise provided by the Trust's
transfer agent or Shareholder Service Agreement, including, but not
limited to, personnel of the Distributor, allocated overhead, office
space and equipment, telephone facilities and expenses, answering
routine inquiries regarding the Fund, processing shareholder
transactions and providing any other shareholder services as the Trust
may reasonably request; (c) all payments made pursuant to the form of
Service Agreement attached hereto as an Exhibit; (d) costs relating to
the formulation and implementation of marketing and promotional
activities, including, but not limited to, direct mail promotions and
television, radio, newspaper, magazine and other mass media
advertising; (e) costs of preparing, printing and distributing
prospectuses, statements of additional information and report of the
Fund to prospective shareholders of the Fund; (f) costs involved in
preparing, printing and distributing sales literature pertaining to the
Fund; and (g) costs involved in obtaining whatever information,
analyses and reports with respect to marketing and promotional
activities that the Trust may, from time to time, deem advisable. Such
expenses shall be deemed incurred whether paid directly by the
Distributor or by a third party to the extent reimbursed therefor by
the Distributor. The Distributor is authorized to engage in the
activities listed above, and in any other activities which may be
deemed to be related to the distribution of the Fund's shares, either
directly or through other persons with which the Trust or the
Distributor has entered into agreements related to this Plan.
5. Prophylactic Provisions. No additional payments are to be
made by the Fund as a result of the Plan. To the extent any payments by
the Fund are deemed to be payments for the financing of any activity
primarily intended to result in the sale of shares of the Fund within
the context of the Rule, then such payments shall be deemed to have
been made pursuant to the Plan, except that the limitation set forth in
the first sentence of Section 3 of the Plan shall not apply.
6. Written Reports. The Distributor shall furnish to the
Board of Trustees of the Trust, for their review, on a quarterly basis,
a written report of the monies paid to it under the Plan and the
purposes therefor, and shall furnish the Board of Trustees of the Trust
with such other information as the Board of Trustees may reasonably
request in connection with
- 2 -
<PAGE>
the payments made under the Plan in order to enable the Board of
Trustees to make an informed determination of whether the Plan should
be continued.
7. Termination. The Plan may be terminated at any time,
without penalty, by vote of a majority of the Disinterested Trustees or
by vote of a majority of the outstanding voting securities of the Fund.
Any Service Agreement under the Plan may likewise be terminated on not
more than sixty (60) days' written notice, and shall terminate
automatically in the event of its assignment. Upon termination of the
Plan, the obligations of the Fund to make payments hereunder will cease
and the Fund will not be required to make any payments for expenses
incurred after the date of termination.
8. Amendments. The Plan may not be amended to increase
materially the amount to be spent for distribution and servicing of the
Fund shares pursuant to Section 2 hereof without approval by a majority
of the outstanding voting securities of the Fund. All material
amendments to the Plan and any Service Agreement entered into with
third parties shall be approved by a majority of both (a) the Trustees
of the Trust and (b) the Disinterested Trustees, cast in person at a
meeting called for the purpose of voting on any such amendment.
9. Selection of Disinterested Trustees. So long as the Plan
is in effect, the selection and nomination of the Disinterested
Trustees shall be committed to the discretion of such Disinterested
Trustees.
10. Relationship to Agreement and Declaration of Trust. A copy
of the Agreement and Declaration of Trust of the Trust is on file with
The Secretary of State of Ohio and notice is hereby given that this
Plan is executed on behalf of the Trustees of the Trust as Trustees,
and not individually, and that the Trust's obligations arising out of
this Plan are not binding upon the Trustees or holders of the Trust's
shares individually but are binding only upon the assets and property
of the Fund. The Distributor acknowledges that it has received notice
of and accepts the limitations of liability as set forth in the
Agreement and Declaration of Trust of the Trust. The Distributor agrees
that the Trust's obligations hereunder shall be limited to the Fund and
to its assets, and that no party shall seek satisfaction of any such
obligation from any shareholder of the Fund, nor from any trustee,
officer, employee or agent of the Trust.
11. Effective Date of Plan. The Plan shall take effect at such
time as the Trust's Post-Effective Amendment to the Trust's
Registration Statement under the Securities Act of 1933, as amended,
with respect to shares of the Fund is declared effective by the
Securities and Exchange Commission, and, unless sooner terminated,
shall continue in effect for a period of more than one year from the
date of its execution only so long as such continuance is specifically
approved at least annually by a majority of both (a) the Trustees of
the Trust, and (b) the Disinterested Trustees, cast in person at a
meeting called for the purpose of voting on such continuance.
12. Preservation of Materials. The Trust will preserve
copies of the Plan, any agreements relating to the Plan and any report
made pursuant to Section 6 above, for a
- 3 -
<PAGE>
period of not less than six years (the first two years in an easily
accessible place) from the date of the Plan, agreement or report.
13. Meanings of Certain Terms. As used in the Plan, the terms
"interested person" and "majority of the outstanding voting securities"
will be deemed to have the same meaning that those terms have under the
Act and the rules and regulations under the Act, subject to any
exemption that may be granted to the Trust under the Act by the
Securities and Exchange Commission.
This Plan and the terms and provisions thereof are hereby accepted and
agreed to by the Fund and the Distributor, as evidenced by their execution
hereof, as of this ____ day of __________________, 1996.
THE XYZ CONTRARIAN FUND
By: _______________________________________________
Kenneth D. Trumpfheller, President of AmeriPrime
Funds
NEWPORT ADVISORY COMPANY, INC.
By: _______________________________________________
- 4 -
THE XYZ CONTRARIAN FUND
Service Agreement
(Broker-Dealers)
This Service Agreement (the "Agreement") is between Newport Advisory
Company, Inc. (the "Distributor") and ______________________________________
(the "Service Organization"), and has been adopted pursuant to Rule 12b-1 under
the Investment Company Act of 1940, as amended, (the "Act") with respect to The
XYZ Contrarian Fund (the "Fund") by AmeriPrime Funds (the "Trust") as an
agreement related to a 12b-1 distribution plan adopted pursuant to said Rule
(the "Plan"). This Agreement has been approved both by a majority of the
Trustees of the Trust, and by a majority of the Trustees who are not interested
persons of the Trust or the Fund and who have no direct or indirect financial
interest in the operation of the Plan or this Agreement (the "Disinterested
Trustees"), cast in person at a meeting called for the purpose of voting on this
Agreement. The Plan authorizes the Distributor to pay expenses which may be
deemed to be related the distribution of the Fund. Accordingly, in consideration
of the mutual covenants contained herein, the parties hereby agree as follows:
1. The Distributor hereby appoints the Service Organization
(a) to undertake from time to time distribution services to promote the
sale of shares of the Fund and (b) to render or cause to be rendered
administrative support services to the Fund and its shareholders, which
distribution and administrative support services may include, without
limitation: forwarding sales literature, aggregating and processing
purchase and redemption requests and placing net purchase and
redemption orders with the Fund's transfer agent; answering client
inquiries about the Fund and referring to the Fund those inquiries
which the Service Organization is unable to answer; assisting clients
in changing dividend options, account designations and addresses;
performing sub-accounting; establishing, maintaining and closing
shareholder accounts and records; investing client account cash
balances automatically in shares of the Fund; providing periodic
statements showing a client's account balance, integrating such
statements with those of other transactions and balances in the
client's other accounts serviced by the Service Organization and
performing such other recordkeeping as is necessary for the Fund's
transfer agent to comply with the recordkeeping requirements of the Act
and the regulations promulgated thereunder; arranging for bank wires;
and providing such other information and services as the Fund
reasonably may request, to the extent the Service Organization is
permitted by applicable statute, rule or regulation to provide these
services.
2. The Service Organization shall provide such office space
and equipment, telephone facilities and personnel (which may be all or
any part of the space, equipment and facilities currently used in the
Service Organization's business, or all or any personnel employed by
the Service Organization) as is necessary or beneficial for providing
information and services to shareholders of the Fund, and to assist the
Fund in servicing accounts of clients. Shares of the Fund purchased by
Service Organization on behalf of its clients may be registered in its
name or the name of its nominee. The client will be the beneficial
owner of the shares of the Fund purchased and held by Service
Organization in accordance with the client's instructions and the
client may exercise all applicable rights of a holder of such
<PAGE>
Shares. The Service Organization shall transmit promptly to clients all
prospectuses, proxy statements and other materials and communications
sent to it for transmittal to clients by or on behalf of the Trust, the
Fund or the Fund's investment advisor, administrator, underwriter,
custodian or transfer or dividend disbursing agent. Service
Organization agrees to transfer record ownership of a client's Fund
shares to the client promptly upon the request of a client. In
addition, record ownership will be promptly transferred to the client
in the event that the person or entity ceases to be Service
Organization's client.
3. Distributor shall pay you a monthly fee based on the
average net asset value during any month of Fund shares which are
attributable to clients of your firm, at the rate set forth on Schedule
A attached hereto and made a part hereof. The Service Organization
shall notify the Trust if the Service Organization directly charges a
fee to Fund shareholders for its services as described in this
Agreement.
4. The Service Organization agrees to comply with the
requirements of all laws applicable to it, including but not limited
to, ERISA, federal and state securities laws and the rules and
regulations promulgated thereunder. The Service Organization agrees to
provide services hereunder in compliance with the then current
Prospectus and Statement of Additional Information of the Fund and the
operating procedures and policies established by the Fund, including,
but not limited to, required minimum investment and minimum account
size.
5. No person is authorized to make any representations
concerning the Fund or its shares except those contained in the current
Prospectus or Statement of Additional Information of the Fund and any
such information as may be officially designated as information
supplemental to the Prospectus. Additional copies of any Prospectus and
any printed information officially designated as supplemental to such
Prospectus will be supplied by the Trust to the Service Organization in
reasonable quantities on request. Service Organization is specifically
authorized to distribute the Fund's Prospectus and sales material
received from the Fund or the Fund's Distributor. No person is
authorized to distribute any other sales material relating to the Fund
without the prior approval of the Fund.
6. The Service Organization agrees that it will provide
distribution and administrative support services only to those persons
who reside in any jurisdiction in which the Fund's shares are
registered for sale and in which the Service Organization may lawfully
provide such services. Upon request, the Fund shall provide the Service
Organization with a list of the states in which the Fund's shares are
registered for sale and shall keep such list updated. Distributor and
the Trust assume no responsibility or obligation as to the right of
Service Organization to sell Fund shares in any jurisdiction.
7. Service Organization represents that it is and will be at
all times relevant hereto a member in good standing of the National
Association of Securities Dealers, Inc., and further represents and
warrants that it is and will be at all times relevant hereto a
broker-dealer properly registered and qualified under all applicable
federal, state and local laws to engage in the business and
transactions described in this Agreement. Service Organization agrees
to comply with all requirements applicable to it of all applicable
laws, including federal and state securities laws, the Rules and
Regulations of the Securities and Exchange Commission
- 2 -
<PAGE>
and the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. Service Organization agrees that it will not
offer Fund shares to persons in any jurisdiction in which the shares
are not registered for sale and in which Service Organization may not
lawfully make such offer due to the fact that it has not registered
under, or is not exempt from, the applicable registration or licensing
requirements of such jurisdiction. Service Organization further agrees
that it will maintain all records required by applicable law relating
to transactions involving purchases or redemptions of the shares by it
or its clients. In all sales of Fund shares to the public, Service
Organization shall act as agent on behalf of the Fund, and in no
transaction, shall it act as dealer for its own account.
8. The Service Organization agrees not to solicit or cause to
be solicited directly, or indirectly at any time in the future, any
proxies from the shareholders of the Fund in opposition to proxies
solicited by management of the Trust, unless a court of competent
jurisdiction shall have determined that the conduct of a majority of
the Board of Trustees of the Trust constitutes willful misfeasance, bad
faith, gross negligence or reckless disregard of their duties. This
paragraph 8 will survive the expiration or termination of this
Agreement.
9. The Service Organization shall prepare such quarterly
reports for the Trust as shall reasonably be requested by the Trust. In
addition, the Service Organization will furnish the Trust or its
designees with such information as the Trust or they may reasonably
request (including, without limitation, periodic certifications
confirming the provision to clients of the services described herein),
and will otherwise cooperate with the Trust and its designees
(including, without limitation, any auditors designated by the Trust),
in connection with the preparation of reports to the Trust's Board of
Trustees concerning this Agreement and the monies paid or payable by
the Distributor pursuant hereto, as well as any other reports or
filings that may be required by law.
10. The Service Organization acknowledges that the Distributor
may enter into similar agreements with others without the consent of
the Service Organization.
11. The Service Organization understands and acknowledges that
the Trust has the right, at its discretion and without notice, to
suspend the sale of shares or withdraw the sale of shares of the Fund.
12. This Agreement shall continue in effect for one year from
the date of its execution, and thereafter for successive periods of one
year if the form of this Agreement is approved as to the Fund at least
annually by the Trustees of the Trust, including a majority of the
Disinterested Trustees, cast in person at a meeting for that purpose.
In the event this Agreement, or any part thereof, is found invalid or
is ordered terminated by any regulatory or judicial authority, or the
Service Organization shall fail to perform the shareholder servicing
and administrative functions contemplated hereby, this Agreement is
terminable effective upon receipt of notice thereof by the Service
Organization.
13. Notwithstanding paragraph 12, this Agreement may be
terminated as follows:
(a) at any time, without the payment of any penalty,
by the vote of a majority of the Disinterested Trustees of
the Fund or by a vote of a majority of the
- 3 -
<PAGE>
outstanding voting securities of the Fund on not more than
sixty (60) days' written notice to the parties to this
Agreement;
(b) automatically in the event of the Agreement's
assignment as defined in the Act; or
(c) by any party to the Agreement without cause by
giving the other parties at least thirty (30) days' written
notice of its intention to terminate.
14. Any termination of this Agreement shall not affect the
provisions of paragraph 17, which shall survive the expiration or
termination of this Agreement and continue to be enforceable
thereafter.
15. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors.
16. This Agreement is not intended to, and shall not, create
any rights against any party hereto by any third person solely on
account of this Agreement.
17. The Service Organization shall provide such security as is
necessary to prevent unauthorized use of any computer hardware or
software provided to it by or on behalf of the Trust, if any. The
Service Organization agrees to release, indemnify and hold harmless the
Fund, the Trust, the Trust's transfer agent, custodian, investment
advisor, administrator and underwriter, and their respective
principals, directors, trustees, officers, employees and agents from
any and all direct or indirect liabilities or losses resulting from
requests, directions, actions or inactions of or by the Service
Organization, its officers, employees or agents regarding the purchase,
redemption, transfer or registration of shares for accounts of the
Service Organization, its clients and other shareholders. Such
indemnity shall also cover any losses and liabilities relating to the
lawfulness of Service Organization's participation in this Agreement,
or resulting from the Service Organization's performance of or failure
to perform its obligations or its breach of any representations or
warranties under this Agreement. If any claims are asserted which may
give rise to indemnification hereunder, the indemnified parties shall
have the right to engage in their own defense, including the selection
and engagement of legal counsel of their choosing and all costs of such
defense shall be borne by Service Organization. Principals of the
Service Organization will be available to consult from time to time
with the Trust concerning the administration and performance of the
services contemplated by this Agreement.
18. This Agreement may be amended only by an agreement in
writing signed by the parties.
19. To the extent this Agreement may be deemed to create
obligations on the part of the Trust, such obligations shall not be
binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but shall bind only the
property of the Trust, as provided in the Trust's Agreement and
Declaration of Trust. The authorization of this Agreement by the
Trustees shall not be deemed to have been made by any of them
individually or to impose any liability on any of them personally.
- 4 -
<PAGE>
20. If any provision of this Agreement, or any covenant,
obligation or agreement contained herein, is determined by a court to
be invalid or unenforceable, the parties agree that (a) such
determination shall not affect any other provision, covenant,
obligation or agreement contained herein, each of which shall be
construed and enforced to the full extent permitted by law, and (b)
such invalid or unenforceable portion shall be deemed to be modified to
the extent necessary to permit its enforcement to the maximum extent
permitted by applicable law.
21. This Agreement shall be construed in accordance with the
laws of the State of Ohio.
IN WITNESS WHEREOF, this Agreement has been executed for the parties by
their duly authorized officers, on this ______ day of ______________________,
1996.
_______________________________ NEWPORT ADVISORY COMPANY, INC.
Service Organization Distributor
By: ___________________________ By: _________________________________
Authorized Signature Authorized Signature
- 5 -
THE XYZ CONTRARIAN FUND
Service Agreement
(Other Than Broker-Dealers)
This Service Agreement (the "Agreement") is between Newport Advisory
Company, Inc. (the "Distributor") and ______________________________________
(the "Service Organization"), and has been adopted pursuant to Rule 12b-1 under
the Investment Company Act of 1940, as amended, (the "Act") with respect to The
XYZ Contrarian Fund (the "Fund") by AmeriPrime Funds (the "Trust") as an
agreement related to a 12b-1 distribution plan adopted pursuant to said Rule
(the "Plan"). This Agreement has been approved both by a majority of the
Trustees of the Trust, and by a majority of the Trustees who are not interested
persons of the Trust or the Fund and who have no direct or indirect financial
interest in the operation of the Plan or this Agreement (the "Disinterested
Trustees"), cast in person at a meeting called for the purpose of voting on this
Agreement. The Plan authorizes the Distributor to pay expenses which may be
deemed to be related the distribution of the Fund. Accordingly, in consideration
of the mutual covenants contained herein, the parties hereby agree as follows:
1. The Distributor hereby appoints the Service Organization
to render or cause to be rendered administrative support services to
the Fund and its shareholders, which services may include, without
limitation: aggregating and processing purchase and redemption requests
and placing net purchase and redemption orders with the Fund's transfer
agent; answering client inquiries about the Fund and referring to the
Fund those inquiries which the Service Organization is unable to
answer; assisting clients in changing dividend options, account
designations and addresses; performing sub-accounting; establishing,
maintaining and closing shareholder accounts and records; investing
client account cash balances automatically in shares of the Fund;
providing periodic statements showing a client's account balance,
integrating such statements with those of other transactions and
balances in the client's other accounts serviced by the Service
Organization and performing such other recordkeeping as is necessary
for the Fund's transfer agent to comply with all the recordkeeping
requirements of the Act and the regulations promulgated thereunder;
arranging for bank wires; and providing such other information and
services as the Fund reasonably may request, to the extent the Service
Organization is permitted by applicable statute, rule or regulation to
provide these services.
2. The Service Organization shall provide such office space
and equipment, telephone facilities and personnel (which may be all or
any part of the space, equipment and facilities currently used in the
Service Organization's business, or all or any personnel employed by
the Service Organization) as is necessary or beneficial for providing
information and services to shareholders of the Fund, and to assist the
Fund in servicing accounts of clients. The Service Organization shall
transmit promptly to clients all communications sent to it for
transmittal to clients by or on behalf of the Trust, the Fund or the
Fund's investment advisor, administrator, underwriter, custodian or
transfer or dividend disbursing agent.
3. Distributor shall pay you a monthly fee based on the
average net asset value during any month of Fund shares which are
attributable to clients of your firm, at the rate set
<PAGE>
forth on Schedule A attached hereto and made a part hereof. The Service
Organization shall notify the Trust if the Service Organization
directly charges a fee to Fund shareholders for its administrative
support services as described in this Agreement.
4. The Service Organization agrees to comply with the
requirements of all laws applicable to it, including but not limited
to, ERISA, federal and state securities laws and the rules and
regulations promulgated thereunder. The Service Organization agrees to
provide services to the Fund in compliance with the then current
Prospectus and Statement of Additional Information of the Fund and the
operating procedures and policies established by the Fund, including,
but not limited to, required minimum investment and minimum account
size.
5. No person is authorized to make any representations
concerning the Fund or its shares except those contained in the current
Prospectus or Statement of Additional Information of the Fund and any
such information as may be officially designated as information
supplemental to the Prospectus. Additional copies of any Prospectus and
any printed information officially designated as supplemental to such
Prospectus will be supplied by the Trust to the Service Organization in
reasonable quantities on request.
6. The Service Organization agrees that it will provide
administrative support services only to those persons who reside in any
jurisdiction in which the Fund's shares are registered for sale and in
which the Service Organization may lawfully provide such services. Upon
request, the Fund shall provide the Service Organization with a list of
the states in which the Fund's shares are registered for sale and shall
keep such list updated.
7. In no transaction shall the Service Organization have any
authority whatsoever to act as agent for the Trust, the Fund or any
person affiliated with the Trust or the Fund.
8. The Service Organization agrees not to solicit or cause to
be solicited directly, or indirectly at any time in the future, any
proxies from the shareholders of the Fund in opposition to proxies
solicited by management of the Trust, unless a court of competent
jurisdiction shall have determined that the conduct of a majority of
the Board of Trustees of the Trust constitutes willful misfeasance, bad
faith, gross negligence or reckless disregard of their duties. This
paragraph 8 will survive the expiration or termination of this
Agreement.
9. The Service Organization shall prepare such quarterly
reports for the Trust as shall reasonably be requested by the Trust. In
addition, the Service Organization will furnish the Trust or its
designees with such information as the Trust or they may reasonably
request (including, without limitation, periodic certifications
confirming the provision to clients of the services described herein),
and will otherwise cooperate with the Trust and its designees
(including, without limitation, any auditors designated by the Trust),
in connection with the preparation of reports to the Trust's Board of
Trustees concerning this Agreement and the monies paid or payable by
the Distributor pursuant hereto, as well as any other reports or
filings that may be required by law.
10. The Service Organization acknowledges that the Distributor
may enter into similar agreements with others without the consent of
the Service Organization.
- 2 -
<PAGE>
11. The Service Organization understands and acknowledges that
the Trust has the right, at its discretion and without notice, to
suspend the sale of shares or withdraw the sale of shares of the Fund.
12. This Agreement shall continue in effect for one year from
the date of its execution, and thereafter for successive periods of one
year if the form of this Agreement is approved as to the Fund at least
annually by the Trustees of the Trust, including a majority of the
Disinterested Trustees, cast in person at a meeting for that purpose.
In the event this Agreement, or any part thereof, is found invalid or
is ordered terminated by any regulatory or judicial authority, or the
Service Organization shall fail to perform the shareholder servicing
and administrative functions contemplated hereby, this Agreement is
terminable effective upon receipt of notice thereof by the Service
Organization.
13. Notwithstanding paragraph 12, this Agreement may be
terminated as follows:
(a) at any time, without the payment of any penalty,
by the vote of a majority of the Disinterested Trustees of the
Fund or by a vote of a majority of the outstanding voting
securities of the Fund on not more than sixty (60) days'
written notice to the parties to this Agreement;
(b) automatically in the event of the Agreement's
assignment as defined in the Act; or
(c) by any party to the Agreement without cause by
giving the other parties at least thirty (30) days' written
notice of its intention to terminate.
14. Any termination of this Agreement shall not affect the
provisions of paragraph 17, which shall survive the expiration or
termination of this Agreement and continue to be enforceable
thereafter.
15. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors.
16. This Agreement is not intended to, and shall not, create
any rights against any party hereto by any third person solely on
account of this Agreement.
17. The Service Organization shall provide such security as is
necessary to prevent unauthorized use of any computer hardware or
software provided to it by or on behalf of the Trust, if any. The
Service Organization agrees to release, indemnify and hold harmless the
Fund, the Trust, the Trust's transfer agent, custodian, investment
advisor, administrator and underwriter, and their respective
principals, directors, trustees, officers, employees and agents from
any and all direct or indirect liabilities or losses resulting from
requests, directions, actions or inactions of or by the Service
Organization, its officers, employees or agents regarding the purchase,
redemption, transfer or registration of shares for accounts of the
Service Organization, its clients and other shareholders. Such
indemnity shall also cover any losses and liabilities relating to the
lawfulness of Service Organization's participation in this Agreement,
or resulting from the Service Organization's performance of or failure
to
- 3 -
<PAGE>
perform its obligations or its breach of any representations or
warranties under this Agreement. If any claims are asserted which may
give rise to indemnification hereunder, the indemnified parties shall
have the right to engage in their own defense, including the selection
and engagement of legal counsel of their choosing and all costs of such
defense shall be borne by Service Organization. Principals of the
Service Organization will be available to consult from time to time
with the Trust concerning the administration and performance of the
services contemplated by this Agreement.
18. This Agreement may be amended only by an agreement in
writing signed by the parties.
19. To the extent this Agreement may be deemed to create
obligations on the part of the Trust, such obligations shall not be
binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but shall bind only the
property of the Trust, as provided in the Trust's Agreement and
Declaration of Trust. The authorization of this Agreement by the
Trustees shall not be deemed to have been made by any of them
individually or to impose any liability on any of them personally.
20. This Agreement does not authorize the Service Organization
to participate in any activities relating to the sale or distribution
of the shares, and the Service Organization agrees that it shall not
participate in such activities.
21. If any provision of this Agreement, or any covenant,
obligation or agreement contained herein, is determined by a court to
be invalid or unenforceable, the parties agree that (a) such
determination shall not affect any other provision, covenant,
obligation or agreement contained herein, each of which shall be
construed and enforced to the full extent permitted by law, and (b)
such invalid or unenforceable portion shall be deemed to be modified to
the extent necessary to permit its enforcement to the maximum extent
permitted by applicable law.
22. This Agreement shall be construed in accordance with the
laws of the State of Ohio.
IN WITNESS WHEREOF, this Agreement has been executed for the parties by
their duly authorized officers, on this ______ day of ______________________,
1996.
_______________________________ NEWPORT ADVISORY COMPANY, INC.
Service Organization Distributor
By: ___________________________ By: _________________________________
Authorized Signature Authorized Signature
- 4 -
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS:
WHEREAS, AmeriPrime Funds, a business trust organized under the laws of
the State of Ohio (hereinafter referred to as the "Trust"), proposes to file
with the Securities and Exchange Commission under the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
Post-Effective Amendment No. 1 to its Registration Statement; and
NOW, THEREFORE, the Trust hereby constitutes and appoints JAMES R.
CUMMINS and DONALD S. MENDELSOHN, and each of them, its attorneys for it and in
its name, place and stead, to execute and file such Post-Effective Amendment,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises as fully to all intents and purposes as it might
or could do if personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the Trust has caused its name to be subscribed
hereto by the President this 12 day of December, 1995.
ATTEST: AmeriPrime Funds
By:/s/ Kenneth D. Trumpfheller
__________________________________ ____________________________________
Kelli D. Shomaker, Secretary KENNETH D. TRUMPFHELLER, President
STATE OF TEXAS )
) ss:
COUNTY OF TARRANT )
Before me, a Notary Public, in and for said county and state,
personally appeared KENNETH D. TRUMPFHELLER, President, who represented that he
is duly authorized in the premises, and who is known to me to be the person
described in and who executed the foregoing instrument, and he duly acknowledged
to me that he executed and delivered the same for the purposes therein
expressed.
WITNESS my hand and official seal this 12 day of December, 1995.
/s/ Michelle L. Gillispie
____________________________________
Notary Public
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS:
WHEREAS, AmeriPrime Funds, a business trust organized under the laws of
the State of Ohio (hereinafter referred to as the "Trust"), proposes to file
with the Securities and Exchange Commission under the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
Post-Effective Amendment No. 1 to its Registration Statement; and
NOW, THEREFORE, the Trust hereby constitutes and appoints JAMES R.
CUMMINS and DONALD S. MENDELSOHN, and each of them, its attorneys for it and in
its name, place and stead, to execute and file such Post-Effective Amendment,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises as fully to all intents and purposes as it might
or could do if personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the Trust has caused its name to be subscribed
hereto by the President this 12 day of December, 1995.
ATTEST: AmeriPrime Funds
/s/ Kelli D. Shomaker
__________________________________ By:_________________________________
Kelli D. Shomaker, Secretary KENNETH D. TRUMPFHELLER, President
STATE OF TEXAS )
) ss:
COUNTY OF BRAZOS )
Before me, a Notary Public, in and for said county and state,
personally appeared KELLI D. SHOMAKER, Secretary, who represented that she is
duly authorized in the premises, and who is known to me to be the person
described in and who executed the foregoing instrument, and she duly
acknowledged to me that she executed and delivered the same for the purposes
therein expressed.
WITNESS my hand and official seal this 12 day of December, 1995.
/s/ Marsha Lee Berger
___________________________________
Notary Public
<PAGE>
CERTIFICATE
The undersigned, Secretary of AmeriPrime Funds, hereby certifies that
the following resolution was duly adopted by a majority of the Board of Trustees
at a meeting held December 12, 1995, and is in full force and effect:
"WHEREAS, AmeriPrime Funds, a business trust organized under
the laws of the State of Ohio (hereinafter referred to as the
"Trust"), proposes to file with the Securities and Exchange
Commission under the provisions of the Securities Act of 1933
and the Investment Company Act of 1940, as amended,
Post-Effective Amendment No. 1 to its Registration Statement;
NOW, THEREFORE, the Trust hereby constitutes and appoints
JAMES R. CUMMINS and DONALD S. MENDELSOHN, and each of them,
its attorneys for it and in its name, place and stead, to
execute and file such Post-Effective Amendment, hereby giving
and granting to said attorneys full power and authority to do
and perform all and every act and thing whatsoever requisite
and necessary to be done in and about the premises as fully to
all intents and purposes as it might or could do if personally
present at the doing thereof, hereby ratifying and confirming
all that said attorneys may or shall lawfully do or cause to
be done by virtue hereof."
/s/ Kelli D. Shomaker
Dated: December 12, 1995 _________________________________________
Kelli D. Shomaker, Secretary
AmeriPrime Funds
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AmeriPrime Funds, a business trust organized under the laws of
the State of Ohio (hereinafter referred to as the "Trust"), proposes to file
with the Securities and Exchange Commission under the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
Post-Effective Amendment No. 1 to its Registration Statement; and
WHEREAS, the undersigned is a Trustee and the President of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JAMES
R. CUMMINS and DONALD S. MENDELSOHN, and each of them, his attorneys for him and
in his name, place and stead, and in his office and capacity in the Trust, to
execute and file such Post- Effective Amendment, hereby giving and granting to
said attorneys full power and authority to do and perform all and every act and
thing whatsoever requisite and necessary to be done in and about the premises as
fully to all intents and purposes as he might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
11 day of December, 1995.
/s/ Kenneth D. Trumpfheller
___________________________________________
KENNETH D. TRUMPFHELLER, Trustee and
President
STATE OF TEXAS )
) ss:
COUNTY OF TARRANT )
Before me, a Notary Public, in and for said county and state,
personally appeared KENNETH D. TRUMPFHELLER, known to me to be the person
described in and who executed the foregoing instrument, and who acknowledged to
me that he executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 11 day of December, 1995.
/s/ Cynthia K. Mays
___________________________________________
Notary Public
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AmeriPrime Funds, a business trust organized under the laws of
the State of Ohio (hereinafter referred to as the "Trust"), proposes to file
with the Securities and Exchange Commission under the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
Post-Effective Amendment No. 1 to its Registration Statement; and
WHEREAS, the undersigned is a Trustee of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JAMES
R. CUMMINS and DONALD S. MENDELSOHN, and each of them, his attorneys for him and
in his name, place and stead, and in his office and capacity in the Trust, to
execute and file such Post- Effective Amendment, hereby giving and granting to
said attorneys full power and authority to do and perform all and every act and
thing whatsoever requisite and necessary to be done in and about the premises as
fully to all intents and purposes as he might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
11 day of December, 1995.
/s/ Steve L. Cobb
_________________________________
STEVE L. COBB, Trustee
STATE OF TEXAS )
) ss:
COUNTY OF DALLAS )
Before me, a Notary Public, in and for said county and state,
personally appeared STEVE L. COBB, known to me to be the person described in and
who executed the foregoing instrument, and who acknowledged to me that he
executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 11 day of December, 1995.
/s/ Debra Hildebrant
________________________________
Notary Public
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AmeriPrime Funds, a business trust organized under the laws of
the State of Ohio (hereinafter referred to as the "Trust"), proposes to file
with the Securities and Exchange Commission under the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
Post-Effective Amendment No. 1 to its Registration Statement; and
WHEREAS, the undersigned is a Trustee of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JAMES
R. CUMMINS and DONALD S. MENDELSOHN, and each of them, his attorneys for him and
in his name, place and stead, and in his office and capacity in the Trust, to
execute and file such Post- Effective Amendment, hereby giving and granting to
said attorneys full power and authority to do and perform all and every act and
thing whatsoever requisite and necessary to be done in and about the premises as
fully to all intents and purposes as he might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
12 day of December, 1995.
/s/ Gary E. Hippenstiel
_________________________________
GARY E. HIPPENSTIEL, Trustee
STATE OF TEXAS )
) ss:
COUNTY OF HARRIS )
Before me, a Notary Public, in and for said county and state,
personally appeared GARY E. HIPPENSTIEL, known to me to be the person described
in and who executed the foregoing instrument, and who acknowledged to me that he
executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 12 day of December, 1995.
/s/ Candice Turner
_________________________________
Notary Public
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AmeriPrime Funds, a business trust organized under the laws of
the State of Ohio (hereinafter referred to as the "Trust"), proposes to file
with the Securities and Exchange Commission under the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
Post-Effective Amendment No. 1 to its Registration Statement; and
WHEREAS, the undersigned is Treasurer of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JAMES
R. CUMMINS and DONALD S. MENDELSOHN, and each of them, her attorneys for her and
in her name, place and stead, and in her office and capacity in the Trust, to
execute and file such Post- Effective Amendment, hereby giving and granting to
said attorneys full power and authority to do and perform all and every act and
thing whatsoever requisite and necessary to be done in and about the premises as
fully to all intents and purposes as she might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this
12 day of December, 1995.
/s/ Kelli D. Shomaker
________________________________
KELLI D. SHOMAKER, Treasurer
STATE OF TEXAS )
) ss:
COUNTY OF BRAZOS )
Before me, a Notary Public, in and for said county and state,
personally appeared KELLI D. SHOMAKER, known to me to be the person described in
and who executed the foregoing instrument, and who acknowledged to me that she
executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 12 day of December, 1995.
/s/ Marsha Lee Berger
______________________________
Notary Public
