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. 19 /X/
---------- ---
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
---
Amendment No. 20 /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 Dr., Suite 200, Southlake, TX 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
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective:
/ / immediately upon filing pursuant to paragraph (b) / / on pursuant
to paragraph (b) / / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1) /X/ 75 days after filing
pursuant to paragraph (a)(2) / / on (date) pursuant to paragraph (a)(2)
of Rule 485
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
<PAGE>
AmeriPrime Funds
CROSS REFERENCE SHEET
FORM N-1A
FOR CARL DOMINO EQUITY INCOME FUND (INVESTOR CLASS)
ITEM SECTION IN PROSPECTUS
1........................Cover Page
2........................Summary of Fund Expenses
3........................Financial Highlights; Performance Information
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;Supplement
to Prospectus
7..........................Cover Page, How to Invest in the Fund, Share Price
Calculation, Operation of the Fund; Supplement to
Prospectus
8........................How to Redeem Shares
9........................None..
13........................General Information
15........................General Information; Supplement to Prospectus
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........................Description of the Trust
16........................The Investment Adviser, Custodian, Transfer Agent,
Accountants, Administrator
17........................Portfolio Transactions and Brokerage
18........................Description of the Trust
19........................Determination of Share Price
20........................None..
21........................Distributor
22........................Investment Performance
23........................Financial Statements
<PAGE>
AmeriPrime Funds
CROSS REFERENCE SHEET
FORM N-1A
FOR CARL DOMINO EQUITY INCOME FUND (CLASS A SHARES)
ITEM SECTION IN PROSPECTUS
1........................Cover Page
2........................Summary of Fund Expenses
3........................Financial Highlights; Performance Information
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
8........................How to Redeem Shares
9........................None..
13........................General Information
15........................General Information
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........................Description of the Trust
16........................The Investment Adviser, Custodian, Transfer Agent,
Accountants, Administrator
17........................Portfolio Transactions and Brokerage
18........................Description of the Trust
19........................Determination of Share Price
20........................None..
21........................Distributor
22........................Investment Performance
23........................Financial Statements
<PAGE>
AmeriPrime Funds
CROSS REFERENCE SHEET
FORM N-1A
FOR FOUNTAINHEAD SPECIAL VALUE FUND
ITEM SECTION IN PROSPECTUS
1........................Cover Page
2........................Summary of Fund Expenses
3........................Financial Highlights; Performance Information
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,
Supplement to Prospectus
7........................Cover Page, How to Invest in the Fund, Share Price
Calculation, Operation of the Fund
8........................How to Redeem Shares
9........................None..
15........................General Information
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........................Description of the Trust
16........................The Investment Adviser, Custodian, Transfer Agent,
Accountants, Administrator
17........................Portfolio Transactions and Brokerage
18........................Description of the Trust
19........................Determination of Share Price
20........................None..
21........................Distributor
22........................Investment Performance
23........................Financial Statements
<PAGE>
AmeriPrime Funds
CROSS REFERENCE SHEET
FORM N-1A
FOR AIT VISION U.S. EQUITY PORTFOLIO
ITEM SECTION IN PROSPECTUS
1........................Cover Page
2........................Summary of Fund Expenses
3........................Financial Highlights; Performance Information
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
8........................How to Redeem Shares
9........................None..
13........................General Information
15........................General Information
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........................Description of the Trust
16........................The Investment Adviser, Custodian, Transfer Agent,
Accountants, Administrator
17........................Portfolio Transactions and Brokerage
18........................Description of the Trust
19........................Determination of Share Price
20........................None..
21........................Distributor
22........................Investment Performance
23........................Financial Statements
<PAGE>
AmeriPrime Funds
CROSS REFERENCE SHEET
FORM N-1A
FOR GLOBALT GROWTH FUND
ITEM SECTION IN PROSPECTUS
1........................Cover Page
2........................Summary of Fund Expenses
3........................Financial Highlights; Performance Information
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
8........................How to Redeem Shares
9........................None..
15........................General Information
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........................Description of the Trust
16........................The Investment Adviser, Custodian, Transfer Agent,
Accountants, Administrator
17........................Portfolio Transactions and Brokerage
18........................Description of the Trust
19........................Determination of Share Price
20........................None..
21........................Distributor
22........................Investment Performance
23........................Financial Statements
<PAGE>
AmeriPrime Funds
CROSS REFERENCE SHEET
FORM N-1A
FOR THE NEWCAP CONTRARIAN FUND
ITEM SECTION IN PROSPECTUS
1........................Cover Page
2........................Summary of Fund Expenses
3........................Financial Highlights; Performance Information
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........................Description of the Trust
16........................The Investment Adviser, Distribution Plan, Custodian,
Transfer Agent, Accountants, Administrator
17........................Portfolio Transactions and Brokerage
18........................Description of the Trust
19........................Determination of Share Price
20........................None..
21........................Distributor
22........................Investment Performance
23........................Financial Statements
<PAGE>
AmeriPrime Funds
CROSS REFERENCE SHEET
FORM N-1A
FOR IMS CAPITAL VALUE FUND
ITEM SECTION IN PROSPECTUS
1........................Cover Page
2........................Summary of Fund Expenses
3........................Financial Highlights; Performance Information
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
8........................How to Redeem Shares
9........................None..
15........................General Information
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........................Description of the Trust
16........................The Investment Adviser, Custodian, Transfer Agent,
Accountants, Administrator
17........................Portfolio Transactions and Brokerage
18........................Description of the Trust
19........................Determination of Share Price
20........................None..
21........................Distributor
22........................Investment Performance
23........................Financial Statements
<PAGE>
AmeriPrime Funds
CROSS REFERENCE SHEET
FORM N-1A
FOR CORBIN SMALL-CAP VALUE FUND
ITEM SECTION IN PROSPECTUS
1........................Cover Page
2........................Summary of Fund Expenses
3........................Financial Highlights; Performance Information
4........................The Fund, Investment Objective and Strategies and
Risk Considerations, Investment Policies and
Techniques, 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
8........................How to Redeem Shares
9........................None..
15........................General Information
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, Custodian, Transfer Agent,
Accountants, Administrator
17........................Portfolio Transactions and Brokerage
18........................Description of the Trust
19........................Determination of Share Price
20........................None..
21........................Distributor
22........................Investment Performance
23........................Financial Statements
<PAGE>
AmeriPrime Funds
CROSS REFERENCE SHEET
FORM N-1A
FOR FLORIDA STREET BOND FUND AND FLORIDA STREET GROWTH FUND
ITEM SECTION IN PROSPECTUS
1........................Cover Page
2........................Summary of Fund Expenses
3........................Financial Highlights; Performance Information
4........................The Funds, Investment Objective and Strategies,
Investment Policies and Techniques, Risk
Considerations, Operation of the Funds, General
Information
5........................Operation of the Funds
5A.......................None..
6........................Cover Page, Dividends and Distributions, Taxes,
Operation of the Funds, General Information
7........................Cover Page, How to Invest in the Funds, Share Price
Calculation, Operation of the
Funds
8........................How to Redeem Shares
9........................None..
13........................General Information
15........................General Information
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 Advisor, Custodian, Transfer Agent,
Accountants, Administrator
17........................Fund Transactions and Brokerage
18........................Description of the Trust
19........................Determination of Share Price
20........................None..
21........................Distributor
22........................Investment Performance
23........................Financial Statements
<PAGE>
AmeriPrime Funds
CROSS REFERENCE SHEET
FORM N-1A
FOR MARATHON VALUE FUND
ITEM SECTION IN PROSPECTUS
1........................Cover Page
2........................Summary of Fund Expenses
3........................Performance Information; Financial Highlights
4........................The Funds, Investment Objective and Strategies and
Risk Considerations, Investment Policies, 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, How to
Redeem Shares
7........................Cover Page, How to Invest in the Fund, Share Price
Calculation, Operation of the Fund
8........................How to Redeem Shares
9........................None..
13........................General Information
15........................General Information
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, Custodian, Transfer Agent,
Accountants, Administrator
17........................Portfolio Transactions and Brokerage
18........................Description of the Trust
19........................Determination of Share Price
20........................None..
21........................Distributor
22........................Investment Performance
23........................ Financial Statements
<PAGE>
AmeriPrime Funds
CROSS REFERENCE SHEET
FORM N-1A
FOR AAM EQUITY FUND
ITEM SECTION IN PROSPECTUS
1........................Cover Page
2........................Summary of Fund Expenses
3........................Performance Information; Financial Highlights
4........................The Fund, Investment Objective and Strategies,
Investment Policies, 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, How to Redeem Shares
7........................Cover Page, How to Invest in the Fund, Share Price
Calculation, Operation of the Fund
8........................How to Redeem Shares
9........................None..
13........................General Information
15........................General Information
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 Advisor, Custodian, Transfer Agent,
Accountants, Administrator
17........................Portfolio Transactions and Brokerage
18........................Description of the Trust
19........................Determination of Share Price
20........................None..
21........................Distributor
22........................Investment Performance
23........................ Financial Statements
<PAGE>
AmeriPrime Funds
CROSS REFERENCE SHEET
FORM N-1A
FOR DOBSON COVERED CALL FUND
ITEM SECTION IN PROSPECTUS
1........................Cover Page
2........................Summary of Fund Expenses
3........................Performance Information
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, How to
Redeem Shares
7........................Cover Page, How to Invest in the Fund, Share Price
Calculation, Operation of the Fund
8........................How to Redeem Shares
9........................None..
15........................General Information
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 Advisor, Custodian, Transfer Agent,
Accountants, Administrator
17........................Portfolio Transactions and Brokerage
18........................Description of the Trust
19........................Determination of Share Price
20........................None..
21........................Distributor
22........................Investment Performance
23........................None..
<PAGE>
AmeriPrime Funds
CROSS REFERENCE SHEET
FORM N-1A
FOR AUXIER EQUITY FUND
ITEM SECTION IN PROSPECTUS
1........................Cover Page
2........................Summary of Fund Expenses
3........................Performance Information
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, How to
Redeem Shares
7........................Cover Page, How to Invest in the Fund, Share Price
Calculation, Operation of the Fund
8........................How to Redeem Shares
9........................None..
15........................General Information
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 Advisor, Custodian, Transfer Agent,
Accountants, Administrator
17........................Portfolio Transactions and Brokerage
18........................Description of the Trust
19........................Determination of Share Price
20........................None..
21........................Distributor
22........................Investment Performance
23........................None..
<PAGE>
AmeriPrime Funds
CROSS REFERENCE SHEET
FORM N-1A
FOR SHEPHERD VALUES MARKET NEUTRAL FUND AND SHEPHERD VALUES GROWTH
FUND
ITEM SECTION IN PROSPECTUS
1........................Cover Page
2........................Summary of Fund Expenses
3........................Performance Information
4........................The Funds, Investment Objective and Strategies,
Investment Policies and Techniques and Risk
Considerations, Operation of the Funds, General
Information
5........................Operation of the Funds
5A.......................None..
6........................Cover Page, Dividends and Distributions, Taxes,
Operation of the Funds, General Information, How to
Redeem Shares
7........................Cover Page, How to Invest in the Funds, Share Price
Calculation, Operation of the Fund
8........................How to Redeem Shares
9........................None..
15........................General Information
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 Advisor, Custodian, Transfer Agent,
Accountants, Administrator
17........................Portfolio Transactions and Brokerage
18........................Description of the Trust
19........................Determination of Share Price
20........................None..
21........................Distributor
22........................Investment Performance
23........................None..
<PAGE>
AmeriPrime Funds
CROSS REFERENCE SHEET
FORM N-1A
FOR 10K SMART TRUST
ITEM SECTION IN PROSPECTUS
1........................Cover Page
2........................Summary of Fund Expenses
3........................Performance Information
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, How to
Redeem Shares
7........................Cover Page, How to Invest in the Fund, Share Price
Calculation, Operation of the Fund
8........................How to Redeem Shares
9........................None..
15........................General Information
SECTION IN STATEMENT OF
ITEM ADDITIONAL INFORMATION
10........................Cover Page
11........................Table of Contents
12........................None..
13........................Investment Limitations
14........................Trustees and Officers
15........................None..
16........................The Investment Advisor, Custodian, Transfer Agent,
Accountants, Administrator
17........................Portfolio Transactions and Brokerage
18........................Description of the Trust
19........................Determination of Share Price
20........................None..
21........................Distributor
22........................Investment Performance
23........................None..
<PAGE>
CARL DOMINO EQUITY INCOME FUND
INVESTOR CLASS SHARES
PROSPECTUS February 14, 1999
580 Village Blvd., Suite 225
West Palm Beach, Florida 33409
For Information, Shareholder Services and Requests:
(800) 506-9922
Carl Domino Equity Income Fund (the "Fund") is a mutual fund whose
investment objective is to provide long term growth of capital together with
current income. The Fund's portfolio is comprised primarily of dividend-paying
common stocks of large, established companies believed by the Adviser, Carl
Domino Associates, L.P., to possess less downside risk and volatility than the
S&P 500 Index.
This Prospectus offers shares of the Fund on a "no-load" basis, which
means there are no sales charges or commissions. In addition, there are no 12b-1
fees, distribution expenses or deferred sales charges which are borne by the
shareholders. 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 (the "SEC") dated February 14, 1999, which is incorporated
herein by reference and can be obtained without charge by calling the Fund at
the phone number listed above. The SEC maintains a Web Site (http://www.sec.gov)
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
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.
<PAGE>
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 operating expenses incurred during
the most recent 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. In addition, the Fund does not
have a 12b-1 Plan. 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. The Adviser pays all of the expenses (including
organizational expenses) of the Fund except brokerage, taxes, interest, fees and
expenses of non-interested person trustees and extraordinary expenses.
[TABLE TO BE UPDATE:
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)1
Management Fees........................................................... 1.50%
12b-1 Charges.................................................. ............NONE
Other Expenses2 (after reimbursement)......................................0.00%
Total Fund Operating Expenses2 (after reimbursement).......................1.50%
1 The Fund's total operating expenses are equal to the management fee paid to
the Adviser because the Adviser pays all of the Fund's operating expenses
(except as described above).
2 The Adviser has agreed to reimburse other expenses for the fiscal year ending
October 31, 1998 to the extent necessary to maintain total operating expenses as
indicated. For the fiscal year ended October 31, 1997, other expenses (fees and
expenses of the trustees who are not "interested persons" as defined in the
Investment Company Act) were 0.05% of average net assets and total fund
operating expenses were 1.55% of average net assets, absent any waiver or
reimbursement.
The tables above are provided to assist an investor in understanding the
direct and indirect
-2-
<PAGE>
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:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$15 $47 $82 $179
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
fiscal years ended October 31, 1997 and 1998, is derived from the audited
financial statements of the Fund. The financial statements of the Fund have been
audited by McCurdy & Associates CPA's, Inc., independent public accountants, and
are included in the Fund's Annual Report. The Annual Report contains additional
performance information and is available upon request and without charge.
[financial highlights to be supplied]
THE FUND
Carl Domino Equity Income Fund (the "Fund") was organized as a series
of AmeriPrime Funds, an Ohio business trust (the "Trust"), on August 8, 1995,
and commenced operations on November 6, 1995. This prospectus offers shares of
the Fund on a no-load basis and each share represents an undivided,
proportionate interest in the Fund. The investment adviser to the Fund is Carl
Domino Associates, L.P. (the "Adviser").
INVESTMENT OBJECTIVE AND STRATEGIES
The investment objective of the Fund is to provide long term growth of
capital together with current income. The Fund seeks to achieve its objective by
investing primarily in equity securities which the Adviser believes offer less
downside risk and volatility than the S&P 500 Index. In making investments for
the Fund, the Adviser uses a disciplined, conservative, value and yield
strategy, consistent with capital preservation. The Adviser will particularly
seek to purchase stocks of companies which, in its estimation, are undervalued
due to special circumstances which the Adviser believes are temporary. As the
Fund will primarily invest in dividend-paying common stocks, it is expected that
the Fund will generate a combination of current income and long term capital
appreciation.
The Adviser generally will select stocks with above average dividend
yield, which the
-3-
<PAGE>
Adviser believes will enhance the Fund's stability and reduce market risk. The
Adviser seeks to further limit investment risk by diversifying the Fund's
investments across a broad range of industries and companies, and by investing
primarily in larger, more established companies.
The Adviser has been managing equity income accounts for its
institutional clients since 1987. The performance of the accounts with
investment objectives, policies and strategies substantially similar to those of
the Fund appears below. The data is provided to illustrate past performance of
the Adviser in managing such accounts, as compared to the S&P 500 Index. The
persons responsible for the performance of the accounts are the same as those
responsible for the investment management of the Fund. As of December 31, 1998,
the assets in those accounts totaled approximately $____ million.
Summary of Annual Investment Returns of
the Fund and Carl Domino Associates, L.P. Managed Accounts
UPDATE:
Managed
Period Fund Accounts* S&P 500
------ ---- --------- -------
1987** -11.30% -17.43%
1988 21.68% 16.57%
1989 25.25% 31.65%
1990 - 6.91% - 3.14%
1991 25.47% 30.45%
1992 8.55% 7.62%
1993 13.16% 10.06%
1994 4.36% 1.30%
1995 3.00%*** 35.40% 37.54%
1996 24.35% 22.95% 22.99%
1997 35.34% 31.25% 33.36%
* The Carl Domino Associates, L.P. managed account performance is the
time-weighted, dollar-weighted average total return associated with a composite
of equity income accounts having objectives similar to the Fund, and is
unaudited. The composite does not include non-institutional accounts (those with
assets less than $5,000,000) and non- discretionary accounts because the nature
of those accounts make them inappropriate for purposes of comparison. Results
after June 30, 1988 include the reinvestment of income on an accrual basis,
while prior period results include the reinvestment of income on a cash basis.
Performance figures reflected are net of management fees and all expenses of the
accounts, including transaction costs and commissions. Results include the
reinvestment of dividends and capital gains. The presentation of the performance
composite complies with the Performance Presentation Standards of the
Association for Investment Management and Research (AIMR). The S&P 500 Index is
a widely recognized, unmanaged index of market activity based
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upon the aggregate performance of a selected portfolio of publicly
traded common stocks, including monthly adjustments to reflect the
reinvestment of dividends and other distributions. The S&P 500 Index
reflects the total return of securities comprising the Index, including
changes in market prices as well as accrued investment income, which is
presumed to be reinvested. Performance figures for the S&P 500 Index do
not reflect deduction of transaction costs or expenses, including
management fees.
The performance of the accounts managed by the Adviser does not
represent the historical performance of the Fund and should not be
considered indicative of future performance of the Fund. Results may
differ because of, among other things, differences in brokerage
commissions, account expenses, including management fees, the size of
positions taken in relation to account size and diversification of
securities, timing of purchases and sales, and availability of cash for
new investments. In addition, the managed accounts are not subject to
certain investment limitations, diversification requirements, and other
restrictions imposed by the Investment Company Act and the Internal
Revenue Code which, if applicable, may have adversely affected the
performance results of the managed accounts composite. The results for
different periods may vary.
** From June 30, 1987 inception.
*** For the period December 4, 1995 (commencement of operations in
accordance with the Fund's investment objective) through December 31,
1995, not annualized.
Under normal circumstances, at least 65% of the total assets of the
Fund will be invested in income producing equity securities. The Adviser
generally intends to stay fully invested (subject to liquidity requirements and
defensive purposes) in common stock and common stock equivalents (such as
rights, warrants and securities convertible into common stocks) regardless of
the movement of stock prices. However, the Fund may invest in preferred stocks,
bonds, corporate debt and U.S. government obligations to maintain liquidity or
pending investment in equity securities. Most equity securities in the Fund's
portfolio are listed on a major stock exchange or traded over-the-counter. While
the Fund ordinarily will invest in common stocks of U.S. companies, it may
invest in foreign companies.
For temporary defensive purposes under abnormal market or economic
conditions, the Fund may hold all or a portion of its assets in money market
instruments (including money market funds), cash equivalents or U.S. government
repurchase agreements. The Fund may also invest in such instruments at any time
to maintain liquidity or pending selection of investments in accordance with its
policies. If the Fund acquires securities of a money market fund, the
shareholders of the Fund will be subject to duplicative management fees.
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. Rates of total return quoted by the
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Fund may be higher or lower than past quotations, and there can be no assurance
that any rate of total return will be maintained. See "Investment Policies and
Techniques and Risk Considerations" for a more detailed discussion of the Fund's
investment practices.
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 $2,000 and minimum subsequent investments of $100 ($50 for IRAs).
Investors choosing to purchase or redeem their shares through a broker/dealer or
other institution may be charged a fee by that institution. Investors choosing
to purchase or redeem shares directly from the Fund will not incur charges on
purchases or redemptions. To the extent investments of individual investors are
aggregated into an omnibus account established by an investment adviser, broker
or other intermediary, the account minimums apply to the omnibus account, not to
the account of the individual investor.
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 Carl Domino Equity Income Fund, and sent to the P.O. Box listed
below. If you prefer overnight delivery, use the overnight address listed below:
U.S. Mail:Carl Domino Equity Income Fund Overnight: Carl Domino Equity Income
Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 Pennsylvania St.
Indianapolis, IN 46206-6110 Indianapolis, IN 46204
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 800-506-9922 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: Carl Domino Equity Income Fund
D.D.A. # 483889747
Account Name _________________ (write in shareholder
name) For the Account # ______________ (write in
account number)
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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 and the 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.
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 Carl Domino Equity Income Fund and should be sent to the address
listed above. A bank wire should be sent as outlined above.
Automatic Investment Plan
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
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 plans (IRAs); simplified employee pensions
(SEPs); 401(k) plans; qualified corporate pension and profit sharing plans (for
employees); tax deferred investment 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
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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. 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. Investors choosing to purchase or redeem their
shares through a broker/dealer or other institution may be charged a fee by that
institution.
By Mail - You may redeem any part of your account in the Fund at no
charge by mail. Your request should be addressed to:
U.S. Mail:Carl Domino Equity Income Fund Overnight: Carl Domino Equity Income
Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 Pennsylvania St.
Indianapolis, IN 46206-6110 Indianapolis, IN 46204
"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 Unified Fund 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 800-506-9922. 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
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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) 506-9922. 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 calendar 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 $2,000 due to 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.
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 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
Adviser's opinion, the last bid price does not accurately
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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
Adviser 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 Adviser, 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 Adviser 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 Adviser, 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.
In the absence of written instructions otherwise, 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.
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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 diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund retains various organizations to perform
specialized services.
The Fund retains Carl Domino Associates, L.P., 580 Village Blvd., Suite
225, West Palm Beach, Florida 33409 (the "Adviser") to manage the Fund's
investments. The Adviser provides equity, balanced and fixed income portfolio
management services to a select group of corporations, institutions,
foundations, trusts and high net worth individuals. The Adviser is a limited
partnership organized in Delaware and its general partner is Carl Domino, Inc.
The controlling shareholder of Carl Domino, Inc. is Carl J. Domino. Mr. Domino
is primarily responsible for the day-to-day management of the Fund's portfolio.
A graduate of Florida State University in 1966 with a B.S. degree in accounting
(Cum Laude) he received an MBA from Harvard Business School in 1972 and joined a
national money management firm. During his 12 year association with Delaware
Investment Advisers he was Chairman of the Investment Strategy Committee for
seven years and personally managed over $1 billion. Mr. Domino has been the
managing partner of the Adviser since its founding in 1987. Mr. Domino, a
portfolio
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analyst for over 20 years, has been quoted in the press, is regularly
interviewed by the Wall Street Journal and appears frequently on the Public
Education Channel's Inside Money program.
The Fund is authorized to pay the Adviser a fee equal to an annual
average rate of 1.50% of its average daily net assets. The Adviser pays all of
the operating expenses of the Fund (including organizational expenses) except
brokerage, taxes, interest, fees and expenses of non-interested person trustees
and extraordinary expenses. In this regard, it should be noted that most
investment companies pay their own operating expenses directly, while the Fund's
expenses, except those specified above, are paid by the Adviser.
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 Adviser 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 Adviser will reimburse the
Administrator for organizational expenses advanced by the Administrator. The
Fund retains Unified Fund Services, Inc., 431 N. Pennsylvania St., Indianapolis,
IN 46204 (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
Adviser.
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 Adviser may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions. The Adviser (not the Fund) may pay certain financial
institutions (which may include banks, brokers, securities dealers and other
industry professionals) a "servicing fee" for performing certain administrative
servicing functions for Fund shareholders to the extent these institutions are
allowed to do so by applicable statute, rule or regulation.
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ.
Equity Securities
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Equity securities consist of common stock, preferred stock and common
stock equivalents (such as convertible preferred stock, rights and warrants).
Equity securities also include common stocks and common stock equivalents of
domestic real estate investment trusts and other companies which operate as real
estate corporations or which have a significant portion of their assets in real
estate. The Fund will not acquire any direct ownership of real estate.
The Fund may invest in foreign equity securities, including, but not
limited to, the purchase of American Depository Receipts. American Depository
Receipts are dollar-denominated receipts that are generally issued in registered
form by domestic banks, and represent the deposit with the bank of a security of
a foreign issuer. To the extent that the Fund does invest in foreign securities,
such investments may be subject to special risks, such as changes in
restrictions on foreign currency transactions and rates of exchange, and changes
in the administrations or economic and monetary policies of foreign governments.
The Fund will not invest more than 5% of its net assets at the time of purchase
in foreign securities which are not American Depository Receipts.
Fixed Income Securities
The Fund may invest in fixed income securities. Fixed income securities
include corporate debt securities, U.S. government securities, mortgage-related
securities and participation interests in such securities. Fixed income
securities are generally considered to be interest rate sensitive, which means
that their value will generally decrease when interest rates rise and increase
when interest rates fall. Securities with shorter maturities, while offering
lower yields, generally provide greater price stability than longer term
securities and are less affected by changes in interest rates.
Corporate Debt Securities - Corporate debt securities are long
and short term debt obligations issued by companies (such as publicly issued and
privately placed bonds, notes and commercial paper). The Fund will only invest
in corporate debt securities rated A or higher by Standard & Poor's Corporation
or Moody's Investors Services, Inc.
U.S. Government Obligations - U.S. government obligations may
be backed by the credit of the government as a whole or only by the issuing
agency. U.S. Treasury bonds, notes, and bills and some agency securities, such
as those issued by the Federal Housing Administration and the Government
National Mortgage Association (GNMA), are backed by the full faith and credit of
the U.S. government as to payment of principal and interest and are the highest
quality government securities. Other securities issued by U.S. government
agencies or instrumentalities, such as securities issued by the Federal Home
Loan Banks and the Federal Home Loan Mortgage Corporation, are supported only by
the credit of the agency that issued them, and not by the U.S. government.
Securities issued by the Federal Farm Credit System, the Federal Land Banks, and
the Federal National Mortgage Association (FNMA) are supported by the agency's
right to borrow money from the U.S. Treasury under certain circumstances, but
are not backed by the full faith and credit of the U.S. government.
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Mortgage-Related Securities - Mortgage-related securities
include securities representing interests in a pool of mortgages. These
securities, including securities issued by FNMA and GNMA, provide investors with
payments consisting of both interest and principal as the mortgages in the
underlying mortgage pools are repaid. Pools of mortgage loans are assembled for
sale to investors (such as the Fund) by various governmental, government-related
and private organizations, such as dealers. Unscheduled or early payments on the
underlying mortgages may shorten the securities' effective maturities.
Other types of securities representing interests in a pool of
mortgage loans are known as collateralized mortgage obligations (CMOs) and real
estate mortgage investment conduits (REMICs). CMOs and REMICs are debt
instruments collateralized by pools of mortgage loans or other mortgage-backed
securities. The average life of securities representing interests in pools of
mortgage loans is likely to be substantially less than the original maturity of
the mortgage pools as a result of prepayments or foreclosures of such mortgages.
Prepayments are passed through to the registered holder with the regular monthly
payments of principal and interest, and have the effect of reducing future
payments. To the extent the mortgages underlying a security representing an
interest in a pool of mortgages are prepaid, a Fund may experience a loss (if
the price at which the respective security was acquired by the Fund was at a
premium over par, which represents the price at which the security will be
redeemed upon prepayment). In addition, prepayments of such securities held by a
Fund will reduce the share price of the Fund to the extent the market value of
the securities at the time of prepayment exceeds their par value. Furthermore,
the prices of mortgage-related securities can be significantly affected by
changes in interest rates. Prepayments may occur with greater frequency in
periods of declining mortgage rates because, among other reasons, it may be
possible for mortgagors to refinance their outstanding mortgages at lower
interest rates. In such periods, it is likely that any prepayment proceeds would
be reinvested by a Fund at lower rates of return.
Investment Techniques
The Fund may invest up to 5% of its net assets in repurchase agreements
fully collateralized by U.S. Government obligations. 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, but investment in such securities may not exceed
5% of the Fund's net assets. Also limited to 5% of the Fund's net assets is the
Fund's investment in STRIPs (Separate Trading of Registered Interest and
Principal of Securities). The Federal Reserve creates STRIPs by separating the
coupon payments and the principal payments from the outstanding Treasury
security and selling them as individual securities.
Loans of Portfolio Securities - The Fund may make short and
long term loans of its portfolio securities. Under the lending policy authorized
by the Board of Trustees and implemented by the Adviser in response to requests
of broker-dealers or institutional investors which the Adviser deems qualified,
the borrower must agree to maintain collateral, in the form of cash or U.S.
government obligations, with the Fund on a daily mark-to-market basis in an
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amount at least equal to 100% of the 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 which the Board of Trustees determines to be serious. With respect to
loans of securities, there is the risk that the borrower may fail to return the
loaned securities or that the borrower may not be able to provide additional
collateral.
General
The Fund may invest in other investment companies, time deposits,
certificates of deposit or banker's acceptances, and may buy and write put and
call options, provided the Fund's investment in each does not exceed 5% of its
net assets. The Fund will not invest more than 5% of its net assets in illiquid
securities, including repurchase agreements maturing in more than seven days.
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 Adviser 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%.
Shareholder Rights. This Prospectus offers Investor Class shares of the
Fund on a no- load basis. The Fund also offers "Class A" shares. The classes
differ as follows: 1) no sales charge is imposed on Investor Class shares, 2)
Class A shares are subject to a front-end sales load, and 3) each class may bear
differing amounts of certain class-specific expenses.
The differing sales charges and other expenses applicable to the
different classes of the Fund's shares may affect the performance of those
classes. Broker/dealers and others entitled to receive compensation for selling
or servicing Fund shares may receive more with respect to one class than
another. The Board of Trustees of the Trust does not anticipate that there will
be any conflicts among the interests of the holders of the different classes of
Fund shares. On an ongoing basis, the Board will consider whether any such
conflict exists and, if so, take appropriate action. More information concerning
the classes of shares of the Fund may be obtained by calling the Fund at
800-506-9922.
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<PAGE>
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. [UPDATE:
As of ______________, 1998, Carl Domino Associates Profit Sharing Trust 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 advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
nonstandardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of 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. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
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.
-16-
<PAGE>
Investment Adviser Administrator
Carl Domino Associates, L.P. AmeriPrime Financial Services, Inc.
580 Village Blvd., Suite 225 1793 Kingswood Drive, Suite 200
West Palm Beach, Florida 33409 Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchase Auditors
and redemption requests) McCurdy & Associates CPA's, Inc.
Unified Fund Services, Inc. 27955 Clemens Road
431 N. Pennsylvania St. Westlake, Ohio 44145
Indianapolis, IN 46204
Legal Counsel
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
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.
-17-
<PAGE>
TABLE OF CONTENTS PAGE
SUMMARY OF FUND EXPENSES........................................................
Shareholder Transaction Expenses................................. ........
Annual Fund Operating Expenses.............................................
FINANCIAL HIGHLIGHTS............................................................
THE FUND........................................................................
INVESTMENT OBJECTIVE AND STRATEGIES.............................................
HOW TO INVEST IN THE FUND.......................................................
Initial Purchase..........................................................
By Mail..................................................................
By Wire..................................................................
Additional Investments..................................................
Tax Sheltered Retirement Plans...........................................
Other Purchase Information......................................................
HOW TO REDEEM SHARES............................................................
By Mail..................................................................
By Telephone.............................................................
Additional Information...................................................
SHARE PRICE CALCULATION.........................................................
DIVIDENDS AND DISTRIBUTIONS.....................................................
TAXES...........................................................................
OPERATION OF THE FUND...........................................................
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS......................
Equity Securities.......................................................
Fixed Income Securities.................................................
Corporate Debt Securities......................................
U.S. Government Obligations....................................
Mortgage-Related Securities....................................
Investment Techniques.................................................
Loans of Portfolio Securities..........................................
General................................................................
-18-
<PAGE>
GENERAL INFORMATION.............................................................
Fundamental Policies..................................................
Portfolio Turnover..................................................
Shareholder Rights....................................................
PERFORMANCE INFORMATION........................................................
-19-
<PAGE>
A CARL DOMINO EQUITY INCOME FUND
CLASS A SHARES
PROSPECTUS February 14 , 1999
580 Village Blvd., Suite 225
West Palm Beach, Florida 33409
For Information, Shareholder Services and Requests:
(800) 506-9922
Carl Domino Equity Income Fund (the "Fund") is a mutual fund whose
investment objective is to provide long term growth of capital together with
current income. The Fund's portfolio is comprised primarily of dividend-paying
common stocks of large, established companies believed by the Adviser, Carl
Domino Associates, L.P., to possess less downside risk and volatility than the
S&P 500 Index.
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 (the "SEC") dated February 14, 1999, which is incorporated
herein by reference and can be obtained without charge by calling the Fund at
the phone number listed above. The SEC maintains a Web Site (http://www.sec.gov)
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
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.
<PAGE>
SUMMARY OF FUND EXPENSES
The tables below are provided to assist an investor in understanding
the direct and indirect expenses that an investor in Class A shares of the Fund
may incur as a shareholder. 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.
[TABLE TO BE UPDATED:
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)1
...........................................................................4.75%
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)2
Management Fees........................................................... 1.50%
12b-1 Fees..................................................................NONE
Other Expenses3 (after reimbursement)......................................0.00%
Total Fund Operating Expenses3 (after reimbursement).......................1.50%
1 The sales load is 4.75% for purchases less than $100,000, declining to 0% for
purchases of $1 million or more. 2 The Fund's total operating expenses are equal
to the management fee paid to the Adviser because the Adviser pays all of the
Fund's operating expenses (except as described above). 3 The Adviser has agreed
to reimburse other expenses for the fiscal year ending October 31, 1998 to the
extent necessary to maintain total operating expenses as indicated. For the
fiscal year ended October 31, 1997, other expenses (fees and expenses of the
trustees who are not "interested persons" as defined in the Investment Company
Act) were 0.05% of average net assets and total fund operating expenses were
1.55% of average net assets, absent any waiver or reimbursement.
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:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$ $ $ $
FINANCIAL HIGHLIGHTS
[TO BE SUPPLIED]
-2-
<PAGE>
THE FUND
Carl Domino Equity Income Fund (the "Fund") was organized as a series
of AmeriPrime Funds, an Ohio business trust (the "Trust"), on August 8, 1995,
and commenced operations on November 6, 1995. This prospectus offers Class A
shares, which were established on ____________________, 1998 and were first
offered to shareholders on ______________________, 1998. The investment adviser
to the Fund is Carl Domino Associates, L.P. (the "Adviser").
INVESTMENT OBJECTIVE AND STRATEGIES
The investment objective of the Fund is to provide long term growth of
capital together with current income. The Fund seeks to achieve its objective by
investing primarily in equity securities which the Adviser believes offer less
downside risk and volatility than the S&P 500 Index. In making investments for
the Fund, the Adviser uses a disciplined, conservative, value and yield
strategy, consistent with capital preservation. The Adviser will particularly
seek to purchase stocks of companies which, in its estimation, are undervalued
due to special circumstances which the Adviser believes are temporary. As the
Fund will primarily invest in dividend-paying common stocks, it is expected that
the Fund will generate a combination of current income and long term capital
appreciation.
The Adviser generally will select stocks with above average dividend
yield, which the Adviser believes will enhance the Fund's stability and reduce
market risk. The Adviser seeks to further limit investment risk by diversifying
the Fund's investments across a broad range of industries and companies, and by
investing primarily in larger, more established companies.
The Adviser has been managing equity income accounts for its
institutional clients since 1987. The performance of the accounts with
investment objectives, policies and strategies substantially similar to those of
the Fund appears below. The data is provided to illustrate past performance of
the Adviser in managing such accounts, as compared to the S&P 500 Index. The
persons responsible for the performance of the accounts are the same as those
responsible for the investment management of the Fund. As of December 31, 1998,
the assets in those accounts totaled approximately $____ million.
Summary of Annual Investment Returns of
the Fund and Carl Domino Associates, L.P. Managed Accounts
UPDATE:
Managed
Period Fund Accounts* S&P 500
------ ---- --------- -------
1987** -11.30% -17.43%
1988 21.68% 16.57%
1989 25.25% 31.65%
1990 - 6.91% - 3.14%
1991 25.47% 30.45%
1992 8.55% 7.62%
1993 13.16% 10.06%
1994 4.36% 1.30%
1995 3.00%*** 35.40% 37.54%
-3-
<PAGE>
1996 24.35% 22.95% 22.99%
1997 35.34% 31.25% 33.36%
* The Carl Domino Associates, L.P. managed account performance is the
time-weighted, dollar- weighted average total return associated with a
composite of equity income accounts having objectives similar to the Fund,
and is unaudited. The composite does not include non- institutional
accounts (those with assets less than $5,000,000) and non-discretionary
accounts because the nature of those accounts make them inappropriate for
purposes of comparison. Results after June 30, 1988 include the
reinvestment of income on an accrual basis, while prior period results
include the reinvestment of income on a cash basis. Performance figures
reflected are net of management fees and all expenses of the accounts,
including transaction costs and commissions. Results include the
reinvestment of dividends and capital gains. The presentation of the
performance composite complies with the Performance Presentation Standards
of the Association for Investment Management and Research (AIMR).
The S&P 500 Index is a widely recognized, unmanaged index of market
activity based upon the aggregate performance of a selected portfolio
of publicly traded common stocks, including monthly adjustments to
reflect the reinvestment of dividends and other distributions. The S&P
500 Index reflects the total return of securities comprising the Index,
including changes in market prices as well as accrued investment
income, which is presumed to be reinvested. Performance figures for the
S&P 500 Index do not reflect deduction of transaction costs or
expenses, including management fees.
The performance of the accounts managed by the Adviser does not
represent the historical performance of the Fund and should not be
considered indicative of future performance of the Fund. Results may
differ because of, among other things, differences in brokerage
commissions, account expenses, including management fees, the size of
positions taken in relation to account size and diversification of
securities, timing of purchases and sales, and availability of cash for
new investments. In addition, the managed accounts are not subject to
certain investment limitations, diversification requirements, and other
restrictions imposed by the Investment Company Act and the Internal
Revenue Code which, if applicable, may have adversely affected the
performance results of the managed accounts composite. The results for
different periods may vary.
** From June 30, 1987 inception.
*** For the period December 4, 1995 (commencement of operations in
accordance with the Fund's investment objective) through December 31,
1995, not annualized.
Under normal circumstances, at least 65% of the total assets of the
Fund will be invested in income producing equity securities. The Adviser
generally intends to stay fully invested (subject to liquidity requirements and
defensive purposes) in common stock and common stock equivalents (such as
rights, warrants and securities convertible into common stocks) regardless of
the movement of stock prices. However, the Fund may invest in preferred stocks,
bonds, corporate debt and U.S. government obligations to maintain liquidity or
pending investment in equity securities. Most equity securities in the Fund's
portfolio are listed on a major stock exchange or traded over-the-counter. While
the Fund ordinarily will invest in common stocks of U.S. companies, it may
invest in foreign companies.
For temporary defensive purposes under abnormal market or economic
conditions, the Fund may hold all or a portion of its assets in money market
instruments (including money market funds),
-4-
<PAGE>
cash equivalents or U.S. government repurchase agreements. The Fund may also
invest in such instruments at any time to maintain liquidity or pending
selection of investments in accordance with its policies. If the Fund acquires
securities of a money market fund, the shareholders of the Fund will be subject
to duplicative management fees.
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. 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. See "Investment Policies and Techniques and Risk
Considerations" for a more detailed discussion of the Fund's investment
practices.
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 $2,000 and minimum subsequent investments of $100 ($50 for IRAs).
You may purchase additional shares through the Open Account Program described
below. You may open an account and make an initial investment through securities
dealers having a sales agreement with the Distributor.
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 Carl Domino Equity Income Fund -
Class A, and sent to the P.O. Box listed below. If you prefer overnight
delivery, use the overnight address listed below:
U.S. Mail: Overnight:
Carl Domino Equity Income Fund-Class A Carl Domino Equity Income Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 N. Pennsylvania Street
Indianapolis, IN 46204-6110 Indianapolis, IN 46204
Shares of the Fund are purchased at the public offering price. The
public offering price is the next determined net asset value per share plus a
sales load as shown in the following table.
<TABLE>
<CAPTION>
<S> <C> <C>
===================================================================================================================================
Sales Load as of % of:
Public Net
Offering Amount Dealer Reallowance as %
Amount of Investment Price Invested of Public Offering Price
- -----------------------------------------------------------------------------------------------------------------------------------
Less Than $100,000 4.75% 4.99% 4.75%
- -----------------------------------------------------------------------------------------------------------------------------------
$100,000 but less than $250,000 3.50% 3.63% 3.50%
- -----------------------------------------------------------------------------------------------------------------------------------
$250,000 but less than $500,000 2.50% 2.56% 2.50%
- -----------------------------------------------------------------------------------------------------------------------------------
$500,000 but less than $1,000,000 2.00% 2.04% 2.00%
-5-
<PAGE>
- -----------------------------------------------------------------------------------------------------------------------------------
$1,000,000 or more None None None
===================================================================================================================================
</TABLE>
Under certain circumstances, the Distributor may change the reallowance
to Dealers. Dealers engaged in the sale of shares of the Fund may be deemed to
be underwriters under the Securities Act of 1933. The Distributor retains the
entire sales load on all direct initial investments in the Fund and on all
investments in accounts with no designated dealer of record.
Shares of the Fund are sold on a continuous basis at the public
offering price next determined after receipt of a purchase order by the Trust.
Purchase orders received by dealers prior to 4:00 p.m., Eastern time, on any
business day and transmitted to the Distributor by 5:00 p.m., Eastern time, that
day are confirmed at the public offering price determined as of the close of the
regular session of trading on the New York Stock Exchange on that day. It is the
responsibility of dealers to transmit properly completed orders so that they
will be received by the Distributor by 5:00 p.m., Eastern time. Dealers may
charge a fee for effecting purchase orders. Direct purchase orders received by
4:00 p.m., Eastern time, are confirmed at that day's public offering price.
Direct investments received after 4:00 p.m. and others received from dealers
after 5:00 p.m. are confirmed at the public offering price next determined on
the following business day.
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 800-506-9922 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: Carl Domino Equity Income 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 and the 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.
[Open Account Program
After an initial investment, all investors are considered participants
int he Open Account Program. The Open Account Program helps investors make
additional purchases of the Fund over a period of years and permits automatic
reinvestment of dividends and distributions of the Fund without a sales load.]
[Reduced Sales Load
-6-
<PAGE>
You may use the Right of Accumulation to combine the cost or current
net asset value (whichever is higher) of your shares of the Fund with the amount
of your current purchases in order to take advance of the reduced sales load set
forth in the table above. Purchases made pursuant to a Letter of Intent may also
be eligible for the reduced sales loads. The minimum initial investment under a
Letter of Intent is $10,000. Shareholders should contact the Transfer Agent for
information about the Right of Accumulation and Letter of Intent.]
Purchases at Net Asset Value
You may purchase shares of the Fund at net asset value when the payment
for your investment represents the proceeds from the redemption of shares of any
other mutual fund which has a front-end sales load. Your investment will qualify
for this provision if the purchase price of the shares of the other fund
included a sales load and the redemption occurred within one year of the
purchase of such shares and no more than sixty days prior to your purchase of
shares of the Fund. To make a purchase at net asset value pursuant to this
provision, you must submit photocopies of the confirmations (or similar
evidence) showing the purchase and redemption of shares of the other fund. Your
payment may be made with the redemption check representing the proceeds of the
shares redeemed, endorsed to the order of the Fund. The redemption of shares of
the other fund is, for federal income tax purposes, a sale on which you may
realize a gain or loss. These provisions may be modified or terminated at any
time. Contact your securities dealer or the Fund for further information.
Banks, bank trust departments and savings and loan associations, in
their fiduciary capacity or for their own accounts, may also purchase shares of
the Fund at net asset value. To the extent permitted by regulatory authorities,
a bank trust department may charge fees to clients for whose account it
purchases shares at net asset value. Federal and state credit unions may also
purchase shares at net asset value.
Purchases may be effected at net asset value for the benefit of the
clients of brokers-dealers and registered investment advisers affiliated with a
broker-dealer, if such broker-dealer or investment adviser has entered into an
agreement with the Distributor providing specifically for the purchase of Class
A Shares in connection with special investment products, such as wrap accounts
or similar fee based programs. In addition, shares of the Fund may be purchased
at net asset value by broker-dealers who have a sales agreement with the
Distributor, and their registered personnel and employees, including members of
the immediate families of such registered personnel and employees.
Trustees, directors, officers and employees of the Trust, the Adviser
or the Distributor, including members of the immediate family of such
individuals and employee benefit plans established by such entities, may also
purchase shares of the Fund at net asset value.
Additional Information
For purposes of determining the applicable sales load, a purchaser
includes an individual, his spouse and their children under the age of 21,
purchasing shares for his or their own account; or a trustee or other fiduciary
purchasing shares for a single fiduciary account although more than one
beneficiary is involved; or employees of a common employer, provided that
economies of scale are realized through remittances from a single source and
quarterly confirmation of such purchases; or an organized group, provided that
the purchases are made through a central administration, or a single dealer, or
by other means which result in economy of sales effort or expense.
-7-
<PAGE>
Automatic Investment Plan
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
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 plans (IRAs); simplified employee pensions
(SEPs); 401(k) plans; qualified corporate pension and profit sharing plans (for
employees); tax deferred investment 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. 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. Investors choosing to purchase or redeem their
shares through a broker/dealer or other institution may be charged a fee by that
institution.
By Mail - You may redeem any part of your account in the Fund at no
charge by mail. Your request should be addressed to:
Carl Domino Equity Income Fund
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, IN 46204-6110
-8-
<PAGE>
"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 800-506-9922. 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) 506-9922. 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 calendar 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 $2,000 due to 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.
SHARE PRICE CALCULATION
The value of an individual share in the Fund (the net asset value) is
calculated by dividing the
-9-
<PAGE>
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 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
Adviser'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 Adviser 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 Adviser, 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 Adviser 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 Adviser, 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.
In the absence of written instructions otherwise, 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
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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 diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund retains various organizations to perform
specialized services.
The Fund retains Carl Domino Associates, L.P., 580 Village Blvd., Suite
225, West Palm Beach, Florida 33409 (the "Adviser") to manage the Fund's
investments. The Adviser provides equity, balanced and fixed income portfolio
management services to a select group of corporations, institutions,
foundations, trusts and high net worth individuals. The Adviser is a limited
partnership organized in Delaware and its general partner is Carl Domino, Inc.
The controlling shareholder of Carl Domino, Inc. is Carl J. Domino. Mr. Domino
is primarily responsible for the day-to-day management of the Fund's portfolio.
A graduate of Florida State University in 1966 with a B.S. degree in accounting
(Cum Laude) he received an MBA from Harvard Business School in 1972 and joined a
national money management firm. During his 12 year association with Delaware
Investment Advisers he was Chairman of the Investment Strategy Committee for
seven years and personally managed over $1 billion. Mr. Domino has been the
managing partner of the Adviser since its founding in 1987. Mr. Domino, a
portfolio analyst for over 20 years, has been quoted in the press,
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is regularly interviewed by the Wall Street Journal and appears frequently on
the Public Education Channel's Inside Money program.
The Fund is authorized to pay the Adviser a fee equal to an annual
average rate of 1.50% of its average daily net assets. The Adviser pays all of
the operating expenses of the Fund (including organizational expenses) except
brokerage, taxes, interest, fees and expenses of non-interested person trustees
and extraordinary expenses. In this regard, it should be noted that most
investment companies pay their own operating expenses directly, while the Fund's
expenses, except those specified above, are paid by the Adviser.
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 Adviser 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 Adviser will reimburse the
Administrator for organizational expenses advanced by the Administrator. The
Fund retains Unified Fund Services, Inc., 431 N. Pennsylvania Street,
Indianapolis, IN 46204 (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 Adviser.
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 Adviser may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions. The Adviser (not the Fund) may pay certain financial
institutions (which may include banks, brokers, securities dealers and other
industry professionals) a "servicing fee" for performing certain administrative
servicing functions for Fund shareholders to the extent these institutions are
allowed to do so by applicable statute, rule or regulation.
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ.
Equity Securities
Equity securities consist of common stock, preferred stock and common
stock equivalents (such as convertible preferred stock, rights and warrants).
Equity securities also include common stocks and common stock equivalents of
domestic real estate investment trusts and other companies which operate as real
estate corporations or which have a significant portion of their assets in real
estate. The Fund will not acquire any direct ownership of real estate.
The Fund may invest in foreign equity securities, including, but not
limited to, the purchase of American Depository Receipts. American Depository
Receipts are dollar-denominated receipts that
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are generally issued in registered form by domestic banks, and represent the
deposit with the bank of a security of a foreign issuer. To the extent that the
Fund does invest in foreign securities, such investments may be subject to
special risks, such as changes in restrictions on foreign currency transactions
and rates of exchange, and changes in the administrations or economic and
monetary policies of foreign governments. The Fund will not invest more than 5%
of its net assets at the time of purchase in foreign securities which are not
American Depository Receipts.
Fixed Income Securities
The Fund may invest in fixed income securities. Fixed income securities
include corporate debt securities, U.S. government securities, mortgage-related
securities and participation interests in such securities. Fixed income
securities are generally considered to be interest rate sensitive, which means
that their value will generally decrease when interest rates rise and increase
when interest rates fall. Securities with shorter maturities, while offering
lower yields, generally provide greater price stability than longer term
securities and are less affected by changes in interest rates.
Corporate Debt Securities - Corporate debt securities are long
and short term debt obligations issued by companies (such as publicly issued and
privately placed bonds, notes and commercial paper). The Fund will only invest
in corporate debt securities rated A or higher by Standard & Poor's Corporation
or Moody's Investors Services, Inc.
U.S. Government Obligations - U.S. government obligations may
be backed by the credit of the government as a whole or only by the issuing
agency. U.S. Treasury bonds, notes, and bills and some agency securities, such
as those issued by the Federal Housing Administration and the Government
National Mortgage Association (GNMA), are backed by the full faith and credit of
the U.S. government as to payment of principal and interest and are the highest
quality government securities. Other securities issued by U.S. government
agencies or instrumentalities, such as securities issued by the Federal Home
Loan Banks and the Federal Home Loan Mortgage Corporation, are supported only by
the credit of the agency that issued them, and not by the U.S. government.
Securities issued by the Federal Farm Credit System, the Federal Land Banks, and
the Federal National Mortgage Association (FNMA) are supported by the agency's
right to borrow money from the U.S. Treasury under certain circumstances, but
are not backed by the full faith and credit of the U.S. government.
Mortgage-Related Securities - Mortgage-related securities
include securities representing interests in a pool of mortgages. These
securities, including securities issued by FNMA and GNMA, provide investors with
payments consisting of both interest and principal as the mortgages in the
underlying mortgage pools are repaid. Pools of mortgage loans are assembled for
sale to investors (such as the Fund) by various governmental, government-related
and private organizations, such as dealers. Unscheduled or early payments on the
underlying mortgages may shorten the securities' effective maturities.
Other types of securities representing interests in a pool of
mortgage loans are known as collateralized mortgage obligations (CMOs) and real
estate mortgage investment conduits (REMICs). CMOs and REMICs are debt
instruments collateralized by pools of mortgage loans or other mortgage-backed
securities. The average life of securities representing interests in pools of
mortgage loans is likely to be substantially less than the original maturity of
the mortgage pools as a result of prepayments or foreclosures of such mortgages.
Prepayments are passed through to the registered holder with the regular monthly
payments of principal and interest, and have the effect of
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reducing future payments. To the extent the mortgages underlying a security
representing an interest in a pool of mortgages are prepaid, a Fund may
experience a loss (if the price at which the respective security was acquired by
the Fund was at a premium over par, which represents the price at which the
security will be redeemed upon prepayment). In addition, prepayments of such
securities held by a Fund will reduce the share price of the Fund to the extent
the market value of the securities at the time of prepayment exceeds their par
value. Furthermore, the prices of mortgage-related securities can be
significantly affected by changes in interest rates. Prepayments may occur with
greater frequency in periods of declining mortgage rates because, among other
reasons, it may be possible for mortgagors to refinance their outstanding
mortgages at lower interest rates. In such periods, it is likely that any
prepayment proceeds would be reinvested by a Fund at lower rates of return.
Investment Techniques
The Fund may invest up to 5% of its net assets in repurchase agreements
fully collateralized by U.S. Government obligations. 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, but investment in such securities may not exceed
5% of the Fund's net assets. Also limited to 5% of the Fund's net assets is the
Fund's investment in STRIPs (Separate Trading of Registered Interest and
Principal of Securities). The Federal Reserve creates STRIPs by separating the
coupon payments and the principal payments from the outstanding Treasury
security and selling them as individual securities.
Loans of Portfolio Securities - The Fund may make short and
long term loans of its portfolio securities. Under the lending policy authorized
by the Board of Trustees and implemented by the Adviser in response to requests
of broker-dealers or institutional investors which the Adviser deems qualified,
the borrower must agree to maintain collateral, in the form of cash or U.S.
government obligations, with the Fund on a daily mark-to-market basis in an
amount at least equal to 100% of the 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 which the Board of Trustees determines to be serious. With respect to
loans of securities, there is the risk that the borrower may fail to return the
loaned securities or that the borrower may not be able to provide additional
collateral.
General
The Fund may invest in other investment companies, time deposits,
certificates of deposit or banker's acceptances, and may buy and write put and
call options, provided the Fund's investment in each does not exceed 5% of its
net assets. The Fund will not invest more than 5% of its net assets in illiquid
securities, including repurchase agreements maturing in more than seven days.
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
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<PAGE>
trading purposes. The Fund will, however, sell any portfolio security (without
regard to the length of time it has been held) when the Adviser 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%.
Shareholder Rights. The shares of beneficial interest of the Fund are
divided into two classes, designated "Investor Class" and "Class A." The classes
differ as follows: 1) no sales charge is imposed on Investor Class shares, 2)
Class A shares are subject to a front-end sales load, and 3) each class may bear
differing amounts of certain class-specific expenses.
The differing sales charges and other expenses applicable to the
different classes of the Fund's shares may affect the performance of those
classes. Broker/dealers and others entitled to receive compensation for selling
or servicing Fund shares may receive more with respect to one class than
another. The Board of Trustees of the Trust does not anticipate that there will
be any conflicts among the interests of the holders of the different classes of
Fund shares. On an ongoing basis, the Board will consider whether any such
conflict exists and, if so, take appropriate action. More information concerning
the classes of shares of the Fund may be obtained by calling the Fund at
800-506-9922.
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. [UPDATE:
As of ______________, 1998, Carl Domino and the Carl Domino Associates Profit
Sharing Trust 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 advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of 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. These non-standardized quotations do not include the effect of
the applicable sales load which, if included, would reduce the quoted
performance. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
The Fund may also include in advertisements data comparing performance with
other mutual
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<PAGE>
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.
Investment Adviser Administrator
Carl Domino Associates, L.P. AmeriPrime Financial Services, Inc.
580 Village Blvd., Suite 225 1793 Kingswood Drive, Suite 200
West Palm Beach, Florida 33409 Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchase Auditors
and redemption requests) McCurdy & Associates CPA's, Inc.
Unified Fund Services, Inc. 27955 Clemens Road
431 N. Pennsylvania Street Westlake, Ohio 44145
Indianapolis, IN 46204
Legal Counsel
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
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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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...........................................-5-
Initial Purchase...........................................-5-
By Mail...........................................-5-
By Wire...........................................-6-
...........................................................-8-
Tax Sheltered Retirement Plans.............................-8-
Other Purchase Information...................................................-8-
HOW TO REDEEM SHARES................................................-8-
By Mail....................................................-8-
By Telephone...............................................-9-
Additional Information.....................................-9-
SHARE PRICE CALCULATION............................................-10-
DIVIDENDS AND DISTRIBUTIONS........................................-10-
TAXES..............................................................-11-
OPERATION OF THE FUND..............................................-11-
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS.........-12-
Equity Securities.........................................-12-
Fixed Income Securities...................................-13-
Corporate Debt Securities........................-13-
U.S. Government Obligations......................-13-
Mortgage-Related Securities......................-13-
Investment Techniques.....................................-14-
Loans of Portfolio Securities....................-14-
General...................................................-14-
GENERAL INFORMATION................................................-14-
Fundamental Policies......................................-14-
Portfolio Turnover........................................-15-
Shareholder Rights........................................-15-
PERFORMANCE INFORMATION............................................-15-
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CARL DOMINO EQUITY INCOME FUND
STATEMENT OF ADDITIONAL INFORMATION
February 14, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Investor Class Prospectus of Carl Domino Equity
Income Fund dated February 14, 1999 or the Class A Prospectus of Carl Domino
Equity Income Fund dated February 14, 1999. A copy of either Prospectus can be
obtained by writing the Transfer Agent at 431 N. Pennsylvania Street,
Indianapolis, IN 46204, or by calling 1-800-506-9922.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUST...................................................... 1
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS................................................................ 2
INVESTMENT LIMITATIONS........................................................ 3
THE INVESTMENT ADVISER........................................................ 6
TRUSTEES AND OFFICERS......................................................... 6
PORTFOLIO TRANSACTIONS AND BROKERAGE.......................................... 7
DETERMINATION OF SHARE PRICE.................................................. 9
INVESTMENT PERFORMANCE........................................................ 9
CUSTODIAN.................................................................... 10
TRANSFER AGENT............................................................... 10
ACCOUNTANTS.................................................................. 10
DISTRIBUTOR.................................................................. 10
ADMINISTRATOR.................................................................10
FINANCIAL STATEMENTS..........................................................11
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DESCRIPTION OF THE TRUST
Carl Domino Equity Income 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 a series of funds
currently authorized by the Trustees. The Fund is divided into two classes,
designated Class A and Investor Class.
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.
The Fund may determine to allocate certain of its expenses to the
specific class of the Fund's shares to which those expenses are attributable.
[UPDATE: As of _______________, 1998, the following persons may be
deemed to beneficially own five percent (5%) or more of the Fund: Carl Domino
Associates Profit Sharing Trust, 580 Village Boulevard, Suite 225, West Palm
Beach, Florida - 23.48%; Carl Domino IRA, 108 Toteka Circle, Jupiter, Florida -
7.95%; National Financial, 200 Liberty Street, 5th Floor, New York, New York -
8.16%.]
[UPDATE: As of _______________, 1998, Carl Domino and the Carl Domino
Associates Profit Sharing Trust may be deemed to control the Fund as a result of
their beneficial ownership of shares of the Fund. As of _______________, 1998,
the officers and trustees as a group own less than one percent of the Fund.]
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.
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<PAGE>
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. The Fund may invest up to 5%
of its net assets at the time of purchase in each of the following: rights,
warrants, or convertible preferred stocks.
B. Repurchase Agreements. A repurchase agreement is a short-term
investment in which the purchaser (i.e., the Fund) acquires ownership of a U.S.
Government obligation (which may be of any maturity) and the seller agrees to
repurchase the obligation at a future time at a set price, thereby determining
the yield during the purchaser's holding period (usually not more than seven
days from the date of purchase). Any repurchase transaction in which the Fund
engages will require full collateralization of the seller's obligation during
the entire term of the repurchase agreement. In the event of a bankruptcy or
other default of the seller, the Fund could experience both delays in
liquidating the underlying security and losses in value. However, the Fund
intends to enter into repurchase agreements only with the Custodian, other banks
with assets of $1 billion or more and registered securities dealers determined
by the Adviser (subject to review by the Board of Trustees) to be creditworthy.
The Adviser monitors the creditworthiness of the banks and securities dealers
with which the Fund engages in repurchase transactions, and the Fund will not
invest more than 5% of its net assets in repurchase agreements.
C. Illiquid Securities. The portfolio of the Fund may contain illiquid
securities. 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 following securities are
considered to be illiquid: repurchase agreements maturing in more than seven
days, nonpublicly offered securities and restricted securities. The Fund will
not invest more than 5% of its net assets in illiquid securities.
D. Other Investment Companies. The Fund is permitted to invest up to 5%
of its net assets in other investment companies at any time. The Fund will not
purchase more than 3% of the outstanding voting stock of any investment company.
If the Fund acquires securities of another investment company, the shareholders
of the Fund will be subject to duplicative management fees.
E. Foreign Securities. The Fund may invest in foreign equity securities
including common stock, preferred stock and common stock equivalents issued by
foreign companies, and foreign fixed income securities. Foreign fixed income
securities include corporate debt
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<PAGE>
obligations issued by foreign companies and debt obligations of foreign
governments or international organizations. This category may include floating
rate obligations, variable rate obligations, Yankee dollar obligations (U.S.
dollar denominated obligations issued by foreign companies and traded on U.S.
markets) and Eurodollar obligations (U.S. dollar denominated obligations issued
by foreign companies and traded on foreign markets).
Foreign government obligations generally consist of debt
securities supported by national, state or provincial governments or similar
political units or governmental agencies. Such obligations may or may not be
backed by the national government's full faith and credit and general taxing
powers. Investments in foreign securities also include obligations issued by
international organizations. International organizations include entities
designated or supported by governmental entities to promote economic
reconstruction or development as well as international banking institutions and
related government agencies. Examples are the International Bank for
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, the Asian Development Bank and the InterAmerican Development Bank. In
addition, investments in foreign securities may include debt securities
denominated in multinational currency units of an issuer (including
international issuers). An example of a multinational currency unit is the
European Currency Unit. A European Currency Unit represents specified amounts of
the currencies of certain member states of the European Economic Community, more
commonly known as the Common Market.
Purchases of foreign securities are usually made in foreign
currencies and, as a result, the Fund may incur currency conversion costs and
may be affected favorably or unfavorably by changes in the value of foreign
currencies against the U.S. dollar. In addition, there may be less information
publicly available about a foreign company then about a U.S. company, and
foreign companies are not generally subject to accounting, auditing and
financial reporting standards and practices comparable to those in the U.S.
Other risks associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes in
the administrations or economic and monetary policies of foreign governments,
the imposition of exchange control regulations, the possibility of expropriation
decrees and other adverse foreign governmental action, the imposition of foreign
taxes, less liquid markets, less government supervision of exchanges, brokers
and issuers, difficulty in enforcing contractual obligations, delays in
settlement of securities transactions and greater price volatility. In addition,
investing in foreign securities will generally result in higher commissions than
investing in similar domestic securities.
F. 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 they hold, and
maintain 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 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
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<PAGE>
Fund may dispose of a commitment prior to the settlement if the Adviser deems it
appropriate to do so.
G. Collateralized Mortgage Obligations (CMOs). CMOs are securities
collateralized by mortgages or mortgage-backed securities and are issued with a
variety of classes or series which have different maturities and are often
retired in sequence. CMOs may be issued by governmental or non-governmental
entities such as banks and other mortgage lenders. Non-government securities may
offer a higher yield but also may be subject to greater price fluctuation than
government securities. Investments in CMOs are subject to the same risks as
direct investments in the underlying mortgage and mortgage-backed securities. In
addition, in the event of a bankruptcy or other default of an entity who issued
the CMO held by a Fund, the Fund could experience both delays in liquidating its
position and losses.
H. Financial Services Industry Obligations. The Fund may invest up to
5% of its net assets in each of the following obligations of the financial
services industry:
(1) Certificate of Deposit. Certificates of deposit are
negotiable certificates evidencing the indebtedness of a commercial
bank or a savings and loan association to repay funds deposited with it
for a definite period of time (usually from fourteen days to one year)
at a stated or variable interest rate.
(2) Time Deposits. Time deposits are non-negotiable deposits
maintained in a banking institution or a savings and loan association
for a specified period of time at a stated interest rate.
(3) Bankers' Acceptances. Bankers' acceptances are credit
instruments evidencing the obligation of a bank to pay a draft which
has been drawn on it by a customer, which instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of
the instrument upon maturity.
I. Option Transactions. The Fund may engage in option transactions
involving individual securities and market indices. An option involves either
(a) the right or the obligation to buy or sell a specific instrument at a
specific price until the expiration date of the option, or (b) the right to
receive payments or the obligation to make payments representing the difference
between the closing price of a market index and the exercise price of the option
expressed in dollars times a specified multiple until the expiration date of the
option. Options are sold (written) on securities and market indices. The
purchaser of an option on a security pays the seller (the writer) a premium for
the right granted but is not obligated to buy or sell the underlying security.
The purchaser of an option on a market index pays the seller a premium for the
right granted, and in return the seller of such an option is obligated to make
the payment. A writer of an option may terminate the obligation prior to
expiration of the option by making an offsetting purchase of an identical
option. Options are traded on organized exchanges and in the over-the-counter
market. Options on securities which the Fund sells (writes) will be covered or
secured, which means that it will own the underlying security (for a call
option); will segregate with the Custodian high quality liquid debt obligations
equal to the option exercise price (for a put option); or (for an option on a
stock index) will hold a portfolio of securities substantially replicating the
movement of
-4-
<PAGE>
the index (or, to the extent it does not hold such a portfolio, will maintain a
segregated account with the Custodian of high quality liquid debt obligations
equal to the market value of the option, marked to market daily). When the Fund
writes options, it may be required to maintain a margin account, to pledge the
underlying securities or U.S. government obligations or to deposit liquid high
quality debt obligations in a separate account with the Custodian.
The purchase and writing of options involves certain risks; for
example, the possible inability to effect closing transactions at favorable
prices and an appreciation limit on the securities set aside for settlement, as
well as (in the case of options on a stock index) exposure to an indeterminate
liability. The purchase of options limits the Fund's potential loss to the
amount of the premium paid and can afford the Fund the opportunity to profit
from favorable movements in the price of an underlying security to a greater
extent than if transactions were effected in the security directly. However, the
purchase of an option could result in the Fund losing a greater percentage of
its investment than if the transaction were effected directly. When the Fund
writes a covered call option, it will receive a premium, but it will give up the
opportunity to profit from a price increase in the underlying security above the
exercise price as long as its obligation as a writer continues, and it will
retain the risk of loss should the price of the security decline. When the Fund
writes a covered put option, it will receive a premium, but it will assume the
risk of loss should the price of the underlying security fall below the exercise
price. When the Fund writes a covered put option on a stock index, it will
assume the risk that the price of the index will fall below the exercise price,
in which case the Fund may be required to enter into a closing transaction at a
loss. An analogous risk would apply if the Fund writes a call option on a stock
index and the price of the index rises above the exercise price.
J. STRIPS. The Federal Reserve creates STRIPS (Separate Trading of
Registered Interest and Principal of Securities) by separating the coupon
payments and the principal payment from an outstanding Treasury security and
selling them as individual securities. To the extent the Fund purchases the
principal portion of the STRIP, the Fund will not receive regular interest
payments. Instead they are sold at a deep discount from their face value. The
Fund will accrue income on such STRIPS for tax and accounting purposes, in
accordance with applicable law, which income is distributable to shareholders.
Because no cash is received at the time such income is accrued, the Fund may be
required to liquidate other portfolio securities to satisfy its distribution
obligations. Because the principal portion of the STRIP does not pay current
income, its price can be very volatile when interest rates change. In
calculating its dividend, the Fund takes into account as income a portion of the
difference between the principal portion of the STRIP's purchase price and its
face value.
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
the 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
-5-
<PAGE>
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 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.
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 rules and regulations
promulgated thereunder or interpretations of the Securities and Exchange
Commission or its staff and (b) as described in the Prospectus and the 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. 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 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.
-6-
<PAGE>
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 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 5% of its total
assets are outstanding. The Fund will not enter into reverse repurchase
agreements.
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. Short Sales. The Fund will not effect short sales of securities.
v. Options. The Fund will not purchase or sell puts, calls, options or
straddles, except as described in the Prospectus and the Statement of Additional
Information.
vi. Repurchase Agreements. The Fund will not invest more than 5% of its
net assets in repurchase agreements.
-7-
<PAGE>
vii. Illiquid Investments. The Fund will not invest more than 5% of its
net assets in securities for which there are legal or contractual restrictions
on resale and other illiquid securities.
THE INVESTMENT ADVISER
The Fund's investment adviser is Carl Domino Associates, L.P., 580 Village
Blvd., Suite 225, West Palm Beach, Florida 33409. Carl Domino, Inc. and CW
Partners may both be deemed to control the Adviser due to their respective share
of ownership of the Adviser.
Under the terms of the management agreement (the "Agreement"), the
Adviser manages the Fund's investments subject to approval of the Board of
Trustees and pays all of the expenses of the Fund (including organizational
expenses) 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 Adviser a fee computed and accrued daily and paid monthly
at an annual rate of 1.50% of the average daily net assets of the Fund. The
Adviser may waive all or part of its fee, at any time, and at its sole
discretion, but such action shall not obligate the Adviser to waive any fees in
the future. For the period November 6, 1995 (commencement of operations) through
October 31, 1996 and the fiscal years ended October 31, 1997 and 1998, the Fund
paid advisory fees of $11,548, $33,503 and $_________, respectively.
The Adviser retains the right to use the name "Domino" in connection
with another investment company or business enterprise with which the Adviser is
or may become associated. The Trust's right to use the name "Domino"
automatically ceases ninety days after termination of the Agreement and may be
withdrawn by the Adviser on ninety days written notice.
The Adviser 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.
TRUSTEES AND OFFICERS
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<PAGE>
The names of the Trustees and executive officers of the Trust are shown
below. Each Trustee who is an "interested person" of the Trust, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
<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: 40 Financial Services, Inc., the Fund's administrator, and
1793 Kingswood Drive AmeriPrime Financial Securities, Inc., the Fund's
Suite 200 distributor, since 1994. Prior to December, 1994, a
Southlake, Texas 76092 senior client executive with SEI Financial Services.
- -----------------------------------------------------------------------------------------------------------------------------------
_________________ Secretary, Treasurer Secretary, Treasurer and Chief Financial Officer of
Age: __ AmeriPrime Financial Services, Inc. and AmeriPrime
1793 Kingswood Drive Financial Securities, Inc.
Suite 200
Southlake, Texas 76092
- -----------------------------------------------------------------------------------------------------------------------------------
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil
Age: 41 and gas services company; various positions with Carbo
2001 Indianwood Ave. Ceramics, Inc., oil field manufacturing/supply company
Broken Arrow, Oklahoma from 1984 to 1997, most recently Vice President of
47012 Marketing.
- -----------------------------------------------------------------------------------------------------------------------------------
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of
Age: 51 Legacy Trust Company since 1992; President and
600 Jefferson Street, Suite 350 Director of Heritage Trust Company from 1994 to 1996.
Houston, Texas 70002
===================================================================================================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the period ended
October 31, 1998 is set forth in the following table. Trustee fees are Trust
expenses and each series of the Trust is responsible for a portion of the
Trustee fees. The Adviser voluntarily reimbursed the Fund for the Fund's share
of the Trustee fees paid for the period ended October 31, 1998.
<TABLE>
<CAPTION>
<S> <C> <C>
======================================================================================
Name Aggregate Total Compensation
Compensation from Trust (the Trust is
from Trust not in a Fund Complex)
- --------------------------------------------------------------------------------------
Kenneth D. Trumpfheller 0 0
- --------------------------------------------------------------------------------------
Steve L. Cobb $4,000 $4,000
- --------------------------------------------------------------------------------------
Gary E. Hippenstiel $4,000 $4,000
======================================================================================
</TABLE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Adviser is responsible for the Fund's portfolio decisions and the placing of
the Fund's portfolio transactions. In placing portfolio transactions, the
Adviser 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
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<PAGE>
the broker or dealer. The Adviser generally seeks favorable prices and
commission rates that are reasonable in relation to the benefits received.
The Adviser 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 Adviser 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 Adviser 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 Adviser'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 Adviser in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Adviser in connection with its services to the
Fund. Although research services and other information are useful to the Fund
and the Adviser, 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
Adviser that the review and study of the research and other information will not
reduce the overall cost to the Adviser of performing its duties to the Fund
under the Agreement. Due to research services provided by brokers, the Fund
directed to brokers $2,828,070 and $_________ of brokerage transactions (on
which commissions were $3,651 and $_______) during the fiscal years ended
October 31, 1997 and 1998, respectively.
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 Adviser'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.
For the period November 6, 1995 (commencement of operations) through
October 31, 1996 and for the fiscal years ended October 31, 1997 and 1998, the
Fund paid brokerage commissions of $2,617, $5,317 and $_______, respectively.
-10-
<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, Martin
Luther King, Jr. 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 for the period indicated 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. For the period November
6, 1995 (commencement of operations) through October 31, 1996 and for the fiscal
year ended October 31, 1998, the Fund's average annual total return was ______%,
annualized, and _____%, respectively.
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.
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<PAGE>
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 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
As of July 1, 1998, Unified Fund Services, Inc. ("Unified"), 431 N.
Pennsylvania Street, Indianapolis, Indiana 46204, 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 shareholder service functions.
American Data Services, Inc., 150 Motor Parkway, Hauppauge, New York 11760
("ADS") provides the Fund with certain monthly reports, record-keeping and other
management-related services. For the period November 6, 1995 (commencement of
operations) through October 31, 1996 and for the fiscal years ended October 31,
1997 and 1998, ADS received $17,600, $19,200 and $________, respectively, from
the Adviser (not the Fund) for these 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, 1999. 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.
ADMINISTRATOR
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<PAGE>
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (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. For the period November 6, 1995 (commencement of operations) through
October 31, 1996 and for the fiscal years ended October 31, 1997 and 1998, the
Administrator received $______, $______ and $______, respectively, from the
Adviser, (not the Fund) for these services.
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Trust's Annual Report to Shareholders for the fiscal year
ended October 31, 1998. The Trust will provide the Annual Report without charge
by calling the Fund at 1-800-506-9922.
-13-
<PAGE>
FOUNTAINHEAD SPECIAL VALUE FUND
PROSPECTUS February 14, 1999
c/o King Investment Advisors, Inc.
Two Post Oak Central
1980 Post Oak Blvd., Suite 2400
Houston, Texas 77056-3898
For Information, Shareholder Services and Requests:
(800) 868-9535
Fountainhead Special Value Fund (the "Fund") is a mutual fund whose
investment objective is to provide long term capital growth. The Fund's Advisor,
King Investment Advisors, Inc., seeks to achieve the objective by investing
primarily in a broad range of equity securities believed by the Advisor to be
selling at attractive prices relative to their intrinsic value.
The Fund is "no-load," which means there are no sales charges or
commissions. In addition, there are no 12b-1 fees, distribution expenses or
deferred sales charges which are borne by the shareholders. 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 (the "SEC") dated February 14, 1999, which is incorporated
herein by reference and can be obtained without charge by calling the Fund at
the phone number listed above. The SEC maintains a Website (http://www.sec.gov)
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
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.
<PAGE>
SUMMARY OF FUND EXPENSES
The expense information provided below is based on operating expenses
incurred during the most recent 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 on
purchase or redemption of shares of the Fund. In addition, the Fund does not
have a 12b-1 Plan.
[TABLE TO BE UPDATED:
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 (after fee waiver)........................................ 1.25%
12b-1 Charges...............................................................NONE
Other Expenses (after reimbursement).......................................0.00%
Total Fund Operating Expenses (after reimbursement)........................1.25%
* Expense information has been restated to reflect current fees.
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:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$13 $40 $69 $151
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
period December 31, 1996 (commencement of operations) through October 31, 1997
and the fiscal year ended October 31, 1998, is derived from the audited
financial statements of the Fund. The financial
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statements of the Fund have been audited by McCurdy & Associates CPA's, Inc.,
independent public accountants and are included in the Fund's Annual Report. The
Annual Report contains additional performance information and is available on
request and without charge.
[FINANCIAL HIGHLIGHTS TO BE INSERTED]
THE FUND
Fountainhead Special Value Fund (the "Fund") was organized as a series
of AmeriPrime Funds, an Ohio business trust (the "Trust"), on October 20, 1995,
and commenced operations on December 31, 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 King Investment Advisors, Inc. (the
"Advisor").
INVESTMENT OBJECTIVE AND STRATEGIES
The investment objective of the Fund is to provide long term capital
growth. The Fund seeks to achieve the objective by investing primarily in a
broad range of equity securities which the Advisor believes to be selling at
attractive prices relative to their intrinsic value. It is anticipated that an
emphasis will be placed on domestic small-cap and mid-cap equity securities
(those with a market capitalization between $50 million and $5 billion).
The Advisor is a bottom-up value manager selecting on a method the Advisor
calls the "Business Valuation Approach". This highly-disciplined Approach seeks
to identify attractive investment opportunities using a broad definition of
value, uncovering securities often overlooked by other investors. The Advisor
believes value can be found in different types of securities at different points
in the economic cycle. The Advisor's buy criteria consist of three elements. The
Advisor will buy a stock trading at a discount to: 1) its private-market value
(based on its projected level of cash flows, balance sheet characteristics,
future earnings, and payments made for similar companies in mergers and
acquisitions), 2) its five-year projected earnings growth rate (unlike many
typical value managers who buy only low P/E or price/book stocks), or 3) its
seven-year historical valuation based on its price/earnings, price/book,
price/cash flow, or price/sales ratios. While it is anticipated that the Fund
will diversify its investments across a range of industries/sectors, certain
industries are likely to be overweighed compared to others because the Advisor
seeks the best investment values regardless of industry. The Advisor retains the
flexibility to invest in securities of various market capitalizations.
The Advisor generally intends to stay fully invested (subject to
liquidity requirements and defensive purposes) in common stock and common stock
equivalents (such as securities convertible into common stocks) regardless of
the movement of stock prices. However, the Fund may invest in preferred stocks,
bonds, corporate debt and U.S. government obligations when the Advisor believes
these securities offer opportunities to further the Fund's investment objective.
While the Fund ordinarily will invest in common stocks of U.S. companies, it may
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invest in foreign companies through the purchase of American Depository
Receipts.
For temporary defensive purposes under abnormal market or economic
conditions, the Fund may hold all or a portion of its assets in money market
instruments (including money market funds) or U.S. government repurchase
agreements. The Fund may also invest in such instruments at any time to maintain
liquidity or pending selection of investments in accordance with its policies.
If the Fund acquires securities of a money market fund, the shareholders of the
Fund will be subject to duplicative management fees.
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. 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. See "Investment Policies and Techniques and Risk
Considerations" for a more detailed discussion of the Fund's investment
practices.
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 $5,000 ($2,000 for IRAs) and minimum subsequent investments of
$1,000. For corporate retirement plans, however, there is no minimum for
separate employee accounts. Investors choosing to purchase or redeem their
shares through a broker/dealer or another institution may be charged a fee by
that institution. Investors choosing to purchase or redeem shares directly from
the Fund will not incur charges on purchases or redemptions. To the extent
investments of individual investors are aggregated into an omnibus account
established by an investment advisor, broker, or other intermediary, the account
minimums apply to the omnibus account, not to the account of the individual
investor.
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 Fountainhead Special Value Fund, and sent to the P.O. Box listed
below. If you prefer overnight delivery, use the overnight address listed below.
U.S. Mail: Overnight:
Fountainhead Special Value Fund Fountainhead Special Value Fund
Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 N. Pennsylvania St.
Indianapolis, IN 46206-6110 Indianapolis, IN 46204
Your purchase of shares of the Fund will be effected at the next share price
calculated after receipt of your investment.
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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 800-868-9535 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: Fountainhead Special Value Fund
D.D.A. #483885570
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 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 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.
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 Fountainhead Special Value Fund and should be sent to the
address listed above. 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
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retirement plans (IRAs); simplified employee pensions (SEPs); 401(k) plans;
qualified corporate pension and profit-sharing plans (for employees); tax
deferred investment 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 advisor 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 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 by check or federal wire transfer.
The proceeds 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.
Investors choosing to purchase or redeem their shares through a broker/dealer or
another institution may be charged a fee by that institution.
By Mail - You may redeem any part of your account in the Fund at no
charge by mail. Your request should be addressed to:
U.S. Mail: Overnight:
Fountainhead Special Value Fund Fountainhead Special Value Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 N. Pennsylvania St.
Indianapolis, IN 46206-6110 Indianapolis, IN 46204
"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
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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 Unified
Fund 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) 868-9535. 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 cannot 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) 868-9535. 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
may take up to fifteen calendar 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 $2,000 due to 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 advisor 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.
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<PAGE>
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 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 in price.
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 are generally 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 uses 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.
Income dividends and capital-gains 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-gains 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
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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 ("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 advisors 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.
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. If 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 diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund
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retains various organizations to perform specialized services.
The Fund retains King Investment Advisors, Inc. (formerly Jenswold,
King & Associates, Inc.), 1980 Post Oak Boulevard, Suite 2400, Houston, Texas
77056-3898 (the "Advisor") to manage the Fund's investments. The Advisor is a
Houston-based independent investment advisor providing value-oriented equity and
balanced management for both taxable and tax-exempt clients, and currently
manages approximately $700 million in assets. The Advisor is a Texas corporation
controlled by Roger E. King, the Chairman, President, and majority shareholder
of the Advisor. Mr. King is primarily responsible for the day-to-day management
of the Fund's portfolio. Mr. King co-founded the firm in 1981 and has served as
its president since 1986 and as chairman since 1993. The Fund is authorized to
pay the Advisor a fee equal to an annual average rate of 1.43% of its average
daily net assets. The Advisor has agreed to waive management fees and reimburse
expenses to limit total net operating expenses for the Fund to not more than
1.25% of its average daily net assets for at least the next year (through 1998).
The Fund retains AmeriPrime Financial Services, Inc. (the "Administrator")
to manage the Fund's business affairs and to 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 Unified Fund Services, Inc., 431 N. Pennsylvania St., Indianapolis,
IN 46204 (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. The Advisor (not the Fund) may pay certain financial
institutions (which may include banks, brokers, securities dealers and other
industry professionals) a "servicing fee" for performing certain administrative
servicing functions for Fund shareholders to the extent these institutions are
allowed to do so by applicable statute, rule, or regulation.
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
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This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ.
Equity Securities
Equity securities consist of common stock, preferred stock, and common
stock equivalents (such as convertible preferred stock and convertible
debentures, rights, and warrants) and investment companies which invest
primarily in the above. Convertible preferred stock is preferred stock that can
be converted into common stock pursuant to its terms. Convertible debentures are
debt instruments that can be converted into common stock pursuant to their
terms. The Fund will not invest more than 5% of its net assets at the time of
purchase in either rights or warrants. Equity securities also include common
stocks and common stock equivalents of domestic real estate investment trusts
and other companies which operate as real estate corporations or which have a
significant portion of their assets in real estate. The Fund will not acquire
any direct ownership of real estate.
The Fund may invest in foreign equity securities through the purchase
of American Depository Receipts (ADRs). ADRs are dollar-denominated receipts
generally issued in registered form by domestic banks, and represent the deposit
with the bank of a security of a foreign issuer. To the extent that the Fund
does invest in foreign securities, such investments may be subject to special
risks, such as changes in restrictions on foreign currency transactions and
rates of exchange, and changes in the administrations or economic and monetary
policies of foreign governments.
Fixed Income Securities
The Fund may invest in fixed income securities. Fixed income securities
include corporate debt securities, U.S. government securities, and participation
interests in such securities. Fixed income securities are generally considered
to be interest rate sensitive, which means that their value will generally
decrease when interest rates rise and increase when interest rates fall.
Securities with shorter maturities, while offering lower yields, generally
provide greater price stability than longer-term securities and are less
affected by changes in interest rates.
Corporate Debt Securities - Corporate debt securities are
long- and short-term debt obligations issued by companies (such as publicly
issued and privately placed bonds, notes, and commercial paper). The Advisor
considers corporate debt securities to be of investment grade quality if they
are rated BBB or higher by Standard & Poor's Corporation ("S&P"), or Baa or
higher by Moody's Investors Services, Inc. ("Moody's"), or if unrated,
determined by the Advisor to be of comparable quality. Investment grade debt
securities generally have adequate to strong protection of principal and
interest payments. In the lower end of this category, credit quality may be more
susceptible to potential future changes in circumstances, and the securities
have speculative elements. The Fund will not invest more than 5% of the value of
its net assets in securities that are below investment grade, and will
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not purchase debt securities below B by S&P or Moody's (or unrated securities
determined by the Advisor to be of inferior quality to securities so rated).
U.S. Government Obligations - U.S. government obligations may
be backed by the credit of the government as a whole or only by the issuing
agency. U.S. Treasury bonds, notes, and bills, and some agency securities, such
as those issued by the Federal Housing Administration and the Government
National Mortgage Association (GNMA), are backed by the full faith and credit of
the U.S. government as to payment of principal and interest and are the highest
quality government securities. Other securities issued by U.S. government
agencies or instrumentalities, such as securities issued by the Federal Home
Loan Banks and the Federal Home Loan Mortgage Corporation, are supported only by
the credit of the issuing agency, and not by the U.S. government. Securities
issued by the Federal Farm Credit System, the Federal Land Banks, and the
Federal National Mortgage Association (FNMA) are supported by the agency's right
to borrow money from the U.S. Treasury under certain circumstances, but are not
backed by the full faith and credit of the U.S. government.
Investment Techniques
The Fund may invest up to 5% of its net assets in repurchase agreements
fully collateralized by U.S. Government obligations, as well as reverse
repurchase agreements. The Fund may engage in short sales, but the percentage of
the Fund's net assets that may be used as collateral or segregated for short
sales is limited to 5%.
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 they
hold, and maintain 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. The Fund will not invest more than 25% of its total assets
in forward commitments. Forward 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.
Loans of Portfolio Securities - The Fund may make short- and
long-term loans of its portfolio securities. 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 on a daily mark-to-market basis in an
amount at least equal to 102% of the value of the loaned securities. The Fund
will continue to receive dividends or interest on the loaned securities, and it
may terminate such loans at any time or reacquire such securities in time to
vote on any matter which the Board of Trustees
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determines to be serious. With respect to loans of securities, there is the risk
that the borrower may fail to return the loaned securities or that the borrower
may not be able to provide additional collateral.
General
The Fund may invest in mortgage-related securities, invest in foreign
securities other than ADR's, and may buy and write put and call options and
futures on stock indices, provided the Fund's investment in each does not exceed
5% of its net assets. The Fund may also invest in Rule 144A Securities. Rule
144A Securities are securities in the United States not registered for sale
under Federal securities laws but which can be resold to institutions under SEC
Rule 144A. Provided that a dealer or institutional trading market in such
securities exists, these restricted securities are treated as exempt from the
Fund's limitation that it will not invest more than 5% of its net assets in
illiquid securities (those which cannot be disposed of promptly and in the
ordinary course of business without taking a reduced price). Under the
supervision of the Board of Trustees, the Advisor determines the liquidity of
restricted securities and, through reports from the Advisor, the Board will
monitor trading activity in restricted securities. If institutional trading in
restricted securities were to decline, the liquidity of a Fund could be
adversely affected.
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 changes in its price or underlying value, or general
economic or market conditions, warrant such action. The Fund's portfolio
turnover rate may exceed 100%. To the extent it does, the brokerage commissions
incurred by the Fund will generally be higher than those incurred by a fund with
a lower portfolio turnover rate. The Fund's higher turnover rate may result in
the realization, for federal tax purposes, of more net capital gains, and any
distributions derived from such gains may be ordinary income.
Shareholder Rights. Any Trustee of the Trust may be removed by vote of
the shareholders holding at least 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
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votes for fractional shares he owns. All shares of the Fund have equal
voting rights and liquidation rights.
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 advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
nonstandardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of 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. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
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) MidCap Index, the Russell MidCap Index, or the S&P 500 Index.
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.
The Advisor has been managing equity accounts since 1982. The
performance of the accounts with investment objectives, policies, and strategies
similar to those of the Fund appears below. The data is provided to illustrate
past performance of the Advisor in managing such accounts, as compared to the
Russell MidCap Index. Roger E. King is responsible for the performance of the
accounts and is also responsible for the investment management of the
-14-
<PAGE>
Fund. As of December 31, 1998, the assets in those accounts totaled
approximately $____ million.
The performance of the accounts managed by the Advisor should not be
considered indicative of future performance of the Fund. Results may differ
because of, among other things, differences in brokerage commissions, account
expenses (including management fees), the size of positions taken in relation to
account size and diversification of securities, timing of purchases and sales,
and availability of cash for new investments. In addition, managed accounts are
not subject to certain investment limitations, diversification requirements, and
other restrictions imposed by the Investment Company Act and the Internal
Revenue Code. The results for different periods may vary. For the year ended
December 31, 1998, the total return of the Fund was _____%, and the total return
of the equity accounts was _____%.
[chart showing growth of $10,000 investment from January 1, 1982 through
December 31, 1998, compared to the Russell MidCap Index]
UPDATE:
* The Advisor's total returns by year were as follows: 1982 40.67%, 1983 22.95%,
1984 12.43%, 1985 28.60%, 1986 15.56%, 1987 -5.35%, 1988 27.96%, 1989 25.20%,
1990 -1.04%, 1991 36.86%, 1992 11.40%, 1993 6.50%, 1994 -8.35%, 1995 55.00%,
1996 12.42%, 1997 36.50%. The King Investment Advisors, Inc. performance is the
time-weighted, dollar-weighted average total return associated with a composite
of equity income accounts managed by Roger E. King, having objectives similar to
the Fund, and is unaudited. The composite does not include accounts with less
than $1,000,000 in assets or accounts under the Advisor's management for less
than one quarter, because the nature of those accounts make them inappropriate
for purposes of comparison. Performance figures of the accounts are net of
management fees and all expenses of the accounts, including transaction costs
and commissions. Results include the reinvestment of dividends and capital
gains.
The Russell MidCap Index is a widely recognized, unmanaged index of
market activity based on the aggregate performance of a selected portfolio of
publicly traded common stocks, including monthly adjustments to reflect the
reinvestment of dividends and other distributions. The Russell MidCap Index
reflects the total return of securities comprising the Index with market
capitalizations ranging from $1 billion to $6 billion, including changes in
market prices as well as accrued investment income, which is presumed to be
reinvested. Performance figures for the Russell MidCap Index do not reflect
deduction of transaction costs or expenses, including management fees.
Investment Advisor Administrator
King Investment Advisors, Inc. AmeriPrime Financial Services, Inc.
Two Post Oak Central 1793 Kingswood Drive, Suite 200
1980 Post Oak Blvd., Suite 2400 Southlake, Texas 76092
Houston, Texas 77056-3898
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
-15-
<PAGE>
Transfer Agent (all purchase and Auditors
redemption requests) McCurdy & Associates CPA's, Inc.
Unified Fund Services, Inc. 27955 Clemens Road
431 N. Pennsylvania St. Westlake, Ohio 44145
Indianapolis, IN 46204
Legal Counsel
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
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.
-16-
<PAGE>
TABLE OF CONTENTS PAGE
SUMMARY OF FUND EXPENSES..............................................
Shareholder Transaction Expenses.............................
Annual Fund Operating Expenses.............................
FINANCIAL HIGHLIGHTS.................................................
THE FUND..............................................................
INVESTMENT OBJECTIVE AND STRATEGIES................................
HOW TO INVEST IN THE FUND..............................................
Initial Purchase............................................
By Mail.........................................
By Wire..........................................
Additional Investments...................................
Tax Sheltered Retirement Plans...............................
Other Purchase Information...................................
HOW TO REDEEM SHARES..................................................
By Mail......................................................
By Telephone..................................................
Additional Information....................................
SHARE PRICE CALCULATION...............................................
DIVIDENDS AND DISTRIBUTIONS............................................
TAXES.................................................................
OPERATION OF THE FUND..................................................
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS............
Equity Securities...............................................................
Fixed Income Securities.....................................
Investment Techniques........................................
General...................................................
GENERAL INFORMATION..................................................
Fundamental Policies.........................................
Portfolio Turnover.........................................
Shareholder Rights............................................
PERFORMANCE INFORMATION...............................................
-17-
<PAGE>
FOUNTAINHEAD SPECIAL VALUE FUND
STATEMENT OF ADDITIONAL INFORMATION
February 14, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of Fountainhead Special Value Fund
dated February 14, 1999. A copy of the Prospectus can be obtained by writing the
Transfer Agent at 431 N. Pennsylvania St., Indianapolis, IN 46204 or by calling
1-800-868-9535.
<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.............................................. 6
THE INVESTMENT ADVISOR.............................................. 8
TRUSTEES AND OFFICERS............................................... 9
PORTFOLIO TRANSACTIONS AND BROKERAGE................................ 10
DETERMINATION OF SHARE PRICE........................................ 11
INVESTMENT PERFORMANCE.............................................. 11
CUSTODIAN........................................................... 12
TRANSFER AGENT...................................................... 12
ACCOUNTANTS......................................................... 12
DISTRIBUTOR......................................................... 12
ADMINISTRATOR.................................................................12
FINANCIAL STATEMENTS................................................ 12
<PAGE>
DESCRIPTION OF THE TRUST
Fountainhead Special Value 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 four 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.
[UPDATE: As of _______________, 1998, the following persons may be deemed to
beneficially own five percent (5%) or more of the Fund: Servis Beulah IRA, 602
Hallie, Houston, Texas 77024 - 9.40%; King Investment Advisors, Inc. Profit
Sharing Plan, Roger E. King, Trustee, 1980 Post Oak Boulevard, #2400, Houston,
Texas - 16.84%; Betty F. Wolfenson, 5555 Del Monte, Suite 106, Houston, Texas -
13.16%; Robert E. Holloway IRA, 12518 Overcup Drive, Houston, Texas - 7.79%;
Keogh Money Purchase Plan, Terry Donovan, Trustee, 8723 Winningham Lane,
Houston, Texas - 5.02%; and Keogh Money Purchase Plan, John Douglas, Trustee,
8723 Winningham Lane, Houston, Texas - 7.37%. As of ______________, 1998, the
officers and trustees as a group may be deemed to beneficially own less than one
percent (1%) of the Fund.]
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").
<PAGE>
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. The Fund may invest up to 5%
of its net assets at the time of purchase in rights or warrants.
B. Repurchase Agreements. A repurchase agreement is a short-term
investment in which the purchaser (i.e., the Fund) acquires ownership of a U.S.
Government obligation (which may be of any maturity) and the seller agrees to
repurchase the obligation at a future time at a set price, thereby determining
the yield during the purchaser's holding period (usually not more than seven
days from the date of purchase). Any repurchase transaction in which the Fund
engages will require full collateralization of the seller's obligation during
the entire term of the repurchase agreement. In the event of a bankruptcy or
other default of the seller, the Fund could experience both delays in
liquidating the underlying security and losses in value. However, the Fund
intends to enter into repurchase agreements only with the Custodian, other banks
with assets of $1 billion or more and registered securities dealers determined
by the Advisor (subject to review by the Board of Trustees) to be creditworthy.
The Advisor monitors the creditworthiness of the banks and securities dealers
with which the Fund engages in repurchase transactions, and the Fund will not
invest more than 5% of its net assets in repurchase agreements.
C. Reverse Repurchase Agreements. Reverse repurchase agreements involve
sales of portfolio securities by the Fund to member banks of the Federal Reserve
System or recognized securities dealers, concurrently with an agreement by the
Fund to repurchase the same securities at a later date at a fixed price, which
is generally equal to the original sales price plus interest. The Fund retains
record ownership and the right to receive interest and principal payments on the
portfolio security involved. The Fund's objective in such a transaction would be
to obtain funds to pursue additional investment opportunities whose yield would
exceed the cost of the reverse repurchase transaction. Generally, the use of
reverse repurchase agreements should reduce portfolio turnover and increase
yield.
In connection with each reverse repurchase agreement, the Fund
will direct its Custodian to place cash or U.S. government obligations in a
separate account in an amount equal to the repurchase price. In the event of
bankruptcy or other default by the purchaser, the Fund could experience both
delays in repurchasing the portfolio securities and losses.
D. Illiquid Securities. The portfolio of the Fund may contain illiquid
securities. 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 following securities are
considered to be illiquid: repurchase agreements and reverse repurchase
agreements maturing in more than seven days, nonpublicly offered securities and
restricted securities. Restricted securities are securities the resale of which
is subject to legal or contractual restrictions. Restricted securities may be
sold only in privately negotiated transactions, in a
<PAGE>
public offering with respect to which a registration statement is in effect
under the Securities Act of 1933 or pursuant to Rule 144 or Rule 144A
promulgated under such Act. Where registration is required, the Fund may be
obligated to pay all or part of the registration expense, and a considerable
period may elapse between the time of the decision to sell and the time such
security may be sold 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 the price it could have obtained when it decided to sell.
The Fund will not invest more than 5% of its net assets in illiquid securities.
E. Mortgage-Related Securities. Mortgage-related securities include
securities representing interests in a pool of mortgages. These securities,
including securities issued by FNMA, GNMA and the Federal Home Loan Mortgage
Corporation, provide investors with payments consisting of both interest and
principal as the mortgages in the underlying mortgage pools are repaid. The Fund
will only invest in pools of mortgage loans assembled for sale to investors by
agencies or instrumentalities of the U.S. government and will limit its
investment to 5% of its net assets. Unscheduled or early payments on the
underlying mortgages may shorten the securities' effective maturities.
Other types of securities representing interests in a pool of
mortgage loans are known as collateralized mortgage obligations (CMOs) and real
estate mortgage investment conduits (REMICs) and multi-class pass-throughs. CMOs
and REMICs are debt instruments collateralized by pools of mortgage loans or
other mortgage-backed securities. Multi-class pass-through securities are equity
interests in a trust composed of mortgage loans or other mortgage-backed
securities. Payments of principal and interest on underlying collateral provides
the funds to pay debt service on the CMO or REMIC or make scheduled
distributions on the multi-class pass-through securities. The Fund will only
invest in CMOs, REMICs and multi-class pass-through securities (collectively
"CMOs" unless the context indicates otherwise) issued by agencies or
instrumentalities of the U.S. government (such as the Federal Home Loan Mortgage
Corporation). Neither Fund will invest in "stripped" CMOs, which represent only
the income portion or the principal portion of the CMO.
CMOs are issued with a variety of classes or "tranches," which
have different maturities and are often retired in sequence. One or more
tranches of a CMO may have coupon rates which reset periodically at a specified
increment over an index such as the London Interbank Offered Rate ("LIBOR").
These "floating rate CMOs," typically are issued with lifetime "caps" on their
coupon rate, which means that there is a ceiling beyond which the coupon rate
may not be increased. The yield of some floating rate CMOs varies in excess of
the change in the index, which would cause the value of such CMOs to fluctuate
significantly once rates reach the cap.
REMICs, which have elected to be treated as such under the
Internal Revenue Code, are private entities formed for the purpose of holding a
fixed pool of mortgages secured by an interest in real property. REMICs are
similar to CMOs in that they issue multiple classes of securities. As with other
CMOs, the mortgages which collateralize the REMICs in which a Fund may invest
include mortgages backed by GNMA certificates or other mortgage pass-throughs
issued or guaranteed by the U.S. government, its agencies or instrumentalities.
<PAGE>
The average life of securities representing interests in pools
of mortgage loans is likely to be substantially less than the original maturity
of the mortgage pools as a result of prepayments or foreclosures of such
mortgages. Prepayments are passed through to the registered holder with the
regular monthly payments of principal and interest, and have the effect of
reducing future payments. To the extent the mortgages underlying a security
representing an interest in a pool of mortgages are prepaid, the Fund may
experience a loss (if the price at which the respective security was acquired by
the Fund was at a premium over par, which represents the price at which the
security will be redeemed upon prepayment). In addition, prepayments of such
securities held by the Fund will reduce the share price of the Fund to the
extent the market value of the securities at the time of prepayment exceeds
their par value. Furthermore, the prices of mortgage-related securities can be
significantly affected by changes in interest rates. Prepayments may occur with
greater frequency in periods of declining mortgage rates because, among other
reasons, it may be possible for mortgagors to refinance their outstanding
mortgages at lower interest rates. In such periods, it is likely that any
prepayment proceeds would be reinvested by the Fund at lower rates of return.
F. Foreign Securities. The Fund may invest up to 5% of its net assets
at the time of purchase in foreign equity securities including common stock,
preferred stock and common stock equivalents issued by foreign companies, and
foreign fixed income securities. Foreign fixed income securities include
corporate debt obligations issued by foreign companies and debt obligations of
foreign governments or international organizations. This category may include
floating rate obligations, variable rate obligations, Yankee dollar obligations
(U.S. dollar denominated obligations issued by foreign companies and traded on
U.S. markets) and Eurodollar obligations (U.S. dollar denominated obligations
issued by foreign companies and traded on foreign markets).
Foreign government obligations generally consist of debt
securities supported by national, state or provincial governments or similar
political units or governmental agencies. Such obligations may or may not be
backed by the national government's full faith and credit and general taxing
powers. Investments in foreign securities also include obligations issued by
international organizations. International organizations include entities
designated or supported by governmental entities to promote economic
reconstruction or development as well as international banking institutions and
related government agencies. Examples are the International Bank for
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, the Asian Development Bank and the InterAmerican Development Bank. In
addition, investments in foreign securities may include debt securities
denominated in multinational currency units of an issuer (including
international issuers). An example of a multinational currency unit is the
European Currency Unit. A European Currency Unit represents specified amounts of
the currencies of certain member states of the European Economic Community, more
commonly known as the Common Market.
Purchases of foreign securities are usually made in foreign
currencies and, as a result, the Fund may incur currency conversion costs and
may be affected favorably or unfavorably by changes in the value of foreign
currencies against the U.S. dollar. In addition, there may be less information
publicly available about a foreign company then about a U.S. company, and
foreign companies are not generally subject to accounting, auditing and
financial
<PAGE>
reporting standards and practices comparable to those in the U.S. Other risks
associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes in
the administrations or economic and monetary policies of foreign governments,
the imposition of exchange control regulations, the possibility of expropriation
decrees and other adverse foreign governmental action, the imposition of foreign
taxes, less liquid markets, less government supervision of exchanges, brokers
and issuers, difficulty in enforcing contractual obligations, delays in
settlement of securities transactions and greater price volatility. In addition,
investing in foreign securities will generally result in higher commissions than
investing in similar domestic securities.
G. Option Transactions. Up to 5% of the Fund's net assets may be
invested in option transactions involving individual securities and market
indices. An option involves either (a) the right or the obligation to buy or
sell a specific instrument at a specific price until the expiration date of the
option, or (b) the right to receive payments or the obligation to make payments
representing the difference between the closing price of a market index and the
exercise price of the option expressed in dollars times a specified multiple
until the expiration date of the option. Options are sold (written) on
securities and market indices. The purchaser of an option on a security pays the
seller (the writer) a premium for the right granted but is not obligated to buy
or sell the underlying security. The purchaser of an option on a market index
pays the seller a premium for the right granted, and in return the seller of
such an option is obligated to make the payment. A writer of an option may
terminate the obligation prior to expiration of the option by making an
offsetting purchase of an identical option. Options are traded on organized
exchanges and in the over-the-counter market. Options on securities which the
Fund sells (writes) will be covered or secured, which means that it will own the
underlying security (for a call option); will segregate with the Custodian high
quality liquid debt obligations equal to the option exercise price (for a put
option); or (for an option on a stock index) will hold a portfolio of securities
substantially replicating the movement of the index (or, to the extent it does
not hold such a portfolio, will maintain a segregated account with the Custodian
of high quality liquid debt obligations equal to the market value of the option,
marked to market daily). When the Fund writes options, it may be required to
maintain a margin account, to pledge the underlying securities or U.S.
government obligations or to deposit liquid high quality debt obligations in a
separate account with the Custodian.
The purchase and writing of options involves certain risks; for
example, the possible inability to effect closing transactions at favorable
prices and an appreciation limit on the securities set aside for settlement, as
well as (in the case of options on a stock index) exposure to an indeterminate
liability. The purchase of options limits the Fund's potential loss to the
amount of the premium paid and can afford the Fund the opportunity to profit
from favorable movements in the price of an underlying security to a greater
extent than if transactions were effected in the security directly. However, the
purchase of an option could result in the Fund losing a greater percentage of
its investment than if the transaction were effected directly. When the Fund
writes a covered call option, it will receive a premium, but it will give up the
opportunity to profit from a price increase in the underlying security above the
exercise price as long as its obligation as a writer continues, and it will
retain the risk of loss should the price of the security decline. When the Fund
writes a covered put option, it will receive a premium, but it will assume the
risk of loss should the price of the underlying security fall below the exercise
price. When the Fund writes a covered put option on a stock index, it will
assume the
<PAGE>
risk that the price of the index will fall below the exercise price, in which
case the Fund may be required to enter into a closing transaction at a loss. An
analogous risk would apply if the Fund writes a call option on a stock index and
the price of the index rises above the exercise price.
H. Hedging Transactions. The Fund may hedge all or a portion of its
portfolio investments through the use of options and futures contracts. The
objective of the hedging program is to protect a profit or offset a loss in a
portfolio security from future price erosion or to assure a definite price for a
security by acquiring the right or option to purchase or to sell a fixed amount
of the security at a future date. For example, in order to hedge against the
risk that the value of the Fund's portfolio securities may decline, the fund
might sell futures contracts on stock indices. When hedging of this character is
successful, any depreciation in the value of the hedged portfolio securities
will be substantially offset by an increase in the Fund's equity in the stock
index futures position.
There is no assurance that the objective of the hedging
program will be achieved, since the success of the program will depend on the
Advisor's ability to predict the future direction of the relevant security or
stock index, and incorrect predictions by the Advisor may have an adverse effect
on the Fund. In this regard, skills and techniques necessary to arrive at such
predictions are different from those needed to predict price changes in
individual stocks.
A stock index futures contract is a binding contractual
commitment which involves the payment or receipt of payments representing,
respectively, the loss or gain of a specified market index. Ordinarily, the Fund
would enter into stock index futures contracts to hedge its investments in
common stocks. Futures contracts are traded on exchanges licensed and regulated
by the Commodity Futures Trading Commission. The Fund will be subject to any
limitations imposed by the exchanges with respect to futures contracts trading
and positions. A clearing corporation associated with the particular exchange
assumes responsibility for all purchases and sales and guarantees delivery and
payment on the contracts. Although most futures contracts call for actual
delivery or acceptance of the underlying securities or currency, in most cases
the contracts are closed out before settlement date without the making or taking
of delivery. Closing out is accomplished by entering into an offsetting
transaction, which may result in a profit or a loss. There is no assurance that
the Fund will be able to close out a particular futures contract.
A hedging strategy involving options and futures contracts
entails some risks. For example, the total premium paid for an option may be
lost if the Fund does not exercise the option or futures contract, or the writer
does not perform his obligations. It is also possible that the futures contracts
selected by the Fund will not follow the price movement of the underlying stock
index. If this occurs, the hedging strategy may not be successful. Further, if
the Fund sells a stock index futures contract and is required to pay an amount
measured by any increase in the market index, it will be exposed to an
indeterminate liability. In addition, a liquid secondary market may not exist
for any particular option or futures contract at any specific time.
The Fund will incur transactional costs in connection with the
hedging program.
<PAGE>
When the Fund purchases or sells a futures contract, an amount of cash and
liquid assets will be deposited in a segregated account with the Trust's
Custodian to guarantee performance of the futures contract. The amount of such
deposits will depend upon the requirements of each exchange and broker and will
vary with each futures contract. Because open futures contract positions are
marked to market and gains and losses are settled on a daily basis, the Fund may
be required to deposit additional funds in such a segregated account if it has
incurred a net loss on its open futures contract positions on any day.
The Trust has filed a supplemental notice of eligibility with
the Commodity Futures Trading Commission ("CFTC") to claim relief from
regulation as a commodity "pool" within the meaning of the CFTC's regulations.
In its filing, the Trust has represented that the Fund's transactions in futures
contracts will constitute bona fide hedging transactions within the meaning of
such regulations and that the Fund will enter into commitments which require as
deposits for initial margin for futures contracts no more than 5% of the fair
market value of its assets.
I. Short Sales. The Fund may sell a security short in anticipation of a
decline in the market value of the security. When the Fund engages in a short
sale, it sells a security which it does not own. To complete the transaction,
the Fund must borrow the security in order to deliver it to the buyer. The Fund
must replace the borrowed security by purchasing it at the market price at the
time of replacement, which may be more or less than the price at which the Fund
sold the security. 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
profit if the security declines in price between those dates.
In connection with its short sales, the Fund will be required
to maintain a segregated account with its Custodian of cash or high grade liquid
assets equal to the market value of the securities sold less any collateral
deposited with its broker. The Fund will limit its short sales so that no more
than 5% of its net assets (less all its liabilities other than obligations under
the short sales) will be deposited as collateral and allocated to the segregated
account. However, the segregated account and deposits will not necessarily limit
the Fund's potential loss on a short sale, which is unlimited. The Fund's policy
with respect to short sales is non-fundamental, and may be changed by the Board
of Trustees without the vote of the Fund's shareholders.
J. Corporate Debt Securities. Corporate debt securities are bonds or
notes issued by corporations and other business organizations, including
business trusts, in order to finance their credit needs. Corporate debt
securities include commercial paper which consist of short term (usually from
one to two hundred seventy days) unsecured promissory notes issued by
corporations in order to finance their current operations.
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
<PAGE>
changed without the affirmative vote of a majority of the outstanding shares of
the Fund. As used in the Prospectus and the 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 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.
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 rules and regulations
promulgated thereunder or interpretations of the Securities and Exchange
Commission or its staff and (b) as described in the Prospectus and the 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 have a significant portion of
their assets in real estate (including real estate investment trusts).
5. Commodities. 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 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
<PAGE>
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 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 5% of its total
assets are outstanding. The Fund will not invest more than 5% of its net assets
in reverse repurchase agreements.
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. Short Sales. The Fund will not effect short sales of securities
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short.
v. Options. The Fund will not purchase or sell puts, calls, options or
straddles,
<PAGE>
except as described in the Prospectus and the Statement of Additional
Information.
vi. Repurchase Agreements. The Fund will not invest more than 5% of its
net assets in repurchase agreements.
vii. Illiquid Investments. The Fund will not invest more than 5% of its
net assets in securities for which there are legal or contractual restrictions
on resale and other illiquid securities.
THE INVESTMENT ADVISOR
The Fund's investment advisor is King Investment Advisors, Inc.
(formerly Jenswold, King & Associates, Inc.), Two Post Oak Central, 1980 Post
Oak Boulevard, Suite 2400, Houston, Texas 77056-3898. Roger E. King may be
deemed to be a controlling person of the Advisor due to his ownership of a
majority of its shares.
Under the terms of the management agreement (the "Agreement"), the
Advisor manages the Fund's investments subject to approval of the Board of
Trustees. As compensation for its management services, the Fund is obligated to
pay the Advisor a fee computed and accrued daily and paid monthly at an annual
rate of 1.75% 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. For the period
December 31, 1996 (commencement of operations) through October 31, 1997 and the
fiscal year ended October 31, 1998, the Fund paid advisory fees of $6,173 and
$_______ [after fee waiver?], respectively.
The Advisor retains the right to use the name "Fountainhead" 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
"Fountainhead" 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.
<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, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
<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: 40 Financial Services, Inc., the Fund's administrator, and
1793 Kingswood Drive AmeriPrime Financial Securities, Inc., the Fund's
Suite 200 distributor, since 1994. Prior to December, 1994, a
Southlake, Texas 76092 senior client executive with SEI Financial Services.
- -----------------------------------------------------------------------------------------------------------------------------------
_________________ Secretary, Treasurer Secretary, Treasurer and Chief Financial Officer of
Age: __ AmeriPrime Financial Services, Inc. and AmeriPrime
1793 Kingswood Drive Financial Securities, Inc.
Suite 200
Southlake, Texas 76092
- -----------------------------------------------------------------------------------------------------------------------------------
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil
Age: 41 and gas services company; various positions with Carbo
2001 Indianwood Avenue Ceramics, Inc., oil field manufacturing/supply company,
Broken Arrow, OK 74012 from 1984 to 1997, most recently Vice President of
Marketing.
- -----------------------------------------------------------------------------------------------------------------------------------
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of
Age: 51 Legacy Trust Company since 1992; President and
600 Jefferson Street, Suite 350 Director of Heritage Trust Company from 1994-1996.
Houston, TX 77063
===================================================================================================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the fiscal year
ended October 31, 1998 is set forth in the following table. Trustee fees are
Trust expenses and each series of the Trust pays a portion of the Trustee fees.
<TABLE>
<CAPTION>
<S> <C> <C>
======================================================================================
Aggregate Total Compensation
Compensation from Trust (the Trust is
Name from Trust not in a Fund Complex)
- --------------------------------------------------------------------------------------
Kenneth D. Trumpfheller 0 0
- --------------------------------------------------------------------------------------
Steve L. Cobb $4,000 $4,000
- --------------------------------------------------------------------------------------
Gary E. Hippenstiel $4,000 $4,000
======================================================================================
</TABLE>
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.
<PAGE>
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. For the period December 31, 1996 (commencement of
operations) through October 31, 1997 and the fiscal year ended October 31, 1998,
the Fund paid brokerage commissions of $4,398 and $_______, respectively.
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, Martin
Luther King, Jr. 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.
<PAGE>
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 for the period indicated 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. For the period December
31, 1996 (commencement of operations) through October 31, 1997 and for fiscal
year ended October 31, 1998, the Fund's average annual total return was 40.09%,
annualized, and _____%, respectively.
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 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.
<PAGE>
TRANSFER AGENT
As of July 1, 1998, Unified Fund Services, Inc., 431 N. Pennsylvania
St., Indianapolis, IN 46204 ("Unified"), 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 shareholder service functions. American Data Services,
Inc., Hauppauge Corporate Center, 150 Motor Parkway, New York, 11760 ("ADS")
provides the Fund with certain monthly reports, record-keeping and other
management-related services. For the period December 31, 1996 (commencement of
operations) through October 31, 1997 and for the fiscal year ended October 31,
1998, ADS received $16,000 and $______, respectively, from the Fund for these
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, 1999. 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.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (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. For the period December 31, 1996 (commencement of operations)
through October 31, 1997 and for the fiscal year ended October 31, 1998, the
Administrator received $______ and $______, respectively, from the Fund for
these services.
FINANCIAL STATEMENTS
The financial statements and independent auditors' report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Fund's Annual Report to Shareholders for the fiscal year
ended October 31, 1998. The Fund will provide the Annual Report without charge
at written request or request by telephone.
<PAGE>
AIT VISION U.S. EQUITY PORTFOLIO
PROSPECTUS February 14, 1999
311 Park Place Blvd., Suite 250
Clearwater, Florida 34619
For Information, Shareholder Services and Requests:
(800) 507-9922
AIT Vision U.S. Equity Portfolio (the "Fund") is a mutual fund whose
investment objective is to provide long term growth of capital. The Fund's
Adviser, Advanced Investment Technology, Inc., intends the Fund to be a core
equity investment vehicle. Characteristics of individual companies considered by
the Adviser in the securities selection process will include traditional growth
as well as fundamental value measures, among others. The process of evaluating
securities is quantitatively rigorous, using state of the art advanced
computational techniques developed by the Adviser.
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 (the "SEC") dated February 14, 1999, which is incorporated
herein by reference and can be obtained without charge by calling the Fund at
the phone number listed above. The SEC maintains a Web Site (http://www.sec.gov)
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
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.
<PAGE>
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 operating expenses incurred during
the most recent 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. In addition, the Fund does not
have a 12b-1 Plan. 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. The Adviser pays all of the expenses of the Fund except
brokerage, taxes, interest, fees and expenses of non-interested person trustees
and extraordinary expenses.
[TABLE TO BE UPDATED:
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a percentage of offering price).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)1
Management Fees........................................................... 0.70%
12b-1 Charges...............................................................NONE
Other Expenses2 (after reimbursement)......................................0.00%
Total Fund Operating Expenses2 (after reimbursement).......................0.70%
1 The Fund's total operating expenses are equal to the management fee paid to
the Adviser because the Adviser pays all of the Fund's general administrative
and significant operating expenses (except as described above).
2 The Adviser has agreed to reimburse other expenses for the fiscal year ending
October 31, 1998 to the extent necessary to maintain total operating expenses as
indicated. For the fiscal year ended October 31, 1997, other expenses (fees and
expenses of the trustees who are not "interested persons" as defined in the
Investment Company Act) were 0.04% of average net assets and total fund
operating expenses were 0.74% of average net assets, absent reimbursement.
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:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$7 $22 $38 $86
<PAGE>
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
period November 6, 1995 (commencement of operations) to October 31, 1996 and the
fiscal years ended October 31, 1997 and October 31, 1998, is derived from the
audited financial statements of the Fund. The financial statements of the Fund
have been audited by McCurdy & Associates CPA's, Inc., independent public
accountants, and are included in the Fund's Annual Report. The Annual Report
contains additional performance information and is available upon request and
without charge.
[FINANCIAL HIGHLIGHTS TO BE ADDED]
THE FUND
AIT Vision U.S. Equity Portfolio (the "Fund") was organized as a series of
AmeriPrime Funds, an Ohio business trust (the "Trust") on August 8, 1995, and
commenced operations on November 6, 1995. This prospectus offers shares of the
Fund and each share represents an undivided, proportionate interest in the Fund.
The investment adviser to the Fund is Advanced Investment Technology, Inc. (the
"Adviser").
INVESTMENT OBJECTIVE AND STRATEGIES
The investment objective of the Fund is to provide long term growth of
capital. The Adviser will utilize computer technology and financial databases to
assist in the stock selection process. Characteristics of individual companies
considered in the securities selection process will include traditional growth
as well as fundamental value measures, among others. The process of evaluating
securities is quantitatively rigorous, using state of the art advanced
computational techniques developed by the Adviser. The Fund is designed by its
Adviser to be a core equity investment vehicle.
Under normal circumstances, at least 65% of the total assets
of the Fund will be invested in U.S. equity securities. The Adviser generally
intends to stay fully invested (subject to liquidity requirements and defensive
purposes) in common stock and seeks to limit investment risk and diversify the
Fund's portfolio by investing in companies in all capitalization ranges. Most
equity securities in the Fund's portfolio are listed on a major stock exchange
or traded over-the-counter. The Fund may also invest in fixed income securities
(including repurchase agreements); may write covered call options on common
stocks in the Fund's portfolio; may purchase call options; and may engage in
short sales (if the Fund owns or has the right to obtain an equal amount of the
security being sold). See "Investment Policies and Techniques and Risk
Considerations" for a more detailed discussion of the Fund's investment
practices.
For temporary defensive purposes under abnormal market or economic
conditions, the Fund may invest all or a portion of its assets in money market
instruments (including U.S. Treasury bills), securities of no-load registered
investment companies and repurchase agreements fully collateralized by U.S.
government obligations. The Fund may also invest in such instruments at any time
to maintain liquidity or pending selection of investments in accordance with its
policies. If the Fund acquires securities of another investment company, the
shareholders of the Fund will be subject to additional management fees.
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. Rates of total return quoted by the Fund
may be higher
<PAGE>
or lower than past quotations, and there can be no assurance that any rate of
total return will be maintained. See "Investment Policies and Techniques and
Risk Considerations" for a more detailed discussion of the Fund's investment
practices.
<PAGE>
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 $5,000 ($2,000 for retirement accounts). Investors choosing to purchase or
redeem their shares through a broker/dealer or other institution may be charged
a fee by that institution. Investors choosing to purchase or redeem shares
directly from the Fund will not incur charges on purchases or redemptions. To
the extent investments of individual investors are aggregated into an omnibus
account established by an investment adviser, broker or other intermediary, the
account minimums apply to the omnibus account, not to the account of the
individual investor.
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 AIT Vision U.S. Equity Portfolio, and sent to the P.O. Box listed
below. If you prefer overnight delivery, use the overnight address listed below.
U.S. Mail: AIT Vision U.S. Equity Portfolio Overnight: AIT Vision U.S. Equity
Portfolio
c/o American Data Services, Inc. c/o American Data Services, Inc.
P.O. Box 5536 Hauppauge Corporate Center
Hauppauge, New York 11788-0132 150 Motor Parkway
Hauppauge, New York 11788
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) 507-9922 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: AIT Vision U.S. Equity Portfolio
D.D.A. # 483889770
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 and the 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.
<PAGE>
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 AIT Vision U.S. Equity Portfolio and should be sent to the
address listed above. 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 plans (IRAs); simplified employee pensions
(SEPs); 401(k) plans; qualified corporate pension and profit sharing plans (for
employees); tax deferred investment 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. A broker may charge a transaction fee
for the 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. Investors choosing to purchase or redeem their shares through a
broker/dealer or other institution may be charged a fee by that institution.
By Mail - You may redeem any part of your account in the Fund at no
charge by mail. Your request should be addressed to:
AIT Vision U.S. Equity Portfolio
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, New York 11788-0132
<PAGE>
"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) 507-9922. 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) 507-9922. 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 calendar 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 $5,000 due to 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.
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
<PAGE>
p.m., Eastern time) on each day that the exchange 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 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
Adviser'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 Adviser 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 Adviser, 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 Adviser 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 Adviser, 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.
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
<PAGE>
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 diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund retains various organizations to perform
specialized services.
The Fund retains Advanced Investment Technology, Inc., 311 Park Place
Blvd., Clearwater, Florida 34619 (the "Adviser") to manage the Fund's
investments. The Adviser is controlled by its majority shareholder, State Street
Global Advisers, a division of State Street Bank and Trust Company. The Adviser
develops and uses advanced computational quantitative techniques for money
management. In addition to offering tactical overlay services to private
individuals and institutions, the Adviser manages private investor and
institutional funds in global asset allocation and individually managed accounts
(equity). Douglas W. Case, CFA, Chief Investment Officer, Susan L. Reigel,
Portfolio Manager, and Dean S. Barr, Chairman and Chief Executive Officer, are
primarily responsible for the day-to-day management of the Fund's portfolio. Mr.
Case joined the firm in 1996 and is the portfolio manager for the Adviser's
managed U.S. equity accounts. From 1994 to 1996, he was the Director of Equity
Portfolio Management of LBS Capital Management, Inc. ("LBS"). From 1988 to 1994,
he worked with the Florida Retirement System, where he oversaw all internal
quantitatively driven portfolios and assisted in the risk analysis of the
aggregate domestic equity fund. Ms. Reigel joined LBS as a portfolio manager in
early 1996 and joined AIT in late 1996. She assists in the management of all
equity accounts. From 1994 to 1996, Ms. Reigel worked with the Florida
Retirement System where she managed quantitatively driven portfolios. Mr. Barr
founded the Adviser in 1996 and oversees research development of all of the
Adviser's programs. From 1989 to 1996, he was the Managing Director and Chief
Investment Officer of LBS. He is an authority and expert in the development of
artificial intelligence systems for market and security analysis. Additionally,
he is the author of several technical papers on Artificial Intelligence. The
Fund is authorized to pay the Adviser a fee equal to an annual average rate of
0.70% of its average daily net assets. The Adviser pays all of the operating
expenses of the Fund except brokerage, taxes, interest, fees and expenses on
non-interested person trustees and extraordinary expenses. It should be noted
that most investment companies pay their own operating expenses directly, while
the Fund's expenses, except those specified above, are paid by the Adviser.
<PAGE>
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 Adviser 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 Adviser will reimburse the
Administrator for organizational expenses advanced by the Administrator. The
Fund retains American Data Services, Inc., P.O. Box 5536, Hauppauge, New York
11788-0132 (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
Adviser.
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 Adviser may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions. Investment Technology Group, Inc., a registered
broker-dealer and an affiliate of the Adviser, may receive brokerage commissions
from the Fund. The Adviser (not the Fund) may pay certain financial institutions
(which may include banks, brokers, securities dealers and other industry
professionals) a "servicing fee" for performing certain administrative servicing
functions for Fund shareholders to the extent these institutions are allowed to
do so by applicable statute, rule or regulation.
<PAGE>
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ.
Equity Securities
The Fund may invest in common stock, preferred stock, common stock
equivalents (such as convertible preferred stock and convertible debentures) and
closed-end investment companies which invest primarily in common stocks.
Convertible preferred stock is preferred stock that can be converted into common
stock pursuant to its terms. Convertible debentures are debt instruments that
can be converted into common stock pursuant to their terms. The Adviser intends
to invest only in convertible debentures rated A or higher by Standard & Poor's
Corporation ("S&P") or by Moody's Investors Services, Inc. ("Moody's") and will
limit the Fund's investment in such debentures to 10% of net assets. The Fund
may hold warrants and rights issued in conjunction with common stock, but in
general will sell any such warrants or rights as soon as practicable after they
are received. 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.
The Fund may invest a significant portion of its portfolio in smaller
companies when the Adviser believes it to be consistent with the Fund's
objective. Some characteristics of smaller companies, such as limited product
diversity, a lack of managerial or financial resources, and thinly traded
securities may result in increased stock price volatility.
Equity securities include common stocks of domestic real estate
investment trusts and other companies which operate as real estate corporations
or which have a significant portion of their assets in real estate. The Fund
will not acquire any direct ownership of real estate.
The Fund may invest in foreign equity securities through the purchase
of American Depository Receipts. American Depository Receipts are
dollar-denominated receipts that are generally issued in registered form by
domestic banks, and represent the deposit with the bank of a security of a
foreign issuer. To the extent that the Fund does invest in foreign securities,
such investments may be subject to special risks, such as changes in
restrictions on foreign currency transactions and rates of exchange, and changes
in the administrations or economic and monetary policies of foreign governments.
In addition, the Fund may invest in S&P Depositary Receipts ("SPDRs")
and other similar instruments. SPDRs are shares of a publicly traded unit
investment trust which owns the stocks included in the S&P 500 Index, and
changes in the price of SPDRs track the movement of the Index relatively
closely.
Fixed Income Securities
The Fund may invest in U.S. Treasury bills and repurchase agreements,
both of which are fixed income securities. Fixed income securities are generally
considered to be interest rate sensitive, which means that their value will
generally decrease when interest rates rise and increase when interest rates
fall. Securities with shorter maturities, while offering lower yields, generally
provide greater price stability than longer term securities and are less
affected by changes in interest rates. U.S. Treasury bills are backed by the
full faith and credit of the U.S. Government as to payment of principal and
interest and are among the highest quality government securities.
<PAGE>
A repurchase agreement is a short-term investment in which the
purchaser (i.e., the Fund) acquires ownership of a U.S. Government obligation
(which may be of any maturity) and the seller agrees to repurchase the
obligation at a future time at a set price, thereby determining the yield during
the purchaser's holding period (usually not more than seven days from the date
of purchase). Any repurchase transaction in which the Fund engages will require
full collateralization of the seller's obligation during the entire term of the
repurchase agreement. In the event of a bankruptcy or other default of the
seller, the Fund could experience both delays in liquidating the underlying
security and losses in value. However, the Fund intends to enter into repurchase
agreements only with Star Bank, N.A. (the Fund's Custodian), other banks with
assets of $1 billion or more and registered securities dealers determined by the
Adviser (subject to review by the Board of Trustees) to be creditworthy. The
Adviser monitors the creditworthiness of the banks and securities dealers with
which the Fund engages in repurchase transactions.
Options Transactions
The Fund may write (sell) covered call options on common stocks in the
Fund's portfolio. A covered call option on a security is an agreement to sell a
particular portfolio security if the option is exercised at a specified price,
or before a set date. The Fund profits from the sale of the option, but gives up
the opportunity to profit from any increase in the price of the stock above the
option price, and may incur a loss if the stock price falls. Risks associated
with writing covered call options include the possible inability to effect
closing transactions at favorable prices and an appreciation limit on the
securities set aside for settlement. The Fund may also purchase call options.
The Fund will only engage in exchange-traded options transactions.
General
The Fund may engage in short sales if, at the time of the short sale,
the Fund owns or has the right to obtain an equal amount of the security being
sold, at no additional cost, and the Fund's investment does not exceed 5% of its
net assets. See "Additional Information About Fund Investments and Risk
Considerations" in the Statement of Additional Information.
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 Adviser 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 200%. The brokerage commissions
incurred by the Fund will generally be higher than those incurred by a fund with
a lower portfolio turnover rate. The Fund does not anticipate any adverse tax
consequences as a result of its portfolio turnover rate, although substantial
net capital gains could be realized, and any distributions derived from such
gains may be ordinary income for federal tax purposes.
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
<PAGE>
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. [UPDATE: As of ______________, 1998,
U.S. Trust Company of Florida, as Trustee of the Killian Charitable Remainder
Unitrust, owns a majority of the outstanding shares of the Fund and may be
deemed to control the Fund. Raymond Killian, as a beneficiary of the Unitrust,
may also 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 advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of 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. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
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, the Dow Jones Industrial Average or the Russell 3000
Index.
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.
<PAGE>
Investment Adviser Administrator
Advanced Investment Technology, Inc. AmeriPrime Financial Services, Inc.
311 Park Place Blvd., Suite 250 1793 Kingswood Drive, Suite 200
Clearwater Florida 34619 Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent Auditors
(all purchase and redemption requests) McCurdy & Associates CPA's, Inc.
American Data Services, Inc. 27955 Clemens Road
P.O. Box 5536 Westlake, Ohio 44145
Hauppauge, New York 11788-0132
Legal Counsel
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
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.
<PAGE>
TABLE OF CONTENTS
PAGE
SUMMARY OF FUND EXPENSES...................................................... 2
Shareholder Transaction Expenses..................................... 2
Annual Fund Operating Expenses....................................... 2
FINANCIAL HIGHLIGHTS.......................................................... 3
THE FUND ..................................................................... 4
INVESTMENT OBJECTIVE AND STRATEGIES........................................... 4
HOW TO INVEST IN THE FUND..................................................... 5
Initial Purchase..................................................... 5
By Mail ................................................... 5
By Wire ................................................... 5
Additional Investments............................................... 6
Tax Sheltered Retirement Plans....................................... 6
Other Purchase Information........................................... 6
HOW TO REDEEM SHARES.......................................................... 6
By Mail ............................................................ 6
By Telephone......................................................... 7
Additional Information............................................... 7
SHARE PRICE CALCULATION....................................................... 8
DIVIDENDS AND DISTRIBUTIONS................................................... 8
TAXES ..................................................................... 9
OPERATION OF THE FUND......................................................... 9
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS....................11
Equity Securities....................................................11
Fixed Income Securities..............................................11
Options Transactions.................................................12
General ............................................................12
GENERAL INFORMATION...........................................................12
Fundamental Policies.................................................12
Portfolio Turnover...................................................12
Shareholder Rights...................................................13
PERFORMANCE INFORMATION.......................................................13
<PAGE>
AIT VISION U.S. EQUITY PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
February 14, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of AIT Vision U.S. Equity Portfolio
dated February 14, 1999. A copy of the Prospectus can be obtained by writing the
Transfer Agent at Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge, New
York 11788, or by calling 1-800-507-9922.
<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........................................................ 2
THE INVESTMENT ADVISER........................................................ 4
TRUSTEES AND OFFICERS......................................................... 5
PORTFOLIO TRANSACTIONS AND BROKERAGE.......................................... 6
DETERMINATION OF SHARE PRICE.................................................. 8
INVESTMENT PERFORMANCE........................................................ 8
CUSTODIAN..................................................................... 9
TRANSFER AGENT................................................................ 9
ACCOUNTANTS................................................................... 9
DISTRIBUTOR................................................................... 9
ADMINISTRATOR................................................................. 9
FINANCIAL STATEMENTS...........................................................9
<PAGE>
DESCRIPTION OF THE TRUST
AIT Vision U.S. Equity Portfolio (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 a series of funds
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.
[UPDATE: As of __________ __, 1998, the following persons may be deemed to
beneficially own five percent (5%) or more of the Fund: LBS Capital Management
Resources Trust Co., P.O. Box 5900, Denver, Colorado - 9.27%; Killian Charitable
Remainder Unitrust, U.S. Trust Company of Florida, Trustee, 765 Seagate Drive,
Naples, Florida - 68.42%; Wooten Charitable Remainder Unitrust, Rike D. Wooten,
Trustee, 1865 E. Cedar Avenue, Denver, Colorado - 7.54.]
[UPDATE: As of November __, 1998, U.S. Trust Company of Florida,
Trustee of the Killian Charitable Remainder Unitrust, owns a majority of the
outstanding shares of the Fund and may be deemed to control the Fund. Raymond
Killian, as beneficiary of the Unitrust, may also be deemed to control the Fund.
As of _________ ___, 1998 the officers and trustees as a group may be deemed to
beneficially own less than one percent (1%) of the Fund.]
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").
<PAGE>
American Depository Receipts. American Depository Receipts are
dollar-denominated receipts that are generally issued in registered form by
domestic banks, and represent the deposit with the bank of a security of a
foreign issuer. To the extent that the Fund invests in foreign securities, such
investments may be subject to special risks. For example, there may be less
information publicly available about a foreign company than about a U.S.
company, and foreign companies are not generally subject to accounting, auditing
and financial reporting standards and practices comparable to those in the U.S.
Other risks associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes in
the administrations or economic and monetary policies of foreign governments,
the imposition of exchange control regulations, the possibility of expropriation
decrees and other adverse foreign governmental action, the imposition of foreign
taxes, less liquid markets, less government supervision of exchanges, brokers
and issuers, difficulty in enforcing contractual obligations, delays in
settlement of securities transactions and greater price volatility. In addition,
investing in foreign securities will generally result in higher commissions than
investing in similar domestic securities.
Convertible Debentures. The Adviser considers convertible debentures
rated A or higher by Standard & Poor's Corporation ("S&P") or by Moody's
Investors Services, Inc. ("Moody's") to be of investment grade quality.
Investment grade securities generally have adequate to strong protection of
principal and interest payments. Convertible debentures rated A possess many
favorable investment attributes and are considered to be upper-medium grade
obligations. Securities rated A may be more susceptible to the adverse effects
of changes in circumstances and economic conditions (changes that increase long
term risk) than higher rated securities.
Short Sales. The Fund may sell a security short in anticipation of a
decline in the market value of the security. When the Fund engages in a short
sale, it sells a security which it does not own. To complete the transaction,
the Fund must borrow the security in order to deliver it to the buyer. The Fund
must replace the borrowed security by purchasing it at the market price at the
time of replacement, which may be more or less than the price at which the Fund
sold the security. 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
profit if the security declines in price between those dates.
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
the 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 borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only,
<PAGE>
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.
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 rules and regulations
promulgated thereunder or interpretations of the Securities and Exchange
Commission or its staff and (b) as described in the Prospectus and the 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. 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 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 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
<PAGE>
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 5% of its total
assets are outstanding.
The Fund will not enter into reverse repurchase agreements.
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. Short Sales. The Fund will not effect short sales of securities
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short.
v. Options. The Fund will not purchase or sell puts, calls, options or
straddles, except as described in the Prospectus and the Statement of Additional
Information.
vi. Illiquid Investments. The Fund will not invest in securities for
which there are legal or contractual restrictions on resale or other illiquid
securities.
THE INVESTMENT ADVISER
The Fund's investment adviser is Advanced Investment Technology, Inc.,
311 Park Place Blvd., Clearwater, Florida 34619. State Street Global Advisers, a
division of State Street Bank and Trust Company, may be deemed to control the
Adviser due to its majority ownership of shares of the Adviser.
Under the terms of the management agreement (the "Agreement"), the
Adviser 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 Adviser a
fee computed and accrued daily and paid monthly at an annual rate of 0.70% of
the average daily net assets of the Fund. The Adviser may waive all or part of
its fee, at any time, and at its sole discretion, but such action shall not
obligate the Adviser to waive any fees in the future. For the period November 6,
1995 (commencement of operations) through October 31, 1996 and for
<PAGE>
the fiscal years ended October 31, 1997 and 1998, the Fund paid advisory fees of
$5,994, $21,591 and __________, respectively.
The Adviser retains the right to use the names "AIT" and "AIT Vision"
in connection with another investment company or business enterprise with which
the Adviser is or may become associated. The Trust's right to use the name "AIT"
and "AIT Vision" automatically ceases ninety days after termination of the
Agreement and may be withdrawn by the Adviser on ninety days written notice.
The Adviser 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.
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, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
<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: 40 Financial Services, Inc., the Fund's administrator, and
1793 Kingswood Drive AmeriPrime Financial Securities, Inc., the Fund's
Suite 200 distributor, since 1994. Prior to December, 1994, a
Southlake, Texas 76092 senior client executive with SEI Financial Services.
- -----------------------------------------------------------------------------------------------------------------------------------
Secretary, Treasurer Secretary, Treasurer and Chief Financial Officer of
Age: AmeriPrime Financial Services, Inc. and AmeriPrime
1793 Kingswood Drive Financial Securities, Inc.
Suite 200
Southlake, Texas 76092
- -----------------------------------------------------------------------------------------------------------------------------------
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil
Age: 41 and gas services company; various positions with Carbo
2001 Indianwood Avenue Ceramics, Inc., oil field manufacturing/supply Company,
Broken Arrow, Oklahoma 74012 from 1984 to 1997, most recently Vice President of
Marketing.
- -----------------------------------------------------------------------------------------------------------------------------------
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of
Age: 51 Legacy Trust Company since 1992; President and
32 Sunlit Forest Drive Director of Heritage Trust Company from 1994 to 1996.
The Woodlands, Texas 77381
===================================================================================================================================
</TABLE>
<PAGE>
The compensation paid to the Trustees of the Trust for the period ended
October 31, 1998 is set forth in the following table. Trustee fees are Trust
expenses and each series of the Trust pays a portion of the Trustee fees.
<TABLE>
<CAPTION>
<S> <C> <C>
======================================================================================
Aggregate Total Compensation
Compensation from Trust (the Trust is
Name from Trust not in a Fund Complex)
- --------------------------------------------------------------------------------------
Kenneth D. Trumpfheller 0 0
- --------------------------------------------------------------------------------------
Steve L. Cobb $4,000 $4,000
- --------------------------------------------------------------------------------------
Gary E. Hippenstiel $4,000 $4,000
======================================================================================
</TABLE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Adviser is responsible for the Fund's portfolio decisions and the placing of
the Fund's portfolio transactions. In placing portfolio transactions, the
Adviser 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 Adviser generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.
The Adviser 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 Adviser 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 Adviser 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 Adviser'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 Adviser in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Adviser in connection with its services to the
Fund. Although research services and other information are useful to the Fund
and the Adviser, 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
Adviser that the review and study of the research and other information will not
reduce the overall cost to the Adviser of performing its duties to the Fund
under the Agreement. Due to research services provided by brokers, the Fund
directed to brokers $746,066 and $ _________ (on which commissions were $991 and
$________) during the fiscal years ended October 31, 1997 and 1998,
respectively.
While the Fund does not deem it practicable and in its best interests to
solicit competitive
<PAGE>
bids for commission rates on each transaction, consideration is regularly given
to posted commission rates as well as other information concerning the level of
commissions charged on comparable transactions by qualified brokers.
The Fund has no obligation to deal with any broker or dealer in the
execution of its transactions. However, it is contemplated that Investment
Technology Group, Inc. ("ITG"), in its capacity as a registered broker-dealer,
will effect securities transactions which are executed on a national securities
exchange and over-the-counter transactions conducted on an agency basis. Such
transactions will be executed at competitive commission rates through Jefferies
Group, Inc.
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.
Under the Investment Company Act of 1940, persons affiliated with an
affiliate of the Adviser (such as ITG) may be prohibited from dealing with the
Fund as a principal in the purchase and sale of securities. Therefore, ITG will
not serve as the Fund's dealer in connection with over-the-counter transactions.
However, ITG may serve as the Fund's broker in over-the-counter transactions
conducted on an agency basis and will receive brokerage commissions in
connection with such transactions. Such agency transactions will be executed
through Jefferies Group, Inc.
The Fund will not effect any brokerage transactions in its portfolio
securities with ITG if such transactions would be unfair or unreasonable to Fund
shareholders, and the commissions will be paid solely for the execution of
trades and not for any other services. The Agreement provides that affiliates of
affiliates of the Adviser may receive brokerage commissions in connection with
effecting such transactions for the Fund. In determining the commissions to be
paid to ITG, it is the policy of the Fund that such commissions will, in the
judgement of the Trust's Board of Trustees, be (a) at least as favorable to the
Fund as those which would be charged by other qualified brokers having
comparable execution capability and (b) at least as favorable to the Fund as
commissions contemporaneously charged by ITG on comparable transactions for its
most favored unaffiliated customers, except for customers of ITG considered by a
majority of the Trust's disinterested Trustees not to be comparable to the Fund.
The disinterested Trustees from time to time review, among other things,
information relating to the commissions charged by ITG to the Fund and its other
customers, and rates and other information concerning the commissions charged by
other qualified brokers.
While the Fund contemplates no ongoing arrangements with any other
brokerage firms, brokerage business may be given from time to time to other
firms. ITG will not receive reciprocal brokerage business as a result of the
brokerage business placed by the Fund with others.
To the extent that the Trust and another of the Adviser'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
<PAGE>
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.
For the period November 6, 1995 (commencement of operations) through
October 31, 1996 and for the fiscal years ended October 31, 1997 and 1998, the
Fund paid brokerage commissions of $3,203, $14,536 and $_______, respectively.
For the fiscal year ended October 31, 1998, the Fund paid $______ (____% of the
total brokerage commissions paid) to ITG, an affiliate of the Adviser, for
effecting ____% of all brokerage transactions.
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, Martin
Luther King, Jr. 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 for the period indicated 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. For the period November
6, 1995
<PAGE>
(commencement of operations) through October 31, 1996 and the fiscal year ended
October 31, 1998, the Fund's average annual total return was _____%, annualized,
and _____%, respectively.
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 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. ("ADS"), Hauppauge Corporate Center, 150
Motor Parkway, Hauppauge, New York 11760, 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, ADS provides the Fund with certain monthly reports, record-keeping and
other management-related services. For the period November 6, 1995 (commencement
of operations) through October 31, 1996 and for the fiscal years ended October
31, 1997 and 1998, ADS received $17,600, $19,200 and $________, respectively,
from the Adviser (not the Fund) for these 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, 1999. 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.
ADMINISTRATOR
<PAGE>
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (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. For the period November 6, 1995 (commencement of operations) though
October 31, 1996 and for the fiscal years ended October 31, 1997 and 1998, the
Administrator received $ ________, $_________ and $ __________, respectively,
from the Adviser (not the Fund) for these services.
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Trust's Annual Report to Shareholders for the fiscal year
ended October 31, 1998. The Trust will provide the Annual Report without the
charge by calling the Fund at 1-800-507-9922.
<PAGE>
GLOBALT GROWTH FUND
NASDAQ Symbol: GROWX
PROSPECTUS February 14, 1999
3060 Peachtree Road, N.W.
One Buckhead Plaza, Suite 225
Atlanta, Georgia 30305
http://www.globalt.com
For Information, Shareholder Services and Requests:
877-BUY-GROWX (877-289-4769)
GLOBALT Growth Fund (the "Fund") is a mutual fund whose investment
objective is to provide long term growth of capital. The Fund seeks to achieve
its objective by investing in a broad range of equity securities of U.S.
companies believed by its Adviser, GLOBALT, Inc., to offer superior growth
potential. As the Adviser believes exposure to rapidly growing foreign markets
enhances growth potential, all stocks in the Fund's portfolio will be of
companies which compete in both U.S. and foreign economies and thus, in the
Adviser's opinion, are globally positioned for success.
The Fund is "no-load," which means there are no sales charges or
commissions. In addition, there are no 12b-1 fees, distribution expenses or
deferred sales charges which are borne by the shareholders. 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 (the "SEC") dated February 14, 1999, which is incorporated
herein by reference and can be obtained without charge by calling the Fund at
the phone number listed above. The SEC maintains a Web Site (http://www.sec.gov)
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
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.
<PAGE>
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 operating expenses incurred during
the most recent 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. In addition, the Fund does not
have a 12b-1 Plan. 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. The Adviser pays all of the expenses of the Fund (including
organizational expenses) except brokerage, taxes, interest, fees and expenses of
non-interested person trustees and extraordinary expenses.
[TABLE TO BE UPDATED:
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)1
Management Fees............................................................1.17%
12b-1 Charges...............................................................NONE
Other Expenses2 (after reimbursement)......................................0.00%
Total Fund Operating Expenses2 (after reimbursement).......................1.17%
1 The Fund's total operating expenses are equal to the management fee paid to
the Adviser because the Adviser pays all of the Fund's operating expenses
(except as described above).
2 The Adviser has voluntarily agreed, as in 1997, to reimburse other expenses
for the fiscal year ending October 31, 1998 to the extent necessary to maintain
total operating expenses as indicated. For the fiscal year ended October 31,
1997, other expenses (fees and expenses of the trustees who are not "interested
persons" as defined in the Investment Company Act) were 0.02% of average net
assets and total fund operating expenses were 1.19% of average net assets,
absent any reimbursement.
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.]
-2-
<PAGE>
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:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$12 $37 $64 $142
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
fiscal years ended October 31, 1997 and October 31, 1998, is derived from the
audited financial statements of the Fund. The financial statements of the Fund
have been audited by McCurdy & Associates CPA's, Inc., independent public
accountants, and are included in the Fund's Annual Report. The Annual Report
contains additional performance information and is available upon request and
without charge.
[highlights to be inserted]
THE FUND
GLOBALT Growth Fund (the "Fund") was organized as a series of
AmeriPrime Funds, an Ohio business trust (the "Trust"), on October 20, 1995 and
commenced operations on December 1, 1995. This prospectus offers shares of the
Fund and each share represents an undivided, proportionate interest in the Fund.
The investment adviser to the Fund is GLOBALT, Inc. (the "Adviser"). Visit
GLOBALT on the Internet at http://www.globalt.com.
INVESTMENT OBJECTIVE AND STRATEGIES
The investment objective of the Fund is to provide long term growth of
capital. The Fund seeks to achieve its objective by investing primarily in a
broad range of equity securities of U.S. companies which the Adviser believes
offer superior growth potential, based on certain fundamental and technical
standards of selection. As the Adviser believes exposure to rapidly growing
foreign markets enhances growth potential, all stocks in the Fund's portfolio
will be of companies which compete in both U.S. and foreign economies and thus,
in the Adviser's opinion, are globally positioned for success. The Adviser will
only purchase stocks of companies that are expected to derive at least 20% of
their revenues outside of the U.S. It is anticipated that, in the aggregate, the
stocks in the Fund's portfolio will derive at least 50% of their revenues
outside of the U.S. and as a result will provide higher relative growth than the
S&P 500 Index.
The Fund is designed for investors with a long term wealthbuilding
horizon and is particularly suitable for retirement and educational funds. The
Adviser seeks to limit investment risk by diversifying the Fund's investments
across a broad range of industries and companies. After screening for securities
with exposure to foreign markets, the Adviser uses a disciplined selection
process to assemble a portfolio which it anticipates will have at least a 50%
exposure to foreign markets and will be highly diversified across economic
sectors. As the Fund will primarily invest in growth-oriented stocks, it is
expected that the Fund will generate a total return that is predominantly
derived from long term capital appreciation, although current income is also
expected.
-3-
<PAGE>
The Adviser has been managing income accounts for its clients since
1991. The performance of all accounts with investment objectives, policies and
strategies substantially similar to those of the Fund appears below. The data is
provided to illustrate past performance of the Adviser in managing such
accounts, as compared to the S&P 500 Index. The persons responsible for the
performance of the accounts are the same as those responsible for the investment
management of the Fund. As of December 31, 1998, the assets in those accounts
totaled approximately $____ million. The Adviser's total assets under management
were approximately $____ million as of December 31, 1998.
Summary of Annual Investment Returns of the Fund and GLOBALT, Inc. Managed
Accounts *
UPDATE:
Period Fund Managed Accounts S&P 500 Russell
------ ---- ---------------- ------- -------
1000
Growth
1991 35.4% 30.5% 44.0%
1992 7.8% 7.6% 5.0%
1993 18.9% 10.1% 2.9%
1994 -0.7% 1.3% 2.5%
1995 6.4%** 36.5% 37.6% 37.1%
1996 20.0% 21.8% 22.9% 23.2%
1997 28.7% 30.1% 33.4% 30.5%
Average Annual Total Return
Since Fund Inception
(12/1/95) 26.9% 26.1% 28.0% 25.9%
Average Annual Total Return
Since Managed Accounts
Inception (1/1/91) N/A 20.7% 19.8% 19.3%
* The GLOBALT, Inc. managed account performance is the time-weighted,
dollar- weighted average total return associated with a composite of equity
accounts having objectives similar to the Fund, and is unaudited. The composite
does not include non- discretionary or otherwise restricted accounts because the
nature of those accounts make them inappropriate for purposes of comparison.
Performance figures of the accounts are net of management fees and all expenses
of the accounts, including transaction costs and commissions. Results include
the reinvestment of dividends and capital gains. The presentation of the
performance composite complies with the Performance Presentation Standards of
the Association for Investment Management and Research (AIMR).
The S&P 500 Index is a widely recognized, unmanaged index of market
activity, based upon the aggregate performance of a selected portfolio
of publicly traded common stocks, including monthly adjustments to
reflect the reinvestment of dividends and other distributions. The S&P
500 Index reflects the total return of securities comprising the Index,
including changes in market prices as well as accrued investment
income, which is presumed to be reinvested. Performance figures for the
S&P 500 Index do not reflect
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deduction of transaction costs or expenses, including management fees.
The Russell 1000 Growth Index is a widely recognized, unmanaged index
of market activity, based upon the aggregate performance of a selected
portfolio of publicly traded common stocks, including monthly
adjustments to reflect the reinvestment of dividends and other
distributions. The Russell 1000 Growth Index reflects the total return
of securities comprising the Index, including changes in market prices
as well as accrued investment income, which is presumed to be
reinvested. Performance figures for the Russell 1000 Growth Index do
not reflect deduction of transaction costs or expenses, including
management fees.
The performance of the accounts managed by the Adviser does not
represent the historical performance of the Fund, and should not be
considered indicative of future performance of the Fund. Results may
differ because of, among other things, differences in brokerage
commissions, account expenses, including management fees, the size of
positions taken in relation to account size and diversification of
securities, timing of purchases and sales, and availability of cash for
new investments. In addition, the managed accounts are not subject to
certain investment limitation, diversification requirements, and other
restrictions imposed by the Investment Company Act and the Internal
Revenue Code which, if applicable, may have adversely affected the
performance results of the managed accounts composite. The results for
different periods may vary.
** For the period December 1, 1995 (commencement of operations) through
December 31, 1995, not annualized.
The Adviser generally intends to stay fully invested (subject to
liquidity requirements and defensive purposes) in common stock and common stock
equivalents (such as rights, warrants and securities convertible into common
stocks) of U.S. companies, regardless of the movement of stock prices. However,
the Fund may invest in preferred stocks, bonds, corporate debt and U.S.
government obligations to maintain liquidity or pending investment in equity
securities. Substantially all equity securities in the Fund's portfolio are
listed on a major stock exchange or traded over-the-counter. The Fund will not
invest in foreign securities.
For temporary defensive purposes under abnormal market or economic
conditions, the Fund may hold all or a portion of its assets in money market
instruments, securities of other no-load registered investment companies or U.S.
government repurchase agreements. The Fund may also invest in such instruments
at any time to maintain liquidity or pending selection of investments in
accordance with its policies. If the Fund acquires securities of another
investment company, the shareholders of the Fund will be subject to additional
management fees.
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. 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. See "Investment Policies and Techniques and Risk
Considerations" for a more detailed discussion of the Fund's investment
practices.
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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 $25,000 and minimum subsequent investments of $5,000. Investors
choosing to purchase or redeem their shares through a broker/dealer or other
institution may be charged a fee by that institution. Investors choosing to
purchase or redeem shares directly from the Fund will not incur charges on
purchases or redemptions. To the extent investments of individual investors are
aggregated into an omnibus account established by an investment adviser, broker
or other intermediary, the account minimums apply to the omnibus account, not to
the account of the individual investor.
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 GLOBALT Growth Fund, and sent to the P.O. Box listed below. If
you prefer overnight delivery, use the overnight address listed below.
U.S. Mail: GLOBALT Growth Fund Overnight: GLOBALT Growth Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 N. Pennsylvania St.
Indianapolis, IN 46206-6110 Indianapolis, IN 46204
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 the money is
to be wired, you must call the Transfer Agent at (877) 289-4769 to set up your
account and obtain an account number. You should be prepared to provide the
information on the application to the Transfer Agent. 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: GLOBALT Growth Fund
D.D.A. # 483889739
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 and the 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
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service is reserved by the Fund.
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 GLOBALT Growth Fund and should be sent to the address listed
above. 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 plans (IRAs); simplified employee pensions
(SEPs); 401(k) plans; qualified corporate pension and profit sharing plans (for
employees); tax deferred investment 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. A broker may charge a transaction fee
for the redemption. 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.
Investors choosing to purchase or redeem their shares through a broker/dealer or
other institution may be charged a fee by that institution.
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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:
U.S. Mail: GLOBALT Growth Fund Overnight: GLOBALT Growth Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 N. Pennsylvania St.
Indianapolis, IN 46206-6110 Indianapolis, IN 46204
"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 Unified Fund 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 (877) 289-4769. 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 (877) 289-4769. 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 calendar 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 $25,000 due
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to 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.
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 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
Adviser'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 Adviser 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 Adviser, 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 Adviser 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 Adviser, 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.
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
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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 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 diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund retains various organizations to perform
specialized services.
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The Fund retains GLOBALT, Inc., 3060 Peachtree Road, N.W., One Buckhead
Plaza, Suite 225, Atlanta, Georgia 30305 (the "Adviser") to manage the Fund's
investments. The Adviser was organized as a Georgia corporation in 1990. The
Adviser manages larger capitalization equity, medium capitalization equity,
balanced and fixed income portfolios for a variety of tax-exempt and taxable
clients. Angela Allen, President of the Adviser, and Samuel Allen, Chairman of
the Adviser, are the controlling shareholders of GLOBALT, Inc. The investment
decisions for the Fund are made by a committee of the Adviser, which is
primarily responsible for the day-to-day management of the Fund's portfolio.
The Fund is authorized to pay the Adviser a fee equal to an annual
average rate of 1.17% of its average daily net assets. The Adviser pays all of
the operating expenses (including organizational expenses) of the Fund except
brokerage, taxes, interest, fees and expenses of non-interested person trustees
and extraordinary expenses. It should be noted that most investment companies
pay their own operating expenses directly, while the Fund's expenses, except
those specified above, are paid by the Adviser.
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 Adviser 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 Adviser will reimburse the
Administrator for organizational expenses advanced by the Administrator. The
Fund retains Unified Fund Services, Inc., 431 N. Pennsylvania St., Indianapolis,
IN 46204 (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
Adviser.
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 Adviser may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions. The Adviser (not the Fund) may pay certain financial
institutions (which may include banks, brokers, securities dealers and other
industry professionals) a "servicing fee" for performing certain administrative
servicing functions for Fund shareholders to the extent these institutions are
allowed to do so by applicable statute, rule or regulation.
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ.
Equity Securities
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Equity securities consist of common stock, preferred stock and common
stock equivalents (such as convertible preferred stock, convertible debentures,
rights and warrants) and investment companies which invest primarily in the
above. Equity securities also include common stocks and common stock equivalents
of domestic real estate investment trusts and other companies which operate as
real estate corporations or which have a significant portion of their assets in
real estate.
Fixed Income Securities
The Fund may temporarily invest in short term fixed income securities.
The Fund will limit its investment in fixed income securities to corporate debt
securities and U.S. government securities. Fixed income securities are generally
considered to be interest rate sensitive, which means that their value will
generally decrease when interest rates rise and increase when interest rates
fall. Securities with shorter maturities, while offering lower yields, generally
provide greater price stability than longer term securities and are less
affected by changes in interest rates.
Corporate Debt Securities - Corporate debt securities are long
and short term debt obligations issued by companies (such as publicly issued and
privately placed bonds, notes and commercial paper). The Fund will only invest
in corporate debt securities rated A or higher by Standard & Poor's Corporation
or Moody's Investors Services, Inc.
U.S. Government Obligations - U.S. government obligations may
be backed by the credit of the government as a whole or only by the issuing
agency. U.S. Treasury bonds, notes, and bills and some agency securities, such
as those issued by the Federal Housing Administration and the Government
National Mortgage Association (GNMA), are backed by the full faith and credit of
the U.S. government as to payment of principal and interest and are the highest
quality government securities. Other securities issued by U.S. government
agencies or instrumentalities, such as securities issued by the Federal Home
Loan Banks and the Federal Home Loan Mortgage Corporation, are supported only by
the credit of the agency that issued them, and not by the U.S. government.
Securities issued by the Federal Farm Credit System, the Federal Land Banks, and
the Federal National Mortgage Association (FNMA) are supported by the agency's
right to borrow money from the U.S. Treasury under certain circumstances, but
are not backed by the full faith and credit of the U.S. government.
Loans of Portfolio Securities
The Fund may make short and long term loans of its portfolio
securities. Under the lending policy authorized by the Board of Trustees and
implemented by the Adviser in response to requests of broker-dealers or
institutional investors which the Adviser deems qualified, the borrower must
agree to maintain collateral, in the form of cash or U.S. government
obligations, with the Fund on a daily mark-to-market basis in an amount at least
equal to 100% of the 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 securities in time to vote on any matter which
the Board of Trustees determines to be serious. With respect to loans of
securities, there is the risk that the borrower may fail to return the loaned
securities or that the borrower may not be able to provide additional
collateral.
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General
The Fund may invest up to 5% of its net assets in repurchase agreements
fully collateralized by U.S. Government obligations. The Fund may invest in time
deposits, certificates of deposit or banker's acceptances, and may buy and write
put and call options, provided the Fund's investment in each does not exceed 5%
of its net assets.
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 Adviser believes that market conditions, creditworthiness factors or general
economic conditions warrant such action. The Fund's portfolio turnover rate may
exceed 100%. To the extent it does, the brokerage commissions incurred by the
Fund will generally be higher than those incurred by a fund with a lower
portfolio turnover rate. The Fund's higher turnover rate may result in the
realization, for federal tax purposes, of more net capital gains, and any
distributions derived from such gains may be ordinary income.
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.
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 advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized
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quotation may also be an average annual compounded rate of return over a
specified period, which may be a period different from those specified for
"average annual total return." In addition, a non-standardized quotation may be
an indication of 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. A non-standardized quotation will always be accompanied by the Fund's
"average annual total return" as described above.
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.
Investment Adviser Administrator
GLOBALT, Inc. AmeriPrime Financial Services, Inc.
3060 Peachtree Road, N.W. 1793 Kingswood Drive, Suite 200
One Buckhead Plaza, Suite 225 Southlake, Texas 76092
Atlanta, Georgia 30305
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchase and Auditors
redemption requests) McCurdy & Associates CPA's, Inc.
Unified Fund Services, Inc. 27955 Clemens Road
431 N. Pennsylvania St. Westlake, Ohio 44145
Indianapolis, IN 46204
Legal Counsel
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
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
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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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TABLE OF CONTENTS
Page
SUMMARY OF FUND EXPENSES..............................................
Shareholder Transaction Expenses..........................
Annual Fund Operating Expenses...............................
FINANCIAL HIGHLIGHTS...................................................
THE FUND..............................................................
INVESTMENT OBJECTIVE AND STRATEGIES....................................
HOW TO INVEST IN THE FUND..............................................
Initial Purchase.............................................
By Mail.............................................
By Wire............................................
Additional Investments.......................................
Tax Sheltered Retirement Plans...............................
Other Purchase Information...................................
HOW TO REDEEM SHARES.................................................
By Mail.............................................
By Telephone........................................
Additional Information..............................
SHARE PRICE CALCULATION...............................................
DIVIDENDS AND DISTRIBUTIONS..........................................
TAXES................................................................
OPERATION OF THE FUND................................................
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS............
Equity Securities............................................
Fixed Income Securities.......................................
Corporate Debt Securities...........................
U.S. Government Obligations.........................
Loans of Portfolio Securities ..............................
General.....................................................
GENERAL INFORMATION...................................................
Fundamental Policies................................
Portfolio Turnover.................................
Shareholder Rights.................................
PERFORMANCE INFORMATION...............................................
<PAGE>
GLOBALT GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION
February 14, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of GLOBALT Growth Fund dated February
14, 1999. A copy of the Prospectus can be obtained by writing the Transfer Agent
at 431 N. Pennsylvania St., Indianapolis, IN 46204, or by calling
1-877-BUY-GROWX (877-289-4769).
<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.............................................. 3
THE INVESTMENT ADVISER.............................................. 6
TRUSTEES AND OFFICERS............................................... 7
PORTFOLIO TRANSACTIONS AND BROKERAGE................................ 8
DETERMINATION OF SHARE PRICE........................................ 9
INVESTMENT PERFORMANCE.............................................. 9
CUSTODIAN........................................................... 10
TRANSFER AGENT...................................................... 10
ACCOUNTANTS......................................................... 10
DISTRIBUTOR......................................................... 10
ADMINISTRATOR.................................................................10
FINANCIAL STATEMENTS..........................................................10
<PAGE>
DESCRIPTION OF THE TRUST
Globalt Growth 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 a series of funds
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.
[UPDATE: As of ______________, 1998, the following persons may be deemed to
beneficially own five percent (5%) or more of the Fund: Samuel Emory Allen IRA,
3060 Peachtree Road, NW, Suite 225 Atlanta, Georgia - 6.9%; Brenda M. Hackney, 2
Office Park Circle, Birmingham, Alabama - 6.71%; Management Psychology Group
Profit Sharing Trust, 3340 Peachtree Road, N.E., Atlanta, Georgia - 5.32%;
Lorraine & Lloyd Glidden Foundation, Inc., Debra K. Glidden, Treasurer, 3400
Peachtree Road, NE, Suite 1735, Atlanta, Georgia - 13.89%; Maynard, Cooper &
Gale, P.C. FBO: N. Lee Cooper P.C. Money Purchase Pension, 1927 First Avenue
North, Birmingham, Alabama - 7.93%. As of _____________, 1998, the officers and
trustees as a group may be deemed to beneficially own less than one percent (1%)
of the Fund.]
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
<PAGE>
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. The Fund may invest up to 5% of its net assets at the time of
purchase in each of the following: rights, warrants, or convertible preferred
stocks.
B. Repurchase Agreements. A repurchase agreement is a short-term
investment in which the purchaser (i.e., the Fund) acquires ownership of a U.S.
Government obligation (which may be of any maturity) and the seller agrees to
repurchase the obligation at a future time at a set price, thereby determining
the yield during the purchaser's holding period (usually not more than seven
days from the date of purchase). Any repurchase transaction in which the Fund
engages will require full collateralization of the seller's obligation during
the entire term of the repurchase agreement. In the event of a bankruptcy or
other default of the seller, the Fund could experience both delays in
liquidating the underlying security and losses in value. However, the Fund
intends to enter into repurchase agreements only with the Custodian, other banks
with assets of $1 billion or more and registered securities dealers determined
by the Adviser (subject to review by the Board of Trustees) to be creditworthy.
The Adviser monitors the creditworthiness of the banks and securities dealers
with which the Fund engages in repurchase transactions, and the Fund will not
invest more than 5% of its net assets in repurchase agreements.
C. Other Investment Companies. The Fund is permitted to invest in other
investment companies at any time. The Fund will not purchase more than 3% of the
outstanding voting stock of any investment company. If the Fund acquires
securities of another investment company, the shareholders of the Fund will be
subject to duplicative management fees.
D. Financial Services Industry Obligations. The Fund may invest up to
5% of its net assets in each of the following obligations of the financial
services industry:
(1) Certificate of Deposit. Certificates of deposit are
negotiable certificates evidencing the indebtedness of a commercial
bank or a savings and loan association to repay funds deposited with it
for a definite period of time (usually from fourteen days to one year)
at a stated or variable interest rate.
(2) Time Deposits. Time deposits are non-negotiable deposits
maintained in a banking institution or a savings and loan association
for a specified period of time at a stated interest rate.
(3) Bankers' Acceptances. Bankers' acceptances are credit
instruments evidencing the obligation of a bank to pay a draft which
has been drawn on it by a customer, which instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of
the instrument upon maturity.
E. Option Transactions. The Fund may engage in option transactions
involving individual securities and market indices. An option involves either
(a) the right or the obligation to buy or sell a specific instrument at a
specific price until the expiration date of the option, or (b) the right to
receive payments or the obligation to make payments representing the difference
between the closing price of a market index and the exercise price of the option
expressed in dollars times a specified multiple until the expiration date of the
option. Options are sold (written) on securities and market indices. The
purchaser of an option on a security pays the
<PAGE>
seller (the writer) a premium for the right granted but is not obligated to buy
or sell the underlying security. The purchaser of an option on a market index
pays the seller a premium for the right granted, and in return the seller of
such an option is obligated to make the payment. A writer of an option may
terminate the obligation prior to expiration of the option by making an
offsetting purchase of an identical option. Options are traded on organized
exchanges and in the over-the-counter market. Options on securities which the
Fund sells (writes) will be covered or secured, which means that it will own the
underlying security (for a call option); will segregate with the Custodian high
quality liquid debt obligations equal to the option exercise price (for a put
option); or (for an option on a stock index) will hold a portfolio of securities
substantially replicating the movement of the index (or, to the extent it does
not hold such a portfolio, will maintain a segregated account with the Custodian
of high quality liquid debt obligations equal to the market value of the option,
marked to market daily). When the Fund writes options, it may be required to
maintain a margin account, to pledge the underlying securities or U.S.
government obligations or to deposit liquid high quality debt obligations in a
separate account with the Custodian.
The purchase and writing of options involves certain risks; for
example, the possible inability to effect closing transactions at favorable
prices and an appreciation limit on the securities set aside for settlement, as
well as (in the case of options on a stock index) exposure to an indeterminate
liability. The purchase of options limits the Fund's potential loss to the
amount of the premium paid and can afford the Fund the opportunity to profit
from favorable movements in the price of an underlying security to a greater
extent than if transactions were effected in the security directly. However, the
purchase of an option could result in the Fund losing a greater percentage of
its investment than if the transaction were effected directly. When the Fund
writes a covered call option, it will receive a premium, but it will give up the
opportunity to profit from a price increase in the underlying security above the
exercise price as long as its obligation as a writer continues, and it will
retain the risk of loss should the price of the security decline. When the Fund
writes a covered put option, it will receive a premium, but it will assume the
risk of loss should the price of the underlying security fall below the exercise
price. When the Fund writes a covered put option on a stock index, it will
assume the risk that the price of the index will fall below the exercise price,
in which case the Fund may be required to enter into a closing transaction at a
loss. An analogous risk would apply if the Fund writes a call option on a stock
index and the price of the index rises above the exercise price.
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
the 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
<PAGE>
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.
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 rules and regulations
promulgated thereunder or interpretations of the Securities and Exchange
Commission or its staff and (b) as described in the Prospectus and the 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 have a significant portion of
their assets in real estate (including real estate investment trusts).
5. Commodities. 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 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 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
<PAGE>
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 5% of its total
assets are outstanding.
The Fund will not enter into reverse repurchase agreements.
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. Short Sales. The Fund will not effect short sales of securities
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short.
v. Options. The Fund will not purchase or sell puts, calls, options or
straddles, except as described in the Prospectus and the Statement of Additional
Information.
vi. Repurchase Agreements. The Fund will not invest more than 5% of its
net assets in repurchase agreements.
vii. Illiquid Investments. The Fund will not invest in securities for
which there are legal or contractual restrictions on resale and other illiquid
securities.
THE INVESTMENT ADVISER
The Fund's investment adviser is Globalt, Inc., 3060 Peachtree Road,
N.W., One Buckhead Plaza, Suite 225, Atlanta, Georgia 30305. Angela and Samuel
Allen may each be deemed to be a controlling person of the Adviser due to their
ownership of its shares and their respective positions as president and chairman
of the Adviser.
Under the terms of the management agreement (the "Agreement"), the
Adviser manages the Fund's investments subject to approval of the Board of
Trustees and pays all of the expenses of the Fund (including organizational
expenses) 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
<PAGE>
the Adviser a fee computed and accrued daily and paid monthly at an annual rate
of 1.17% of the average daily net assets of the Fund. The Adviser may waive all
or part of its fee, at any time, and at its sole discretion, but such action
shall not obligate the Adviser to waive any fees in the future. For the period
December 1, 1995 (commencement of operations) through October 31, 1996 and for
the fiscal years ended October 31, 1997 and 1998, the Fund paid advisory fees of
$21,686, $62,923 and $______, respectively.
The Adviser retains the right to use the name "Globalt" in connection
with another investment company or business enterprise with which the Adviser is
or may become associated. The Trust's right to use the name "Globalt"
automatically ceases ninety days after termination of the Agreement and may be
withdrawn by the Adviser on ninety days written notice.
The Adviser 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.
<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, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
<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: 40 Financial Services, Inc., the Fund's administrator, and
1793 Kingswood Drive AmeriPrime Financial Securities, Inc., the Fund's
Suite 200 distributor, since 1994. Prior to December, 1994, a
Southlake, Texas 76092 senior client executive with SEI Financial Services.
- -----------------------------------------------------------------------------------------------------------------------------------
__________________ Secretary, Treasurer Secretary, Treasurer and Chief Financial Officer of
Age: __ AmeriPrime Financial Services, Inc. and AmeriPrime
1793 Kingswood Drive Financial Securities, Inc.
Suite 200
Southlake, Texas 76092
- -----------------------------------------------------------------------------------------------------------------------------------
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C. oil
Age: 41 and gas services company; various positions with Carbo
2001 Indianwood Avenue Ceramics, Inc., oil field manufacturing/supply company,
Broken Arrow, Oklahoma 74012 from 1984 to 1997, most recently Vice President of
Marketing.
- -----------------------------------------------------------------------------------------------------------------------------------
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of
Age: 51 Legacy Trust Company since 1992; President and
600 Jefferson Street, Suite 350 Director of Heritage Trust Company from 1994 to 1996.
Houston, TX 77063
===================================================================================================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the fiscal year
ended October 31, 1998 is set forth in the following table. Trustee fees are
Trust expenses and each series of the Trust is responsible for a portion of the
Trustee fees. The Adviser voluntarily reimbursed the Fund for the Fund's share
of the Trustee fees paid for the fiscal year ended October 31, 1998.
<TABLE>
<CAPTION>
<S> <C> <C>
======================================================================================
Aggregate Total Compensation
Compensation from Trust (the Trust is
Name from Trust not in a Fund Complex)
- --------------------------------------------------------------------------------------
Kenneth D. Trumpfheller 0 0
- --------------------------------------------------------------------------------------
Steve L. Cobb $4,000 $4,000
- --------------------------------------------------------------------------------------
Gary E. Hippenstiel $4,000 $4,000
======================================================================================
</TABLE>
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Adviser is responsible for the Fund's portfolio decisions and the placing of
the Fund's portfolio transactions. In placing portfolio transactions, the
Adviser 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 Adviser generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.
The Adviser 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 Adviser 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 Adviser 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 Adviser'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 Adviser in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Adviser in connection with its services to the
Fund. Although research services and other information are useful to the Fund
and the Adviser, 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
Adviser that the review and study of the research and other information will not
reduce the overall cost to the Adviser 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 Adviser'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.
For the period December 1, 1995 (commencement of operations) through
October 31,
<PAGE>
1996 and for the fiscal years ended October 31, 1997 and 1998, the Fund paid
brokerage commissions of $7,819, $7,702 and $______, respectively.
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, Martin
Luther King, Jr. 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 for the period indicated 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. For the period December
1, 1995 (commencement of operations) through October 31, 1996 and for the fiscal
year ended October 31, 1998, the Fund's average annual total return was _____%,
annualized, and _____%, respectively.
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.
<PAGE>
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 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
As of July 1, 1998, Unified Fund Services, Inc., 431 N. Pennsylvania
St., Indianapolis, IN 46204 ("Unified"), 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 shareholder service functions. American Data Services,
Inc. ("ADS"), Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge, New York
11760, provides the Fund with certain monthly reports, record-keeping and other
management-related services. For the period December 1, 1995 (commencement of
operations) through October 31, 1996 and for the fiscal years ended October 31,
1997 and 1998, ADS received $17,600, $22,000 and $______, respectively, from the
Adviser (not the Fund) for these 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, 1999. 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.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (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. For the period December 1, 1995 (commencement of operations) through
October 31, 1996 and for the fiscal years ended October 31, 1997 and 1998, the
Administrator received $______, $______, and $______, respectively, from the
Adviser (not the Fund) for these services.
<PAGE>
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Trust's Annual Report to Shareholders for the fiscal year
ended October 31, 1998. The Trust will provide the Annual Report without charge
by calling the Fund at 1-800-831-9922.
<PAGE>
Supplement Dated , 1998 to the
Prospectus Dated , 1999 of the
NewCap Contrarian Fund
The Board of Trustees of the AmeriPrime Funds has determined, in light
of current market conditions and the relatively small size of the New Cap
Contrarian Fund, that the Fund should no longer pursue its investment objective
and instead should invest 100% of its assets in cash equivalents, money market
funds and investment grade debt securities. These changes in investments and
strategy will remain in effect until further notice. In addition, shares of the
Fund are no longer available for purchase, and the Fund will no longer incur
expenses pursuant to its Distribution Plan, although shares will continue to be
redeemable in accordance with the Prospectus.
This Supplement, and the Prospectus dated , 1998, contain information
that you should know before investing in the Fund and should be retained for
future reference. Additional information is included in the Statement of
Additional Information dated , 1998, which has been filed with the Securities
and Exchange Commission and is incorporated herein by reference. It is available
upon request and without charge by calling (800) .
<PAGE>
THE NEWCAP CONTRARIAN FUND
PROSPECTUS February 14, 1999
23775 Commerce Park Road
Cleveland, Ohio 44122
For Information, Shareholder Services and Requests:
Call toll free: 800-466-7678
Local: 216-514-5151
The NewCap 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 Investment Advisors, Inc. believes
are attractively priced and offer investment value. 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 is a non-diversified fund, and this Prospectus provides additional
information relating to the additional risks associated with
non-diversification.
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 dated February 14, 1999, which has been
filed with the Securities and Exchange Commission (the "SEC"), is incorporated
herein by reference and can be obtained without charge by calling the Fund at
the phone number listed above. The SEC maintains a Web Site (http://www.sec.gov)
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
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
<PAGE>
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
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 the most recent 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 operating expenses of the Fund except 12b-1 fees, brokerage, taxes,
interest, fees and expenses of non-interested person trustees and extraordinary
expenses.
[TABLE TO BE UPDATED:
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 Expenses.............................................................0.08%
Total Fund Operating Expenses..............................................2.83%
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.
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
<PAGE>
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:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$29 $88 $150 $317
THE FUND
The NewCap Contrarian Fund, formerly known as the MAXIM Contrarian Fund
(the "Fund"), was organized as a non-diversified series of AmeriPrime Funds, an
Ohio business trust (the "Trust"), on December 26, 1995, and commenced
operations on May 2, 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 Investment Advisors, Inc. (the
"Advisor").
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
fiscal years ended October 31, 1997 and 1998, is derived from the audited
financial statements of the Fund. The financial statements of the Fund have been
audited by McCurdy & Associates CPA's, Inc., independent public accountants, and
are included in the Statement of Additional Information. The Fund's Annual
Report contains additional performance information and will be made available
upon request and without charge.
[HIGHLIGHTS TO BE SUPPLIED]
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
<PAGE>
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. 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.
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 no prior experience in acting as an investment advisor to a mutual fund and
that the Fund has no operating history.
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). Investors choosing to
purchase or redeem their shares through a broker/dealer or other institution may
be charged a fee by that institution. Investors choosing to purchase or redeem
shares directly from the Fund will not incur charges on purchases or
redemptions.
Initial Purchase
<PAGE>
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 NewCap 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: Overnight:
The NewCap Contrarian Fund The NewCap Contrarian Fund
c/o American Data Services, Inc. c/o American Data Services, Inc.
P.O. Box 5536 Hauppauge Corporate Center
Hauppauge, New York 11788-0132 150 Motor Parkway
Hauppauge, New York 11788
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 516-385-9580 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 NewCap Contrarian Fund Master Account
D.D.A. # 485772974
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.
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
<PAGE>
account(s), your account number(s), and the name of the Fund. Checks should be
made payable to The NewCap Contrarian Fund and should be sent to the address
listed above. A bank wire should be sent as outlined above.
Automatic Investment Plan
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
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
<PAGE>
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. Investors choosing to purchase or redeem their
shares through a broker/dealer or other institution may be charge a fee by that
institution. Investors choosing to purchase or redeem shares directly from the
Fund will not incur charges on purchases or redemptions.
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 NewCap Contrarian Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, New York 11788-0132
"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 (516) 385-9580. 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
<PAGE>
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 (516) 385-9580. 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 calendar 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 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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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 Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund retains various organizations to perform
specialized services.
<PAGE>
The Fund retains Newport Investment Advisors, Inc., 23775 Commerce Park
Road, Cleveland, Ohio 44122 (the "Advisor") to manage the Fund's investments.
The Advisor, an Ohio corporation, provides investment management services to
taxable and tax-exempt clients, and currently manages approximately $250 million
in assets. Kenneth M. Holeski, controlling shareholder of the Advisor, has
served as the President of the Advisor since its founding in 1989. He is
primarily responsible for the day-to-day management of the portfolio of the
Fund. Prior to 1996, Mr. Holeski was also the Vice President of Newport
Evaluation Services, Inc., a consulting firm that primarily monitors the
performance of money managers on behalf of retirement funds.
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. 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). The Fund retains American Data Services, Inc., P.O.
Box 5536, Hauppauge, New York 11788-0132 (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. WRP Investments, Inc., a registered broker dealer of
which Mr. Holeski is a registered representative and branch manager, may receive
brokerage commissions from the Fund on a basis comparable to trades
<PAGE>
placed with unaffiliated broker dealers. Mr. Holeski does not receive
compensation on these trades.
<PAGE>
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 accrued daily and paid monthly, at an annual rate of
0.25% of the average daily net assets of the Fund. Amounts are paid at that rate
regardless of actual distribution expenses incurred. 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 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
<PAGE>
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.
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.
<PAGE>
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.
<PAGE>
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 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 its 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
<PAGE>
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.
In connection with its short sales, the Fund will be required to
maintain a segregated account with its custodian of cash or U.S. Government
Securities or other high grade liquid debt securities equal to the market value
of the securities sold less any collateral deposited with its broker. The Fund
will limit its short sales so that no more than 25% of its net assets (less all
its liabilities other than obligations under the short sales) will be deposited
as collateral and allocated to the segregated account. However, the segregated
account and deposits will not necessarily limit the Fund's potential loss on a
short sale, which is unlimited. 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 and Futures Contracts. 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 precious metal options and futures.
Options and futures 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. In addition, losses from
certain futures transactions are potentially unlimited.
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
<PAGE>
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.
Precious Metals. The Fund may invest up to 5% of its total assets in
gold, silver, platinum or other precious metals. Gold and other precious metals
have been subject to substantial price fluctuations over short periods of time
and may be affected by unpredictable international monetary and other
governmental policies, and economic and social conditions. In addition, the Fund
may invest without limitation in securities of companies principally engaged in
exploration, mining or processing of gold or other precious metals and minerals.
These securities involve additional risk because the price volatility of
precious metals has an increased impact on their market value.
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.
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 net assets in illiquid investments.
Other Investments. For temporary defensive purposes under adverse
market conditions, the Fund may invest up to 100% of its assets in cash
equivalents, money market funds and investment grade debt securities. The Fund
may also invest in such instruments at any time to maintain liquidity or pending
selection of investments in accordance with its
<PAGE>
policies. To the extent the Fund acquires the securities of a money market fund,
the shareholders of the Fund will be subject to duplicative management fees.
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. The Fund's portfolio turnover rate may
exceed 100%. To the extent it does, the brokerage commissions incurred by the
Fund will generally be higher than those incurred by a fund with a lower
portfolio turnover rate. The Fund's higher turnover rate may result in the
realization, for federal tax purposes, of more net capital gains, and any
distributions derived from such gains may be ordinary income.
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. However,
the Declaration of Trust contains provisions which authorize the shareholders to
call a meeting under certain circumstances. 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. [UPDATE: As of
__________, 1998, Cheryl and Kenneth Holeski may be deemed to control the Fund
as a result of their beneficial ownership of the shares of 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
<PAGE>
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 advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual return." A nonstandardized quotation of total return may be a cumulative
return which measures the percentage change in the value of an account between
the beginning and end of a period, assuming no activity in the account other
than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of 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. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
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.
Investment Advisor Administrator
Newport Investment Advisors, Inc. AmeriPrime Financial Services,
Inc.
23775 Commerce Park Road 1793 Kingswood Drive, Suite 200
Cleveland, Ohio 44122 Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities,
Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchase and Auditors
<PAGE>
redemption requests) McCurdy & Associates CPA's,
Inc.
American Data Services, Inc. 27955 Clemens Road
P.O. Box 5536 Westlake, Ohio 44145
Hauppauge, New York 11788-0132
Legal Counsel
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
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.
<PAGE>
TABLE OF CONTENTS
Page #
SUMMARY OF FUND EXPENSES..................................................... 2
Shareholder Transaction Expenses.................................... 2
Annual Fund Operating Expenses...................................... 2
THE FUND .................................................................... 3
FINANCIAL HIGHLIGHTS......................................................... 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
Automatic Investment Plan........................................... 5
Tax Sheltered Retirement Plans...................................... 5
Other Purchase Information.......................................... 6
HOW TO REDEEM SHARES......................................................... 6
By Mail ........................................................... 6
By Telephone........................................................ 7
Additional Information........................... .................. 7
SHARE PRICE CALCULATION...................................................... 8
DIVIDENDS AND DISTRIBUTIONS.................................................. 8
TAXES .................................................................... 9
OPERATION OF THE FUND........................................................ 9
DISTRIBUTION PLAN............................................................ 11
INVESTMENT POLICIES, TECHNIQUES AND RISK CONSIDERATIONS...................... 11
Equity Securities.......................................... 11
Debt Securities............................................ 11
Foreign Securities......................................... 12
Indexed Securities......................................... 12
Repurchase Agreements...................................... 12
When Issued Securities and Forward Commitments............. 13
<PAGE>
Borrowing and Leverage; Reverse Repurchase Agreements...... 13
Lending .................................................. 13
Short Sales................................................ 14
Options and Futures Contracts.............................. 14
Zero Coupon Debt Securities and Pay-in-Kind Securities..... 15
Illiquid Investments........................................15
Other Investments.......................................... 15
Investment Risks.................................................... 16
GENERAL INFORMATION.......................................................... 16
Fundamental Policies................................................ 16
Portfolio Turnover.................................................. 16
Shareholder Rights.................................................. 16
PERFORMANCE INFORMATION...................................................... 16
<PAGE>
THE NEWCAP CONTRARIAN FUND
STATEMENT OF ADDITIONAL INFORMATION
February 14, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of The NewCap Contrarian Fund dated
February 14, 1999. A copy of the Prospectus can be obtained by writing the
Transfer Agent at Hauppage Corporate Center, 150 Motor Parkway, Hauppauge, New
York 11788, or by calling toll free 1-888-816- 2946.
<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.............................................. 14
THE INVESTMENT ADVISOR.............................................. 16
DISTRIBUTION PLAN................................................... 17
TRUSTEES AND OFFICERS............................................... 17
PORTFOLIO TRANSACTIONS AND BROKERAGE................................ 19
DETERMINATION OF SHARE PRICE........................................ 21
INVESTMENT PERFORMANCE.............................................. 21
CUSTODIAN........................................................... 22
TRANSFER AGENT...................................................... 22
ACCOUNTANTS......................................................... 22
DISTRIBUTOR......................................................... 22
ADMINISTRATOR.................................................................22
FINANCIAL STATEMENTS................................................ 22
<PAGE>
DESCRIPTION OF THE TRUST
The NewCap Contrarian Fund (the "Fund"), formerly known as the MAXIM
Contrarian 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 several series of funds 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.
[UPDATE: As of _________________, 1998, the following persons may be deemed to
beneficially own five percent (5%) or more of the Fund: Cheryl Holeski, 12448
Bentbrook Drive, Chesterland, Ohio - 19.41%; Newport Investment Advisors Profit
Sharing Plan, 23775 Commerce Park Road, Beachwood, Ohio - 6.08%; Leonard Ronis,
24617 Duffield Road, Beachwood, Ohio - 5.51%; National Financial, 200 Liberty
Street, New York, New York - 24.59%; Kenneth Holeski, 23775 Commerce Park Road,
Beachwood, Ohio - 19.41%.]
[UPDATE: As of ________________, 1998, Cheryl and Kenneth Holeski may be
deemed to control the Fund as a result of their beneficial ownership of the
shares of the Fund. As of _________________, 1998, the officers and trustees as
a group may be deemed to beneficially own 1.30% of the Fund.]
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).
<PAGE>
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 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
<PAGE>
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.
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
<PAGE>
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 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
<PAGE>
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.
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 cash or U.S.
Government securities or other high-grade liquid debt securities 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
<PAGE>
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.
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.
<PAGE>
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 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.
<PAGE>
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 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,
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
established 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 or U.S. Government securities or other
high-grade liquid debt securities 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% of the Fund's total assets would be
hedged with such futures or options; or (b) write put
<PAGE>
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 the fund to hold or
sell precious metals, securities, options or futures when it would not otherwise
do so.
<PAGE>
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
the 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 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
<PAGE>
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 the
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 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,
<PAGE>
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 which the Fund has not fully
collateralized as described in the Prospectus) representing more than 5% 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.
THE INVESTMENT ADVISOR
The Fund's investment advisor is Newport Investment Advisors, Inc.,
23775 Commerce Park Road, Cleveland, Ohio 44122. Kenneth M. Holeski may be
deemed to control the Advisor due to his ownership of its shares and his
positions as an officer and director 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 operating expenses of the Fund except 12b-1 fees
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 Fund is
responsible for the payment of all expenses incurred in connection with the
organization and initial registration of shares of the Fund. For the period May
2, 1996 (commencement of operations) through October 31, 1996 and for the fiscal
years ended October 31, 1997 and 1998, the Fund paid advisory fees of $11,261,
$43,568 and $______, respectively.
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
<PAGE>
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.
During the period ended October 31, 1998, AmeriPrime Financial Securities, Inc.,
the Trust's distributor, spent $______ under the Distribution Plan. Of this
amount, approximately $______ was spent on printing of the prospectus and
$______ was spent on compensation to brokers. Kenneth M. Holeski, as controlling
shareholder of the Advisor, and other employees of the Advisor may indirectly
benefit from any payments made pursuant to the Plan.
<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, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
<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: 40 Financial Services, Inc., the Fund's administrator, and
1793 Kingswood Drive AmeriPrime Financial Securities, Inc., the Fund's
Suite 200 distributor, since 1994. Prior to December, 1994, a
Southlake, Texas 76092 senior client executive with SEI Financial Services.
- -----------------------------------------------------------------------------------------------------------------------------------
__________________ Secretary, Treasurer Secretary, Treasurer and Chief Financial Officer of
Age: __ AmeriPrime Financial Services, Inc. and AmeriPrime
1793 Kingswood Drive Financial Securities, Inc.
Suite 200
Southlake, Texas 76092
- -----------------------------------------------------------------------------------------------------------------------------------
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C.,
Age: 41 and services company; various positions with Carbo
2001 Indianwood Ave. Ceramics, Inc., oil field manufacturing/supply company
Broken Arrow, OK 74012 from 1994 to 1997, most recently Vice President of
Marketing.
- -----------------------------------------------------------------------------------------------------------------------------------
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of
Age: 51 Legacy Trust Company since 1992; President and
600 Jefferson Street, Suite 350 Director of Heritage Trust Company from 1994 to 1996.
Houston, TX 77063
===================================================================================================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the fiscal year
ended October 31, 1998 is set forth in the following table. Trustee fees are
Trust expenses and each series of the Trust pays a portion of the Trustee fees.
<TABLE>
<CAPTION>
<S> <C> <C>
======================================================================================
Aggregate Total Compensation
Compensation from Trust (the Trust is
Name from Trust not in a Fund Complex)
- --------------------------------------------------------------------------------------
Kenneth D. Trumpfheller 0 0
- --------------------------------------------------------------------------------------
Steve L. Cobb $4,000 $4,000
- --------------------------------------------------------------------------------------
Gary E. Hippenstiel $4,000 $4,000
======================================================================================
</TABLE>
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.
<PAGE>
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. For the period May 2, 1996 (commencement of operations)
through October 31, 1996 and for the fiscal years ended October 31, 1997 and
1998, the Fund paid total brokerage commissions of $14,358, $20,521 and
$_______, respectively. For the fiscal year ended October 31, 1998, the Fund
paid $_______ (___% of the total brokerage commissions paid) to WRP Investments,
Inc., an affiliate of the Advisor, for effecting ____% of all brokerage
transactions.
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, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day,
<PAGE>
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 for the period indicated 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. For the fiscal year
ended October 31, 1998, the Fund's average annual total return was ____%.
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 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,
<PAGE>
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. ("ADS"), Hauppauage Corporate Center, 150
Motor Parkway, Hauppauge, New York 11788, 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, ADS provides the Fund with certain monthly reports, record-keeping and
other management-related services. For the period May 2, 1996 (commencement of
operations) through October 31, 1996 and for the fiscal years ended October 31,
1997 and 1998, ADS received $9,600, $19,200 and $______, respectively, from the
Advisor (not the Fund) for these 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, 1999. 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.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (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. For the period May 2, 1996 (commencement of operations) through
October 31, 1996 and for the fiscal years ended October 31, 1997 and 1998, the
Administrator received $______, $______ and $______, respectively, from the
Advisor (not the Fund) for these services.
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Trust's Annual Report to Shareholders for the fiscal year
ended October 31, 1998. The Trust will provide the Annual Report without charge
by calling the Fund at 1-800-466-7678.
<PAGE>
PROSPECTUS February 14, 1999
IMS CAPITAL VALUE FUND
10159 S.E. Sunnyside Road
Suite 330
Portland, Oregon 97015
For Information, Shareholder Services and Requests:
(800) 934-5550
The investment objective of the IMS Capital Value Fund (the "Fund") is long term
growth. IMS Capital Management, Inc. (the "Advisor") applies a value-oriented
investment philosophy designed to reduce risk and enhance potential returns. The
Advisor seeks to reduce risk through diversification and by focusing on large,
high quality, dividend-paying U.S. companies. The Advisor strives to maximize
potential returns by purchasing companies at historically low prices, when they
are temporarily out of favor and showing signs of positive business momentum.
The Fund is "no-load," which means that investors incur no sales charges,
commissions or deferred sales charges on the purchase or redemption of their
shares. The Fund is one of the mutual funds comprising AmeriPrime Funds, an
open-end management investment company, 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 February 14, 1999, 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.
<PAGE>
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 operating expenses incurred during
the most recent 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.
[TABLE TO BE UPDATED:
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............................................................1.36%
12b-1 Charges...............................................................NONE
Other Expenses 1 (after reimbursement).....................................0.33%
Total Fund Operating Expenses1 (after reimbursement)........... ...........1.69%
1 Effective February 14, 1998 and through October 31, 1998 the Advisor has
agreed to reimburse other expenses to the extent necessary to maintain total
operating expenses for that period as indicated. For the fiscal year ended
October 31, 1997, total fund operating expenses were 1.97% (after expense
reimbursement) and 2.54% (before expense reimbursement) of average net assets.
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:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$17 $53 $92 $200
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the fiscal
years ended
<PAGE>
October 31, 1997 and 1998, is derived from the audited financial statements of
the Fund. The financial statements of the Fund have been audited by McCurdy &
Associates CPA's, Inc., independent public accountants, and are included in the
Fund's Annual Report. The Annual Report contains additional performance
information and is available upon request and without charge.
[FINANCIAL HIGHLIGHTS TO BE SUPPLIED]
THE FUND
IMS Capital Value Fund (the "Fund") was organized as a series of
AmeriPrime Funds, an Ohio business trust (the "Trust"), on July 30, 1996, and
commenced operations on August 5, 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 IMS Capital Management, Inc. (the
"Advisor").
INVESTMENT OBJECTIVE AND STRATEGIES
The investment objective of the IMS Capital Value Fund (the "Fund") is
long term growth. IMS Capital Management, Inc. (the "Advisor") applies a
value-oriented investment philosophy designed to reduce risk and enhance
potential returns. The Advisor seeks to reduce risk through diversification and
by focusing on large, high quality, dividend-paying U.S. companies. The Advisor
strives to maximize potential returns by purchasing companies at historically
low prices, when they are temporarily out of favor and showing signs of positive
business momentum.
The Advisor will purchase stocks of companies which, in its estimation,
are unfairly valued due to special and temporary circumstances. The Advisor
selects stocks which it believes possess limited downside risk, yet have the
potential to produce significant gains. The Advisor will select either growth or
value stocks that are trading significantly below their previous highs, if such
securities are also determined by the Advisor to be trading at substantial
discounts from their intrinsic values. The companies selected generally will be
highly visible, household names that trade on the New York Stock Exchange and
that historically have had market capitalizations of at least five billion
dollars. These well-capitalized, globally-diversified companies generally have
the resources to weather negative business conditions successfully and provide
both growth and stability. The Advisor seeks to further limit investment risk by
diversifying across a broad range of industries and companies. Because of its
diversified, large company focus, the Fund is designed to be a "core holding"
within a typical investor's asset mix.
The Advisor believes that investors tend to overreact to short-term
negative events, which can in turn create undervalued security prices. For this
reason, the Advisor applies a patient approach to stock selection. Through a
careful process of company research and analysis, the Advisor selects companies
for potential purchase based on various criteria. Companies are monitored until
a combination of events or market conditions cause the stock to decline to the
Advisor's target buy price. A company is purchased only after the Advisor has
determined that investing in the security is timely given the nature of the
decline. When analyzing companies, particular emphasis is given to securities
with improving business momentum, securities with a high potential for gain upon
return to historical levels, securities trading at a discount to the Advisor's
estimation of the company's fair market value (based on
<PAGE>
projected future cash flow, balance sheet characteristics, and future earnings),
and securities trading at the low end of their historical fundamental valuation
ranges based on current financial ratios such as price-to-cash flow,
price-to-book value and price-to-earnings.
By owning a diversified collection of large U.S. companies that, as a
group, have already experienced a "correction" (i.e., as a group are generally
trading at 30% or more below historical levels), the Advisor believes that the
Fund, by design, may weather "bear" (down) markets more favorably than other
funds with similar investment objectives. The Advisor can, however, provide no
assurances to that effect. The Advisor typically holds companies for three to
five years at a time, and therefore believes that the Fund may not be
appropriate for those with shorter time horizons.
The Advisor has been managing equity accounts for its clients since
1988. The performance of the accounts with investment objectives, policies and
strategies substantially similar to those of the Fund appears below. The data is
provided to illustrate past performance of the Advisor in managing such
accounts, as compared to the S&P 500 Index. The persons responsible for the
performance below are the same as those responsible for the investment
management of the Fund.
The performance of the accounts managed by the Advisor does not
represent the historical performance of the Fund and should not be considered
indicative of future performance of the Fund. Results may differ because of,
among other things, differences in brokerage commissions, account expenses,
including management fees, the size of positions taken in relation to account
size and diversification of securities, timing of purchases and sales,
availability of cash for new investments and the private character of accounts
compared with the public character of the Fund. In addition, the managed
accounts are not subject to certain investment limitations, diverisification
requirements, and other restrictions imposed by the Investment Company Act and
the Internal Revenue Code which, if applicable, may have adversely affected the
performance results of the managed accounts. The results for different periods
may vary. For the year ended December 31, 1998, the total return of the Fund was
____%, and the total return of the managed accounts was ____%. For the period
August 5, 1996 (inception) through December 31, 1998, the total return of the
Fund was ____%, and for the period July 1, 1996 through December 31, 1998, the
total return of the managed accounts was ____%.
IMS CAPITAL MANAGEMENT PERFORMANCE SUMMARY
[A Graph with the following data is included in the
Prospectus]
UPDATE:
IMS CAPITAL MANAGEMENT S&P 500 INDEX
1991 $14,103 $13,040
1992 $18,620 $14,038
1993 $23,236 $15,441
1994 $23,124 $15,461
1995 $26,366 $21,490
1996 $______ $______
1997 $_______ $______
<PAGE>
Growth of $10,000 invested January 1, 1991 to December 31, 1996.
* The Advisor's total returns by year were as follows: 1991 41.03%, 1992
32.03%, 1993 24.79%, 1994 0.48%, 1995 14.02%, 1996 26.3%, 1997 ____%. The
Advisor's performance figures reflect the use of time-weighted, dollar-weighted
average annualized total returns for the Advisor's equity accounts having
objectives similar to the Fund. The results are audited by an independent
certified public accounting firm. The composite includes all fee-paying,
discretionary, individual stock portfolios above $10,000. Other accounts of the
Advisor are excluded from the composite because the nature of those accounts
make them inappropriate for purposes of comparison. In addition, performance of
accounts prior to 1991 is excluded for the same reason. In 1988, no account
satisfied the Advisor's criteria for inclusion in the composite. In 1989 and
1990, the aggregate assets in the qualifying accounts were too small to provide
diversification comparable to that of a diversified mutual fund, and therefore
the Advisor believes inclusion of performance for those years would be
misleading. Performance figures reflected are net of all expenses, including
transaction costs, commissions and management fees. Results include the
reinvestment of dividends and capital gains. The presentation of the performance
composite complies with the Performance Presentation Standards of the
Association for Investment Management and Research (AIMR). Complete performance
presentation notes are available on request.
The S&P 500 Index total returns by year were as follows: 1991 30.40%,
1992 7.65%, 1993 10.04%, 1994 1.29%, 1995 37.41%, 1996 22.9%, 1997
_____%. The S&P 500 Index is a widely recognized, unmanaged index of
market activity based upon the aggregate performance of a selected
portfolio of publicly traded common stocks, including monthly
adjustments to reflect the reinvestment of dividends and other
distributions. The S&P 500 Index reflects the total return of
securities comprising the Index, including changes in market prices as
well as accrued investment income, which is presumed to be reinvested.
Performance figures for the S&P 500 Index do not reflect deduction of
transaction costs or expenses, including management fees.
The Advisor generally intends to stay fully invested (subject to
liquidity requirements) in common stock, preferred stock and common stock
equivalents (such as securities convertible into common stocks) regardless of
the movement of stock prices. However, the Fund may invest in fixed income
securities, such as corporate debt securities and U.S. government obligations,
when the Advisor believes that these securities offer opportunities to further
the Fund's investment objective. While the Fund ordinarily will invest in common
stocks of U.S. companies, it may invest in foreign companies through the
purchase of American Depository Receipts.
For temporary defensive purposes under adverse market conditions, the
Fund may hold a substantial portion of its assets in cash equivalents, money
market funds or U.S. government repurchase agreements. The Fund may also invest
in such instruments at any time to maintain liquidity or pending selection of
investments in accordance with its policies. To the extent the Fund acquires the
securities of a money market fund, the shareholders of the Fund will be subject
to duplicative management fees.
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, it should be noted that the Advisor has not
previously managed assets organized as a mutual fund and the Fund has
<PAGE>
no operating history. 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. See "Investment Policies and Techniques and Risk
Considerations" for a more detailed discussion of the Fund's investment
practices.
HOW TO INVEST IN THE FUND
The Fund is "no-load" and shares of the Fund are sold directly to
investors on a continuous basis, subject to the following minimums: minimum
initial investment of $5,000 ($2,000 for IRAs and other retirement plans) and
minimum subsequent investments of $100. These minimums may be waived by the
Advisor for accounts participating in an automatic investment program. Investors
choosing to purchase or redeem their shares through a broker/dealer or other
institution may be charged a fee by that institution. Investors choosing to
purchase or redeem shares directly from the Fund will not incur charges on
purchases or redemptions. To the extent investments of individual investors are
aggregated into an omnibus account established by an investment advisor, broker
or other intermediary, the account minimums apply to the omnibus account, not to
the account of the individual investor.
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 IMS Capital Value Fund, and sent to the P.O. Box listed below.
If you prefer overnight delivery, use the overnight address listed below.
U.S. Mail: IMS Capital Value Fund Overnight: IMS Capital Value Fund
c/o American Data Services, Inc. c/o American Data Services,Inc.
P.O. Box 5536 Hauppauge Corporate Center
Hauppauge, New York 11788-0132 150 Motor Parkway
Hauppauge, New York 11788
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 800-934-5550 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: IMS Capital Value Fund
D.D.A. # 485777197
Account Name _________________ (write in shareholder
name) For the Account # ______________ (write in
account number)
<PAGE>
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.
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 IMS Capital Value Fund and should be sent to the address listed
above. A bank wire should be sent as outlined above.
Automatic Investment Plan
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time. 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 plans (IRAs); simplified employee pensions
(SEPs); 401(k) plans; qualified corporate pension and profit sharing plans (for
employees); tax deferred investment 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 advisor 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
<PAGE>
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. Investors choosing to purchase or redeem their
shares through a broker/dealer or other institution may be charged a fee by that
institution.
By Mail - You may redeem any part of your account in the Fund at no
charge by mail. Your request should be addressed to:
IMS Capital Value Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, New York 11788-0132
"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) 934-5550. 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) 934-5550. 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 calendar days. Also, when the New York Stock
<PAGE>
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 $5,000 due to 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 advisor 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.
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 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
<PAGE>
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.
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 advisors 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 diversified series of AmeriPrime Funds, an open-end
management
<PAGE>
investment company organized as an Ohio business trust on August 8, 1995. The
Board of Trustees supervises the business activities of the Fund. Like other
mutual funds, the Fund retains various organizations to perform specialized
services. The Fund retains IMS Capital Management, Inc., 10159 S.E. Sunnyside
Road, Suite 330, Portland, Oregon 97015 (the "Advisor") to manage the assets of
the Fund and is authorized to pay the Advisor a fee equal to an annual average
rate of 1.59% of the Fund's average daily net assets. The Advisor, an Oregon
corporation, is an independent investment advisory firm that has practiced a
large company, value-oriented, contrarian style of management for a select group
of clients since 1988. The Advisor currently manages accounts for institutional
clients, retirement plans, families, trusts and small businesses, both taxable
and non-taxable. Carl W. Marker is primarily responsible for the day-to-day
management of the Fund's portfolio. Mr. Marker has served as the Advisor's
chairman, president and primary portfolio manager since its founding in 1988,
and began privately managing individual common stocks in 1981. Mr. Marker, who
graduated from the University of Oregon, previously worked for divisions of both
General Motors and Mercedes-Benz as a financial systems analyst before founding
IMS Capital Management, Inc. Mr. Marker is regularly quoted by the press and has
appeared in Smart Money magazine, the Wall Street Transcript, and several other
publications, and has been a repeated guest on the PBS television program,
Serious Money.
The Fund is responsible for the payment of all organizational and
operating expenses of the Fund, including brokerage fees and commissions; taxes
or governmental fees; interest; fees and expenses of the non-interested person
trustees; 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; insurance expenses; fees and expenses of the custodian, transfer agent,
dividend disbursing agent, shareholder service 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 shareholders; the cost of
printing or preparing statements, reports or other documents to shareholders;
expenses of shareholders' meetings and proxy solicitations; 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. The Fund will only be liable for organizational
expenses when the Fund reaches $10,000,000 in assets or when the Fund has been
in existence for at least one year.
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 Fund 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., P.O. Box 5536, Hauppauge, New York
11788-0132 (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,
<PAGE>
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 Fund.
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. The Advisor (not the Fund) may pay certain financial
institutions (which may include banks, brokers, securities dealers and other
industry professionals) a "servicing fee" for performing certain administrative
functions for the Fund shareholders to the extent these institutions are allowed
to do so by applicable statute, rule or regulation.
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ.
Equity Securities
The fund will invest primarily in U.S. equity securities consisting of
common stock, preferred stock and common stock equivalents such as convertible
preferred stock and convertible debentures, rights and warrants. Convertible
preferred stock is preferred stock that can be converted into common stock
pursuant to its terms. Convertible debentures are debt instruments that can be
converted into common stock pursuant to their terms. The Fund will not invest
more that 5% of its net assets in convertible preferred stock, convertible
debentures, rights or warrants. The Fund reserves the right to invest in foreign
stocks, through the purchase of American Depository Receipts (ADRs), provided
the companies have substantial operations in the U.S. and do not exceed 5% of
the Fund's net assets. ADRs are dollar-denominated receipts that are generally
issued in registered form by domestic banks, and represent the deposit with the
bank of a security of a foreign issuer.
Fixed Income Securities
Although the Fund intends to invest primarily in U.S. common stocks, the Advisor
reserves the right, during periods of unusually high interest rates or unusual
market conditions, to invest in fixed income securities for preservation of
capital, total return and capital gain purposes, if the Advisor believes that
such a position would best serve the Fund's investment objective. Fixed income
securities include corporate debt securities, U.S. government securities and
participation interests in such securities. Fixed income securities are
generally considered to be interest rate sensitive, which means that their value
will generally decrease when interest rates rise and increase when interest
rates fall. Securities with shorter maturities, while offering lower yields,
generally provide greater price stability than longer term securities and are
less affected by changes in interest rates.
Corporate Debt Securities - Corporate debt securities are long
and short term debt obligations issued by companies (such as publicly issued and
privately placed bonds, notes and commercial paper). The Advisor considers
corporate debt securities to be of investment grade quality if they are rated A
or higher by Standard & Poor's Corporation, or Moody's Investors Services, Inc.,
or if unrated, determined by the Advisor to be of comparable quality.
<PAGE>
Investment grade debt securities generally have adequate to strong protection of
principal and interest payments. In the lower end of this category, credit
quality may be more susceptible to potential future changes in circumstances and
the securities have speculative elements. The Fund will not invest more than 5%
of the value of its net assets in securities that are below investment grade.
U.S. Government Obligations - U.S. government obligations may
be backed by the credit of the government as a whole or only by the issuing
agency. U.S. Treasury bonds, notes, and bills and some agency securities, such
as those issued by the Federal Housing Administration and the Government
National Mortgage Association (GNMA), are backed by the full faith and credit of
the U.S. government as to payment of principal and interest and are the highest
quality government securities. Other securities issued by U.S. government
agencies or instrumentalities, such as securities issued by the Federal Home
Loan Banks and the Federal Home Loan Mortgage Corporation, are supported only by
the credit of the agency that issued them, and not by the U.S. government.
Securities issued by the Federal Farm Credit System, the Federal Land Banks, and
the Federal National Mortgage Association (FNMA) are supported by the agency's
right to borrow money from the U.S. Treasury under certain circumstances, but
are not backed by the full faith and credit of the U.S. government.
Investment Techniques
General
The Fund, on occasion, may write covered call options on securities
held within the portfolio, for income purposes, provided that such investments
do not exceed 5% of the Fund's net assets. The Fund may also use up to 5% of its
net assets to buy call or put options. The Fund may not engage in short sales of
any kind. For income purposes, the Fund may lend its portfolio securities from
time to time, provided that such transactions do not exceed 5% of the Fund's net
assets.
Repurchase Agreements - The Fund may invest in repurchase
agreements fully collateralized by U.S. Government obligations. A repurchase
agreement is a short-term investment in which the purchaser (i.e., the Fund)
acquires ownership of a U.S. Government obligation (which may be of any
maturity) and the seller agrees to repurchase the obligation at a future time at
a set price, thereby determining the yield during the purchaser's holding period
(usually not more than seven days from the date of purchase). Any repurchase
transaction in which the Fund engages will require full collateralization of the
seller's obligation during the entire term of the repurchase agreement. In the
event of a bankruptcy or other default of the seller, the Fund could experience
both delays in liquidating the underlying security and losses in value. However,
the Fund intends to enter into repurchase agreements only with Star Bank, N.A.
(the Fund's Custodian), other banks with assets of $1 billion or more and
registered securities dealers determined by the Advisor (subject to review by
the Board of Trustees) to be creditworthy. The Advisor monitors the
creditworthiness of the banks and securities dealers with which the Fund engages
in repurchase transactions.
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
<PAGE>
the Fund.
Portfolio Turnover. The Fund does not intend to purchase or sell
securities for short term trading purposes. However, if the objectives of the
Fund would be better served, short-term profits or losses may be realized from
time to time. It is anticipated that the Fund will hold most securities from 1
to 5 years at a time and that portfolio turnover will average less than 45%.
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.
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 advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
nonstandardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of 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. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
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. 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. Fund performance may also be
compared to the Value Line Composite Index, an equally-weighted index of over
1,600 companies, including those which make up the S&P 500. The average market
capitalization of the composite is approximately $6 billion. Returns are gross
of fees and as of the end of the quarter.
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
<PAGE>
original investment.
Investment Advisor Administrator
IMS Capital Management, Inc. AmeriPrime Financial Services, Inc.
10159 S.E. Sunnyside Road, Suite 330 1793 Kingswood Drive, Suite 200
Portland, Oregon 97015 Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchase and Independent Auditors
redemption requests) McCurdy & Associates CPA's, Inc.
American Data Services, Inc. 27955 Clemens Road
P.O. Box 5536 Westlake, Ohio 44145
Hauppauge, New York 11788-0132
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.
<PAGE>
TABLE OF CONTENTS PAGE
SUMMARY OF FUND EXPENSES........................................................
Shareholder Transaction Expenses......................................
Annual Fund Operating Expenses.........................................
FINANCIAL HIGHLIGHTS............................................................
THE FUND ......................................................................
INVESTMENT OBJECTIVE AND STRATEGIES.............................................
HOW TO INVEST IN THE FUND.......................................................
Initial Purchase.....................................................
By Mail .....................................................
By Wire ....................................................
Additional Investments.................................................
Automatic Investment Plan..............................................
Tax Sheltered Retirement Plans.......................................
Other Purchase Information.............................................
HOW TO REDEEM SHARES............................................................
By Mail ..............................................................
By Telephone...........................................................
Additional Information..............................................
SHARE PRICE CALCULATION........................................................
DIVIDENDS AND DISTRIBUTIONS.....................................................
TAXES ......................................................................
OPERATION OF THE FUND...........................................................
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS......................
Equity Securities......................................................
Fixed Income Securities..............................................
Corporate Debt Securities.....................................
U.S. Government Obligations..................................
Investment Techniques..................................................
General
GENERAL INFORMATION.............................................................
Fundamental Policies.................................................
Portfolio Turnover.....................................................
Shareholder Rights...................................................
PERFORMANCE INFORMATION........................................................
<PAGE>
IMS CAPITAL VALUE FUND
STATEMENT OF ADDITIONAL INFORMATION
February 14, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of IMS Capital Value Fund dated
February 14, 1999. A copy of the Prospectus can be obtained by writing the
Transfer Agent at Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge, New
York 11788, or by calling 1-800-934-5550.
<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..............................................-3-
THE INVESTMENT ADVISOR..............................................-5-
TRUSTEES AND OFFICERS...............................................-6-
PORTFOLIO TRANSACTIONS AND BROKERAGE................................-7-
DETERMINATION OF SHARE PRICE........................................-8-
INVESTMENT PERFORMANCE..............................................-8-
CUSTODIAN...........................................................-9-
TRANSFER AGENT......................................................-9-
ACCOUNTANTS........................................................-10-
DISTRIBUTOR........................................................-10-
ADMINISTRATOR...........................................................-10-
FINANCIAL STATEMENTS...............................................-10-
<PAGE>
DESCRIPTION OF THE TRUST
IMS Capital Value 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 a series of funds
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.
[5% shareholders to be supplied]
Upon sixty days prior written notice to shareholders, the Fund may make
redemption payments in whole or in part in securities or other property if the
Trustees determine that existing conditions make cash payments undesirable. For
other 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
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<PAGE>
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. The Fund may invest up to 5% of its net assets at the time of
purchase in convertible preferred stock, convertible debentures, rights or
warrants.
B. American Depository Receipts. American Depository Receipts are
dollar-denominated receipts that are generally issued in registered form by
domestic banks, and represent the deposit with the bank of a security of a
foreign issuer. To the extent that the Fund invests in foreign securities, such
investments may be subject to special risks. For example, there may be less
information publicly available about a foreign company than about a U.S.
company, and foreign companies are not generally subject to accounting, auditing
and financial reporting standards and practices comparable to those in the U.S.
Other risks associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes in
the administrations or economic and monetary policies of foreign governments,
the imposition of exchange control regulations, the possibility of expropriation
decrees and other adverse foreign governmental action, the imposition of foreign
taxes, less liquid markets, less government supervision of exchanges, brokers
and issuers, difficulty in enforcing contractual obligations, delays in
settlement of securities transactions and greater price volatility. In addition,
investing in foreign securities will generally result in higher commissions than
investing in similar domestic securities.
C. Covered Call Options. The Fund may write (sell) covered call options
on common stocks in the Fund's portfolio. A covered call option on a security is
an agreement to sell a particular portfolio security if the option is exercised
at a specified price, or before a set date. The Fund profits from the sale of
the option, but gives up the opportunity to profit from any increase in the
price of the stock above the option price, and may incur a loss if the stock
price falls. Risks associated with writing covered call options include the
possible inability to effect closing transactions at favorable prices and an
appreciation limit on the securities set aside for settlement. When the Fund
writes a covered call option, it will receive a premium, but it will give up the
opportunity to profit from a price increase in the underlying security above the
exercise price as long as its obligation as a writer continues, and it will
retain the risk of loss should the price of the security decline. The Fund will
only engage in exchange-traded options transactions.
D. Loans of Portfolio Securities. The Fund may made short and long term
loans of its portfolio securities. 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 on a daily mark-to-market basis in an
amount at least equal to 100% of the 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 which the Board of Trustees determines to be serious. With respect to
loans of securities, there is the risk that the borrower may fail to return the
loaned securities or that the borrower may not be able to provide
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<PAGE>
additional collateral.
E. Purchases of Options. Up to 5% of the Fund's net assets may be
invested in purchases of put and call options involving individual securities
and market indices. An option involves either (a) the right or the obligation to
buy or sell a specific instrument at a specific price until the expiration date
of the option, or (b) the right to receive payments or the obligation to make
payments representing the difference between the closing price of a market index
and the exercise price of the option expressed in dollars times a specified
multiple until the expiration date of the option. Options are sold (written) on
securities and market indices. The purchaser of an option on a security pays the
seller (the writer) a premium for the right granted but is not obligated to buy
or sell the underlying security. The purchaser of an option on a market index
pays the seller a premium for the right granted, and in return the seller of
such an option is obligated to make the payment. Options are traded on organized
exchanges and in the over-the-counter market.
The purchase of options involves certain risks. The purchase of options
limits the Fund's potential loss to the amount of the premium paid and can
afford the Fund the opportunity to profit from favorable movements in the price
of an underlying security to a greater extent than if transactions were effected
in the security directly. However, the purchase of an option could result in the
Fund losing a greater percentage of its investment than if the transaction were
effected directly.
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
the 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 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, which will not be considered as borrowings
provided they are fully collateralized.
2. Senior Securities. The Fund will not issue senior securities. This
limitation is
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<PAGE>
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 rules and regulations promulgated thereunder or
interpretations of the Securities and Exchange Commission or its staff and (b)
as described in the Prospectus and the 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 have
a significant portion of their assets in real estate.
5. Commodities. 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 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 non-publicly 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 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
-4-
<PAGE>
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
representing more than 5% of its total assets are outstanding. The Fund will not
invest in reverse repurchase agreements.
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 and other permitted investments and techniques.
iv. Short Sales. The Fund will not effect short sales.
v. Options. The Fund will not purchase or sell puts, calls, options or
straddles, except as described in the Prospectus and the Statement of Additional
Information.
vi. Repurchase Agreements. The Fund may invest some or all of the funds
assets in U.S. Government repurchase agreements temporarily under certain
conditions described in the prospectus.
vii. Illiquid Investments. The Fund will not invest in securities for
which there are legal or contractual restrictions on resale and other illiquid
securities.
viii. Mortgage-related Securities. The Fund will not invest in
mortgage-related securities.
THE INVESTMENT ADVISOR
The Fund's investment advisor is IMS Capital Management, 10159 S.E.
Sunnyside Road, Suite 330, Portland, Oregon 97015. Carl W. Marker may be deemed
to be a controlling person of the Advisor due to his ownership of the shares of
the corporation.
Under the terms of the management agreement (the "Agreement"), the Advisor
manages
-5-
<PAGE>
the Fund's investments subject to approval of the Board of Trustees. As
compensation for its management services, the Fund is obligated to pay the
Advisor a fee computed and accrued daily and paid monthly at an annual rate of
1.59% 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. For the period August
5, 1996 (commencement of operations) through October 31, 1996 and for the fiscal
years ended October 31, 1997 and 1998, the Fund paid advisory fees of $9,952,
$108,433 and $_______, respectively.
The Advisor retains the right to use the name "IMS" 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 "IMS" 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.
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, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
<S> <C> <C>
============================================================================================================================
Name, Age and Address Position Principal Occupations During
Past 5 Years
-6-
<PAGE>
- ----------------------------------------------------------------------------------------------------------------------------
* Kenneth D. Trumpfheller President and Trustee President, Treasurer and Secretary of
Age: 40 AmeriPrime Financial Services, Inc., the
1793 Kingswood Drive Fund's administrator, and AmeriPrime
Suite 200 Financial Securities, Inc., the Fund's
Southlake, Texas 76092 distributor, since 1994. Prior to December,
1994, a
senior
client
executive
with SEI
Financial
Services.
- ----------------------------------------------------------------------------------------------------------------------------
____________________ Secretary, Treasurer Secretary, Treasurer and Chief Financial
Age: __ Officer of AmeriPrime Financial Services,
1793 Kingswood Drive Inc. and AmeriPrime Financial Securities, Inc.
Suite 200
Southlake, Texas 76092
- ----------------------------------------------------------------------------------------------------------------------------
Steve L. Cobb Trustee President of Chandler Engineering Company,
Age: 41 L.L.C., oil and gas services company; various
2001 Indianwood Ave. positions with Carbo Ceramics, Inc., oil field
Broken Arrow, Oklahoma 74102 manufacturing/supply company, from 1984 to
1997, most recently Vice President of
Marketing.
- ----------------------------------------------------------------------------------------------------------------------------
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment
Age: 51 Officer of Legacy Trust Company since 1992;
600 Jefferson St. Suite 350 President and Director of Heritage Trust
Houston, Texas 77063 Company from 1994 to 1996.
============================================================================================================================
</TABLE>
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<PAGE>
The compensation paid to the Trustees of the Trust for the fiscal year
ended October 31, 1998 is set forth in the following table. Trustee fees are
Trust expenses and each series of the Trust pays a portion of the Trustee fees.
<TABLE>
<CAPTION>
<S> <C> <C>
============================================================================================================================
Name Aggregate Total Compensation
Compensation from Trust (the Trust is
from Trust not in a Fund Complex)
- ----------------------------------------------------------------------------------------------------------------------------
Kenneth D. Trumpfheller 0 0
- ----------------------------------------------------------------------------------------------------------------------------
Steve L. Cobb $4,000 $4,000
- ----------------------------------------------------------------------------------------------------------------------------
Gary E. Hippenstiel $4,000 $4,000
============================================================================================================================
</TABLE>
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
-8-
<PAGE>
overall cost to the Advisor of performing its duties to the Fund under the
Agreement. Due to research services provided by brokers, the Fund directed to
brokers $________ and $_______ of brokerage transactions (on which commissions
were $________ and $_______) during the fiscal years ended October 31, 1997 and
1998.
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.
For the period August 5, 1996 (commencement of operations) through
October 31, 1996 and for the fiscal years ended October 31, 1997 and 1998, the
Fund paid brokerage commissions of $3,318, $22,002 and $_________, respectively.
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, Martin
Luther King, Jr. 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 for the period indicated that would equate the initial amount invested
to the ending redeemable value, according to the following formula:
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<PAGE>
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. For the fiscal year
ended October 31, 1998, the Fund's average annual total return was _____%.
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 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, safekeeping 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. ("ADS"), Hauppauge Corporate Center, 150 Motor
Parkway, Hauppauge, New York 11788, acts as the Fund's transfer agent and, in
such capacity,
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<PAGE>
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, ADS provides
the Fund with certain monthly reports, record-keeping and other
management-related services. For the period August 5, 1996 (commencement of
operations) through October 31, 1996 and for the fiscal years ended October 31,
1997 and 1998, ADS received $4,800, $20,000 and $________, respectively, from
the Fund for these 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, 1999. 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.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (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. For the period August 5, 1996 (commencement of operations) through
October 31, 1996 and for the fiscal years ended October 31, 1997 and 1998, the
Administrator received $_______, $_______, and $_______, respectively from the
Fund for these services.
FINANCIAL STATEMENTS
The financial statements and independent auditors' report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Trust's Annual Report to Shareholders for the fiscal year
ended October 31, 1998. The Trust will provide the Annual Report without charge
by calling the Fund at 1-800-934-5550.
-11-
<PAGE>
PROSPECTUS February 14, 1999
CORBIN SMALL-CAP VALUE FUND
6300 Ridglea Place
Suite 1111
Fort Worth, Texas 76116
For Information, Shareholder Services and Requests:
(800) 924-6848
The investment objective of the Corbin Small-Cap Value Fund (the
"Fund") is to provide long term capital appreciation to its shareholders. The
Fund's advisor, Corbin & Company (the "Advisor"), seeks to achieve this
objective by investing primarily in small capitalization stocks (those with
market capitalizations of $2 billion or less) selling at attractive valuations
versus the market. The Advisor believes its value-oriented approach will
mitigate risk while enhancing potential returns.
The Fund is "no-load," which means that investors incur no sales
charges, commissions or deferred sales charges on the purchase or redemption of
their shares. The Fund is one of the mutual funds comprising AmeriPrime Funds,
an open-end management investment company, 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 dated February 14, 1999 has been filed with
the Securities and Exchange Commission (the "SEC"), is incorporated herein by
reference, and can be obtained without charge by calling the Fund at the phone
number listed above. The SEC maintains a Web Site (http://www.sec.gov) that
contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
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.
<PAGE>
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. In addition, the Fund does not
charge a 12b-1 fee. 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. The Advisor pays all of the expenses of the Fund except
brokerage, taxes, interest, fees and expenses of non-interested person trustees
and extraordinary expenses.
[TABLE TO BE UPDATED:
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)1
Management Fees...................................................... 1.25%
12b-1 Charges..........................................................NONE
Other Expenses2.......................................................0.00%
Total Fund Operating Expenses.........................................1.25%
1 The Fund's total operating expenses are equal to the management fee paid
to the Advisor because the Advisor pays all of the Fund's operating
expenses (except as described above).
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 less than .001% 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:
1 Year 3 Years 5 Year 10 Years
------ ------- ------ --------
$13 $40 $69 $151
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FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
period June 30, 1997 (commencement of operations) through October 31, 1997 and
the fiscal year ended October 31, 1998, is derived from the audited financial
statements of the Fund. The financial statements of the Fund have been audited
by McCurdy & Associates CPA's, Inc., independent public accountants, and are
included in the Fund's Annual Report. The Annual Report contains additional
performance information and is available upon request and without charge.
[FINANCIAL HIGHLIGHTS TO BE SUPPLIED]
THE FUND
Corbin Small-Cap Value Fund (the "Fund") was organized as a series of
AmeriPrime Funds, an Ohio business trust (the "Trust"), on June 10, 1997, and
commenced operations on June 30, 1997. 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 Corbin & Company (the "Advisor").
INVESTMENT OBJECTIVE AND STRATEGIES AND RISK CONSIDERATIONS
The investment objective of the Corbin Small-Cap Value Fund (the
"Fund") is to provide long term capital appreciation to its shareholders. The
Advisor seeks to achieve this objective by investing primarily in small
capitalization stocks (those with market capitalizations of $2 billion or less)
selling at attractive valuations versus the market. The Advisor believes its
value-oriented approach will mitigate risk while enhancing potential returns.
The Advisor selects securities using a model known as the value score.
A security's value score is determined by a formula that consists of three
variables: the security's five-year estimated earnings growth rate, its dividend
yield, and its price/earnings ratio based on the current year's estimated
earnings. Securities with value scores 50% greater than the market are
considered candidates for purchase. They are then analyzed based on five
additional factors: management, financial position, long-term industry
fundamentals, contrarianism, and complexity of business. The Advisor selects
securities with the intention of holding them for 3 to 5 years, during which
time the Advisor believes they will reach their full value.
Under normal circumstances, the Fund will invest at least 65% of its
total assets in small capitalization stocks. The Advisor generally plans to stay
fully invested (subject to liquidity requirements) in common stocks, preferred
stocks, and common stock equivalents (such as securities convertible into common
stocks), regardless of price movements. The Fund may also invest up to 5% of its
assets in foreign companies meeting its investment criteria. For temporary
defensive purposes under abnormal market or economic conditions, the Fund may
hold all or a portion of its assets in money market instruments, securities of
other no-load registered investment companies or U.S. government repurchase
agreements. The Fund may also
2
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invest in such instruments at any time to maintain liquidity or pending
selection of investments in accordance with its policies. If the Fund acquires
securities of another investment company, the shareholders of the Fund will be
subject to additional management fees.
By investing primarily in small capitalization companies, the Fund will
be subject to the risks associated with such companies. Smaller capitalization
companies may experience higher growth rates and higher failure rates than do
larger capitalization companies. Companies in which the Fund is likely to invest
may have limited product lines, markets or financial resources and may lack
management depth. The trading volume of securities of smaller capitalization
companies is normally less than that of larger capitalization companies, and,
therefore, may disproportionately affect their market price, tending to make
them rise more in response to buying demand and fall more in response to selling
pressure than is the case with larger capitalization companies. The Advisor
seeks to reduce risk by having at least twenty different securities in the
portfolio; however, substantial concentrations in economic sectors might occur,
and some issues may have liquidity concerns.
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, it should be noted that the Advisor has not
previously managed assets organized as a mutual fund and the Fund has no
operating history. 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. See "Investment Policies and Techniques" for a more
detailed discussion of the Fund's investment practices.
HOW TO INVEST IN THE FUND
The Fund is "no-load" and shares of the Fund are sold directly to
investors on a continuous basis, subject to a minimum initial investment of
$2,000 and minimum subsequent investments of $50. These minimums may be waived
by the Advisor for accounts participating in an automatic investment program.
Investors choosing to purchase or redeem their shares through a broker/dealer or
other institution may be charged a fee by that institution. Investors choosing
to purchase or redeem shares directly from the Fund will not incur charges on
purchases or redemptions. To the extent investments of individual investors are
aggregated into an omnibus account established by an investment advisor, broker
or other intermediary, the account minimums apply to the omnibus account, not to
the account of the individual investor.
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 Corbin Small-Cap Value Fund, and sent to the P.O. Box listed
below. If you prefer overnight delivery, use the overnight address listed below.
3
<PAGE>
U.S. Mail:Corbin Small-Cap Value Fund Overnight:Corbin Small-Cap Value Fund
c/o American Data Services, Inc. c/o American Data Services, Inc.
P.O. Box 5536 Hauppauge Corporate Center
Hauppauge, New York 11788-0132 150 Motor Parkway
Hauppauge, New York 11788
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 800-924-6848 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: Corbin Small-Cap Value Fund
D.D.A. # 486479645
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.
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 Corbin Small-Cap Value Fund and should be sent to the address
listed above. A bank wire should be sent as outlined above.
Automatic Investment Plan
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $50 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
4
<PAGE>
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 plans (IRAs); simplified employee pensions
(SEPs); SIMPLE plans; 401(k) plans; qualified corporate pension and profit
sharing plans (for employees); tax deferred investment 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
advisor 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. Investors choosing to purchase or redeem their
shares through a broker/dealer or other institution may be charged a fee by that
institution.
By Mail - You may redeem any part of your account in the Fund at no
charge by mail. Your request should be addressed to:
Corbin Small-Cap Value Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
5
<PAGE>
"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) 924-6848. 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) 924-6848. 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 calendar 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 $2,000 due to 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 advisor 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
6
<PAGE>
discretion that failure to so redeem may have materially adverse consequences to
all or any of the shareholders of the Fund.
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 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.
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
7
<PAGE>
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 advisors 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 diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund
8
<PAGE>
retains various organizations to perform specialized services. The Fund retains
Corbin & Company, 6300 Ridglea Place, Suite 1111, Fort Worth, Texas 76116 (the
"Advisor") to manage the assets of the Fund. The Advisor, a Texas corporation,
is a Fort Worth based independent investment advisor founded in 1992 and
controlled by David A. Corbin, CFA. The Advisor currently manages over $150
million in assets and specializes in the management of assets for clients
seeking a value-oriented, contrarian investment style, including individual
investors, personal trusts, all types of tax-exempt organizations and ERISA
plans, such as foundations, endowments, defined benefit plans, defined
contribution plans and union plans. David A. Corbin has been President and Chief
Investment Officer of the Advisor since 1992, and is primarily responsible for
the day-to-day management of the Fund's portfolio. Prior to founding Corbin &
Company, Mr. Corbin was a trust investment portfolio manager with
Ameritrust/MTrust, where his responsibilities included investment analysis and
investment oversight for personal trust accounts, employee benefit plans, and
endowments. He was also the Portfolio Manager of the William C. Conner
Foundation at Texas Christian University, where he received his Bachelor of
Science degree in Economics. Mr. Corbin has been published and quoted on a
variety of investment management topics in such publications as The Wall Street
Journal and The Wall Street Transcript, and is a Chartered Financial Analyst
(CFA).
The Fund is authorized to pay the Advisor a fee equal to an annual
average rate of 1.25% of its average daily net assets. The Advisor pays all of
the operating expenses of the Fund except brokerage, taxes, interest, fees and
expenses of non-interested person trustees and extraordinary expenses. In this
regard, it should be noted that most investment companies pay their own
operating expenses directly, while the Fund's expenses, except those specified
above, are paid by the Advisor.
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 Fund 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., Hauppauge Corporate Center, 150 Motor
Parkway, Hauppauge, NY 11788 (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
9
<PAGE>
give consideration to sales of shares of the Fund as a factor in the selection
of brokers and dealers to execute portfolio transactions. The Advisor (not the
Fund) may pay certain financial institutions (which may include banks, brokers,
securities dealers and other industry professionals) a "servicing fee" for
performing certain administrative functions for Fund shareholders to the extent
these institutions are allowed to do so by applicable statute, rule or
regulation.
INVESTMENT POLICIES AND TECHNIQUES
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ.
Equity Securities. Equity securities consist of common stock, preferred
stock and common stock equivalents (such as convertible preferred stock, rights
and warrants). Common stocks, the most familiar type, represent an equity
(ownership) interest in a corporation. Warrants are options to purchase equity
securities at a specified price 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. Although equity securities have a history of
long-term growth in value, their prices fluctuate based on changes in a
company's financial condition and on overall market and economic conditions.
Equity securities also include common stocks and common stock equivalents of
domestic real estate investment trusts and other companies which operate as real
estate corporations or which have a significant portion of their assets in real
estate. The Fund will not acquire any direct ownership of real estate.
The Fund may invest in foreign equity securities, including, but not
limited to, the purchase of American Depository Receipts. American Depository
Receipts are dollar-denominated receipts that are generally issued in registered
form by domestic banks, and represent the deposit with the bank of a security of
a foreign issuer. To the extent that the Fund does invest in foreign securities,
such investments may be subject to special risks, such as changes in
restrictions on foreign currency transactions and rates of exchange, and changes
in the administrations or economic and monetary policies of foreign governments.
The Fund will not invest more than 5% of its net assets at the time of purchase
in foreign securities.
Convertible Securities. A convertible security is a bond or preferred
stock which may be converted at a stated price within a specific period of time
into a specified number of shares of common stock of the same or different
issuer. Convertible securities are senior to common stock in a corporation's
capital structure, but usually are subordinated to non-convertible debt
securities. While providing a fixed income stream generally higher in yield than
in the income derived from a common stock but lower than that afforded by a
non-convertible debt security, a convertible security also affords an investor
the opportunity, through its conversion feature, to participate in the capital
appreciation of common stock into which it is convertible. The Advisor expects
that generally the convertible securities in which the Fund will invest will be
rated at least B by S&P or Moody's or, it unrated, of comparable quality in the
opinion of the Advisor.
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In general, the market value of a convertible security is the higher of
its investment value (its value as a fixed income security) or its conversion
value (the value of the underlying shares of common stock if the security is
converted). As a fixed income security, the market value of a convertible
security generally increases when interest rates decline and generally decreases
when interest rates rise; however, the price of a convertible security generally
increases as the market value of the underlying stock increases, and generally
decreases as the market value of the underlying stock declines. Investments in
convertible securities generally entail less risk than investments in the common
stock of the same issuer.
Preferred Stock. Preferred stock has a preference in liquidation (and,
generally dividends) over common stock but is subordinated in liquidation to
debt. As a general rule the market value of preferred stocks with fixed dividend
rates and no conversion rights varies inversely with interest rates and
perceived credit risk, with the price determined by the dividend rate. Some
preferred stocks are convertible into other securities, for example common
stock, at a fixed price and ratio or upon the occurrence of certain events. The
market price of convertible preferred stocks generally reflects an element of
conversion value. Because many preferred stocks lack a fixed maturity date,
these securities generally fluctuate substantially in value when interest rates
change; such fluctuations often exceed those of long-term bonds of the same
issuer. Some preferred stocks pay an adjustable dividend that may be based on an
index, formula, auction procedure or other dividend rate reset mechanism. In the
absence of credit deterioration, adjustable rate preferred stocks tend to have
more stable market values than fixed rate preferred stocks. All preferred stocks
are also subject to the same types of credit risks of the issuer as corporate
bonds. In addition, because preferred stock is junior to debt securities and
other obligations of an issuer, deterioration in the credit rating of the issuer
will cause greater changes in the value of a preferred stock than in a more
senior debt security with similar yield characteristics. Preferred stocks may be
rated by S&P and Moody's although there is no minimum rating which a preferred
stock must have (and a preferred stock may not be rated) to be an eligible
investment for the Fund. The Advisor expects, however, that generally the
preferred stocks in which the Fund invests will be rated at least CCC by S&P or
Caa by Moody's or, if unrated, of comparable quality in the opinion of the
Advisor. Preferred stocks rated CCC by S&P are regarded as predominantly
speculative with respect to the issuer's capacity to pay preferred stock
obligations and represent the highest degree of speculation among securities
rated between BB and CCC; preferred stocks rated Caa by Moody's are likely to be
in arrears on dividend payments. Moody's rating with respect to preferred stocks
does not purport to indicate the future status of payments of dividends.
Repurchase Agreements. The Fund may invest in repurchase agreements
fully collateralized by U.S. Government obligations. A repurchase agreement is a
short-term investment in which the purchaser (i.e., the Fund) acquires ownership
of a U.S. Government obligation (which may be of any maturity) and the seller
agrees to repurchase the obligation at a future time at a set price, thereby
determining the yield during the purchaser's holding period (usually not more
than seven days from the date of purchase). Any repurchase transaction in which
the Fund engages will require full collateralization of the seller's obligation
during the entire term of the repurchase agreement. In the event of a bankruptcy
or other default of the
11
<PAGE>
seller, the Fund could experience both delays in liquidating the underlying
security and losses in value. However, the Fund intends to enter into repurchase
agreements only with Star Bank, N.A. (the Fund's Custodian), other banks with
assets of $1 billion or more and registered securities dealers determined by the
Advisor (subject to review by the Board of Trustees) to be creditworthy. The
Advisor monitors the creditworthiness of the banks and securities dealers with
which the Fund engages in repurchase transactions.
General. The Fund may invest up to 5% of its net assets at the time of
purchase in each of the following financial services industry obligations:
certificates of deposit, time deposits and banker's acceptances. The Statement
of Additional Information provides information about these securities. The Fund
may also invest up to 5% of its net assets in illiquid securities, including
repurchase agreements maturing in more than seven days.
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. However, if the objectives of the
Fund would be better served, short-term profits or losses may be realized from
time to time. [It is anticipated that the Fund will hold most securities from 1
to 5 years at a time and that portfolio turnover will average less than 100%.]
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.
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.
12
<PAGE>
The Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of 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. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
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 Russell 2000
Index and the Standard & Poor's (S&P) 600 Small-Cap Index.
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.
Investment Advisor Administrator
Corbin & Company AmeriPrime Financial Services, Inc.
6300 Ridglea Place, Suite 1111 1793 Kingswood Drive, Suite 200
Fort Worth, Texas 76116 Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchases and Independent Auditors
all redemption requests) McCurdy & Associates CPA's, Inc.
American Data Services, Inc. 27955 Clemens Road
Hauppauge Corporate Center Westlake, Ohio 44145
150 Motor Parkway
Hauppauge, NY 11788
Legal Counsel
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
13
<PAGE>
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.
14
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY OF FUND EXPENSES..................................................... 1
Shareholder Transaction Expenses.................................... 1
Annual Fund Operating Expenses...................................... 1
FINANCIAL HIGHLIGHTS......................................................... 2
THE FUND .................................................................... 2
INVESTMENT OBJECTIVE AND STRATEGIES AND RISK CONSIDERATIONS.................. 2
HOW TO INVEST IN THE FUND.................................................... 3
Initial Purchase.................................................... 3
Additional Investments.............................................. 4
Automatic Investment Plan........................................... 4
Tax Sheltered Retirement Plans...................................... 5
Other Purchase Information.......................................... 5
HOW TO REDEEM SHARES......................................................... 5
By Mail ........................................................... 5
By Telephone........................................................ 6
Additional Information.............................................. 6
SHARE PRICE CALCULATION...................................................... 7
DIVIDENDS AND DISTRIBUTIONS.................................................. 7
TAXES .................................................................... 8
OPERATION OF THE FUND........................................................ 8
INVESTMENT POLICIES AND TECHNIQUES .......................................... 10
Equity Securities................................................... 10
Convertible Securities.............................................. 10
Preferred Stock..................................................... 11
Repurchase Agreements............................................... 11
General ........................................................... 12
GENERAL INFORMATION.......................................................... 12
Fundamental Policies................................................ 12
Portfolio Turnover.................................................. 12
Shareholder Rights.................................................. 12
PERFORMANCE INFORMATION...................................................... 12
15
<PAGE>
CORBIN SMALL-CAP VALUE FUND
STATEMENT OF ADDITIONAL INFORMATION
February 14, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of Corbin Small-Cap Value Fund dated
February 14, 1999. A copy of the Prospectus can be obtained by writing the
Transfer Agent at Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge, NY
11788, or by calling 1-800-924-6848.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
DESCRIPTION OF THE TRUST.......................................................3
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS
AND RISK CONSIDERATIONS........................................................3
INVESTMENT LIMITATIONS.........................................................4
THE INVESTMENT ADVISOR.........................................................6
TRUSTEES AND OFFICERS..........................................................7
PORTFOLIO TRANSACTIONS AND BROKERAGE...........................................8
DETERMINATION OF SHARE PRICE...................................................9
INVESTMENT PERFORMANCE.........................................................9
CUSTODIAN.....................................................................10
TRANSFER AGENT............................................................... 10
ACCOUNTANTS.................................................................. 11
DISTRIBUTOR.................................................................. 11
ADMINISTRATOR................................................................ 11
FINANCIAL STATEMENTS..........................................................11
<PAGE>
DESCRIPTION OF THE TRUST
Corbin Small-Cap Value 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 a series of funds
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.
[UPDATE: As of _________ __, 1998 the following persons may be deemed to
beneficially own five percent (5%) or more of the Fund: Donaldson Lufkin
Jenrette Securities Corp., P.O. Box 2052, Jersey City, New Jersey - 6.94%;
Kenneth W. and Rochelle R. Laudenbach, 1440 Flat Rock Road, Narbeth,
Pennsylvania - 7.97%; 2525 Company, 2525 Ridgmar Blvd., Fort Worth, Texas -
12.53%; Alice Goforth Grantor Trust, Commerce Company, Trustee, Bank of
Commerce, 301 W. 7th Street, Ft. Worth, Texas - 8.93%; Janet R. Corbin IRA, 417
E 57-2D, New York, New York - 7.87%]
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 Objective and Strategies and Risk
Considerations" and "Investment Policies and Techniques").
A. Foreign Securities. The Fund may invest up to 5% of its net assets
in foreign equity securities including common stock, preferred stock and common
stock equivalents issued by foreign companies. Purchases of foreign securities
are usually made in foreign currencies and, as a result, the Fund may incur
currency conversion costs and may be affected favorably or unfavorably by
changes in the value of foreign currencies against the U.S. dollar. In addition,
there may be less information publicly available about a foreign company than
about a U.S. company, and foreign companies are not generally subject to
accounting, auditing and financial reporting standards and practices comparable
to those in the U.S. Other risks associated with investments in foreign
securities include changes in restrictions on foreign currency transactions and
rates of exchanges, changes in the administrations or economic and monetary
policies of foreign governments, the imposition of exchange control regulations,
the possibility of expropriation decrees and other adverse foreign governmental
action, the imposition of foreign taxes, less liquid markets, less government
supervision of exchanges, brokers and issuers, difficulty in enforcing
contractual obligations, delays in settlement of securities transactions and
greater price volatility. In addition, investing in foreign securities will
generally result in higher commissions than investing in similar domestic
securities.
<PAGE>
B. Financial Services Industry Obligations. The Fund may invest up to
5% of its net assets in each of the following obligations of the financial
services industry:
(1) Certificate of Deposit. Certificates of deposit are
negotiable certificates evidencing the indebtedness of a commercial
bank or a savings and loan association to repay funds deposited with it
for a definite period of time (usually from fourteen days to one year)
at a stated or variable interest rate.
(2) Time Deposits. Time deposits are non-negotiable deposits
maintained in a banking institution or a savings and loan association
for a specified period of time at a stated interest rate.
(3) Bankers' Acceptances. Bankers' acceptances are credit
instruments evidencing the obligation of a bank to pay a draft which
has been drawn on it by a customer, which instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of
the instrument upon maturity.
C. Illiquid Securities. The portfolio of the Fund may contain illiquid
securities. 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 following securities are
considered to be illiquid: repurchase agreements maturing in more than seven
days, nonpublicly offered securities and restricted securities. The Fund will
not invest more than 5% of its net assets in illiquid securities.
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
the 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 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.
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 rules and regulations
promulgated thereunder or interpretations of the Securities and Exchange
Commission or its staff and (b) as described in the Prospectus and the 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).
<PAGE>
5. Commodities. 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 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 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).
1. 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.
2. Borrowing. The Fund will not purchase any security while borrowings
(including reverse repurchase agreements) representing more than 5% of its total
assets are outstanding. The Fund will not enter into reverse repurchase
agreements.
3. 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.
4. Short Sales. The Fund will not effect short sales of securities.
5. Options. The Fund will not purchase or sell puts, calls, options or
straddles, except as described in the Prospectus and the Statement of Additional
Information.
6. Illiquid Investments. The Fund will not invest more than 5% of its
net assets in securities for which there are legal or contractual restrictions
on resale and other illiquid securities.
<PAGE>
THE INVESTMENT ADVISOR
The Fund's investment advisor is Corbin & Company, 6300 Ridglea Place,
Suite 1111, Fort Worth, Texas (the "Advisor"). David A. Corbin may be deemed to
be a controlling person of the Advisor due to his ownership of shares of the
corporation, and his position as Chairman and President 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 1.25% 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. For the period June 30,
1997 (commencement of operations) through October 31, 1997 and for the fiscal
year ended October 31, 1998, the Fund paid advisory fees of $2,991 and
$________, respectively .
The Advisor retains the right to use the name "Corbin" 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 "Corbin"
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.
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, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
<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 Financial
Age: 40 Services, Inc., the Fund's administrator, and AmeriPrime
1793 Kingswood Drive Financial Securities, Inc., the Fund's distributor, since 1994.
Suite 200 Prior to December 1994, a senior client executive with SEI
Southlake, Texas 76092 Financial Services.
- -----------------------------------------------------------------------------------------------------------------------------------
Secretary, Treasurer Secretary, Treasurer and Chief Financial Officer of AmeriPrime
Financial Services, Inc. and AmeriPrime Financial Securities, Inc.;
Age:
1793 Kingswood Drive
Suite 200
Southlake, Texas 76092
- -----------------------------------------------------------------------------------------------------------------------------------
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil and gas
Age: 41 services company; various positions with Carbo Ceramics, Inc., oil
2001 Indianwood Ave. field manufacturing/supply company, from 1984 to 1997, most
Broken Arrow, OK 74012 recently Vice President of Marketing.
<PAGE>
- -----------------------------------------------------------------------------------------------------------------------------------
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of Legacy
Age: 51 Trust Company since 1992; President and Director of Heritage
600 Jefferson St., Suite 350 Trust Company from 1994 to 1996.
Houston, Texas 77063
===================================================================================================================================
</TABLE>
Trustee fees are Trust expenses and each series of the Trust pays a
portion of the Trustee fees. The compensation paid to the Trustees for the
fiscal year ended October 31, 1998 is set forth in the following table:
<TABLE>
<CAPTION>
<S> <C> <C>
==============================================================================================================
Name Total Compensation from
Aggregate Trust
Compensation (the Trust is not in a
Fund Complex)
from Trust
- --------------------------------------------------------------------------------------------------------------
Kenneth D. Trumpfheller $0 0
- --------------------------------------------------------------------------------------------------------------
Steve L. Cobb $4,000 $4,000
- --------------------------------------------------------------------------------------------------------------
Gary E. Hippenstiel $4,000 $4,000
==============================================================================================================
</TABLE>
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.
<PAGE>
When the Fund and another of the Advisor's clients seek to purchase or
sell the same security at or about the same time, the Advisor may execute the
transaction on a combined ("blocked") basis. Blocked transactions can produce
better execution for the Fund because of the increased volume of the
transaction. If the entire blocked order is not filled, the Fund 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 Fund 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. In the event that the entire blocked order
is not filled, the purchase or sale will normally be allocated by random client
selection, grouping discretionary and non-discretionary accounts, and in a
manner to reduce custodian transaction costs. For the period June 30, 1997
(commencement of operations) through October 31, 1997 and for the fiscal year
ended October 31, 1998, the Fund paid brokerage commissions of $3,352 and
$_________, respectively.
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, Martin
Luther King, Jr. 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 for the period indicated 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. For the period June 30,
1997 (commencement of operations) through October 31, 1997 and for the fiscal
year ended October 31, 1998, the Fund's average annual total return was 34.19%,
annualized, and _______%, respectively.
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 Russell 2000 Index or the S&P 600 Small-Cap Index.
<PAGE>
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 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., Hauppauge Corporate Center, 150 Motor
Parkway, Hauppauge, NY 11788, 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. For the period
June 30, 1997 (commencement of operations) through October 31, 1997 and for the
fiscal year ended October 31, 1998, ADS received $3,200 and $_________,
respectively, from the Advisor (not the Fund) for these 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, 1999. 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.
ADMINISTRATOR
The Fund retain AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake TX 76092, (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. For the period June 30, 1997 (commencement of operations) through
October 31, 1997 and for the fiscal year ended October 31, 1998, the
Administrator received $_______ and $________, respectively, from the Advisor
(not the Fund) for these services.
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Trust's Annual Report to Shareholders for the fiscal year
ended October 31, 1998. The Trust will provide the Annual Report without charge
by calling the Fund at 1-800-924-6848
<PAGE>
FLORIDA STREET FUNDS
PROSPECTUS February 14, 1999
247 Florida Street
Baton Rouge, LA 70801
For Information, Shareholder Services and Requests:
(800) 890-5344
Florida Street Bond Fund. The investment objective of the Florida
Street Bond Fund is to provide total return to its shareholders over the long
term. The Fund's investment advisor, CommonWealth Advisors, Inc. (the
"Advisor"), seeks to achieve this objective by investing primarily in a
portfolio of high yield, non-investment grade securities issued in many of the
world's securities markets. Under normal circumstances, the Fund will invest at
least 65% of its total assets in bonds and other debt securities, and thus it is
expected that the Fund will generate a high level of current income. However,
the Advisor will also consider the potential for capital appreciation in making
investments for the Fund's portfolio, and may invest in preferred stock,
convertible bonds and other securities (including equity securities) without
regard to yield characteristics.
Florida Street Growth Fund. The investment objective of the Florida
Street Growth Fund is to provide total return to its shareholders over the long
term. The Advisor seeks to achieve this objective by investment primarily in a
portfolio of equity securities that the Advisor believes are undervalued by the
market place. However, the Fund may also invest in bonds and other fixed income
securities that the Advisor believes are consistent with the Fund's objective.
The Funds are "no-load," which means that investors incur no sales
charges, commissions or deferred sales charges on the purchase or redemption of
their shares. Each Fund is one of the mutual funds comprising AmeriPrime Funds,
an open-end management investment company, 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 February 14, 1999, which is incorporated herein by
reference and can be obtained without charge by calling the Funds at the phone
number listed above.
The Florida Street Bond Fund may invest up to 100% of its assets in
non-investment grade securities, commonly known as "junk bonds," that entail
greater risks, including default risks, than those found in investment grade
securities. The Florida Street Growth Fund may also invest in junk bonds.
Investors should carefully consider these risks before investing. See
"Investment Objective and Strategies," page ____; "Risk Considerations, page
______; and "Investment Policies and Techniques," page _______.
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.
<PAGE>
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
each 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 each 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 Funds. In addition, the Funds do not
have a 12b-1 Plan. Unlike most other mutual funds, neither Fund pays directly
for transfer agency, pricing, custodial, auditing or legal services, nor does
either Fund pay directly any general administrative or other significant
operating expenses. The Advisor pays all of the expenses of each Fund except
brokerage, taxes, interest, fees and expenses of non-interested person trustees
and extraordinary expenses.
[TABLE TO BE UPDATED:
Shareholder Transaction Expenses
Florida Street Florida Street Growth
Bond Fund Fund
Sales Load Imposed on Purchases NONE NONE
Sales Load Imposed on Reinvested Dividends NONE NONE
Deferred Sales Load NONE NONE
Redemption Fees NONE NONE
Exchange Fees NONE NONE
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees (after fee waiver with respect to the
Bond Fund) 0.75% 1.35%
12b-1 Charges NONE NONE
Other Expenses2 0.00% 0.00%
Total Fund Operating Expenses (after fee waiver with
respect to the Bond Fund))1 0.75% 1.35%
1 Each Fund's total operating expenses are equal to the management fee paid
to the Advisor because the Advisor pays all of the Fund's operating
expenses (except as described above). Expense information has been restated
to reflect current fees.
2 Each 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 less than of .001% 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
each 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:
1 Year 3 Years
------ -------
Florida Street Bond Fund $08 $24
<PAGE>
Florida Street Growth Fund $14 $43
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
period August 4, 1997 (commencement of operations) through October 31, 1997 and
the fiscal year ended October 31, 1998, is derived from the audited financial
statements of the Fund. The financial statements of the Fund have been audited
by McCurdy & Associates CPA's, Inc., independent public accountants, and are
included in the Fund's Annual Report. The Annual Report contains additional
performance information and is available upon request and without charge.
[FINANCIAL HIGHLIGHTS TO BE INSERTED]
THE FUNDS
Florida Street Bond Fund and Florida Street Growth Fund (each a "Fund"
or collectively the "Funds") were organized as non-diversified series of
AmeriPrime Funds, an Ohio business trust (the "Trust"), on June 10, 1997. This
prospectus offers shares of each Fund and each share represents an undivided,
proportionate interest in a Fund. The investment advisor to each Fund is
CommonWealth Advisors, Inc. (the "Advisor"). The Funds are referred to, and may
conduct business as, the "Florida Street Funds."
INVESTMENT OBJECTIVE AND STRATEGIES
Florida Street Bond Fund
The investment objective of the Florida Street Bond Fund is to provide
total return to its shareholders over the long term. The Advisor seeks to
achieve this objective by investing primarily in a portfolio of high yield,
non-investment grade securities issued in many of the world's securities
markets. Under normal circumstances, the Fund will invest at least 65% of its
total assets in bonds and other debt securities, and thus it is expected that
the Fund will generate a high level of current income. However, the Advisor will
also consider the potential for capital appreciation in making investments for
the Fund's portfolio, and may invest in preferred stock, convertible bonds and
other securities (including equity securities) without regard to yield
characteristics.
The Fund intends to invest in Brady bonds and other sovereign debt and
in high risk, lower quality debt securities commonly referred to as "junk
bonds", as well as in the debt securities of issuers located in emerging
markets. Junk bonds are regarded as predominantly speculative with respect to
the issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligation. It is anticipated that the Fund's assets will primarily
be invested in high yield, non-investment grade debt securities of both
governmental and corporate issuers in both the major industrialized markets and
the so-called "emerging markets." The use of junk bonds, foreign securities
(particularly from emerging markets) and certain other investments and
investment techniques will subject the Fund to greater risk than is typical for
most bond funds. There also is additional risk because the Fund is
non-diversified. See "Investment Policies and Techniques" and "Risk
Considerations".
The Fund generally invests in securities which are rated BB or lower by
S&P or Baa or lower by Moody's or, if unrated, of comparable quality in the
opinion of the Advisor. Securities which are rated BB by S&P or Baa by Moody's
possess some speculative characteristics. A description of the rating categories
is contained in the Appendix herein. There is no lower limit with respect to the
rating categories for securities in which the Fund may invest. See "Risk
Factors: Risks of Investing In High Yield Securities ("Junk Bonds")" herein.
The Fund is not required to dispose of debt securities whose credit
quality declines at some point after the security is purchased; however, no more
than 25% of the Fund's assets will be invested at any time in securities rated
less than CCC by S&P or Caa by Moody's or, if unrated, of comparable quality in
the opinion of the Advisor. S&P's lowest rating for bonds is CI, which is
reserved for income bonds on which no interest is being paid, and D, which is
reserved for debt in default and in respect of which payment of interest or
repayment of principal is
<PAGE>
in arrears. Moody's lowest rating is C, which is applied to bonds which have
extremely poor prospects for ever attaining any real investment standing. The
Fund may, from time to time, purchase defaulted debt securities if, in the
opinion of the Advisor, the issuer may resume interest payments in the near
future. The Fund will not invest more than 15% of its total assets (at the time
of purchase) in defaulted debt securities, which may be illiquid. Other than as
set forth above, there is no restriction on the percentage of the Fund's assets
which may be invested in bonds of a particular rating.
The Fund invests in debt obligations allocated among diverse markets
and denominated in various currencies, including multi-currency units such as
European Currency Units. The Fund may purchase securities that are issued by the
government or a company or financial institution of one country but denominated
in the currency (or multi-currency unit) of another country.
Florida Street Growth Fund
The investment objective of the Florida Street Growth Fund is to
provide total return to its shareholders over the long term. The Advisor seeks
to achieve this objective by investment primarily in a portfolio of equity
securities that the Advisor believes are undervalued by the market place.
However, the Fund may also invest in bonds and other debt securities that the
Advisor believes are consistent with the Fund's objective. Certain investments
eligible for purchase by the Fund entail risks. There also is additional risk
because the Fund is non-diversified. See "Investment Policies and Techniques"
and "Risk Considerations".
In searching for investments for the Fund, the Advisor employs a "value
style" that focuses on a low current price relative to the Advisor's view
regarding long-term future value. The Advisor gauges the ability of a company to
build long-term value while minimizing long-term investment risk, assesses the
quality and quantity of a company's resources, and estimates how those resources
might be converted into earnings over time.
General
For temporary defensive purposes under abnormal market or economic
conditions, either Fund may hold all or a portion of its assets in money market
instruments, securities of other no-load registered investment companies or U.S.
government repurchase agreements. Either Fund may also invest in such
instruments at any time to maintain liquidity or pending selection of
investments in accordance with its policies. If a Fund acquires securities of
another investment company, the shareholders of the Fund will be subject to
additional management fees.
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, neither Fund can give any assurance that its investment objective
will be achieved. In addition, it should be noted that the Advisor has not
previously managed assets organized as a mutual fund, and the Funds have no
operating history. Rates of total return quoted by a Fund may be higher or lower
than past quotations, and there can be no assurance that any rate of total
return will be maintained. See "Investment Policies and Techniques" and "Risk
Considerations" for a more detailed discussion of each Fund's investment
practices and the risks involved in such practices.
HOW TO INVEST IN THE FUNDS
Each Fund is "no-load" and shares of each Fund are sold directly to
investors on a continuous basis, subject to the following minimums: minimum
initial investment of $1,000 and minimum subsequent investments of $100. These
minimums may be waived by the Advisor for accounts participating in an automatic
investment program. Investors choosing to purchase or redeem their shares
through a broker/dealer or other institution may be charged a fee by that
institution. Investors choosing to purchase or redeem shares directly from the
Funds will not incur charges on purchases or redemptions. To the extent
investments of individual investors are aggregated into an omnibus account
established by an investment advisor, broker or other intermediary, the account
minimums apply to the omnibus account, not to the account of the individual
investor.
<PAGE>
Initial Purchase
By Mail - You may purchase shares of each 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 Florida Street Funds, and sent to the to the P.O. Box
listed below. If you prefer overnight delivery, use the overnight address listed
below.
U.S Mail Florida Street Funds Overnight: Florida Street Funds
c/o American Data Services, Inc. c/o American Data Services,
Inc.
P.O. Box 5536 Hauppauge Corporate Center
Hauppauge, New York 11788-0132 150 Motor Parkway
Hauppauge, NY 11788
Please identify the Fund(s) in which you wish to invest. Your purchase of shares
of a Fund will be effected at the next share price calculated after receipt of
your investment.
By Wire - You may also purchase shares of a 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 800-890-5344 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
for Florida Street Funds D.D.A. # 486447600
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 Funds, 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 Funds. Any delays which
may occur in wiring money, including delays which may occur in processing by the
banks, are not the responsibility of the Funds 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 Funds.
Additional Investments
You may purchase additional shares of either 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 Florida Street Funds and should be sent to the above listed
address. A bank wire should be sent as outlined above.
Automatic Investment Plan
You may make regular investments in a Fund with an Automatic Investment
Plan by completing the appropriate section of the account application and
attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
Tax Sheltered Retirement Plans
<PAGE>
Since the Funds are oriented to longer term investments, shares of the
Funds may be an appropriate investment medium for tax sheltered retirement
plans, including: individual retirement plans (IRAs); simplified employee
pensions (SEPs); 401(k) plans; qualified corporate pension and profit sharing
plans (for employees); tax deferred investment 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
advisor regarding these plans is advisable. Custodial fees for an IRA will be
paid by the shareholder by redemption of sufficient shares of the Funds 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 Funds do
not issue share certificates. All shares are held in non-certificate form
registered on the books of the Funds and the Funds' 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 Funds. If your check or wire
does not clear, you will be responsible for any loss incurred by the Funds. If
you are already a shareholder, the Funds can redeem shares from any identically
registered account in the Funds as reimbursement for any loss incurred. You may
be prohibited or restricted from making future purchases in the Funds.
HOW TO REDEEM SHARES
All redemptions will be made at the net asset value next 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 Funds reserve 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. Investors choosing to purchase or redeem their
shares through a broker/dealer or other institution may be charged a fee by that
institution.
By Mail - You may redeem any part of your account in a Fund at no
charge by mail. Your request should be addressed to:
Florida Street Funds
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
"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
Funds require 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 a 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 a Fund by
calling the Transfer Agent at (800) 890-5344. You must first complete the
Optional Telephone Redemption and Exchange section of the investment application
to institute this option. The Funds, 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.
<PAGE>
The telephone redemption and exchange procedures may be terminated at
any time by the Funds or the Transfer Agent. During periods of extreme market
activity it is possible that shareholders may encounter some difficulty in
telephoning the Funds, although neither the Funds 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
Funds by telephone, you may request a redemption or exchange by mail.
By Systematic Withdrawal Plan - As another convenience, the Funds offer
a Systematic Withdrawal Program whereby shareholders may request that a check
drawn in a predetermined amount be sent to them each month or calendar quarter.
A shareholders account must have Fund shares with a value of at least $10,000 in
order to start a systematic Withdrawal Program, and the minimum amount that may
be withdrawn each month or quarter under the Systematic Withdrawal program is
$100. This Program may be terminated by a shareholder or the Funds at any time
without charge or penalty and will become effective five business days following
receipt of your instructions. Shares will be sold within three business days
before month-end. A withdrawal under the Systematic Withdrawal Program involves
a redemption of shares, and may result in a gain or loss for federal income tax
purposes. In addition, if the amount withdrawn exceeds the dividends credited to
the shareholder's account, the account ultimately may be depleted.
Additional Information - If you are not certain of the requirements for
a redemption please call the Transfer Agent at (800) 890-5344. 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 calendar 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 Funds may suspend
redemptions or postpone payment dates.
Because the Funds incur certain fixed costs in maintaining shareholder
accounts, each Fund reserves the right to require any shareholder to redeem all
of his or her shares in a Fund on 30 days' written notice if the value of his or
her shares in the Fund is less than $1,000 due to 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 advisor concerning
the tax consequences of involuntary redemptions. A shareholder may increase the
value of his or her shares in each Fund to the minimum amount within the 30 day
period. Each share of each 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 Funds.
SHARE PRICE CALCULATION
The value of an individual share in a 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 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
<PAGE>
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 Florida Street Growth Fund intends to distribute substantially all
of its net investment income as dividends to its shareholders on an annual
basis. The Florida Street Bond Fund intends to declare substantially all of its
net investment income as dividends to its shareholders on a daily basis and to
pay such dividends monthly. Each Fund intends to distribute its net long term
capital gains and its net short term capital gains at least once a year.
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
Each Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code"). By so
qualifying, a 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 each 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.
Each 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 advisors regarding specific questions as to federal, state or local taxes
and the tax effect of distributions and withdrawals from a Fund.
On the application or other appropriate form, the Funds 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, each
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, a 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 applicable
<PAGE>
Fund may make a corresponding charge against the account.
OPERATION OF THE FUNDS
Each 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 Trustees supervises the business activities of the Funds.
Like other mutual funds, the Funds retain various organizations to perform
specialized services. The Funds retain CommonWealth Advisors, Inc., 247 Florida
Street, Baton Rouge, LA 70801 (the "Advisor") to manage the assets of each Fund.
The Florida Street Bond Fund is authorized to pay the Advisor a fee equal to an
annual average rate of 1.10% of the Fund's average daily net assets, and the
Florida Street Growth Fund is authorized to pay the Advisor a fee equal to an
annual average rate of 1.35% of the Fund's average daily net assets. Effective
November 1, 1997, and until further notice, the Advisor intends to waive a
portion of its management fee in order to reduce total operating expenses of the
Florida Street Bond Fund from 1.10% to .75%. The Advisor pays all of the
operating expenses of the Funds except brokerage, taxes, interest, fees and
expenses of non-interested person trustees and extraordinary expenses. In this
regard, it should be noted that most investment companies pay their own
operating expenses directly, while the Funds' expenses, except those specified
above, are paid by the Advisor.
The Advisor, a Louisiana corporation, is an independent investment advisory
firm that has provided investment supervisory services and financial planning to
individuals, financial institutions, corporations, trusts, estates, charitable
organizations, and retirement plans since 1991. Walter A. Morales is responsible
for the day-to- day management of the Florida Street Bond Fund. Mr. Morales
began privately managing individual common stocks in 1984, and has served as the
Advisor's president and chief investment manager since its founding in 1991. Mr.
Morales has a Masters in Business Administration and a B.S. degree in Chemistry
from Louisiana State University and previously worked as a Vice President and
Senior Trust Investment Officer for Baton Rouge Bank and Trust, and as an
Investment Broker for A.G. Edwards and Sons, Inc. Richard L. Chauvin, Jr. is
responsible for the day-to-day management of the Florida Street Growth Fund. Mr.
Chauvin is Senior Vice President and Fund Manager of the Advisor. Prior to
joining the Advisor in 1997, he served for one year as Regional Director of
Portfolio Management at Bank One Investment Advisors ("BOIA"). From 1986 to
1996, he served as a Vice President, portfolio manager and fund manager for
Premier Investment Advisors which merged into BOIA in 1996. His duties included
managing a $100 million equity mutual fund and numerous accounts for individuals
and foundations. Mr. Chauvin received a B.S. and M.S. in Finance from Louisiana
State University in 1976 and 1978, respectively.
The services of the Administrator, Transfer Agent and Distributor are
operating expenses paid by the Advisor (not the Fund). The Funds retain
AmeriPrime Financial Services, Inc. (the "Administrator") to manage the Funds'
business affairs and provide each Fund with administrative services, including
all regulatory reporting and necessary office equipment, personnel and
facilities. For the Florida Street Bond Fund, the Administrator receives a
monthly fee from the Fund equal to an annual average rate of 0.050% of the
Fund's average daily net assets (subject to a minimum annual payment of
$25,000). For the Florida Street Growth Fund, the Administrator receives a
monthly fee from the Fund 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 $25,000). The Funds retain American Data Services,
Inc., Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge, NY 11788 (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 each Fund's shares.
Kenneth D. Trumpfheller, officer and sole shareholder of the Administrator and
the Distributor, is an officer and trustee of the Trust.
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
a Fund as a factor in the selection of brokers and dealers to execute Fund
transactions.
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RISK CONSIDERATIONS
Risks of Investing in High Yield Securities ("Junk Bonds"). Lower-rated
long-term securities, including securities rated from BB to D by S&P or Ba to C
by Moody's or, if unrated, of comparable quality in the opinion of the Advisor,
will usually offer higher yields than higher-rated securities. However, there is
more risk associated with these investments. This is because of the reduced
creditworthiness and increased risk of default that these securities carry.
Lower-rated long-term securities generally tend to reflect short-term corporate
and market developments to a greater extent than higher-rated securities which
react primarily to fluctuations in the general level of interest rates. Lower
rated long-term securities also involve greater sensitivity to significant
increases in interest rates. Short-term corporate and market developments
affecting the prices and liquidity of lower-rated long-term securities could
include adverse news impacting major issues or underwriters or dealers in
lower-rated long-term or unrated securities. In addition, since there are fewer
investors in lower-rated long-term securities, it may be harder to sell
securities at an optimum time.
An economic downturn may adversely affect the value of some lower-rated
long-term bonds. Such a downturn may especially affect highly leveraged
companies or companies in cyclically sensitive industries, where deterioration
in a company's cash flow may impair its ability to meet its obligation to pay
principal and interest to bondholders in a timely fashion. From time to time, as
a result of changing conditions, issuers of lower-rated long-term bonds may seek
or may be required to restructure the terms and conditions of the securities
they have issued. As a result of these restructurings, holders of lower-rated
long-term securities may receive less principal and interest than originally
expected at the time such bonds were purchased. In the event of a restructuring,
the Funds may bear additional legal or administrative expenses in order to
maximize recovery from an issuer. The secondary trading market for lower-rated
long-term bonds is generally less liquid than the secondary trading market for
higher-rated bonds.
The risk of loss due to default by the issuer is significantly greater
for the holders of high yield securities because such securities are generally
unsecured and are often subordinated to other obligations of the issuer. During
an economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of high yield securities may experience financial stress and
may not have sufficient revenues to meet their interest payment obligations. An
issuer's ability to service its debt obligations may also be adversely affected
by specific corporate developments, its inability to meet specific projected
business forecasts, or the unavailability of additional financing.
Factors adversely affecting the market value of high yield and other
Fund securities will adversely affect the corresponding Fund's net asset value.
In addition, a Fund may incur additional expenses to the extent it is required
to seek recovery upon a default in the payment of principal or interest on its
Fund holdings.
Risks of Investing in Foreign Securities. Investors should realize that
investing in securities of foreign issuers involves considerations not typically
associated with investing in securities of companies organized and operated in
the United States. Investments may be adversely affected by changes in political
or social conditions, diplomatic relations, confiscatory taxation,
expropriation, nationalization, limitation on the removal of funds or assets, or
imposition of (or change in) exchange control or tax regulations in foreign
countries. In addition, changes in government administrations or economic or
monetary policies in the United States or abroad could result in appreciation or
depreciation of Fund securities and could favorably or unfavorably affect a
Fund's operations. Furthermore, the economies of individual foreign nations may
differ from the U.S. economy, whether favorably or unfavorably, in areas such as
growth of gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payments position. It may also be more
difficult to obtain and enforce a judgment against a foreign issuer. In general,
less information is publicly available with respect to foreign issuers than is
available with respect to U.S. companies. Most foreign companies are also not
subject to the uniform accounting and financial reporting requirements
applicable to issuers in the United States. Any foreign investments made by a
Fund must be made in compliance with U.S. and foreign currency restrictions and
tax laws restricting the amounts and types of foreign investments.
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Because foreign securities generally are denominated and pay dividends
or interest in foreign currencies, the value of the net assets of a Fund as
measured in U.S. dollars will be affected favorably or unfavorably by changes in
exchange rates. In order to protect against uncertainty in the level of future
foreign currency exchange rates, each Fund is also authorized to enter into
certain foreign currency exchange transactions. Furthermore, a Fund's foreign
investments may be less liquid and their prices may be more volatile than
comparable investments in securities of U.S. companies. The settlement periods
for foreign securities, which are often longer than those for securities of U.S.
issuers, may affect Fund liquidity. Finally, there may be less government
supervision and regulation of securities exchanges, brokers and issuers in
foreign countries than in the United States.
Risks of Investing in Emerging Markets. The world's industrialized
markets generally include but are not limited to the following: Australia,
Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland,
Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Singapore,
Spain, Sweden, Switzerland, the United Kingdom, and the United States. The
world's emerging markets generally include but are not limited to the following:
Argentina, Bolivia, Brazil, Bulgaria, Chile, China, Colombia, Costa Rica, the
Czech Republic, Ecuador, Egypt, Greece, Hungary, India, Indonesia, Israel, the
Ivory Coast, Jordan, Malaysia, Mexico, Morocco, Nicaragua, Nigeria, Pakistan,
Peru, the Philippines, Poland, Portugal, Romania, Russia, Slovakia, Slovenia,
South Africa, South Korea, Sri Lanka, Taiwan, Thailand, Turkey, Uruguay,
Venezuela, Vietnam and Zimbabwe.
Investment in securities of issuers based in underdeveloped emerging
markets entails all of the risks of investing in securities of foreign issuers
outlined in this section to a heightened degree. These heightened risks include:
(i) greater risks of expropriation, confiscatory taxation, nationalization, and
less social, political and economic stability; (ii) the smaller size of the
market for such securities and a low or nonexistent volume of trading, resulting
in lack of liquidity and in price volatility; (iii) certain national policies
which may restrict a Fund's investment opportunities including restrictions on
investing in issuers or industries deemed sensitive to relevant national
interests; and (iv) in the case of Eastern Europe and in China and other Asian
countries, the absence of developed capital markets and legal structures
governing private or foreign investment and private property and the possibility
that recent favorable economic and political developments could be slowed or
reversed by unanticipated events. So long as the Communist Party continues to
exercise a significant or, in some countries, dominant role in Eastern European
countries or in China and other Asian countries, investments in such countries
will involve risks of nationalization, expropriation and confiscatory taxation.
The Communist governments of a number of Eastern European countries expropriated
large amounts of private property in the past, in many cases without adequate
compensation. There may be no assurance that such expropriation will not occur
in the future in either the Eastern European countries or other countries. In
the event of such expropriation, a Fund could lose a substantial portion of any
investments it has made in the affected countries. Further, no accounting
standards exist in Eastern European countries. Finally, even though certain
Eastern European currencies may be convertible into U.S. dollars, the conversion
rates may be artificial to the actual market values and may be adverse to Fund
shareholders.
In addition to brokerage commissions, custodial services and other
costs relating to investment in emerging markets are generally more expensive
than in the United States. Such markets have been unable to keep pace with the
volume of securities transactions, making it difficult to conduct such
transactions. The inability of a Fund to make intended security purchases due to
settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of a security due to settlement problems
could result either in losses to the Fund due to subsequent declines in the
value of the security or, if the Fund has entered into a contract to sell the
security, could result in possible liability to the purchaser.
Risks of Investings in Options and Futures Contracts. Options and
futures contracts ("Futures") can be volatile investments, and involve certain
risks. Options and Futures may fail as hedging techniques in cases where the
price movements of the securities underlying the options and Futures do not
follow the price movements of the portfolio securities subject to the hedge.
Successful use by a Fund of options and Futures will be subject to the Advisor's
ability to correctly predict movement in the direction of interest rates, the
security market generally or of a particular industry, and other economic
factors. This requires different skills and techniques than predicting changes
in the price of individual securities. A Fund could experience losses if it can
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not close out its positions because of an illiquid secondary market. In
addition, losses from certain Futures transactions are potentially unlimited.
See the sections describing options and futures under "Investment Policies and
Techniques" (page ____) for additional risk information.
Non-Diversified Investment Company. Each Fund is classified as a
"non-diversified" investment company and, as such, each may invest a greater
proportion of its assets in the securities of a smaller number of issuers and
therefore may be subject to greater market and credit risk than a more broadly
diversified fund. As each Fund intends to comply with Subchapter M of the Code,
each Fund may invest up to 50% of its assets at the end of each quarter of its
fiscal year in as few as two issuers, provided that no more than 25% of the
assets are invested in one issuer. With respect to the remaining 50% of its
assets at the end of each quarter, it may invest no more than 5% in one issuer.
Additional Investment Information. Neither Fund will have more than 25% of
the current value of its total assets invested in any single industry. This
restriction does not apply to debt securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities.
The Advisor (not the Funds) may pay certain financial institutions
(which may include banks, brokers, securities dealers and other industry
professionals) a "servicing fee" for performing certain administrative functions
for Fund shareholders to the extent these institutions are allowed to do so by
applicable statute, rule or regulation.
INVESTMENT POLICIES AND TECHNIQUES
This section contains general information about various types of
securities and investment techniques that each Fund may purchase or employ.
Equity Securities. As used herein, "equity securities" are defined as
common stock, preferred stock, trust or limited partnership interests, rights
and warrants to subscribe to or purchase such securities, sponsored or
unsponsored American Depository Receipts ("ADRs"), European Depository Receipts
("EDR"), Global Depository Receipts ("GDRs"), and convertible securities
consisting of debt securities or preferred stock that may be converted into
common stock or that carry the right to purchase common stock. Common stocks,
the most familiar type, represent an equity (ownership) interest in a
corporation. Although equity securities have a history of long-term growth in
value, their prices fluctuate based on changes in a company's financial
condition and on overall market and economic conditions. Smaller companies are
especially sensitive to these factors.
In addition to investing directly in common stocks, each Fund may
invest in S&P Depositary Receipts ("SPDRs") and similar instruments. SPDRs are
shares of a publicly traded unit investment trust which owns the stocks included
in the applicable S&P Index [such as the S&P 500 Index or the S&P Mid Cap 400
Index.] Changes in the price of SPDRs track the movement of the associated Index
relatively closely.
Each Fund stresses four criteria in selecting equity investments:
(1) A strong financial position, as measured not only by balance sheet data
but also measured by off-balance sheet liabilities and contingencies (as
disclosed in footnotes to financial statements and as determined through
research of public information)
(2) Responsible management and control groups, as gauged by managerial
competence as operators and investors as well as by an apparent absence of
intent to profit at the expense of stockholders.
(3) Availability of comprehensive and meaningful financial and related
information. The availability of financial statements and information which
provide the Advisor with reliable benchmarks to aid in understanding the
business, its values and its dynamics.
(4) Availability of the security at a market price which the Advisor
believes is at a substantial discount
<PAGE>
to the Advisor's estimate of what the issuer is worth as a private company or as
a takeover or merger and acquisition candidate, or based on other measures the
Advisor believes reflect the security's value such as price to earnings, price
to sales, price to cash flow, price to book value.
Debt Securities. Each Fund may buy debt securities of all types and
qualities issued by both domestic and foreign issuers. Bonds and other debt
instruments are used by issuers to borrow money from investors. The issuer pays
the investor a fixed or variable rate of interest, and must repay the amount
borrowed at maturity. Some debt securities, such as zero coupon bonds, do not
pay current interest, but are purchased at a discount from their face values.
Debt securities, loans, and other direct debt have varying degrees of quality
and varying levels of sensitivity to changes in interest rates. Longer-term
bonds are generally more sensitive to interest rate changes than short-term
bonds.
Lower-quality foreign government securities are often considered to be
speculative and involve greater risk of default or price changes, or they may
already be in default. These risks are in addition to the general risks
associated with foreign securities.
Each Fund intends to invest for the most part in debt securities which
the Advisor believes will provide above-average current yields or yields to
maturity. When selecting debt instruments, the Advisor stresses:
(1) Strong investor protection in the form of covenants contained in loan
agreements and other contracts that establish the terms of the debt instrument;
and
(2) Appraisals of the business' financial position and operating outlook,
as well as the Advisor's appraisal of values that might be realized in a
reorganization or upon the sale of assets or the liquidation of the issuer.
The Advisor will also use its best judgment as to the most favorable
range of maturities. In general, a Fund will acquire debt issues which have a
senior position in an issuer's capitalization.
Preferred Stock. Preferred stock has a preference in liquidation (and,
generally dividends) over common stock but is subordinated in liquidation to
debt. As a general rule the market value of preferred stocks with fixed dividend
rates and no conversion rights varies inversely with interest rates and
perceived credit risk, with the price determined by the dividend rate. Some
preferred stocks are convertible into other securities, (for example, common
stock) at a fixed price and ratio or upon the occurrence of certain events. The
market price of convertible preferred stocks generally reflects an element of
conversion value. Because many preferred stocks lack a fixed maturity date,
these securities generally fluctuate substantially in value when interest rates
change; such fluctuations often exceed those of long-term bonds of the same
issuer. Some preferred stocks pay an adjustable dividend that may be based on an
index, formula, auction procedure or other dividend rate reset mechanism. In the
absence of credit deterioration, adjustable rate preferred stocks tend to have
more stable market values than fixed rate preferred stocks. All preferred stocks
are also subject to the same types of credit risks of the issuer as corporate
bonds. In addition, because preferred stock is junior to debt securities and
other obligations of an issuer, deterioration in the credit rating of the issuer
will cause greater changes in the value of a preferred stock than in a more
senior debt security with similar yield characteristics. Preferred stocks may be
rated by S&P and Moody's although there is no minimum rating which a preferred
stock must have (and a preferred stock may not be rated) to be an eligible
investment for a Fund. The Advisor expects, however, that generally the
preferred stocks in which a Fund invests will be rated at least CCC by S&P or
Caa by Moody's or, if unrated, of comparable quality in the opinion of the
Advisor. Preferred stocks rated CCC by S&P are regarded as predominantly
speculative with respect to the issuer's capacity to pay preferred stock
obligations and represent the highest degree of speculation among securities
rated between BB and CCC; preferred stocks rated Caa by Moody's are likely to be
in arrears on dividend payments. Moody's rating with respect to preferred stocks
does not purport to indicate the future status of payments of dividends.
Convertible Securities. A convertible security is a bond or preferred stock
which may be converted at a stated price within a specific period of time into a
specified number of shares of common stock of the same or
<PAGE>
different issuer. Convertible securities are senior to common stock in a
corporation's capital structure, but usually are subordinated to non-convertible
debt securities. While providing a fixed income stream generally higher in yield
than in the income derived from a common stock but lower than that afforded by a
non-convertible debt security, convertible security also affords an investor the
opportunity, through its conversion feature, to participate in the capital
appreciation of common stock into which it is convertible.
In general, the market value of a convertible security is the higher of
its investment value (its value as a fixed income security) or its conversion
value (the value of the underlying shares of common stock if the security is
converted). As a fixed income security, the market value of a convertible
security generally increases when interest rates decline and generally decreases
when interest rates rise; however, the price of a convertible security generally
increases as the market value of the underlying stock increases, and generally
decreases as the market value of the underlying stock declines. Investments in
convertible securities generally entail less risk than investments in the common
stock of the same issuer.
Warrants. Warrants are instruments which entitle the holder to buy
underlying equity securities at a specific price for a specific period of time.
A warrant tends to be more volatile than its underlying securities and ceases to
have value if it is not exercised prior to its expiration date. In addition,
changes in the value of a warrant do not necessarily correspond to changes in
the value of its underlying securities.
Mortgage-Backed Securities. Each Fund may invest in mortgage-backed
securities and derivative mortgage-backed securities, including "principal only"
and "interest only" components. Mortgage-backed securities are securities that
directly or indirectly represent a participation in, or are secured by and
payable from, mortgage loans on real property. These securities have special
risk characteristics. The Advisor intends to invest in these securities only
when it believes, after analysis, that there is unlikely to ever be a default by
either the issuer or the guarantor of these securities. These securities do,
nonetheless, entail considerable market risk (i.e., fluctuations in quoted
prices for the instruments), interest rate risk, prepayment risk and inflation
risk.
The Funds may invest in residential mortgage-backed securities
representing participation interests in pools of one-to-four family residential
mortgage loans originated by private mortgage originators including stripped
mortgage-backed securities ("SMBS") of the U.S. Government and certain of its
agencies and instrumentalities. An SMBS is described as "stripped" because some
of the equity or interest components of the security is removed from the
package. The Fund will not invest in non-investment grade subordinated classes
of residential mortgage-backed securities and may invest in commercial
mortgage-backed securities.
SMBS are structured with two or more classes of securities that receive
different proportions of the interest and principal distributions on a pool of
mortgage assets. A common type of SMBS will have at least one class receiving
none or only a small portion of the interest and all or a larger portion of the
principal from the mortgage assets, while the other classes will receive
primarily or entirely interest and none or only a small portion of the
principal.
Prepayments of principal generally may be made at any time without
penalty on residential mortgage-backed securities. Prepayment rates are
influenced by changes in current interest rates and a variety of economic,
geographic, social and other factors. Changes in prepayment rates may change the
yield to maturity of the security and amounts available for reinvestment from
such securities by the Fund are likely to be greater during periods of
relatively low or declining interest rates and therefore are likely to be
reinvested at lower rates than during a period of relatively high interest
rates. As a result, the high credit quality of many of these securities may
provide little or no protection against loss in market value. Due to the
unprecedented volatility of prepayment and interest rates during the past two
years, many mortgage-backed securities have experienced substantial losses in
market value. The Fund's Advisor believes that many of these securities are
currently trading at prices below their inherent value on a risk-adjusted basis
and believes that selective purchases by the Fund could provide high yield and
total return in comparison to risk levels.
<PAGE>
Current federal income tax law requires that companies such as the
Funds which seek to qualify for pass-through federal income tax treatment as
regulated investment companies distribute substantially all of their net
investment income each year, including non-cash income such as income from
principal only mortgage-backed securities. Accordingly, the Fund may be required
to distribute to its shareholders each year the interest it is deemed to earn on
principal only mortgage-backed securities even though it receives no cash
interest payments.
Asset-Backed Securities. Each Fund intends to invest in asset-backed
securities that, through the use of trusts and special purpose vehicles, are
securitized with various types of assets, such as automobile receivables, credit
card receivables and home-equity loans in pass-through structures similar to the
mortgage-related securities described above. In general, the collateral
supporting asset-backed securities is of shorter maturity than the collateral
supporting mortgage loans and is less likely to experience substantial
prepayments. However, asset-backed securities are not backed by any governmental
agency.
U.S. Government Securities are high-quality debt securities issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the U.S.
government. Not all U.S. government securities are backed by the full faith and
credit of the United States. For example, securities issued by the Farm Credit
Banks or by the Federal National Mortgage Association are supported by the
instrumentality's right to borrow money from the U.S. Treasury under certain
circumstances. However, securities issued by other agencies or instrumentalities
are supported only by the credit of the entity that issued them.
ADRs, GDRs 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,
GDRs and EDRs are alternatives to the purchase of the underlying securities in
their national markets and currencies. ADRs, GDRs and EDRs are subject to the
same risks as the foreign securities to which they relate. See "Risks of
Investing in Foreign Securities" herein.
Puts. Each Fund may purchase bonds or notes together with the right to
resell them at an agreed price or yield within a specified period prior to
maturity. This right to resell is known as a put. The aggregate price paid for
securities with puts may be higher than the price which otherwise would be paid.
Consistent with the investment objectives of the Fund and subject to the
supervision of the Trustees of the Fund, the purpose of this practice is to
permit a Fund to be fully invested in securities while maintaining the necessary
liquidity to purchase securities on a when-issued basis, to meet unusually large
redemptions, to purchase at a later date securities other than those subject to
the put and to facilitate the Advisor's ability to manage the Fund actively. The
principal risk of puts is that the put writer may default on its obligation to
repurchase. The Advisor will monitor each writer's ability to meet its
obligations under puts. The amortized cost method is used by the Funds to value
securities with maturities of less than 60 days; when these securities are
subject to puts separate from the underlying securities, no value is assigned to
the puts. The cost of any such put is carried as an unrealized loss from the
time of purchase until it is exercised or expires.
Zero Coupon Securities. Each Fund may invest in zero coupon securities
which are debt securities issued or sold at a discount from their face value
which do not entitle the holder to any periodic payment of interest prior to
maturity or a specified redemption date (or cash payment date). These involve
risks that are similar to those of other debt securities, although they may be
more volatile, and certain zero coupon securities move in the same direction as
interest rates. The amount of the discount varies depending on the time
remaining until maturity or cash payment date, prevailing interest rates,
liquidity of the security and perceived credit quality of the issuer. Zero
coupon securities also may take the form of debt securities that have been
stripped of their unmatured interest coupons, the coupons themselves and
receipts or certificates representing interests in such stripped debt
obligations and coupons. The market prices of zero coupon securities generally
are more volatile than the market prices of interest-bearing securities and are
likely to respond to a greater degree to changes in interest rates than
interest-bearing securities having similar maturities and credit qualities.
STRIPS. The Federal Reserve creates STRIPS (Separate Trading of Registered
Interest and Principal of Securities) by separating the coupon payments and the
principal payment from an outstanding Treasury security and
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selling them as individual securities. To the extent a Fund purchases the
principal portion of the STRIP, the Fund will not receive regular interest
payments. Instead they are sold at a deep discount from their face value. A Fund
will accrue income on such STRIPS for tax and accounting purposes, in accordance
with applicable law, which income is distributable to shareholders. Because no
cash is received at the time such income is accrued, a Fund may be required to
liquidate other Fund securities to satisfy its distribution obligations. Because
the principal portion of the STRIP does not pay current income, its price can be
very volatile when interest rates change. In calculating its dividend, a Fund
takes into account as income a portion of the difference between the principal
portion of the STRIP's purchase price and its face value.
Floating Rate Bonds may have interest rates that move in tandem with a
benchmark, helping to stabilize their prices.
Sovereign and Supranational Debt Obligations. Each Fund may invest
without limitation in debt instruments issued or guaranteed by foreign
governments, agencies, and supranational organizations ("sovereign debt
obligations"). These securities, especially sovereign debt obligations of
developing countries, may involve a high degree of risk, and may be in default
or present the risk of default. The issuer of the obligation or the governmental
authorities that control the repayment of the debt may be unable or unwilling to
repay principal and interest when due, and may require renegotiation or
rescheduling of debt payments. In addition, prospects for repayment of principal
and interest may depend on political as well as economic factors.
Brady Bonds. "Brady bonds" are bonds issued as a result of a
restructuring of a country's debt obligations to commercial banks under the
"Brady plan." Brady bonds have been issued by the governments of Argentina,
Costa Rica, Mexico, Nigeria, Uruguay, Venezuela, Brazil and the Philippines, as
well as other emerging market countries. Most Brady bonds are currently rated
below BBB by S&P or Baa by Moody's. While the Advisor is not aware of the
occurrence of any payment defaults on Brady bonds, investors should recognize
that these debt securities have been issued only recently and, accordingly, do
not have a long payment history. Brady bonds may be collateralized or
uncollateralized, are issued in various currencies (primarily the U.S. dollar)
and are actively traded in the secondary market for Latin American debt.
Rule 144A Securities are securities in the United States that are not
registered for sale under Federal securities laws but which can be resold to
institutions under SEC Rule 144A. Provided that a dealer or institutional
trading market in such securities exists, these restricted securities are
treated as exempt from the 15% limit on illiquid securities. Under the
supervision of the Board of Trustees of each Fund, the Advisor determines the
liquidity of restricted securities and, through reports from the Advisor, the
Board will monitor trading activity in restricted securities. If institutional
trading in restricted securities were to decline, the liquidity of a Fund could
be adversely affected.
When-Issued and Delayed Delivery Securities. Each Fund may purchase
securities on a when-issued or delayed delivery basis. Delivery of and payment
for these securities may take place as long as a month or more after the date of
the purchase commitment. The value of these securities is subject to market
fluctuation during this period and no income accrues to the Fund until
settlement takes place. The Fund maintains with the Custodian a segregated
account containing high grade liquid securities in an amount at least equal to
these commitments.
Repurchase Agreements. In a repurchase agreement, a Fund buys a
security at one price and simultaneously agrees to sell it back at a higher
price at a future date. Delays or losses could result if the other party to the
agreement defaults or becomes insolvent.
Reverse Repurchase Agreements. In a reverse repurchase agreement, a
Fund temporarily transfers possession of a Fund instrument to another party in
return for cash. This could increase the risk of fluctuation in the Fund's yield
or in the market value of its assets. A reverse repurchase agreement is a form
of borrowing and will be counted towards each Fund's borrowing restrictions. See
"Leverage" below.
Investment Companies. The Funds may invest without limitation in other
registered investment
<PAGE>
companies. With respect to certain countries in which capital markets are either
less developed or not easily accessed, investments by each Fund may be made
through investment in other registered investment companies that in turn are
authorized to invest in the securities of such countries. Investment in other
investment companies is limited in amount by the Investment Company Act of 1940,
as amended (the "1940 Act"), will involve the indirect payment of a portion of
the expenses, including advisory fees, of such other investment companies and
may result in a duplication of fees and expenses.
Securities Lending. Each 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 a 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).
Leverage. Each Fund may borrow up to one-third of the value of its
total assets, from banks or through the use of reverse repurchase agreements, to
increase its holdings of Fund securities. Under the 1940 Act, each Fund is
required to maintain continuous asset coverage of 300% with respect to such
borrowings and to sell (within three days) sufficient Fund holdings to restore
such coverage if it should decline to less than 300% due to market fluctuations
or otherwise, even if such liquidations of a Fund's holdings may be
disadvantageous from an investment standpoint.
Leveraging by means of borrowing may exaggerate the effect of any
increase or decrease in the value of each Fund's securities and the
corresponding Fund's net asset value and money borrowed by a Fund will be
subject to interest and other costs (which may include commitment fees and/or
the cost of maintaining minimum average balances) which may or may not exceed
the income received from the securities purchased with borrowed funds.
Floating Rate, Inverse Floating Rate and Index Obligations. Each Fund
may invest without limitation in debt securities with interest payments or
maturity values that are not fixed, but float in conjunction with (or inversely
to) an underlying index or price. These floating rate, inverse floating rate and
index obligations are considered to be instruments which are commonly known as
derivatives. They may be backed by U.S. Government or corporate issuers, or by
collateral such as mortgages. In certain cases, a change in the underlying index
or price may have a leveraging effect on the periodic coupon payments, creating
larger possible swings in the prices of such securities than would be expected
when taking into account their maturities alone. The indices and prices upon
which such securities can be based include interest rates, currency rates and
commodities prices. The Fund may invest in instruments whose value is computed
based on a multiple of the change in price or value of an asset (or of an index
of or relating to assets), provided the relevant asset or assets are eligible
for investment by the Fund.
<PAGE>
To the extent a Fund invests in instruments whose value is computed based on
such a multiple, a leverage factor is involved, which can result in high
volatility and significant losses. See "Derivatives" on pages of the Prospectus.
Floating rate securities pay interest according to a coupon which is
reset periodically. The reset mechanism may be formula based, or reflect the
passing through of floating interest payments on an underlying collateral pool.
The coupon is usually reset daily, weekly, monthly, quarterly or semi-annually,
but other schedules are possible. Floating rate obligations generally exhibit a
low price volatility for a given stated maturity or average life because their
coupons adjust with changes in interest rates. If their underlying index is not
an interest rate, or the reset mechanism lags the movement of rates in the
current market, greater price volatility may be experienced.
Inverse floating rate securities are similar to floating rate
securities except that their coupon payments vary inversely with an underlying
index by use of a formula. Inverse floating rate securities tend to exhibit
greater price volatility than other floating rate securities. Because the
changes in the coupon are usually negatively correlated with changes in overall
interest rates, interest rate risk and price volatility on inverse floating rate
obligations can be high, especially if leverage is used in the formula. Index
securities pay a fixed rate of interest, but have a maturity value that varies
by formula, so that when the obligation matures, a gain or loss is realized. The
risk of index obligations depends on the volatility of the underlying index, the
coupon payment and the maturity of the obligation.
Trade Claims. Each Fund may invest in trade claims and options on trade
claims. Trade claims are interests in amounts owed to suppliers of goods or
services and are purchased from creditors of companies in financial difficulty.
For purchasers such as the Fund, trade claims offer the potential for profits
since they are often purchased at a significant discount from face value and,
consequently, may generate capital appreciation in the event that the market
value of the claim increases as the debtor's financial position improves or the
claim is paid. See "Options on Stocks, Bonds and Stock and Bond Indices," page
___, for additional information on option transactions.
An investment in trade claims is speculative and carries a high degree
of risk. Trade claims are illiquid securities which generally do not pay
interest and there can be no guarantee that the debtor will ever be able to
satisfy the obligation on the trade claim. The markets in trade claims are not
regulated by federal securities laws or the SEC. Because trade claims are
unsecured, holders of trade claims may have a lower priority in terms of payment
than certain other creditors in a bankruptcy proceeding.
Investment In Relatively New Issues. Each Fund may invest in the common
stock and debt securities of selected new issuers (i.e., those having continuous
operating histories of less than three years). If a Fund invests in debt
securities of new issuers, it will only be in those issues where the Advisor
believes there are strong contractual protections for the holder. If issuers
meet the investment criteria discussed above, the Funds may invest in securities
without respect to the age of the issuer. Investments in new issuers may carry
special risks and may be more speculative because such companies are relatively
unseasoned. Such companies may also lack sufficient resources, may be unable to
generate internally the funds necessary for growth and may find external
financing to be unavailable on favorable terms or even totally unavailable.
Those companies will often be involved in the development or marketing of a new
product with no established market, which could lead to significant losses.
Loan Participations and Assignments. Each Fund may invest in fixed and
floating rate loans arranged through private negotiations between a borrower and
one or more lending institutions. The majority of the Funds' investments in
loans in emerging markets is expected to be in the form of participations in
loans ("Participations") and assignments of portions of loans from third parties
("Assignments"). The Funds may also invest in loans, Participations or
Assignments of loans to borrowers located in the industrialized world.
Participations typically will result in a Fund having a contractual relationship
only with the lender, not the borrower. The Fund will have the right to receive
payments of principal, interest and any fees to which it is entitled only from
the lender selling the Participation and only upon receipt by the lender of the
payments from the borrower. In connection with purchasing Participations, the
Fund generally will have no right to enforce compliance by the borrower with the
terms of the loan agreement relating to the loan, nor any rights of set-off
against the borrower, and the Fund may
<PAGE>
not directly benefit from any collateral supporting the loan in which it has
purchased the Participation. As a result, the Fund will assume the credit risk
of both the borrower and the lender that is selling the Participation. In the
event of the insolvency of the lender selling the Participation, the Fund may be
treated as a general creditor of the lender and may not benefit from any set-off
between the lender and the borrower. The Funds will acquire Participations only
if the lender interpositioned between the Fund and the borrower is determined by
the Advisor to be creditworthy. When a Fund purchases Assignments from lenders,
the Fund will acquire direct rights against the borrower on the loan; however,
since Assignments are arranged through private negotiations between the
potential assignees and assignors, the rights and obligations acquired by the
Fund as the purchaser of an Assignment may differ from, and be more limited
than, those held by the assigning lender.
A Fund may have difficulty disposing of Assignments and Participations.
The liquidity of such securities is limited and the Funds anticipate that such
securities could only be sold to a limited number of institutional investors.
The lack of a liquid secondary market could have an adverse impact on the value
of such securities and on the Funds' ability to dispose of particular
Assignments or Participations when necessary to meet liquidity needs or in
response to a specific economic event, such as a deterioration in the
creditworthiness of the borrower. The lack of a liquid secondary market for
Assignments and Participations also may make it more difficult in valuing the
Funds and, therefore, calculating the net asset value per share of the Funds.
All Assignments and Participations shall be considered to be illiquid securities
by the Funds. The investment by a Fund in illiquid securities, including
Assignments and Participations, is limited to a total of 15% of its net assets.
Derivatives. Each Fund may invest in various instruments that are
commonly known as derivatives. Generally, a derivative is a financial
arrangement, the value of which is based on, or "derived" from, a traditional
security, asset, or market index. Some "derivatives" such as mortgage-related
and other asset-backed securities are in many respects like any other
investment, although they may be more volatile or less liquid than more
traditional debt securities. There are, in fact, many different types of
derivatives and many different ways to use them. There are a range of risks
associated with those uses. Futures and options are commonly used for
traditional hedging purposes to attempt to protect a fund from exposure to
changing interest rates, securities prices, or currency exchange rates and as a
low cost method of gaining exposure to a particular securities market without
investing directly in those securities. However, some derivatives are used for
leverage, which tends to magnify the effects of an instrument's price changes as
market conditions change. Leverage involves the use of a small amount of money
to control a large amount of financial assets, and can in some circumstances,
lead to significant losses. The Advisor will use derivatives only in
circumstances where they offer the most efficient means of improving the
risk/reward profile of a Fund and when consistent with a Fund's investment
objective and policies.
The use of derivatives for non-hedging purposes may be considered speculative.
Foreign Currency Exchange Transactions. Each Fund may enter into
foreign currency exchange transactions to convert to and from different foreign
currencies and to convert foreign currencies to and from the U.S. dollar. A Fund
either enters into these transactions on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market or uses forward
contracts to purchase or sell foreign currencies. A forward foreign currency
exchange contract is an obligation by a Fund to purchase or to sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract. Forward foreign currency exchange contracts establish an
exchange rate at a future date. These contracts are transferable in the
interbank market conducted directly between currency traders (usually large
commercial banks) and their customers. A forward foreign currency exchange
contract generally has no deposit requirement and is traded at a net price
without commission. Neither spot transactions nor forward foreign currency
exchange contracts eliminate fluctuations in the prices of a Fund's securities
or in foreign exchange rates, or prevent loss if the prices of these securities
should decline.
A Fund may enter into foreign currency hedging transactions in an
attempt to protect against changes in foreign currency exchange rates between
the trade and settlement dates of specific securities transactions or changes in
foreign currency exchange rates that would adversely affect a Fund position or
an anticipated investment position. Although these transactions tend to minimize
the risk of loss due to a decline in the value of the hedged currency, at the
same time they tend to limit any potential gain that might be realized should
the value of the hedged currency increase. The precise matching of the forward
contract amounts and the value of
<PAGE>
the securities involved will not generally be possible because the future value
of such securities in foreign currencies will change as a consequence of market
movements in the value of such securities between the date the forward contract
is entered into and the date it matures. The projection of currency market
movements is extremely difficult, and the successful execution of a hedging
strategy is highly uncertain.
Options on Foreign Currencies. Each Fund may write covered put and call
options and purchase put and call options on foreign currencies for the purpose
of protecting against declines in the U.S. dollar value of Fund securities and
against increases in the U.S. dollar cost of securities to be acquired. A Fund
may use options on foreign currency to cross-hedge, which involves writing or
purchasing options on one currency to hedge against changes in exchange rates
for a different, but related currency. As with other types of options, however,
the writing of an option on a foreign currency will constitute only a partial
hedge up to the amount of the premium received, and a Fund could be required to
purchase or sell a foreign currency at disadvantageous exchange rates, thereby
incurring losses. The purchase of an option on foreign currency may be used to
hedge against fluctuations in exchange rates although, in the event of exchange
rate movements adverse to a Fund's position, it may forfeit the entire amount of
the premium plus related transaction costs. In addition, a Fund may purchase
call options on a foreign currency when the investment Advisor anticipates that
the currency will appreciate in value.
There is no assurance that a liquid secondary market will exist for any
particular option, or at any particular time. If a Fund is unable to effect a
closing purchase transaction with respect to covered options it has written, the
Fund will not be able to sell the underlying currency or dispose of assets held
in a segregated account until it closes out the options or the options expire or
are exercised. Similarly, if the Fund is unable to close out options it has
purchased, it would have to exercise the options in order to realize any profit
and will incur transaction costs. The Funds pay brokerage commissions or spreads
in connection with options transactions.
As in the case of forward contracts, certain options on foreign
currencies are traded over-the-counter and involve liquidity and credit risks
which may not be present in the case of exchange-traded currency options. The
Funds' ability to terminate over-the-counter options ("OTC Options") will be
more limited than with exchange-traded options. It is also possible that
broker-dealers participating in OTC Options transactions will not fulfill their
obligations. Until such time as the staff of the SEC changes its position, the
Funds will treat purchased OTC Options and assets used to cover written OTC
Options as illiquid securities. With respect to options written with primary
dealers in U.S. government securities pursuant to an agreement requiring a
closing purchase transaction at a formula price, the amount of illiquid
securities may be calculated with reference to the repurchase formula.
Options on Stocks, Bonds and Stock and Bond Indices. Each Fund may
write and purchase covered and uncovered options on stocks or bonds. Each Fund
may also invest in options on trade claims, including the sale of put options on
trade claims. A call option gives the purchaser of the option the right to buy,
and obligates the writer to sell, the underlying security at the exercise price
at any time during the option period. Similarly, a put option gives the
purchaser of the option the right to sell, and obligates the writer to buy the
underlying security at the exercise price at any time during the option period.
A covered call option with respect to which a Fund owns the underlying security
sold by the Fund exposes the Fund during the term of the option to possible loss
of opportunity to realize appreciation in the market price of the underlying
security or to possible continued holding of a security which might otherwise
have been sold to protect against depreciation in the market price of the
security. A covered put option sold by a Fund exposes the Fund during the term
of the option to a decline in price of the underlying security. When a Fund
sells a put option on a trade claim, the Fund is required to purchase the trade
claim if the holder of the option exercises his right to sell the claim to the
Fund. Therefore, the Fund will segregate with the Custodian liquid securities in
an amount at all times equal to or exceeding the Fund's commitment with respect
to these instruments.
Each Fund may purchase and write put and call options on stock or bond
indices listed on domestic and foreign stock exchanges, in lieu of direct
investment in the underlying securities or for hedging purposes. A stock or bond
index fluctuates with changes in the market values of the securities included in
the index. Options on securities indices are generally similar to options on
stocks except that the delivery requirements are different. Instead of giving
the right to take or make delivery of securities at a specified price, an option
on a stock or bond
<PAGE>
index gives the holders the right to receive a cash "exercise settlement amount"
equal to (a) the amount, if any, by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in the case of a call) the
closing value of the underlying index on the date of the exercise, multiplied by
(b) a fixed "index multiplier."
Futures Contracts on Stock and Bond Indices. Each Fund may enter into
contracts providing for the making and acceptance of a cash settlement based
upon changes in the value of an index of domestic or foreign securities
("Futures Contracts"). This investment technique may be used as a low cost
method of gaining exposure to a particular securities market without investing
directly in those securities or to hedge against anticipated future changes in
general market prices which otherwise might either adversely affect the value of
securities held by the Fund or adversely affect the prices of securities which
are intended to be purchased at a later date for the Fund. A Futures Contract
may also be entered into to close out or offset an existing futures position.
When used for hedging purposes, each transaction in Futures Contracts
involves the establishment of a position which will move in a direction opposite
to that of the investment being hedged. If these hedging transactions are
successful, the futures position taken for the Fund will rise in value by an
amount which approximately offsets the decline in value of the portion of the
Fund's investments that is being hedged. Should general market prices move in an
unexpected manner, the full anticipated benefits of Futures Contracts may not be
achieved or a loss may be realized. The risks of Futures Contracts also include
a potential lack of liquidity in the secondary market and incorrect assessments
of market. The loss from investing in Futures Contracts is potentially
unlimited. Brokerage costs will be incurred and "margin" will be required to be
posted and maintained as a good faith deposit against performance of obligations
under Futures Contracts written for a Fund. A Fund may not purchase or sell a
Futures Contract, or purchase an option on a Futures Contract, for non-hedging
purposes if immediately thereafter its aggregate outstanding margin deposits and
premiums on such contracts and options would exceed 5% of the market value of
the Fund's total assets.
Options on Futures Contracts. Each Fund may invest in options on
futures contracts for hedging purposes. There can be no assurance that the use
of these Fund strategies will be successful. The risks associated with options
on futures contracts are similar to those risks associated with futures
contracts and options on stocks, bonds and indices.
Asset Coverage. To assure that a Fund's use of futures and related
options, as well as when-issued and delayed-delivery securities and foreign
currency exchange transactions, are not used to achieve investment leverage, a
Fund will cover such transactions, as required by the SEC, either by owning the
underlying securities, entering into an offsetting transaction, or by
segregating with the Fund's custodian liquid securities in an amount at all
times equal to or exceeding the Fund's commitment with respect to these
instruments or contracts.
Short Sales. Each Fund may sell a security short in anticipation of a
decline in the market value of the security. When a Fund engages in a short
sale, it sells a security which it does not own. To complete the transaction,
the Fund must borrow the security in order to deliver it to the buyer. The Fund
must replace the borrowed security by purchasing it at the market price at the
time of replacement, which may be more or less than the price at which the Fund
sold the security. 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
profit if the security declines in price between those dates.
In connection with its short sales, a Fund will be required to maintain
a segregated account with its Custodian of cash or high grade liquid debt assets
equal to the market value of the securities sold less any collateral deposited
with its broker. However, the segregated account and deposits will not
necessarily limit the Fund's potential loss on a short sale, which is unlimited.
Illiquid Securities. Each Fund may contain illiquid securities. 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
<PAGE>
following securities are considered to be illiquid: repurchase agreements
maturing in more than seven days, nonpublicly offered securities and restricted
securities. Neither Fund will invest more than 15% of its net assets in illiquid
securities.
General. Each Fund may invest up to 5% of its net assets in each of the
following: municipal bonds, certificates of deposit, time deposits and banker's
acceptances.
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
applicable Fund. The investment objective of each 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.
Fund Turnover. Neither Fund intends to purchase or sell securities for
short term trading purposes. However, if the objectives of a Fund would be
better served, short-term profits or losses may be realized from time to time.
[It is anticipated that portfolio turnover will average less than 200% for the
Florida Street Bond Fund and less than 100% for the Florida Street Growth Fund.]
The brokerage commissions incurred by the Florida Street Bond Fund will
generally be higher than those incurred by a fund with a lower portfolio
turnover rate. The Florida Street Bond Fund's higher turnover rate may result in
the realization for federal tax purposes of more net capital gains, and any
distributions derived from such gains may be ordinary income.
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 a Fund have equal voting rights and liquidation
rights.
PERFORMANCE INFORMATION
Each Fund may periodically advertise "average annual total return." The
"average annual total return" of a 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 advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of 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. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
Each 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, the S&P 1500 Index, the Dow Jones Industrial Average,
<PAGE>
the Merrill Lynch High Yield Index and the Russell 2000 Index.
The advertised performance data of each Fund is based on historical performance
and is not intended to indicate future performance. Rates of total return quoted
by a 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 each Fund will fluctuate so that a shareholder's shares,
when redeemed, may be worth more or less than the shareholder's original
investment.
Each Fund acknowledges that it is solely responsible for the
informaiton or any lack of information about it in this joint Prospectus and in
the joint Statement of Additional Information, and no other Fund is responsible
therefore. There is a possibility that one Fund might be deemed liable for
misstatements or omissions regarding another Fund in this Prospectus or in the
joint Statement of Additional Information; however, the Funds deem this
possibility slight.
<PAGE>
APPENDIX A
DESCRIPTION OF CORPORATE BOND RATINGS
STANDARD & POOR'S RATINGS SERVICES
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. Standard
& Poor's does not perform any audit in connection with any rating and may, on
occasion, rely on unaudited financial information. The ratings may be changed,
suspended or withdrawn as a result of changes in, or unavailability of, such
information or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default-capacity and willingness of the obliger as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation.
II. Nature and provisions of the obligation.
III. Protection afforded by, and relative position of the obligation in the
event of bankruptcy, reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA - Debt rated "AAA" has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.
AA - Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A - Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB - Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC, C - Debt rated "BB", "B", "CCC", "CC", and "C" is regarded,
on balance, as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation.
"BB" indicates the lowest degree of speculation and "C" the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
BB - Debt rate "BB" has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The "BB"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB" rating.
B - Debt rated "B" has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"BB" or "BB-" rating.
CCC - Debt rated "CCC" has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The "CCC" rating category
is also used for debt subordinated to senior debt that is assigned an actual or
implied "B" or "B-" rating.
<PAGE>
CC - The rating "CC" is typically applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.
C - The rating "C" is typically applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC-" debt rating. The "C" rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
C1 - The rating "C1" is reserved for income bonds on which no interest is
being paid.
D - Debt rated "D" is in payment default. The "D" rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period. The "D"
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
categories.
MOODY'S INVESTORS SERVICE, INC.
Aaa - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of protective
elements may be of greater amplitude, or there may be other elements present
which make the long-term risk appear somewhat greater than the Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the future.
Baa - Bonds which are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative elements:
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa - Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca - Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C - Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
<PAGE>
Moody's applies numerical modifiers: 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category, the modifier 2 indicates a mid-range ranking, and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
Investment Advisor Administrator
CommonWealth Advisors, Inc. AmeriPrime Financial Services, Inc.
247 Florida Street 1793 Kingswood Drive, Suite 200
Baton Rouge, LA 70801 Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchases and Independent Auditors
all redemption requests) McCurdy & Associates CPA's, Inc.
American Data Services, Inc. 27955 Clemens Road
Hauppauge Corporate Center Westlake, Ohio 44145
150 Motor Parkway
Hauppauge, NY 11788
Legal Counsel
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
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
each Fund. This Prospectus does not constitute an offer by the Funds to sell its
shares in any state to any person to whom it is unlawful to make such offer in
such state.
<PAGE>
TABLE OF CONTENTS
SUMMARY OF FUND EXPENSES........................................................
Shareholder Transaction Expenses.......................................
Annual Fund Operating Expenses........................................
FINANCIAL HIGHLIGHTS...........................................................
THE FUNDS......................................................................
INVESTMENT OBJECTIVE AND STRATEGIES.............................................
General .............................................................
HOW TO INVEST IN THE FUND.......................................................
Initial Purchase.......................................................
Additional Investments................................................
Automatic Investment Plan..............................................
Tax Sheltered Retirement Plans........................................
Other Purchase Information.............................................
HOW TO REDEEM SHARES............................................................
By Mail ..............................................................
By Telephone...........................................................
By Systematic Withdrawal Plan..........................................
Additional Information.................................................
SHARE PRICE CALCULATION.........................................................
DIVIDENDS AND DISTRIBUTIONS.....................................................
TAXES ......................................................................
OPERATION OF THE FUNDS.........................................................
RISK CONSIDERATIONS.............................................................
INVESTMENT POLICIES AND TECHNIQUES ............................................
GENERAL INFORMATION.............................................................
Fundamental Policies...................................................
Fund Turnover.........................................................
Shareholder Rights.....................................................
PERFORMANCE INFORMATION.........................................................
<PAGE>
.
FLORIDA STREET FUNDS
STATEMENT OF ADDITIONAL INFORMATION
February 14, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of Florida Street Funds dated
February 14, 1999. A copy of the Prospectus can be obtained by writing the
Transfer Agent at Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge, NY
11788, or by calling 1-800-890-5344.
<PAGE>
TABLE OF CONTENTS
Page
DESCRIPTION OF THE TRUST...................................... ................1
ADDITIONAL INFORMATION ABOUT FUND
INVESTMENTS AND RISK CONSIDERATIONS............................................1
INVESTMENT LIMITATIONS........................................................21
THE INVESTMENT ADVISOR........................................................24
TRUSTEES AND OFFICERS.........................................................24
FUND TRANSACTIONS AND BROKERAGE................................. ............26
DETERMINATION OF SHARE PRICE..................................................27
INVESTMENT PERFORMANCE........................................................27
CUSTODIAN.....................................................................28
TRANSFER AGENT................................................................28
ACCOUNTANTS.................................................................. 28
DISTRIBUTOR.................................................................. 28
ADMINISTRATOR.................................................................28
FINANCIAL STATEMENTS..........................................................28
<PAGE>
DESCRIPTION OF THE TRUST
Florida Street Bond Fund and Florida Street Growth Fund (each a "Fund"
or collectively the "Funds") were organized as 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. Each Fund is one of a series of funds currently authorized by the
Trustees, and are referred to, and may conduct business as, the "Florida Street
Funds."
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.
[UPDATE: As of __________ __, 1998, Charles Schwab & Co. Inc., 101
Montgomery Street, San Francisco, California ("Schwab") was the record owner of
99.25% of the Florida Street Bond Fund and 100% of the Florida Street Growth
Fund. As a result, Schwab may be deemed to control the Funds. The schwab
accounts are omnibus accounts, and the Funds are unaware of any individual
investor owning 5% or more of either Fund.]
For information concerning the purchase and redemption of shares of the
Funds, see "How to Invest in the Funds" and "How to Redeem Shares" in the Funds'
Prospectus. For a description of the methods used to determine the share price
and value of each Fund's assets, see "Share Price Calculation" in the Funds'
Prospectus.
ADDITIONAL INFORMATION ABOUT FUND
INVESTMENTS AND RISK CONSIDERATIONS
This section contains a more detailed discussion of some of the
investments each Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objectives and Strategies", "Risk
Considerations" and "Investment Policies and Techniques").
A. Lower Quality Debt Securities. Each 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 and 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 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. A 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 a Fund's objective without presenting
excessive risk. The Advisor will consider all factors which it deems
appropriate, including ratings, in making investment decisions for a Fund and
will attempt to minimize investment risks through diversification, investment
analysis and
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monitoring of general economic conditions and trends. To the extend a 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 a Fund to value as Fund securities, and a
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, a 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 a Fund's assets.
If a 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 a Fund. In considering investments for a 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.
B. Brady Bonds. Each Fund may invest in "Brady bonds," which have been
issued by the governments of Argentina, Brazil, Costa Rica, Mexico, Nigeria,
Philippines, Uruguay and Venezuela. Most Brady bonds are currently rated below
BBB by S&P or Baa by Moody's.
The Brady Plan was conceived by the U.S. Treasury in the 1980's in an
attempt to produce a debt restructuring program which would enable a debt
country to (i) reduce the absolute level of debt of its creditor banks, and (ii)
reschedule its external debt repayments, based upon its ability to service such
debts by persuading its creditor banks to accept a debt write-off by offering
them a selection of options, each of which represented an attractive substitute
for the nonperforming debt. Although it was envisaged that each debtor country
would agree to a unique package of options with its creditor banks, the plan was
that these options would be based upon the following:(i) a discount bond
carrying a market rate of interest (whether fixed or floating), with principal
collateralized by the debtor country with cash or securities in an amount equal
to at least one year of rolling interest; (ii) a par bond carrying a low rate of
interest (whether fixed or floating), collateralized in the same way as in (i)
above; and (iii) retention of existing debt (thereby avoiding a debt write-off)
coupled with an advance of new money or subscription of new bonds.
Each Fund may invest in either collateralized or uncollateralized Brady
bonds. U.S. dollar-denominated, collateralized Brady bonds, which may be fixed
rate par bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on such bonds generally are collateralized by cash or
securities in an amount that in the case of fixed rate bonds, is equal to at
least one year of rolling interest payments or, in the case of floating rate
bonds, initially is equal to at least one year's rolling interest payments based
on the applicable interest rate at the time and is adjusted at regular intervals
thereafter.
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C. Municipal Bonds. Municipal bonds generally fund longer-term capital
needs than municipal notes and have maturities exceeding one year when issued.
Municipal bonds include:
General Obligation Bonds. Issuers of general obligation bonds include
states, counties, cities, towns and regional districts. The proceeds of these
obligations are used to fund a wide range of public projects, including
construction or improvement of schools, highways and roads, and water and sewer
systems. The basic security behind general obligation bonds is the issuer's
pledge of its full faith and credit and taxing power for the payment of
principal and interest. The taxes that can be levied for the payment of debt
service may be limited or unlimited as to the rate or amount of special
assessments.
Revenue Bonds. The principal security for a revenue bond is generally
the net revenues derived from a particular facility, group of facilities or, in
some cases, the proceeds of a special excise tax or other specific revenue
source. Revenue bonds are issued to finance a wide variety of capital projects,
including electric, gas, water and sewer systems; highways, bridges, and
tunnels; port and airport facilities; colleges and universities; and hospitals.
Although the principal security behind these bonds may vary, many provide
additional security in the form of a debt service reserve fund that may be used
to make principal and interest payments on the issuer's obligations. Housing
finance authorities have a wide range of security, including partially or fully
insured mortgages, rent subsidized and/or collateralized mortgages, certificates
of deposit and/or the net revenues from housing or other public projects. Some
authorities provide further security in the form of a state's ability (without
obligation) to make up deficiencies in the debt service reserve fund.
Private Activity Bonds. Private activity bonds, which are considered
municipal obligations if the interest paid thereon is excluded from gross income
for Federal income tax purposes but is a specific tax preference item for
Federal individual and corporate alternative minimum tax purposes, are issued by
or on behalf of public authorities to raise money to finance various
privately-operated facilities such as manufacturing facilities, certain hospital
and university facilities and housing projects. These bonds are also used to
finance public facilities such as airports, mass transit systems and ports. The
payment of the principal and interest on these bonds is dependent solely on the
ability of the facility's user to meet its financial obligations and generally
the pledge, if any, of real and personal property so financed as security for
payment.
Municipal Notes. Municipal notes generally fund short-term capital needs.
Each Fund may invest in municipal notes, which include:
Tax Anticipation Notes. Tax anticipation notes are issued to finance
working capital needs of municipalities. Generally, they are issued in
anticipation of various seasonal tax revenue, such as income, sales, use and
business taxes, and are payable from these specific future taxes.
Revenue Anticipation Notes. Revenue anticipation notes are issued in
expectation of receipt of other types of revenue, such as Federal revenues
available under Federal revenue sharing programs.
Bond Anticipation Notes. Bond anticipation notes are issued to provide
interim financing until long-term financing can be arranged. In most cases, the
long-term bonds provide funds for the repayment of these notes.
Miscellaneous, Temporary and Anticipatory Instruments. These
instruments may include notes issued to obtain interim financing pending
entering into alternate financial arrangements, such as receipt of anticipated
Federal, state or other grants or aid, passage of increased legislative
authority to issue longer-term instruments or obtaining other refinancing.
Construction Loan Notes. Construction loan notes are sold to provide
construction financing. Permanent financing, the proceeds of which are applied
to the payment of construction loan notes, is sometimes provided by a commitment
of the Government National Mortgage Association (`GNMA") to purchase the loan,
accompanied
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by a commitment by the Federal Housing Administration to insure mortgage
advances thereunder. In other instances, permanent financing is provided by
commitments of banks to purchase the loan. Each Fund will only purchase
construction loan notes that are subject to permanent GNMA or bank purchase
commitments.
Tax Exempt Commercial Paper. Each Fund may invest in tax-exempt
commercial paper. Tax-exempt commercial paper is a short-term obligation with a
stated maturity of 365 days or less. It is issued by agencies of state and local
governments to finance seasonal working capital needs or as short-term financing
in anticipation of longer-term financing.
Standby Commitments. Each Fund may acquire standby commitments or
"puts" solely to facilitate Fund liquidity; the Fund intends to exercise its
rights thereunder for trading purposes. The maturity of a municipal obligation
is not to be considered shortened by any standby commitment to which the
obligation is subject. Thus, standby commitments do not affect the
dollar-weighted average maturity of the Fund.
When municipal obligations are subject to puts separate from the
underlying securities, no value is assigned to the put. Because of the
difficulty of evaluating the likelihood of exercise or the potential benefit of
a put, the Board of Trustees has determined that puts shall have a fair market
value of zero, regardless of whether any direct or indirect consideration was
paid.
Since the value of the put is partly dependent on the ability of the
put writer to meet its obligation to repurchase, the Fund's policy is to enter
into put transactions only with put writers who are approved by Advisor. It is
the Fund's general policy to enter into put transactions only with those put
writers which are determined to present minimal credit risks. In connection with
this determination, the Board of Trustees will review regularly Advisor's list
of approved put writers, taking into consideration, among other things, the
ratings, if available, of their equity and debt securities, their reputation in
the municipal securities markets, their net worth, their efficiency in
consummating transactions and any collateral arrangements, such as letters of
credit securing the puts written by them. Commercial banks normally will be
members of the Federal Reserve System, and other dealers will be members of the
National Association of Securities Dealers, Inc. or members of a national
securities exchange. Other put writers will have outstanding debt rated Aa or
better by Moody's Investors Services, Inc. (`Moody's") or AA or better by
Standard & Poor's Ratings Group (`S&P"), or will be of comparable quality in
Advisor's opinion, or such put writers' obligations will be collateralized and
of comparable quality in Advisor's opinion. The Board of Trustees has directed
Advisor not to enter into put transactions with any put writer that, in the
judgment of Advisor using the above-described criteria, is or becomes a
recognizable credit risk. The Trust is unable to predict whether all or any
portion of any loss sustained could subsequently be recovered from a put writer
in the event that a put writer should default on its obligation to repurchase an
underlying security.
D. Zero Coupon Bonds. Zero coupon bonds do not make regular interest
payments. Instead they are sold at a deep discount from their face value. Each
Fund will accrue income on such bonds for tax and accounting purposes, in
accordance with applicable law. This income will be distributed to shareholders.
Because no cash is received at the time such income is accrued, the Fund may be
required to liquidate other portfolio securities to satisfy its distribution
obligations. Because a zero coupon bond does not pay current income, its price
can be very volatile when interest rates change. In calculating its dividend,
the Funds take into account as income a portion of the difference between a zero
coupon bond's purchase price and its face value. Certain types of CMOs pay no
interest for a period of time and therefore present risks similar to zero coupon
bonds.
E. Foreign Securities. Each Fund may invest in foreign equity
securities including common stock, preferred stock and common stock equivalents
issued by foreign companies, and foreign fixed income securities. Foreign fixed
income securities include corporate debt obligations issued by foreign companies
and debt obligations of foreign governments or international organizations. This
category may include floating rate obligations, variable rate obligations,
Yankee dollar obligations (U.S. dollar denominated obligations issued by foreign
companies and traded on U.S. markets) and Eurodollar obligations (U.S. dollar
denominated obligations issued by foreign
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companies and traded on foreign markets).
Foreign government obligations generally consist of debt securities
supported by national, state or provincial governments or similar political
units or governmental agencies. Such obligations may or may not be backed by the
national government's full faith and credit and general taxing powers.
Investments in foreign securities also include obligations issued by
international organizations. International organizations include entities
designated or supported by governmental entities to promote economic
reconstruction or development as well as international banking institutions and
related government agencies. Examples are the International Bank for
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, the Asian Development Bank and the InterAmerican Development Bank. In
addition, investments in foreign securities may include debt securities
denominated in multinational currency units of an issuer (including
international issuers). An example of a multinational currency unit is the
European Currency Unit. A European Currency Unit represents specified amounts of
the currencies of certain member states of the European Economic Community, more
commonly known as the Common Market.
Purchases of foreign securities are usually made in foreign currencies
and, as a result, a Fund may incur currency conversion costs and may be affected
favorably or unfavorably by changes in the value of foreign currencies against
the U.S. dollar. In addition, there may be less information publicly available
about a foreign company then about a U.S. company, and foreign companies are not
generally subject to accounting, auditing and financial reporting standards and
practices comparable to those in the U.S. Other risks associated with
investments in foreign securities include changes in restrictions on foreign
currency transactions and rates of exchanges, changes in the administrations or
economic and monetary policies of foreign governments, the imposition of
exchange control regulations, the possibility of expropriation decrees and other
adverse foreign governmental action, the imposition of foreign taxes, less
liquid markets, less government supervision of exchanges, brokers and issuers,
difficulty in enforcing contractual obligations, delays in settlement of
securities transactions and greater price volatility. In addition, investing in
foreign securities will generally result in higher commissions than investing in
similar domestic securities.
F. Financial Services Industry Obligations. Each Fund may invest up to
5% of its net assets in each of the following obligations of the financial
services industry:
(1) Certificate of Deposit. Certificates of deposit are
negotiable certificates evidencing the indebtedness of a commercial
bank or a savings and loan association to repay funds deposited with it
for a definite period of time (usually from fourteen days to one year)
at a stated or variable interest rate.
(2) Time Deposits. Time deposits are non-negotiable deposits
maintained in a banking institution or a savings and loan association
for a specified period of time at a stated interest rate.
(3) Bankers' Acceptances. Bankers' acceptances are credit
instruments evidencing the obligation of a bank to pay a draft which
has been drawn on it by a customer, which instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of
the instrument upon maturity.
G. Repurchase Agreements. A repurchase agreement is a short-term
investment in which the purchaser (i.e., a Fund) acquires ownership of a U.S.
Government obligation (which may be of any maturity) and the seller agrees to
repurchase the obligation at a future time at a set price, thereby determining
the yield during the purchaser's holding period (usually not more than seven
days from the date of purchase). Any repurchase transaction in which a Fund
engages will require full collateralization of the seller's obligation during
the entire term of the repurchase agreement. In the event of a bankruptcy or
other default of the seller, a Fund could experience both delays in liquidating
the underlying security and losses in value. However, each Fund intends to enter
into repurchase agreements only with the Custodian, other banks with assets of
$1 billion or more and registered securities dealers determined by the Advisor
(subject to review by the Board of Trustees) to be creditworthy. The
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Advisor monitors the creditworthiness of the banks and securities dealers with
which a Fund engages in repurchase transactions.
H. Mortgage-Backed Securities. Mortgage-backed securities represent
participation interests in pools of one-to-four family residential mortgage
loans originated by private mortgage originators. Traditionally, residential
mortgage-backed securities have been issued by governmental agencies such as
Fannie Mae, Freddie Mac and Ginnie Mae. Non-governmental entities that have
issued or sponsored residential mortgage-backed securities offerings include
savings and loan associations, mortgage banks, insurance companies, investment
banks and special purpose subsidiaries of the foregoing.
While residential loans do not typically have prepayment penalties or
restrictions, they are often structured so that subordinated classes may be
locked out of prepayments for a period of time. However, in a period of
extremely rapid prepayments, during which senior classes may be retired faster
than expected, the subordinated classes may receive unscheduled payments of
principal and would have average lives that, while longer than the average lives
of the senior classes, would be shorter than originally expected. The types of
residential mortgage-backed securities which the Fund may invest in may include
the following:
Guaranteed Mortgage Pass-Through Securities. Each Fund may invest in
mortgage pass-through securities representing participation interests in pools
of residential mortgage loans originated by the U.S. government and guaranteed,
to the extent provided in such securities, by the U.S. government or one of its
agencies or instrumentalities. Such securities, which are ownership interests in
the underlying mortgage loans, differ from conventional debt securities, which
provide for periodic payment of interest in fixed amounts (usually
semi-annually) and principal payments at maturity or on specified call dates.
Mortgage pass-through securities provide for monthly payments that are a
"pass-through" of the monthly interest and principal payments (including any
prepayments) made by the individual borrowers on the pooled mortgage loans, net
of any fees paid to the guarantor of such securities and the servicer of the
underlying mortgage loans. The guaranteed mortgage pass-through securities in
which the Fund will invest are those issued or guaranteed by Ginnie Mae, Fannie
Mae and Freddie Mac.
Ginnie Mae Certificates. Ginnie Mae is a wholly-owned corporate
instrumentality of the United States Government within the Department of Housing
and Urban Development. The National Housing Act of 1934, as amended (the
"Housing Act"), authorizes Ginnie Mae to guarantee the timely payment of the
principal of and interest on certificates that are based on and backed by a pool
of mortgage loans insured by the Federal Housing Administration under the
Housing Act, or Title V of the Housing Act of 1949 ("FHA Loans"), or guaranteed
by the Veterans' Administration under the Servicemen's Readjustment Act of 1944,
as amended ("VA Loans"), or by pools of other eligible mortgage loans. The
Housing Act provides that the full faith and credit of the U.S. government is
pledged to the payment of all amounts that may be required to be paid under any
guarantee. In order to meet its obligations under such guarantee, Ginnie Mae is
authorized to borrow from the U.S. Treasury with no limitations as to amount.
The Ginnie Mae Certificates will represent a pro rata interest in one
or more pools of the following types of mortgage loans: (i) fixed rate level
payment mortgage loans; (ii) fixed rate graduated payment mortgage loans; (iii)
fixed rate growing equity mortgage loans; (iv) fixed rate mortgage loans secured
by manufactured (mobile) homes; (v) mortgage loans on multifamily residential
properties under construction; (vi) mortgage loans on completed multifamily
projects; (vii) fixed rate mortgage loans as to which escrowed funds are used to
reduce the borrower's monthly payments during the early years of the mortgage
loans ("buydown" mortgage loans); (viii) mortgage loans that provide for
adjustments in payments based on periodic changes in interest rates or in other
payment terms of the mortgage loans; and (ix) mortgage-backed serial notes. All
of these mortgage loans will be FHA Loans or VA Loans and, except as otherwise
specified above, will be fully-amortizing loans secured by first liens on
one-to-four family housing units.
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Fannie Mae Certificates. Fannie Mae is a federally chartered and
privately owned corporation organized and existing under the Federal National
Mortgage Association Charter Act. Fannie Mae was originally established in 1938
as a U.S. government agency to provide supplemental liquidity to the mortgage
market and was transformed into a stockholder owned and privately managed
corporation by legislation enacted in 1968. Fannie Mae provides funds to the
mortgage market primarily by purchasing home mortgage loans from local lenders,
thereby replenishing their funds for additional lending. Fannie Mae acquires
funds to purchase home mortgage loans from many capital market investors that
may not ordinarily invest in mortgage loans directly, thereby expanding the
total amount of funds available for housing.
Each Fannie Mae Certificate entitles the registered holder thereof to
receive amounts representing such holder's pro rata interest in scheduled
principal payments and interest payments (at such Fannie Mae Certificate's
pass-through rate, which is net of any servicing and guarantee fees on the
underlying mortgage loans), and any principal prepayments on the mortgage loans
in the pool represented by such Fannie Mae Certificate and such holder's
proportionate interest in the full principal amount of any foreclosed or
otherwise finally liquidated mortgage loan. The full and timely payment of
principal of and interest on each Fannie Mae Certificate will be guaranteed by
Fannie Mae, which guarantee is not backed by the full faith and credit of the
U.S. government.
Each Fannie Mae Certificate will represent a pro rata interest in one
or more pools of FHA Loans, VA Loans or conventional mortgage loans (i.e.,
Mortgage Loans that are not insured or guaranteed by any governmental agency) of
the following types; (i) fixed rate level payment mortgage loans; (ii) fixed
rate growing equity mortgage loans; (iii) fixed rate graduated payment mortgage
loans; (iv) variable rate California mortgage loans; (v) other adjustable rate
mortgage loans; and (vi) fixed rate mortgage loans secured by multifamily
projects.
Freddie Mac Certificates. Freddie Mac is a corporate instrumentality of
the United States Government created pursuant to the Emergency Home Finance Act
of 1970, as amended (the "FHLMC Act"). Freddie Mac was established primarily for
the purpose of increasing the availability of mortgage credit for the financing
of needed housing. The principal activity of Freddie Mac currently consists of
the purchase of first lien, conventional, residential mortgage loans and
participation interests in such mortgage loans and the resale of the mortgage
loans so purchased in the form of mortgage securities, primarily Freddie Mac
Certificates.
Freddie Mac guarantees to each registered holder of a Freddie Mac
Certificate the timely payment of interest at the rate provided for by such
Freddie Mac Certificate, whether or not received. Freddie Mac also guarantees to
each registered holder of a Freddie Mac Certificate ultimate collection of all
principal of the related mortgage loans, without any offset or deduction, but
does not generally guarantee the timely payment of scheduled principal. Freddie
Mac may remit the amount due on account of its guarantee of collection of
principal at any time after default on an underlying mortgage loan, but not
later than 30 days following (i) foreclosure sale, (ii) payment of a claim by
any mortgage insurer, or (iii) the expiration of any right of redemption,
whichever occurs later, but in any event no later than one year after demand has
been made upon the mortgagor for acceleration of payment of principal. The
obligations of Freddie Mac under its guarantee are obligations solely of Freddie
Mac and are not backed by the full faith and credit of the U.S. government.
Freddie Mac Certificates represent a pro rata interest in a group of
mortgage loans (a "Freddie Mac Certificate group") purchased by Freddie Mac. The
mortgage loans underlying the Freddie Mac Certificates will consist of fixed
rate or adjustable rate mortgage loans with original terms to maturity of
between ten and thirty years, substantially all of which are secured by first
liens on one-to-four family residential properties or multifamily projects. Each
mortgage loan must meet the applicable standards set forth in the FHLMC Act. A
Freddie Mac Certificate group may include whole loans, participation interests
in whole loans and undivided interests in whole loans and participations
comprising another Freddie Mac Certificate group.
Private Mortgage Pass-Through Securities. Private mortgage pass-through
securities ("Private Pass- Throughs") are structured similarly to the Ginnie
Mae, Fannie Mae and Freddie Mac mortgage pass-through
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securities described above and are issued by originators of and investors in
mortgage loans, including savings and loan associations, mortgage banks,
commercial banks, investment banks and special purpose subsidiaries of the
foregoing. Private Pass-Throughs are usually backed by a pool of conventional
fixed rate or adjustable rate mortgage loans.
Since Private Pass-Throughs typically are not guaranteed by an entity
having the credit status of Ginnie Mae, Fannie Mae or Freddie Mac, such
securities generally are structured with one or more types of credit
enhancement.
Collateralized Mortgage Obligations. Collateralized mortgage
obligations or "CMOs" are debt obligations collateralized by mortgage loans or
mortgage pass-through securities. Typically, CMOs are collateralized by Ginnie
Mae, Fannie Mae or Freddie Mac Certificates, but also may be collateralized by
whole loans or Private Pass-Throughs (such collateral collectively hereinafter
referred to as "Mortgage Assets").
Stripped Mortgage-Backed Securities. Multi-class pass-through
securities are equity interests in a fund composed of Mortgage Assets. Unless
the context indicates otherwise, all references herein to CMOs include
multi-class pass-through securities. Payments of principal of and interest on
the Mortgage Assets, and any reinvestment income thereon, provide the funds to
pay debt service on the CMOs or make scheduled distributions on the multi-class
pass-through securities. CMOs may be sponsored by agencies or instrumentalities
of the U.S. Government, or by private originators of, or investors in, mortgage
loans, including savings and loan associations, mortgage banks, commercial
banks, investment banks and special purpose subsidiaries of the foregoing. Under
current law, every newly created CMO issuer must elect to be treated for federal
income tax purposes as a Real Estate Mortgage Investment Conduit (a "REMIC").
In a CMO, a series of bonds or certificates is issued in multiple
classes. Each class of CMOs, often referred to as a "tranche", is issued at a
specific fixed or floating coupon rate and has a stated maturity or final
distribution date. Principal prepayments on the Mortgage Assets may cause the
CMOs to be retired substantially earlier than their stated maturities or final
distribution dates. Interest is paid or accrues on all classes of the CMOs on a
monthly, quarterly or semi-annual basis. The principal of and interest on the
Mortgage Assets may be allocated among the several classes of a series of a CMO
in innumerable ways. In one structure, payments of principal, including any
principal prepayments, on the Mortgage Assets are applied to the classes of a
CMO in the order of their respective stated maturities or final distribution
dates, so that no payment of principal will be made on any class of CMOs until
all other classes having an earlier stated maturity or final distribution date
have been paid in full.
The Fund may also invest in, among others, parallel pay CMOs and
Planned Amortization Class CMOs ("PAC Bonds"). Parallel pay CMOs are structured
to provide payments of principal on each payment date to more than one class.
These simultaneous payments are taken into account in calculating the stated
maturity date or final distribution date of each class, which, as with other CMO
structures, must be retired by its payments of a specified amount of principal
on each payment date.
Multi-class Pass-Through Securities. Stripped mortgage-backed
securities ("SMBS") may be issued by agencies or instrumentalities of the U.S.
Government, or by private originators of, or investors in, mortgage loans,
including savings and loan associations, mortgage banks, commercial banks,
investment banks and special purpose subsidiaries of the foregoing. SMBS issued
by parties other than agencies or instrumentalities of the U.S. Government are
considered, under current guidelines of the staff of the Securities and Exchange
Commission, to be illiquid securities. The Fund will only invest in stripped
mortgage-backed securities of the U.S. Government and certain of its agencies
and instrumentalities.
SMBS are structured with two or more classes of securities that receive
different proportions of the interest and principal distributions on a pool of
Mortgage Assets. A common type of SMBS will have at least one class
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receiving none or only a small portion of the interest and all or a larger
portion of the principal from the Mortgage Assets, while the other classes will
receive primarily or entirely interest and only a small portion of the
principal.
RTC Securities. The Resolution Trust Corporation ("RTC") was organized
by the U.S. Government in connection with the savings and loan crisis. RTC holds
assets of failed savings and loans either as conservator or receiver for such
institutions or acquires such assets in its corporate capacity. These assets
include, among other things, single family and multifamily mortgage loans as
well as commercial mortgage loans. In order to dispose of such assets in an
orderly manner, RTC has established a vehicle registered with the Securities and
Exchange Commission ("SEC") through which it sells credit-enhanced
Mortgage-Backed Securities ("RTC Securities"). These securities represent pro
rata interests in pools of single family and multifamily mortgage loans which
RTC holds or has acquired as described above. It is expected that commercial
mortgage loans may also be included in discrete pools in the near future. Credit
enhancement of RTC Securities is obtained from external sources (including pool
insurance policies, letters of credit and surety guarantees), internal sources
(including subordination and spread accounts) and independent sources (including
reserve funds and cash collateral accounts).
I. Future Contracts and Options on Future Contracts. The successful use
of such instruments draws upon the Advisor's skill and experience with respect
to such instruments and usually depends on the Advisor's ability to forecast
interest rate and currency exchange rate movements correctly. Should interest or
exchange rates move in an unexpected manner, a Fund may not achieve the
anticipated benefits of futures contracts or options on futures contracts or may
realize losses and thus will be in a worse position than if such strategies had
not been used. In addition, the correlation between movements in the price of
futures contracts or options on futures contracts and movements in the price of
the securities and currencies hedged or used for cover will not be perfect and
could produce unanticipated losses.
Futures Contracts. Each Fund may enter into contracts for the purchase
or sale for future delivery of fixed-income securities, foreign currencies, or
contracts based on financial indices including any index of U.S. government
securities, foreign government securities or corporate debt securities. U.S.
futures contracts have been designed by exchanges which have been designated
"contracts markets" by the Commodity Futures Trading Commission ("CFTC"), and
must be executed through a futures commission merchant, or brokerage firm, which
is a member of the relevant contract market. Futures contracts trade on a number
of exchange markets, and, through their clearing corporations, the exchanges
guarantee performance of the contracts as between the clearing members of the
exchange. A Fund may enter into futures contracts which are based on debt
securities that are backed by the full faith and credit of the U.S. Government,
such as long-term U.S. Treasury Bonds, Treasury Notes, Government National
Mortgage Association (`GNMA") modified pass-through mortgage-backed securities
and three-month U.S. Treasury Bills. A Fund may also enter into futures
contracts which are based on bonds issued by entities other than the U.S.
government. At the same time a futures contract is purchased or sold, the Fund
must allocate cash or securities as a deposit payment ("initial deposit"). It is
expected that the initial deposit would be approximately 1 1/2% to 5% of a
contract's face value. Daily thereafter, the futures contract is valued and the
payment of "variation margin" may be required, since each day the Fund would
provide or receive cash that reflects any decline or increase in the contract's
value. At the time of delivery of securities pursuant to such a contract,
adjustments are made to recognize differences in value arising from the delivery
of securities with a different interest rate from that specified in the
contract. In some (but not many) cases, securities called for by a futures
contract may not have been issued when the contract was written.
Although futures contracts by their terms call for the actual delivery
or acquisition of securities, in most cases the contractual obligation is
fulfilled before the date of the contract without having to make or take
delivery of the securities. The offsetting of a contractual obligation is
accomplished by buying (or selling, as the case may be) on a commodities
exchange an identical futures contract calling for delivery in the same month.
Such a transaction, which is effected through a member of an exchange, cancels
the obligation to make or take delivery
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of the securities. Since all transactions in the futures market are made, offset
or fulfilled through a clearinghouse associated with the exchange on which the
contracts are traded, the Fund will incur brokerage fees when it purchases or
sells futures contracts.
The purpose of the acquisition or sale of a futures contract, in the
case of a Fund which holds or intends to acquire fixed-income securities, is to
attempt to protect the Fund from fluctuations in interest or foreign exchange
rates without actually buying or selling fixed-income securities or foreign
currencies. For example, if interest rates were expected to increase, the Fund
might enter into futures contracts for the sale of debt securities. Such a sale
would have much the same effect as selling an equivalent value of the debt
securities owned by the Fund. If interest rates did increase, the value of the
debt security in the Fund would decline, but the value of the futures contracts
to the Fund would increase at approximately the same rate, thereby keeping the
net asset value of the Fund from declining as much as it otherwise would have.
The Fund could accomplish similar results by selling debt securities and
investing in bonds with short maturities when interest rates are expected to
increase. However, since the futures market is more liquid than the cash market,
the use of futures contracts as an investment technique allows the Fund to
maintain a defensive position without having to sell its Fund securities.
Similarly, when it is expected that interest rates may decline, futures
contracts may be purchased to attempt to hedge against anticipated purchases of
debt securities at higher prices. Since the fluctuations in the value of futures
contracts should be similar to those of debt securities, a Fund could take
advantage of the anticipated rise in the value of debt securities without
actually buying them until the market had stabilized. At that time, the futures
contracts could be liquidated and the Fund could then buy debt securities on the
cash market. To the extent a Fund enters into futures contracts for this
purpose, the assets in the segregated asset account maintained to cover the
Fund's obligations with respect to such futures contracts will consist of cash,
cash equivalents or high quality liquid debt securities from its Fund in an
amount equal to the difference between the fluctuating market value of such
futures contracts and the aggregate value of the initial and variation margin
payments made by the Fund with respect to such futures contracts.
The ordinary spreads between prices in the cash and futures market, due
to differences in the nature of those markets, are subject to distortions.
First, all participants in the futures market are subject to initial deposit and
variation requirements. Rather than meeting additional variation margin
requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced, thus producing distortion. Third, from
the point of view of speculators, the margin deposit requirements in the futures
market are less onerous than margin requirements in the securities market.
Therefore, increased participation by speculators in the futures market may
cause temporary price distortions. Due to the possibility of distortion, a
correct forecast of general interest rate trends by the Advisor may still not
result in a successful transaction.
In addition, futures contracts entail risks. Although the Advisor
believes that use of such contracts will benefit the Funds, if the Advisor's
investment judgment about the general direction of interest rates is incorrect,
a Fund's overall performance would be poorer than if it had not entered into any
such contract. For example, if a Fund has hedged against the possibility of an
increase in interest rates which would adversely affect the price of debt
securities held in its Fund and interest rates decrease instead, the Fund will
lose part or all of the benefit of the increased value of its debt securities
which it has hedged because it will have offsetting losses in its futures
positions. In addition, in such situations, if a Fund has insufficient cash, it
may have to sell debt securities from its Fund to meet daily variation margin
requirements. Such sales of bonds may be, but will not necessarily be, at
increased prices which reflect the rising market. A Fund may have to sell
securities at a time when it may be
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disadvantageous to do so.
Options on Futures Contracts. Each Fund may purchase and write options
on futures contracts for hedging purposes. The purchase of a call option on a
futures contract is similar in some respects to the purchase of a call option on
an individual security. Depending on the pricing of the option compared to
either the price of the futures contract upon which it is based or the price of
the underlying debt securities, it may or may not be less risky than ownership
of the futures contract or underlying debt securities. As with the purchase of
futures contracts, when a Fund is not fully invested it may purchase a call
option on a futures contract to hedge against a market advance due to declining
interest rates.
The writing of a call option on a futures contract constitutes a
partial hedge against declining prices of the security or foreign currency which
is deliverable upon exercise of the futures contract. If the futures price at
expiration of the option is below the exercise price, a Fund will retain the
full amount of the option premium which provides a partial hedge against any
decline that may have occurred in the Fund's holdings. The writing of a put
option on a futures contract constitutes a partial hedge against increasing
prices of the security or foreign currency which is deliverable upon exercise of
the futures contract. If the futures price at expiration of the option is higher
than the exercise price, the Fund will retain the full amount of the option
premium which provides a partial hedge against any increase in the price of
securities which the Fund intends to purchase. If a put or call option the Fund
has written is exercised, the Fund will incur a loss which will be reduced by
the amount of the premium it receives. Depending on the degree of correlation
between changes in the value of its Fund securities and changes in the value of
its futures positions, the Fund's losses from existing options on futures may to
some extent be reduced or increased by changes in the value of Fund securities.
The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on Fund securities. For
example, a Fund may purchase a put option on a futures contract to hedge against
the risk of rising interest rates.
The amount of risk a Fund assumes when it purchases an option on a
futures contract is the premium paid for the option plus related transaction
costs. In addition to the correlation risks discussed above, the purchase of an
option also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the option purchased.
The Board of Trustees of each Fund has adopted a further restriction
that the Fund will not enter into any futures contracts or options on futures
contracts if immediately thereafter the amount of margin deposits on all the
futures contracts of the Fund and premiums paid on outstanding options on
futures contracts owned by the Fund (other than those entered into for bona fide
hedging purposes) would exceed 5% of the market value of the total assets of the
Fund.
Options on Foreign Currency. Each Fund may purchase and write options
on foreign currencies for hedging purposes in a manner similar to that in which
futures contracts on foreign currencies, or forward contracts, will be utilized.
For example, a decline in the dollar value of a foreign currency in which Fund
securities are denominated will reduce the dollar value of such securities, even
if their value in the foreign currency remains constant. In order to protect
against such diminutions in the value of Fund securities, the Fund may purchase
put options on the foreign currency. If the value of the currency does decline,
a Fund will have the right to sell such currency for a fixed amount in dollars
and will thereby offset, in whole or in part, the adverse effect on its Fund
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which otherwise would have resulted.
Conversely, where a rise in the dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, the Fund may purchase call options thereon. The
purchase of such options could offset, at least partially, the effects of the
adverse movements in exchange rates. As in the case of other types of options,
however, the benefit to the Fund deriving from purchases of foreign currency
options will be reduced by the amount of the premium and related transaction
costs. In addition, where currency exchange rates do not move in the direction
or to the extent anticipated, the Fund could sustain losses on transactions in
foreign currency options which would require it to forego a portion or all of
the benefits of advantageous changes in such rates.
Each Fund may write options on foreign currencies for the same types of
hedging purposes. For example, where a Fund anticipates a decline in the dollar
value of foreign currency denominated securities due to adverse fluctuations in
exchange rates it could, instead of purchasing a put option, write a call option
on the relevant currency. If the expected decline occurs, the options will most
likely not be exercised, and the diminution in value of Fund securities will be
offset by the amount of the premium received.
Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the dollar cost of securities to be acquired, the Fund
could write a put option on the relevant currency which, if rates move in the
manner projected, will expire unexercised and allow the Fund to hedge such
increased cost up to the amount of the premium. As in the case of other types of
options, however, the writing of a foreign currency option will constitute only
a partial hedge up to the amount of the premium, and only if rates move in the
expected direction. If this does not occur, the option may be exercised and the
Fund would be required to purchase or sell the underlying currency at a loss
which may not be offset by the amount of the premium. Through the writing of
options on foreign currencies, the Fund also may be required to forego all or a
portion of the benefits which might otherwise have been obtained from favorable
movements in exchange rates.
Additional Risks of Options on Futures Contracts and Forward Contracts.
Unlike transactions entered into by a Fund in futures contracts, options on
forward contracts are not traded on contract markets regulated by the CFTC or by
the SEC. To the contrary, such instruments are traded through financial
institutions acting as market-makers, subject to SEC regulation. In an
over-the-counter trading environment, many of the protections afforded to
exchange participants will not be available. For example, there are no daily
price fluctuation limits, and adverse market movements could therefore continue
to an unlimited extent over a period of time. Although the purchaser of an
option cannot lose more than the amount of the premium plus related transaction
costs, this entire amount could be lost. Moreover, the option writer and a
trader of forward contracts could lose amounts substantially in excess of their
initial investments, due to the margin and collateral requirements associated
with such positions.
In addition, futures contracts, options on futures contracts and
forward contracts may be traded on foreign exchanges. Such transactions are
subject to the risk of governmental actions affecting trading in or the prices
of securities. The value of such positions also could be adversely affected by:
(i) other complex foreign political and economic factors; (ii) lesser
availability than in the United States of data on which to make trading
decisions; (iii) delays in the Fund's ability to act upon economic events
occurring in foreign markets during nonbusiness hours in the United States; (iv)
the imposition of different exercise and settlement terms and procedures and
margin requirements than in the United States; and (v) lesser trading volume.
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Options on Securities. Each Fund may write (sell) call and put options
to a limited extent on its Fund securities in an attempt to increase income.
However, the Fund may forgo the benefits of appreciation on securities sold or
may pay more than the market price on securities acquired pursuant to call and
put options written by the Fund.
When a Fund writes a call option, it gives the purchaser of the option
the right to buy the underlying security at the price specified in the option
(the "exercise price") by exercising the option at any time during the option
period. If the option expires unexercised, the Fund will realize income in an
amount equal to the premium received for writing the option. If the option is
exercised, a decision over which the Fund has no control, the Fund must sell the
underlying security to the option holder at the exercise price. By writing a
call option, the Fund forgoes, in exchange for the premium less the commission
("net premium"), the opportunity to profit during the option period from an
increase in the market value of the underlying security above the exercise
price.
When a Fund writes a put option, it gives the purchaser of the option
the right to sell the underlying security to the Fund at the specified exercise
price at any time during the option period. If the option expires unexercised,
the Fund will realize income in the amount of the premium received for writing
the option. If the put option is exercised, a decision over which the Fund has
no control, the Fund must purchase the underlying security from the option
holder at the exercise price. By writing a put option, the Fund, in exchange for
the net premium received, accepts the risk of a decline in the market value of
the underlying security below the exercise price.
A Fund may terminate its obligation as the writer of a call or put
option by purchasing an option with the same exercise price and expiration date
as the option previously written. This transaction is called a "closing purchase
transaction." The Fund will realize a profit or loss for a closing purchase
transaction if the amount paid to purchase an option is less or more, as the
case may be, than the amount received from the sale thereof. To close out a
position as a purchaser of an option, the Fund, may make a `closing sale
transaction" which involves liquidating the Fund's position by selling the
option previously purchased. Where the Fund cannot effect a closing purchase
transaction, it may be forced to incur brokerage commissions or dealer spreads
in selling securities it receives or it may be forced to hold underlying
securities until an option is exercised or expires.
When a Fund writes an option, an amount equal to the net premium
received by the Fund is included in the liability section of the Fund's
Statement of Assets and Liabilities as a deferred credit. The amount of the
deferred credit will be subsequently marked to market to reflect the current
market value of the option written. The current market value of a traded option
is the last sale price or, in the absence of a sale, the mean between the
closing bid and asked price. If an option expires on its stipulated expiration
date or if the Fund enters into a closing purchase transaction, the Fund will
realize a gain (or loss if the cost of a closing purchase transaction exceeds
the premium received when the option was sold), and the deferred credit related
to such option will be eliminated. If a call option is exercised, the Fund will
realize a gain or loss from the sale of the underlying security and the proceeds
of the sale will be increased by the premium originally received. The writing of
covered call options may be deemed to involve the pledge of the securities
against which the option is being written. Securities against which call options
are written will be segregated on the books of the Custodian for the Fund.
A Fund may purchase call and put options on any securities in which it
may invest. The Fund would normally purchase a call option in anticipation of an
increase in the market value of such securities. The purchase of a call option
would entitle the Fund, in exchange for the premium paid, to purchase a security
at a specified price during the option period. The Fund would ordinarily have a
gain if the value of the securities increased above the exercise price
sufficiently to cover the premium and would have a loss if the value of the
securities remained at or
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below the exercise price during the option period.
A Fund would normally purchase put options in anticipation of a decline
in the market value of securities in its Fund ("protective puts") or securities
of the type in which it is permitted to invest. The purchase of a put option
would entitle the Fund, in exchange for the premium paid, to sell a security,
which may or may not be held in the Fund's holdings, at a specified price during
the option period. The purchase of protective puts is designed merely to offset
or hedge against a decline in the market value of the Fund's holdings. Put
options also may be purchased by the Fund for the purpose of affirmatively
benefiting from a decline in the price of securities which the Fund does not
own. The Fund would ordinarily recognize a gain if the value of the securities
decreased below the exercise price sufficiently to cover the premium and would
recognize a loss if the value of the securities remained at or above the
exercise price. Gains and losses on the purchase of protective put options would
tend to be offset by countervailing changes in the value of underlying Fund
securities.
The hours of trading for options on securities may not conform to the
hours during which the underlying securities are traded. To the extent that the
option markets close before the markets for the underlying securities,
significant price and rate movements can take place in the underlying securities
markets that cannot be reflected in the option markets. It is impossible to
predict the volume of trading that may exist in such options, and there can be
no assurance that viable exchange markets will develop or continue.
A Fund may engage in over-the-counter options transactions with
broker-dealers who make markets in these options. At present, approximately ten
broker-dealers, including several of the largest primary dealers in U.S.
government securities, make these markets. The ability to terminate
over-the-counter option positions is more limited than with exchange-traded
option positions because the predominant market is the issuing broker rather
than an exchange, and may involve the risk that broker-dealers participating in
such transactions will not fulfill their obligations. To reduce this risk, the
Fund will purchase such options only from broker-dealers who are primary
government securities dealers recognized by the Federal Reserve Bank of New York
and who agree to (and are expected to be capable of) entering into closing
transactions, although there can be no guarantee that any such option will be
liquidated at a favorable price prior to expiration. The Advisor will monitor
the creditworthiness of dealers with whom the Fund enters into such options
transactions under the general supervision of the Funds' Board of Trustees.
Options on Securities Indices. In addition to options on securities,
each Fund may also purchase and write (sell) call and put options on securities
indices. Such options give the holder the right to receive a cash settlement
during the term of the option based upon the difference between the exercise
price and the value of the index. Such options will be used for the purposes
described above under "Options on Securities."
Options on securities indices entail risks in addition to the risks of
options on securities. The absence of a liquid secondary market to close out
options positions on securities indices is more likely to occur, although the
Fund generally will only purchase or write such an option if the Advisor
believes the option can be closed out.
Use of options on securities indices also entails the risk that trading
in such options may be interrupted if trading in certain securities included in
the index is interrupted. The Fund will not purchase such options unless the
Advisor believes the market is sufficiently developed such that the risk of
trading in such options is no greater than the risk of trading in options on
securities.
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Price movements in a Fund's holdings may not correlate precisely with
movements in the level of an index and, therefore, the use of options on indices
cannot serve as a complete hedge. Because options on securities indices require
settlement in cash, the Advisor may be forced to liquidate Fund securities to
meet settlement obligations.
Forward Foreign Currency Exchange Contracts. Because each Fund may buy
and sell securities denominated in currencies other than the U.S. dollar and
receives interest, dividends and sale proceeds in currencies other than the U.S.
dollar, a Fund from time to time may enter into foreign currency exchange
transactions to convert to and from different foreign currencies and to convert
foreign currencies to and from the U.S. dollar. A Fund either enters into these
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market or uses forward contracts to purchase or sell
foreign currencies.
A forward foreign currency exchange contract is an obligation by a Fund
to purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract. Forward foreign currency exchange
contracts establish an exchange rate at a future date. These contracts are
transferable in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. A forward foreign currency
exchange contract generally has no deposit requirement and is traded at a net
price without commission. Each Fund maintains with its custodian a segregated
account of high grade liquid assets in an amount at least equal to its
obligations under each forward foreign currency exchange contract. Neither spot
transactions nor forward foreign currency exchange contracts eliminate
fluctuations in the prices of the Fund's securities or in foreign exchange
rates, or prevent loss if the prices of these securities should decline.
Each Fund may enter into foreign currency hedging transactions in an
attempt to protect against changes in foreign currency exchange rates between
the trade and settlement dates of specific securities transactions or changes in
foreign currency exchange rates that would adversely affect a Fund position or
an anticipated investment position. Since consideration of the prospect for
currency parities will be incorporated into the Advisor's long-term investment
decisions, a Fund will not routinely enter into foreign currency hedging
transactions with respect to security transactions. However, the Advisor
believes that it is important to have the flexibility to enter into foreign
currency hedging transactions when it determines that the transactions would be
in the Fund's best interest. Although these transactions tend to minimize the
risk of loss due to a decline in the value of the hedged currency, at the same
time they tend to limit any potential gain that might be realized should the
value of the hedged currency increase. The precise matching of the forward
contract amounts and the value of the securities involved will not generally be
possible because the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of such securities
between the date the forward contract is entered into and the date it matures.
The projection of currency market movements is extremely difficult, and the
successful execution of a hedging strategy is highly uncertain.
While these contracts are not presently regulated by the CFTC, the CFTC
may in the future assert authority to regulate forward contracts. In such event
the Fund's ability to utilize forward contracts in the manner set forth in the
Prospectus may be restricted. Forward contracts may reduce the potential gain
from a positive change in the relationship between the U.S. dollar and foreign
currencies. Unanticipated changes in currency prices may result in poorer
overall performance for the Fund than if it had not entered into such contracts.
The use of foreign currency forward contracts may not eliminate fluctuations in
the underlying U.S. dollar equivalent value of the prices of or rates of return
on a Fund's foreign currency denominated Fund securities and the use of such
techniques will subject a Fund to certain risks.
-15-
<PAGE>
The matching of the increase in value of a forward contract and the
decline in the U.S. dollar equivalent value of the foreign currency denominated
asset that is the subject of the hedge generally will not be precise. In
addition, a Fund may not always be able to enter into foreign currency forward
contracts at attractive prices and this will limit the Fund's ability to use
such contracts to hedge or cross-hedge its assets. Also, with regard to a Fund's
use of cross-hedges, there can be no assurance that historical correlations
between the movement of certain foreign currencies relative to the U.S. dollar
will continue. Thus, at any time poor correlation may exist between movements in
the exchange rates of the foreign currencies underlying a Fund's cross-hedges
and the movements in the exchange rates of the foreign currencies in which the
Fund's assets that are the subject of such cross-hedges are denominated.
J. Short-Term Instruments. When a Fund experiences large cash inflows
through the sale of securities and desirable equity securities, that are
consistent with the Fund's investment objective, which are unavailable in
sufficient quantities or at attractive prices, each Fund may invest in
short-term instruments for a limited time pending availability of such Fund
securities. Short-term instruments consist of foreign or domestic: (i)
short-term obligations of sovereign governments, their agencies,
instrumentalities, authorities or political subdivisions; (ii) other short-term
debt securities rated AA or higher by Standard & Poor's Rating Group (`S&P") or
Aa or higher by Moody's Investors Services, Inc. (`Moody's") or, if unrated, of
comparable quality in the opinion of Advisor; (iii) commercial paper; (iv) bank
obligations, including negotiable certificates of deposit, time deposits and
banker's acceptances; and (v) repurchase agreements. At the time the Fund
invests in commercial paper, bank obligations or repurchase agreements, the
issuer of the issuer's parent must have outstanding debt rated AA or higher by
S&P or Aa or higher by Moody's or outstanding commercial paper or bank
obligations rated A-1 by S&P or Prime-1 by Moody's; or, if no such ratings are
available, the instrument must be of comparable quality in the opinion of
Advisor. These instruments may be denominated in U.S. dollars or in foreign
currencies.
K. Illiquid Securities. Historically, illiquid securities have included
securities subject to contractual or legal restrictions on resale because they
have not been registered under the Securities Act of 1933, as amended (the "1933
Act"), securities which are otherwise not readily marketable and repurchase
agreements having a remaining maturity of longer than seven days. Securities
which have not been registered under the 1933 Act are referred to as private
placements or restricted securities and are purchased directly from the issuer
or in the secondary market. Mutual funds do not typically hold a significant
amount of these restricted or other illiquid securities because of the potential
for delays on resale and uncertainty in valuation. Limitations on resale may
have an adverse effect on the marketability of Fund securities and a mutual fund
might be unable to dispose of restricted or other illiquid securities promptly
or at reasonable prices and might thereby experience difficulty satisfying
redemptions within seven days. A mutual fund might also have to register such
restricted securities in order to dispose of them resulting in additional
expense and delay. Adverse market conditions could impede such a public offering
of securities.
In recent years, however, a large institutional market has developed
for certain securities that are not registered under the 1933 Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale of such investments to the
general public or to certain institutions may not be indicative of their
liquidity.
The Securities and Exchange Commission the (the "SEC") has adopted Rule
144A, which allows a broader institutional trading market for securities
otherwise subject to restriction on their resale to the general public. Rule
-16-
<PAGE>
144A establishes a "safe harbor" from the registration requirements of the 1933
Act of resales of certain securities to qualified institutional buyers. The
Advisor anticipates that the market for certain restricted securities such as
institutional commercial paper will expand further as a result of this
regulation and the development of automated systems for the trading, clearance
and settlement of unregistered securities of domestic and foreign issuers, such
as the PORTAL System sponsored by the National Association of Securities
Dealers, Inc.
The Advisor will monitor the liquidity of Rule 144A securities in each
Fund's holdings under the supervision of the Fund's Board of Trustees. In
reaching liquidity decisions, the Advisor will consider, among other things, the
following factors: (1) the frequency of trades and quotes for the security; (2)
the number of dealers and other potential purchasers or sellers of the security;
(3) dealer undertakings to make a market in the security and (4) the nature of
the security and of the marketplace trades (e.g., the time needed to dispose of
the security, the method of soliciting offers and the mechanics of the
transfer).
L. 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, a 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.
Each 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.
M. Securities Lending. Each Fund may lend securities to parties such as
broker-dealers, banks, or institutional investors. Securities lending allows a
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 a 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
-17-
<PAGE>
appreciation or depreciation).
N. Leveraging. Leveraging a 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 a Fund's Fund. Although the principal of such borrowings
will be fixed, a Fund's assets may change in value during the time the borrowing
is outstanding. Leveraging will create interest expenses for the Fund which can
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.
O. Assest-Backed Securities. Assest-backed securities are undivided
fractional interests in pools of consumer loans (unrelated to mortgage loans)
held in a trust. Payments of principal and interest are passed through to
certificate holders and are typically supported by some form of credit
enhancement, such as a letter of credit, surety bond, limited guaranty or
senior/subordination. The degree of credit enhancement varies, but generally
amounts to only a fraction of the asset-backed security's par value until
exhausted. If the credit enhancement is exhausted, certificateholders may
experience losses or delays in payment if the required payments of principal and
interest are not made to the trust with respect to the underlying loans. The
value of these securities also may change because of changes in the market's
perception of the creditworthiness of the servicing agent for the loan pool, the
originator of the loans or the financial institution providing the credit
enhancement. Assest-backed securities are ultimately dependent upon payment of
consumer loans by individuals, and the certificateholder generally has no
recourse against the entity that originated the loans. The underlying loans are
subject to prepayments which shorten the securities' weighted average life and
may lower their return. As prepayments flow through at par, total returns would
be affected by the prepayments: if a security were trading at a premium, its
total return would be lowered by prepayments, and if a security were trading a
discount, its total return would be increased by prepayments.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to each 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
the 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 Funds will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all 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.
-18-
<PAGE>
2. Senior Securities. The Funds 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 rules and regulations
promulgated thereunder or interpretations of the Securities and Exchange
Commission or its staff and (b) as described in the Prospectus and the Statement
of Additional Information.
3. Underwriting. The Funds 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 Fund securities (including restricted
securities), a Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Funds 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 a 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. The Funds will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude a Fund from purchasing or selling 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 Funds will not make loans to other persons, except (a) by
loaning Fund 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. Each 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 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.
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<PAGE>
Non-Fundamental. The following limitations have been adopted by the Trust
with respect to each Fund and are Non-Fundamental (see "Investment Restrictions"
above).
i. Pledging. The Funds will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of a 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. Each Fund will not purchase any security while
borrowings (including reverse repurchase agreements) representing more than 5%
of its total assets are outstanding.
iii. Margin Purchases. The Funds will not purchase securities or
evidences of interest thereon on "margin." This limitation is not applicable to
short term credit obtained by a 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 Securities. Neither Fund will invest more than 15% of its net
assets in illiquid securities. -------------------
THE INVESTMENT ADVISOR
The Funds' investment advisor is CommonWealth Advisors, Inc., 247
Florida Street, Baton Rouge, LA 70801 (the "Advisor"). Walter A. Morales may be
deemed to be a controlling person of the Advisor due to his ownership of the
shares of the Advisor.
Under the terms of the management agreement (the "Agreement"), the
Advisor manages each Fund's investments subject to approval of the Board of
Trustees and pays all of the expenses of each 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 Funds' expenses, the Funds are obligated to pay the Advisor
a fee computed and accrued daily and paid monthly at an annual rate of 1.10% of
the average daily net assets of the Florida Street Bond Fund, and 1.35% of the
average daily net assets of the Florida Street Growth 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. For the
period August 4, 1997 (commencement of operations) through October 31, 1997, and
for the fiscal year ended October 31, 1998, the Florida Street Bond Fund paid
advisory fees of $14,080, $_________ respectively. For the period August 6, 1997
(commencement of operations) through October 31, 1997 and for the fiscal year
ended October 31, 1998, the Florida Street Growth Fund paid advisory fees of
$6,339 and $_______, respectively.
The Advisor retains the right to use the name "Florida Street" 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 "Florida
Street" 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 Funds believes
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<PAGE>
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 Funds believes that there would be no material impact on a
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. Each Fund may from
time to time purchase securities issued by banks which provide such services;
however, in selecting investments for a Fund, no preference will be shown for
such securities.
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, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
<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
Financial Services, Inc., the Funds'
Age: 40 administrator, and AmeriPrime Financial
Securities, Inc., the Funds' distributor, since
1793 Kingswood Drive 1994. Prior to December, 1994, a senior client executive
with SEI Financial Services.
Suite 200
Southlake, Texas 76092
- ----------------------------------------------------------------------------------------------------------------------------------
Secretary, Treasurer Secretary, Treasurer and Chief Financial Officer
of AmeriPrime Financial Services, Inc. and
Age: AmeriPrime Financial Securities, Inc.
1793 Kingswood Drive
Suite 200
Southlake, Texas 76092
- ----------------------------------------------------------------------------------------------------------------------------------
Steve L. Cobb Trustee President of Chandler Engineering Company,
Age: 41 L.L.C., oil and gas services company; various
2001 Indianwood Ave. positions with Carbo Ceramics, Inc., oil field
Broken Arrow, OK 74012 manufacturing/supply company, from 1984 to
1997,
most recently Vice President of Marketing.
- ----------------------------------------------------------------------------------------------------------------------------------
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment
Age: 51 Officer of Legacy Trust Company since 1992;
600 Jefferson St. Suite 350 President and Director of Heritage Trust
Houston, Texas 77063 Company from 1994 to 1996.
==================================================================================================================================
</TABLE>
Trustee fees are Trust expenses and each series of the Trust pays a
portion of the Trustee fees. The compensation paid to the Trustees of the Trust
for the fiscal year ended October 31, 1998 is set forth in the following table:
<TABLE>
<CAPTION>
<S> <C> <C>
=====================================================================================================
Name Aggregate Total Compensation
Compensation from Trust (the Trust is
from Trust not in a Fund Complex)
- -----------------------------------------------------------------------------------------------------
Kenneth D. Trumpfheller 0 0
- -----------------------------------------------------------------------------------------------------
Steve L. Cobb $4,000 $4,000
- -----------------------------------------------------------------------------------------------------
Gary E. Hippenstiel $4,000 $4,000
=====================================================================================================
</TABLE>
FUND TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Advisor is responsible for each Fund's Fund decisions and the placing of
each Fund's Fund transactions. In placing Fund transactions, the Advisor seeks
the best qualitative execution for each 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 Funds 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 a 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
Funds. Although research services and other information are useful to the Funds
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 Funds
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.
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When a Fund and another of the Advisor's clients seek to purchase or
sell the same security at or about the same time, the Advisor may execute the
transaction on a combined ("blocked") basis. Blocked transactions can produce
better execution for the Funds because of the increased volume of the
transaction. If the entire blocked order is not filled, the Fund 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 Fund 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. In the event that the entire blocked order
is not filled, the purchase or sale will normally be allocated on a pro rata
basis. The allocation may be adjusted by the Advisor, taking into account such
factors as the size of the individual orders and transaction costs, when the
Advisor believes an adjustment is reasonable. For the period August 4, 1997
(commencement of operations) through October 31, 1997 and for the fiscal year
ended October 31, 1998, commissions of $480 and $______, respectively. For the
period August 6, 1997 (commencement of operations) through October 31, 1997 and
for the fiscal year ended October 31, 1998 the Florida Street Growth Fund paid
brokerage commissions of $3,897 and $_______ respectively.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of each 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 each 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, Martin
Luther King, Jr. 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 for the period indicated 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.
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<PAGE>
Each Fund's investment performance will vary depending upon market
conditions, the composition of each Fund's Fund and operating expenses of each
Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing a Fund's performance to those of other investment companies or
investment vehicles. The risks associated with each 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. For the period August 4,
1997 (commencement of operations) through October 31, 1997 and for the fiscal
year ended October 31, 1998, the Florida Street Bond Fund's average annual total
return was 0.90%, annualized, and_____%, respectively. For the period August 6,
1997 (commencement of operations) through October 31, 1997 and for the fiscal
year ended October 31, 1998, the Florida Street Growth Fund's average annual
total return was 1.90%, annualized, and _____%, respectively.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of each Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the Fund holdings of the Fund or considered
to be representative of the market in general.
In addition, the performance of each 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 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 each Funds investments. The Custodian acts as each Fund's
depository, safekeeps its Fund securities, collects all income and other
payments with respect thereto, disburses funds at a Fund's request and maintains
records in connection with its duties.
TRANSFER AGENT
American Data Services, Inc., Hauppauge Corporate Center, 150 Motor
Parkway, Hauppauge, NY 11788, acts as each 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 each 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 each Fund with certain monthly
reports, record-keeping and other management-related services. For the period
August 4, 1997 (commencement of operations) through October 31, 1997 and for the
fiscal year ended October 31, 1998, ADS received $1,600 and $________
respectively, from the Adviser (not the Fund) for these services provided to the
Florida Street Bond Fund. For the period August 6, 1997 (commencement of
operations) through October 31, 1997 and for the fiscal year ended October 31,
1998, ADS received $1,600 from the Advisor (not the Fund) for these services
provided to the Florida Street Growth Fund.
-23-
<PAGE>
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, 1999. McCurdy & Associates performs an
annual audit of each 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
each Fund. The Distributor is obligated to sell the shares of each Fund on a
best efforts basis only against purchase orders for the shares. Shares of each
Fund are offered to the public on a continuous basis.
ADMINISTRATOR
The Funds retain AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (the"Administrator") to manage the Funds'
business affairs and provide the Funds with administrative services, including
all regulatory reporting and necessary office equipment, personnel and
facilities. For the period August 4, 1997 (commencement of operations) through
October 31, 1997 and for the fiscal year ended October 31, 1998, the
Administrator received $_______ and $______, respectively, from the Advisor (not
the Funds) for these services provided to the Florida Street Bond Fund. For the
period August 6, 1997 (commencement of operations) through October 31, 1997 and
for the fiscal year ended October 31, 1998, the Administrator received $______
and $________, respectively, from the Advisor (not the Funds) for these services
provided to the Florida Street Growth Fund.
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Trust's Annual Report Shareholders for the period ended
October 31, 1998. The Trust will provide the Annual Report without charge by
calling the Fund at 1-800-890-5344.
-24-
<PAGE>
Marathon Value Fund
702 W. Idaho Street, Suite 810
Boise, ID 83702
For Information, Shareholder Services and Requests:
(800) 788-6086
PROSPECTUS
February 14, 1999
The investment objective of the Marathon Value Fund (the "Fund") is to
provide shareholders with maximum long term capital appreciation. The Fund's
advisor, Burroughs & Hutchinson, Inc. (the "Advisor"), seeks to achieve this
objective by investing in small and medium size companies that it believes to be
undervalued. These stocks are typically viewed as out-of-favor and have a share
price which does not reflect the intrinsic value of the company. The Advisor
believes its price driven, value-oriented approach will provide investors with
the opportunity for growth, while providing some protection against adverse
events.
The Fund is "no-load," which means that investors incur no sales
charges, commissions or deferred sales charges on the purchase or redemption of
their shares. The Fund is one of the mutual funds comprising AmeriPrime Funds,
an open-end management investment company, 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 dated February 14, 1999 has been filed with
the Securities and Exchange Commission (the "SEC"), 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.
<PAGE>
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. In addition, the Fund does not
have a 12b-1 Plan. 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. The Advisor pays all of the expenses of the Fund except
brokerage, taxes, interest, fees and expenses of non-interested person trustees
and extraordinary expenses.
[TABLE TO BE UPDATED:
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)1
Management Fees...................................................1.48%
12b-1 Charges.....................................................0.00%
Other Expenses2...................................................0.00%
Total Fund Operating Expenses.....................................1.48%
1 The fund's total operating expenses are equal to the management fee paid to
the Advisor because the Advisor pays all of the Fund's operating expenses
(except as described above).
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
less than .001% of average net assets.
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:
<PAGE>
1 Year 3 Years 5 years 10 Years
$ 15 $ 47 $_____ $_____
THE FUND
Marathon Value Fund (the "Fund") was organized as a series of
AmeriPrime Funds, an Ohio business trust (the "Trust"), on December 26, 1997.
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 Burroughs & Hutchinson, Inc. (the "Advisor").
INVESTMENT OBJECTIVE AND STRATEGIES AND RISK CONSIDERATIONS
The investment objective of the Fund is to provide shareholders with
maximum long term capital appreciation. The Advisor seeks to achieve this
objective by investing in small and medium size companies that it believes to be
undervalued. These stocks are typically viewed as out-of-favor and have a share
price which does not reflect the intrinsic value of the company. The Advisor
believes its price driven, value-oriented approach will provide investors with
the opportunity for growth, while providing some protection against adverse
events. The Fund is designed for shareholders with a long term investment
horizon.
The Fund intends to invest primarily in equity securities of small and
mid-cap companies whose value has been ignored by other investors. These stocks
are typically found at the bottom of the rankings in terms of price-to-book
value, price-to-earnings or price-to-cash flow. These securities include
attractively priced, stable businesses that have not yet been discovered or
become popular, companies having a new catalyst for appreciation, companies that
have declined in value and lost their following, and previously popular
companies out of favor due to circumstances the Advisor believes to be
temporary.
The Advisor considers small capitalization companies to be those with a
market capitalization of less than $1 billion and mid-capitalization companies
to be those with the same capitalization ranges as companies in the Russell
Midcap Index. The Russell Midcap Index is an unmanaged index of equity
securities of companies which, as of June 30, 1998, ranged in capitalization
from $___ billion to $___ billion. It is expected that small-cap company
securities will range from 15% to 40%, and mid-cap company securities will range
from 60% to 85%, of the Fund's net assets. Investments in companies whose
capitalizations grow above the maximum capitalization level of the Russell
Midcap Index may continue to be held if they are deemed by the Advisor to be
particularly attractive.
The Advisor generally plans to stay fully invested (subject to
liquidity requirements) in common stocks, preferred stocks, and common stock
equivalents (such as securities convertible into common stocks), regardless of
price movements. For temporary defensive purposes, the Fund may hold all or a
portion of its assets in money market instruments, securities of other no-load
registered investment companies or U.S. government repurchase agreements. The
Fund may also invest in such instruments at any time to maintain liquidity or
pending selection of investments in accordance with its policies. If the Fund
acquires securities of another investment company, the shareholders of the Fund
will be subject to duplicative management fees.
By investing primarily in small and mid-capitalization companies, the
Fund will be subject to the risks associated with such companies. Smaller
capitalization companies may experience higher growth rates and higher failure
rates than do larger capitalization companies. Companies in which the
<PAGE>
Fund is likely to invest may have limited product lines, markets or financial
resources and may lack management depth. The trading volume of securities of
smaller capitalization companies is normally less than that of larger
capitalization companies, and, therefore, may disproportionately affect their
market price, tending to make them rise more in response to buying demand and
fall more in response to selling pressure than is the case with larger
capitalization companies. The Advisor seeks to reduce risk by buying "cheap"
stocks, diversifying broadly and avoiding the institutional favorites.
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. It should be noted that the Advisor has not previously managed
assets organized as a mutual fund and has no experience managing a portfolio
composed of small and mid-capitalization stocks. In addition, the Fund has no
operating history. 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. See "Investment Policies and Techniques" for a more
detailed discussion of the Fund's investment practices.
HOW TO INVEST IN THE FUND
The Fund is "no-load" and shares of the Fund are sold directly to
investors on a continuous basis, subject to a minimum initial investment of
$2,500 and minimum subsequent investments of $100. These minimums may be waived
by the Advisor for accounts participating in an automatic investment program.
Investors choosing to purchase or redeem their shares through a broker/dealer or
other institution may be charged a fee by that institution. Investors choosing
to purchase or redeem shares directly from the Fund will not incur charges on
purchases or redemptions. To the extent investments of individual investors are
aggregated into an omnibus account established by an investment advisor, broker
or other intermediary, the account minimums apply to the omnibus account, not to
the account of the individual investor.
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 Marathon Value Fund, and sent to the address listed below.
U.S. Mail: Overnight:
Marathon Value Fund Marathon Value Fund
c/o American Data Services, Inc. c/o American Data Services,Inc.
P.O. Box 5536 Hauppauge Corporate Center
Hauppauge, New York 11788-0132 150 Motor Parkway
Hauppauge, New York 11788
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) 788-6086 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
<PAGE>
the following information for purposes of wiring your investment:
Star Bank, N.A. Cinti/Trust
ABA #0420-0001-3
Attn: Marathon Value Fund
D.D.A. #488886904
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.
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 Marathon Value Fund and should be sent to the address listed
above. A bank wire should be sent as outlined above.
Automatic Investment Plan
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
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 plans (IRAs); simplified employee pensions
(SEPs); SIMPLE plans; 401(k) plans; qualified corporate pension and profit
sharing plans (for employees); tax deferred investment 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
advisor 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
<PAGE>
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. Investors choosing to purchase or redeem their
shares through a securities dealer may be charged a fee by that institution.
By Mail - You may redeem any part of your account in the Fund at no
charge by mail. Your request should be addressed to:
Marathon Value Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, New York 11788-0132
"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) 788-6086. 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
<PAGE>
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) 788-6086. 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 calendar 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 $2,500 due to 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 advisor 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.
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 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
<PAGE>
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.
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 advisors 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
<PAGE>
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 diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund retains various organizations to perform
specialized services.
The Fund retains Burroughs & Hutchinson, Inc. 702 W. Idaho Street,
Suite 810, Boise, ID 83702 (the "Advisor") to manage the Fund's investments.
Burroughs & Hutchinson has been providing portfolio management services since
its founding in 1967 by A.H. Burroughs III. The Advisor provides equity,
balanced and fixed income portfolio management services to a select group of
corporations, institutions, foundations, trusts and high net worth individuals.
The Advisor currently manages over $240 million in assets for clients.
Mark Matsko is primarily responsible for the day-to-day management of
the Fund's portfolio. A graduate of the University of Montana in 1980 with a
B.S. degree in accounting, he passed his CPA exam and worked as a tax accountant
at Arthur Andersen & Co. After leaving Arthur Andersen, he worked for and became
president of Great Falls Coca-Cola. A Chartered Financial Analyst (CFA), his
work in the investment business during the last ten years has included positions
as a broker, a security analyst, and manager of his own hedge fund. Mr. Matsko
joined Burroughs & Hutchinson in 1986.
The Fund is authorized to pay the Advisor a fee equal to an annual
average rate of 1.48% of its average daily net assets. The Advisor pays all of
the operating expenses of the Fund except brokerage, taxes, interest , fees and
expenses of non-interested person trustees and extraordinary expenses. In this
regard, it should be noted that most investment companies pay their own
operating expenses directly, while the Fund's expenses, except those specified
above, are paid by the Advisor.
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 11788 (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.
<PAGE>
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. The advisor (not the fund) may pay certain financial
institutions (which may include banks, brokers, securities dealers and other
industry professionals) a "servicing fee" for performing certain administrative
functions for Fund shareholders to the extent these institutions are allowed to
do so by applicable statute, rule or regulation.
INVESTMENT POLICIES AND TECHNIQUES
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ.
Equity Securities
The Fund will invest primarily in U.S. equity securities of small and
mid-capitalization issuers. Equity securities include common stock and
securities exchangeable for common stock, such as convertible securities, rights
and warrants. The Fund will not invest more than 5% of the value of its net
assets in convertible securities, rights, warrants or real estate investment
trusts. Although equity securities have a history of long-term growth in value,
their prices fluctuate based on changes in a company's financial condition and
on overall market and economic conditions. Smaller companies are especially
sensitive to these factors. The Fund intends to invest primarily in U.S. equity
securities, but reserves the right to invest in short-term cash equivalent
securities, either for temporary defensive purposes or as part of its overall
strategy.
Investment Techniques and Other Investments
The Fund may invest up to 5% of its net assets in repurchase agreements
fully collateralized by U.S. Government and agency obligations and
instrumentalities. 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,
but investment in such securities may not exceed 5% of the Fund's net assets.
The Fund may buy and write put options, and may buy call options and write
covered call options, on individual securities and market indices, provided the
Fund's investment in options (including premiums and potential settlement
obligations) does not exceed 5% of its net assets. The Fund will not invest more
than 5% of its net assets in illiquid securities, including repurchase
agreements maturing in more than seven days. Also limited to 5% of the Fund's
net assets is the Fund's investment in indexed securities and in STRIPs
(Separate Trading of Registered Interest and Principal of Securities). The
Federal Reserve creates STRIPs by separating the coupon payments and the
principal payments from the outstanding Treasury security and selling them as
individual securities.
Loans of Portfolio Securities
The Fund may make short and long term loans of its portfolio
securities. 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 on a daily mark-to-market basis in an amount at least
equal to 100% of the value of the loaned securities. The Fund will continue to
receive dividends or interest on the loaned securities and may terminate such
<PAGE>
loans at any time or reacquire such securities in time to vote on any matter
which the Board of Trustees determines to be important. With respect to loans of
securities, there is the risk that the borrower may fail to return the loaned
securities or that the borrower may not be able to provide additional
collateral.
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 portfolio
turnover rate of the Fund will not exceed 100%.]
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.
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 advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of 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. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
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
<PAGE>
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 Russell Mid-Cap Index.
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.
Investment Advisor Administrator
Burroughs & Hutchinson, Inc. AmeriPrime Financial Services, Inc.
702 W. Idaho Street, Suite 810 1793 Kingswood Drive, Suite 200
Boise, ID 83702 Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Services, Inc.
425 Walnut St., M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchases and Independent Auditors
all redemption requests) McCurdy & Associates CPA's, Inc.
American Data Services, Inc. 27955 Clemens Road
Hauppauge Corporate Center Westlake, Ohio 44145
150 Motor Parkway
Hauppauge, New York 11788
Legal Counsel
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
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.
<PAGE>
TABLE OF CONTENTS Page
SUMMARY OF FUND EXPENSES
Shareholder Transaction Expenses
Annual Fund Operating Expenses
THE FUND
INVESTMENT OBJECTIVE AND STRATEGIES AND RISK CONSIDERATIONS
HOW TO INVEST IN THE FUND
Initial Purchase
Additional Investments
Automatic Investment Plan
Tax Sheltered Retirement Plans
Other Purchase Information
HOW TO REDEEM SHARES
By Mail
By Telephone
Additional Information
SHARE PRICE CALCULATION
DIVIDENDS AND DISTRIBUTIONS
TAXES
OPERATION OF THE FUND
INVESTMENT POLICIES AND TECHNIQUES
Equity Securities
Investment Techniques and Other Investments Loans of Portfolio Securities
GENERAL INFORMATION
Fundamental Policies
Portfolio Turnover
Shareholder Rights
PERFORMANCE INFORMATIO
<PAGE>
MARATHON VALUE FUND
STATEMENT OF ADDITIONAL INFORMATION
February 14, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of Marathon Value Fund dated Febuary
14, 1999. A copy of the Prospectus can be obtained by writing the Transfer Agent
at Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge New York 11788, or
by calling (800) 788-6086.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUST
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS
INVESTMENT LIMITATIONS
THE INVESTMENT ADVISOR
TRUSTEES AND OFFICERS
PORTFOLIO TRANSACTIONS AND BROKERAGE
DETERMINATION OF SHARE PRICE
INVESTMENT PERFORMANCE
CUSTODIAN
TRANSFER AGENT
ACCOUNTANTS
DISTRIBUTOR
ADMINISTRATOR
FINANCIAL STATEMENTS
<PAGE>
DESCRIPTION OF THE TRUST
Marathon Value 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 a series of funds
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.
[ 5% Shareholders to be added]
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 and common
stock equivalents (such as convertible securities, rights and warrants).
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. The Fund
may invest up to 5% of its net assets at the time of purchase in each of the
following:
rights, warrants, or convertible securities.
B. Convertible Securities. A convertible security is a bond, debenture,
preferred stock or other security that may be converted into or exchanged for a
prescribed amount of common stock. The Fund may invest up to 5% of its assets in
convertible securities rated B or higher by Standard & Poor's Corporation
("S&P") or by Moody's Investors Services, Inc. ("Moody's"), or if
- 1 -
<PAGE>
unrated, determined by the Advisor to be of comparable quality. Generally,
investments in securities in the lower rating categories provide higher yields
but involve greater volatility of price and risk of loss of principal and
interest than investments in securities with higher ratings. Securities rated
lower than Baa by Moody's or BBB by S&P are considered speculative. In addition,
lower ratings reflect a greater possibility of an adverse change in the
financial conditions affecting the ability of the issuer to make payments of
principal and interest. The market price of lower rated securities generally
responds to short term corporate and market developments to a greater extent
than higher rated securities which react primarily to fluctuations in the
general level of interest rates. Lower rated securities will also be affected by
the market's perception of their credit quality and the outlook for economic
growth.
In the past, economic downturns or an increase in interest rates have
under certain circumstances caused a higher incidence of default by the issuers
of these securities and may do so in the future, especially in the case of
highly leverages issuers.
The prices for these securities may be affected by legislative and
regulatory developments. For example, new federal rules require that savings and
loan associations gradually reduce their holdings of high-yield securities. An
effect of such legislation may be to significantly depress the prices of
outstanding lower rated securities. The market for lower rated securities may be
less liquid than the market for higher rated securities. Furthermore, the
liquidity of lower rated 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 rated securities, and it
also may be more difficult during certain adverse market conditions to sell
lower rated securities at their fair value to meet redemption requests or to
respond to changes in the market.
If the rating of a security by S&P or Moody's drops below B, the
Advisor will dispose of the security as soon as practicable (depending on market
conditions) unless the Advisor determines based on its own credit analysis that
the security provides 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 risk through conditions and trends. 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.
C. Repurchase Agreements. A repurchase agreement is a short-term
investment in which the purchaser (i.e., the Fund) acquires ownership of a U.S.
Government obligation (which may be of any maturity) and the seller agrees to
repurchase the obligation at a future time at a set price, thereby determining
the yield during the purchaser's holding period (usually not more than seven
days from the date of purchase). Any repurchase transaction in which the Fund
engages will require full collateralization of the seller's obligation during
the entire term of the repurchase agreement. In the event of a bankruptcy or
other default of the seller, the Fund could experience both delays in
liquidating the underlying security and losses in value. However, the Fund
intends to enter into repurchase agreements only with the Custodian, other banks
with assets of $1 billion or more and registered securities dealers determined
by the Advisor (subject to review by the Board of Trustees) to be creditworthy.
The Advisor monitors the creditworthiness of the banks and securities dealers
with which the Fund engages in repurchase transactions, and the Fund will not
invest more than 5% of its net assets in repurchase agreements.
- 2 -
<PAGE>
D. 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 the Fund 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. The Fund will not invest more than 5% of its total assets in
forward commitments. Forward 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.
E. STRIPS. The Federal Reserve creates STRIPS (Separate Trading of
Registered Interest and Principal of Securities) by separating the coupon
payments and the principal payment from an outstanding Treasury security and
selling them as individual securities. To the extent the Fund purchases the
principal portion of the STRIP, the Fund will not receive regular interest
payments. Instead they are sold at a deep discount from their face value. The
Fund will accrue income on such STRIPS for tax and accounting purposes, in
accordance with applicable law, which income is distributable to shareholders.
Because no cash is received at the time such income is accrued, the Fund may be
required to liquidate other portfolio securities to satisfy its distribution
obligations. Because the principal portion of the STRIP does not pay current
income, its price can be very volatile when interest rates change. In
calculating its dividend, the Fund takes into account as income a portion of the
difference between the principal portion of the STRIP's purchase price and its
face value. The Fund will not invest more than 5% of its net assets in STRIPS.
F. Illiquid Securities. The portfolio of the Fund may contain illiquid
securities. 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 following securities are
considered to be illiquid: repurchase agreements maturing in more than seven
days, nonpublicly offered securities and restricted securities. Restricted
securities are securities the resale of which is subject to legal or contractual
restrictions. Restricted securities may be sold only in privately negotiated
transactions, in a public offering with respect to which a registration
statement is in effect under the Securities Act of 1933 or pursuant to Rule 144
or Rule 144A promulgated under such Act. Where registration is required, the
Fund may be obligated to pay all or part of the registration expense, and a
considerable period may elapse between the time of the decision to sell and the
time such security may be sold 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 the price it could have obtained when it
decided to sell. The Fund will not invest more than 5% of its net assets in
illiquid securities.
G. Option Transactions. An option involves either (a) the right or the
obligation to buy or sell a specific instrument at a specific price until the
expiration date of the option, or (b) the right to receive payments or the
obligation to make payments representing the difference between the closing
price of a market index and the exercise price of the option expressed in
dollars times a specified multiple until the expiration date of the option.
Options are sold (written) on securities
- 3 -
<PAGE>
and market indices. The purchaser of an option on a security pays the seller
(the writer) a premium for the right granted but is not obligated to buy or sell
the underlying security. The purchaser of an option on a market index pays the
seller a premium for the right granted, and in return the seller of such an
option is obligated to make the payment. A writer of an option may terminate the
obligation prior to expiration of the option by making an offsetting purchase of
an identical option. Options are traded on organized exchanges and in the
over-the-counter market. Options on securities which the Fund sells (writes)
will be covered or secured, which means that it will own the underlying security
(for a call option); will segregate with the Custodian high quality liquid debt
obligations equal to the option exercise price (for a put option); or (for an
option on a stock index) will hold a portfolio of securities substantially
replicating the movement of the index (or, to the extent it does not hold such a
portfolio, will maintain a segregated account with the Custodian of high quality
liquid debt obligations equal to the market value of the option, marked to
market daily). When the Fund writes options, it may be required to maintain a
margin account, to pledge the underlying securities or U.S. government
obligations or to deposit liquid high quality debt obligations in a separate
account with the Custodian.
The purchase and writing of options involves certain risks; for
example, the possible inability to effect closing transactions at favorable
prices and an appreciation limit on the securities set aside for settlement, as
well as (in the case of options on a stock index) exposure to an indeterminate
liability. The purchase of options limits the Fund's potential loss to the
amount of the premium paid and can afford the Fund the opportunity to profit
from favorable movements in the price of an underlying security to a greater
extent than if transactions were effected in the security directly. However, the
purchase of an option could result in the Fund losing a greater percentage of
its investment than if the transaction were effected directly. When the Fund
writes a covered call option, it will receive a premium, but it will give up the
opportunity to profit from a price increase in the underlying security above the
exercise price as long as its obligation as a writer continues, and it will
retain the risk of loss should the price of the security decline. When the Fund
writes a covered put option, it will receive a premium, but it will assume the
risk of loss should the price of the underlying security fall below the exercise
price. When the Fund writes a covered put option on a stock index, it will
assume the risk that the price of the index will fall below the exercise price,
in which case the Fund may be required to enter into a closing transaction at a
loss. An analogous risk would apply if the Fund writes a call option on a stock
index and the price of the index rises above the exercise price.
H. Indexed Securities. The Fund may invest up to 5% of its net assets
in purchases of securities whose prices are indexed to the prices of other
securities, securities indices, 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.
The performance of indexed securities depends to a great extent on the
performance of the security, 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.
- 4 -
<PAGE>
I. REITs. The Fund may invest up to 5% of its assets in real estate
investment trusts ("REITs"). A REIT is a corporation or business trust that
invests substantially all of its assets in interests in real estate. Equity
REITs are those which purchase or lease land and buildings and generate income
primarily from rental income. Equity REITs may also realize capital gains (or
losses) when selling property that has appreciated (or depreciated) in value.
Mortage REITs are those which invest in real estate mortgages and generate
income primarily from interest payments on mortgage loans. Hydrid REITs
generally invest in both real property and mortgages. In addition, REITs are
generally subject to risks associated with direct ownership of real estate, such
as decreases in real estate values or fluctuations in rental income caused by a
variety of factors, including increases in interest rates, increases in property
taxes and other operating costs, casualty or condemnation losses, possible
environmental liabilities and changes in supply and demand for properties. Risks
associated with REIT investments include the fact that equity and mortgage REITs
are dependent upon specialized management skills and are not fully diversified.
These characteristics subject REITs to the risks associated with financing a
limited number of projects. They are also subject to heavy cash flow dependency,
defaults by borrowers, and self-liquidation. Additionally, equity REITs may be
affected by any changes in the value of the underlying property owned by the
trusts, and mortgage REITs may be affected by the quality of any credit
extended.
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
the 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 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.
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 consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations promulgated
thereunder or interpretations of the Securities and Exchange Commission or its
staff.
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
- 5 -
<PAGE>
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. 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 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 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.
- 6 -
<PAGE>
ii. Borrowing. The Fund will not purchase any security while borrowings
(including reverse repurchase agreements) representing more than 5% of its total
assets are outstanding. The Fund will not enter into reverse repurchase
agreements.
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. Short Sales. The Fund will not effect short sales of securities.
v. Repurchase Agreements. The Fund will not invest more than 5% of its
net assets in repurchase agreements.
vi. Illiquid Investments. The Fund will not invest more than 5% of its
net assets in securities for which there are legal or contractual restrictions
on resale and other illiquid securities.
THE INVESTMENT ADVISOR
The Fund's investment adviser is Burroughs & Hutchinson, 702 W. Idaho
street, Suite 810, Boise, Idaho, 83702. John Hutchinson, President of the
Advisor, and Mark Matsko, the Fund's portfolio manager, are the controlling
shareholders 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 1.48% 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. For the period
___________,1998 (commencement of operations) through October 31, 1998, the Fund
paid advisory fees of
$-------.
The Advisor retains the right to use the name "Marathon" 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 "Marathon"
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
- 7 -
<PAGE>
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.
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>
<CAPTION>
<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: 40 Financial Services, Inc., the Fund's administrator, and
1793 Kingswood Drive AmeriPrime Financial Securities, Inc., the Fund's
Suite 200 distributor, since 1994. Prior to December, 1994, a
Southlake, Texas 76092 senior client executive with SEI Financial Services.
- -----------------------------------------------------------------------------------------------------------------------------------
Secretary, Treasurer Secretary, Treasurer and Chief Financial Officer of
Age: AmeriPrime Financial Services, Inc. and AmeriPrime
1793 Kingswood Drive Financial Securities, Inc.
Suite 200
Southlake, Texas 76092
- -----------------------------------------------------------------------------------------------------------------------------------
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C.,
Age: 41 oil and gas services company; various positions with
2001 Indianwood Avenue Carbo Ceramics, Inc., oil field manufacturing/supply
Broken Arrow, Oklahoma 74012 Company, from 1984 to 1997, most recently Vice
President of Marketing.
- -----------------------------------------------------------------------------------------------------------------------------------
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer
Age: 51 of Legacy Trust Company since 1992; President and
600 Jefferson Street, Suite 350 Director of Heritage Trust Company from 1994 to
Houston, Texas 77063 1996.
===================================================================================================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the period ended
October 31, 1998 is set forth in the following table. Trustee fees are Trust
expenses and each series of the Trust is responsible for a portion of the
Trustee fees.
<TABLE>
<CAPTION>
<S> <C> <C>
===============================================================================================================
Name Aggregate Compensation Total Compensation from Trust
from Trust (the Trust is not in a Fund Complex)
- ---------------------------------------------------------------------------------------------------------------
Kenneth D. Trumpfheller 0 0
- ---------------------------------------------------------------------------------------------------------------
Steve L. Cobb $4,000 $4,000
- 8 -
<PAGE>
- ---------------------------------------------------------------------------------------------------------------
Gary E. Hippenstiel $4,000 $4,000
===============================================================================================================
</TABLE>
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
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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. For the period ________, 1998
(commencement of operations) through October 31, 1998, the Fund paid brokerage
commissions of $__________.
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, Martin
Luther King, Jr. 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
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<PAGE>
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.
For the period _________, 1998 (commencement of operations) through October 31,
1998, the Fund's average annual total return was ____%, annualized.
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 Russell Midcap Index.
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 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., Hauppauge Corporate Center, 150 Motor
Parkway, Hauppauge, NY 11788, 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. For the period
_______, 1998 (commencement of operations) through October 31, 1998, ADS
received $________ from the Advisor (not the Fund) for these 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, 1999. McCurdy & Associates performs an
annual audit of the Fund's financial
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<PAGE>
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.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (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. For the period ________, 1998 (commencement of operations) through
October 31, 1998, the Administrator received $______ from the Advisor (not the
Fund) for these services.
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Trust's Annual Report to Shareholders for the period ended
October 31, 1998. The Trust will provide the Annual Report without charge by
calling the Fund at 1-800-788-6086
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<PAGE>
PROSPECTUS February 14, 1999
AAM EQUITY FUND
1018 Kanawha Blvd., East, Suite 309
Charleston, West Virginia 25301
For Information, Shareholder Services and Requests:
(888) 905-2283
The investment objective of the AAM Equity Fund (the "Fund") is to provide long
term capital appreciation. The Fund seeks to achieve its objective by investing
primarily in a diversified portfolio of common stocks that the Advisor,
Appalachian Asset Management, Inc., believes offer growth opportunities at a
reasonable price. The Advisor selects stocks on the basis of several criteria,
including price-earnings ratio, rate of earnings growth, depth of management,
past financial stability, present and projected position in its industry and the
dividend record. As the Fund will primarily invest in dividend-paying common
stocks, it is expected that the Fund will generate some current income in
addition to long term capital appreciation.
The Fund is "no-load," which means that investors incur no sales
charges, commissions or deferred sales charges on the purchase or redemption of
their shares. The Fund is one of the mutual funds comprising AmeriPrime Funds,
an open-end management investment company, 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 dated February 14, 1999 has been filed with
the Securities and Exchange Commission (the "SEC"), is incorporated herein by
reference, and can be obtained without charge by calling the Fund at the phone
number listed above. The SEC maintains a Web Site (http://www.sec.gov) that
contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
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.
<PAGE>
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. In addition, the Fund does not
charge a 12b-1 fee. 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. The Advisor pays all of the expenses of the Fund except
brokerage, taxes, interest, fees and expenses of non-interested person trustees
and extraordinary expenses (including organizational expenses).
[TABLE TO BE UPDATED:
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)1
Management Fees...................................................1.15%
12b-1 Fees.........................................................NONE
Other Expenses2...................................................0.10%
Total Fund Operating Expenses.....................................1.15%
1 TO BE REVISED: The Fund's total operating expenses are equal to the
management fee paid to the Advisor because the Advisor pays all of the
Fund's operating expenses (except as described above).
2 TO BE REVISED: Other expenses (operating expenses and fees and
expenses of the trustees who are not "interested persons" as defined in
the Investment Company Act) are estimated to be .010% of average net
assets for the 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:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$12 $37 $________ $________
<PAGE>
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
period , 1998 (commencement of operations) through October 31, 1998, is derived
from the audited financial statements fo the Fund. The financial statements of
the Fund have been audited by McCurdy & Associates CPA's Inc., independent
public accountants and are included in the Fund's Annual Report. The Annual
Report contains additional performance information and is available upon request
and without charge.
[Financial Highlights to be inserted]
THE FUND
The AAM Equity Fund (the "Fund") was organized as a series of
AmeriPrime Funds, an Ohio business trust (the "Trust") on April 8, 1998, and
commended operations on , 1998 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 Appalachian Asset Management, Inc. (the
"Advisor").
INVESTMENT OBJECTIVE AND STRATEGIES
The investment objective of the Fund is to provide long term capital
appreciation. The Fund seeks to achieve its objective by investing primarily in
a diversified portfolio of common stocks that the Advisor believes offer growth
opportunities at a reasonable price. Under normal circumstances, at least 65% of
the total assets of the Fund will be invested in equity securities. The Advisor
selects stocks on the basis of several criteria, including price-earnings ratio,
rate of earnings growth, depth of management, past financial stability, present
and projected position in its industry and the dividend record. As the Fund will
primarily invest in dividend-paying common stocks, it is expected that the Fund
will generate some current income in addition to long term capital appreciation.
The Advisor generally plans to stay fully invested (subject to
liquidity requirements) in common stocks of established companies whose
securities, in the opinion of the Advisor, enjoy a fair degree of marketability.
Most equity securities in the Fund's portfolio will be listed on a national
exchange. For temporary defensive purposes under abnormal market or economic
conditions, the Fund may hold all or a portion of its assets in money market
instruments (including money market funds) or U.S. government repurchase
agreements. The Fund may also invest in such instruments at any time to maintain
liquidity or pending selection of investments in accordance with its policies.
If the Fund acquires securities of a money market fund, the shareholders of the
Fund will be subject to additional management fees.
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, it should be noted that the Advisor has not
previously managed assets organized as a mutual fund and that the Fund has no
operating history. 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. See "Investment Policies and Techniques and Risk
Considerations" for a more detailed discussion of the Fund's investment
practices.
HOW TO INVEST IN THE FUND
The Fund is "no-load" and shares of the Fund are sold directly to
investors on a continuous basis, subject to a minimum initial investment of
$2,500 and minimum subsequent investments of $50. These minimums may be waived
by the Advisor for accounts participating in an automatic investment program.
Investors choosing to purchase or redeem their shares through a broker/dealer or
other institution may be charged a fee by that institution. Investors choosing
to purchase or redeem shares directly from the Fund will not incur charges on
purchases or redemptions. To the extent investments of individual investors are
aggregated into an omnibus account established by an investment advisor, broker
or other intermediary, the account minimums apply to the
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<PAGE>
omnibus account, not to the account of the individual investor.
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 Mutual Fund, and sent to the P.O. Box listed below. If you
prefer overnight delivery, use the overnight address listed below.
U.S. Mail: AAM Equity Fund Overnight: AAM Equity Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, Indiana 46204-6110 Indianapolis, Indiana 46204
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 888-905-2283 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: AAM Equity Fund
D.D.A. # 488920927
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.
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 Mutual Fund and should be sent to the address listed above. A
bank wire should be sent as outlined above.
Automatic Investment Plan
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $50 or more from your bank
checking account.
You may change the amount of your monthly purchase at any time.
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<PAGE>
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 plans (IRAs); simplified employee pensions
(SEPs); SIMPLE plans; 401(k) plans; qualified corporate pension and profit
sharing plans (for employees); tax deferred investment 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
advisor 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. Investors choosing to purchase or redeem their
shares through a broker/dealer or other institution may be charged a fee by that
institution.
By Mail - You may redeem any part of your account in the Fund at no
charge by mail. Your request should be addressed to:
AAM Equity Fund
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, Indiana 46204-6110
"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 Unified Fund 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 (888) 905-2283. 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
- 4 -
<PAGE>
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 (888) 905-2283. 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 calendar 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 $2,000 due to 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 advisor 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 anytime 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.
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 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
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<PAGE>
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.
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 advisors 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 diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities
- 6 -
<PAGE>
of the Fund. Like other mutual funds, the Fund retains various organizations to
perform specialized services. The Fund retains the Advisor to manage the assets
of the Fund. The Advisor, a West Virginia corporation, is a private investment
management company founded in 1992, and controlled by Knox H. Fuqua. The Advisor
currently manages over $20 million in assets, and provides equity, balanced
account, and fixed income portfolios for individual, pension and profit sharing
plans, endowments, foundations, municipalities, trusts and corporations.
Knox Fuqua is President and Chief Investment Officer of the Advisor. He has
over twelve years of investment experience. Mr. Fuqua is a graduate of Tennessee
Technological University, and began his investment career with 1st American Bank
(Lee, Robinson & Steine) in Nashville, Tennessee. Mr. Fuqua became associated
with Appalachian Asset Management in 1992, when he was the founding member of
the firm. Mr. Fuqua is President and Chief Investment Officer and is responsible
for all investment decisions. Mr. Fuqua has extensive money management
experience and continues to expand his education through various continuing
education programs.
The Fund is authorized to pay the Advisor a fee equal to an annual
average rate of 1.15% of its average daily net assets. The Advisor pays all of
the operating expenses of the Fund except brokerage, taxes, interest, fees and
expenses of non-interested person trustees and extraordinary expenses (including
organizational expenses). In this regard, it should be noted that most
investment companies pay their own operating expensesdirectly, while the Fund's
expenses, except those specified above, are paid by the Advisor.
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). The Fund retains Unified Fund Services, Inc., 431
North Pennsylvania Street, Indianapolis, Indiana 46204 (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. The Advisor (not the Fund) may pay certain financial
institutions (which may include banks, brokers, securities dealers and other
industry professionals) a "servicing fee" for performing certain administrative
functions for Fund shareholders to the extent these institutions are allowed to
do so by applicable statute, rule or regulation.
- 7 -
<PAGE>
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ. The
Statement of Additional Information provides more information.
Equity Securities. Equity securities consist of common stock,
convertible preferred stock, convertible bonds, rights and warrants. Common
stocks, the most familiar type, represent an equity (ownership) interest in a
corporation. Warrants are options to purchase equity securities at a specified
price 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.
Although equity securities have a history of long-term growth in value, their
prices fluctuate based on changes in a company's financial condition and on
overall market and economic conditions. The Fund may not invest more than 5% of
its net assets in either convertible preferred stocks or convertible bonds. The
Advisor will limit the Fund's investment in convertible securities to those
rated A or better by Moody's Investors Service, Inc. or Standard & Poor's Rating
Group or, if unrated, of comparable quality in the opinion of the Advisor.
The Fund may invest in foreign equity securities by purchasing American
Depository Receipts ("ADRs"). ADRs are certificates evidencing ownership of
shares of a foreign- based issuer held in trust by a bank or similar financial
institution. They are alternatives to the direct purchase of the underlying
securities in their national markets and currencies. To the extent that the Fund
does invest ADRs, such investments may be subject to special risks, such as
changes in restrictions on foreign currency transactions and rates of exchange,
and changes in the administrations or economic and monetary policies of foreign
governments. The Fund will not invest more than 10% of its net assets in ADRs.
Equity securities also include common stocks and common stock
equivalents of domestic real estate investment trusts ("REITS") and other
companies which operate as real estate corporations or which have a significant
portion of their assets in real estate. The Fund may invest up to 5% of its net
assets in REITs. The Fund will not acquire any direct ownership of real estate.
Investments in equity securities are subject to inherent market risks
and fluctuations in value due to earnings, economic conditions and other factors
beyond the control of the Advisor. As a result, the return and net asset value
of the Fund will fluctuate. Securities in the Fund's portfolio may not increase
as much as the market as a whole and some undervalued securities may continue to
be undervalued for long periods of time. Although profits in some Fund holdings
may be realized quickly, it is not expected that most investments will
appreciate rapidly.
Repurchase Agreements. The Fund may invest in repurchase agreements
fully collateralized by U.S. Government obligations. A repurchase agreement is a
short-term investment in which the purchaser (i.e., the Fund) acquires ownership
of a U.S. Government obligation (which may be of any maturity) and the seller
agrees to repurchase the obligation at a future time at a set price, thereby
determining the yield during the purchaser's holding period (usually not more
than seven days from the date of purchase). Any repurchase transaction in which
the Fund engages will require full collateralization of the seller's obligation
during the entire term of the repurchase agreement. In the event of a bankruptcy
or other default of the seller, the Fund could experience both delays in
liquidating the underlying security and losses in value. However, the Fund
intends to enter into repurchase agreements only with Star Bank, N.A. (the
Fund's Custodian), other banks with assets of $1 billion or more and registered
securities dealers determined by the Advisor (subject to review by the Board of
Trustees) to be creditworthy. The Advisor monitors the creditworthiness of the
banks and securities dealers with which the Fund engages in repurchase
transactions.
- 8 -
<PAGE>
General. The Fund may invest up to 5% of its net assets in illiquid
securities, including repurchase agreements maturing in more than seven days.
The Fund may also invest up to 5% of its net assets in securities sold under
Rule 144A (unregistered securities that can be resold to institutions only under
SEC Rule 144A). The Fund may borrow amounts up to 5% of its net assets to meet
redemption requests.
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. However, if the objectives of the
Fund would be better served, short-term profits or losses may be realized from
time to time. [It is anticipated that the Fund will hold most securities from 1
to 5 years at a time and that portfolio turnover will not exceed 50% annually.]
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.
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 advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of 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. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
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
- 9 -
<PAGE>
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 and 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.
Investment Advisor Administrator
Appalachian Asset Management, Inc. AmeriPrime Financial Services, Inc.
1018 Kanawha Blvd., East, Suite 309 1793 Kingswood Drive, Suite 200
Charleston, WV 25301 Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchases and Independent Auditors
all redemption requests) McCurdy & Associates CPA's, Inc.
Unified Fund Services, Inc. 27955 Clemens Road
431 North Pennsylvania Street Westlake, Ohio 44145
Indianapolis, Indiana 46204
Legal Counsel
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
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.
- 10 -
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY OF FUND EXPENSES
Shareholder Transaction Expenses
Annual Fund Operating Expenses
THE FUND
INVESTMENT OBJECTIVE AND STRATEGIES
HOW TO INVEST IN THE FUND
Initial Purchase
Additional Investments
Automatic Investment Plan
Tax Sheltered Retirement Plans
Other Purchase Information
HOW TO REDEEM SHARES
By Mail
By Telephone
Additional Information
SHARE PRICE CALCULATION
DIVIDENDS AND DISTRIBUTIONS
TAXES
OPERATION OF THE FUND
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
Equity Securities
Repurchase Agreements
General
GENERAL INFORMATION
Fundamental Policies
Portfolio Turnover
Shareholder Rights
- 11 -
<PAGE>
AAM EQUITY FUND
STATEMENT OF ADDITIONAL INFORMATION
February 14, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of AAM Fund dated February 14, 1999.
A copy of the Prospectus can be obtained by writing the Transfer Agent at 431
North Pennsylvania Street, Indianapolis, Indiana 46204, or by calling
1-888-905-2283.
<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.........................................................5
THE INVESTMENT ADVISOR.........................................................8
TRUSTEES AND OFFICERS..........................................................8
PORTFOLIO TRANSACTIONS AND BROKERAGE...........................................9
DETERMINATION OF SHARE PRICE..................................................10
INVESTMENT PERFORMANCE........................................................11
CUSTODIAN.....................................................................12
TRANSFER AGENT................................................................12
ACCOUNTANTS...................................................................12
DISTRIBUTOR...................................................................12
ADMINISTRATOR.................................................................12
FINANCIAL STATEMENTS..........................................................12
<PAGE>
DESCRIPTION OF THE TRUST
The AAM Equity 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 a series of funds
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 been titled 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.
[ 5% Shareholders to be supplied ]
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. American Depository Receipts (ADRs). The Fund may invest up to 10%
of its assets in ADRs. ADRs are subject to risks similar to those associated
with direct investment in foreign securities. For example, there may be less
information publicly available about a foreign company then about a U.S.
company, and foreign companies are not generally subject to accounting, auditing
and financial reporting standards and practices comparable to those in the U.S.
Other risks associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes in
the administrations or economic and monetary policies of foreign governments,
the imposition of exchange control regulations, the possibility of expropriation
decrees and other adverse foreign governmental action, the imposition of foreign
taxes, less liquid markets, less government
- 3 -
<PAGE>
supervision of exchanges, brokers and issuers, difficulty in enforcing
contractual obligations, delays in settlement of securities transactions and
greater price volatility. In addition, investing in foreign securities will
generally result in higher commissions than investing in similar domestic
securities.
B. Restricted and Illiquid Securities. The portfolio of the Fund may
contain illiquid securities. 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 following securities
are considered to be illiquid: repurchase agreements and reverse repurchase
agreements maturing in more than seven days, nonpublicly offered securities and
restricted securities. Restricted securities are securities the resale of which
is subject to legal or contractual restrictions. Restricted securities may be
sold only in privately negotiated transactions, in a public offering with
respect to which a registration statement is in effect under the Securities Act
of 1933 or pursuant to Rule 144 or Rule 144A promulgated under such Act. Where
registration is required, the Fund may be obligated to pay all or part of the
registration expense, and a considerable period may elapse between the time of
the decision to sell and the time such security may be sold 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 the price it could
have obtained when it decided to sell. The Fund will not invest more than 5% of
its net assets in illiquid securities.
With respect to Rule 144A securities, these restricted securities are
treated as exempt from the 5% limit on illiquid securities, provided that a
dealer or institutional trading market in such securities exists. The Fund will
not, however invest more than 5% of its net assets in Rule 144A securities.
Under the supervision of the Board of Trustees of the Fund, the Advisor
determines the liquidity of restricted securities and, through reports from the
Advisor, the Board will monitor trading activity in restricted securities. If
institutional trading in restricted securities were to decline, the liquidity of
the Fund could be adversely affected.
C. Real Estate Investment Trusts (REITs). A REIT is a corporation or
business trust that invests substantially all of its assets in interests in real
estate. The Fund's investments in REITs will be those characterized as equity
REITs. Equity REITs are those which purchase or lease land and buildings and
generate income primarily from rental income. Equity REITs may also realize
capital gains (or losses) when selling property that has appreciated (or
depreciated) in value. Risks associated with REIT investments include the fact
that REITs are dependent upon specialized management skills and are not fully
diversified. These characteristics subject REITs to the risks associated with
financing a limited number of projects. They are also subject to heavy cash flow
dependency, defaults by borrowers and self-liquidation. Additionally, equity
REITs may be affected by any changes in the value of the underlying property
owned by the trusts.
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
- 4 -
<PAGE>
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 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.
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 consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations promulgated
thereunder or interpretations of the Securities and Exchange Commission or its
staff.
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. 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 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.
- 5 -
<PAGE>
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 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).
1. 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.
2. Borrowing. The Fund will not purchase any security while borrowings
(including reverse repurchase agreements) representing more than 5% of its total
assets are outstanding.
3. 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.
4. Short Sales. The Fund will not effect short sales of securities.
5. Options. The Fund will not purchase or sell puts, calls, options or
straddles.
6. Illiquid Investments. The Fund will not invest more than 5% of its
net assets in securities for which there are legal or contractual restrictions
on resale and other illiquid securities.
7. Loans of Portfolio Securities. The Fund will not make loans of
portfolio securities.
THE INVESTMENT ADVISOR
The Fund's investment advisor is Appalachian Asset Management, 1018 Kanawha
Boulevard, East, Suite 309, Charleston, West Virginia 25301. Knox Fuqua may be
deemed
- 6 -
<PAGE>
to be a controlling person of the Advisor due to his ownership of a majority of
its shares. The Advisor has provided a uniquely comprehensive and personalized
package of investments and total financial consulting services to small to
medium sized businesses and foundations since 1992. Prior to founding the
Advisor, Mr. Fuqua was a trust investment officer at a national bank.
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 (including organizational 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 1.15% 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. For the period ________________, 1988 (commencement of operations)
through October 31, 1998, the Fund paid advisory fees of
$---------.
The Advisor retains the right to use the name AAM 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 AAM 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.
- 7 -
<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, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
<S> <C> <C>
==========================================================================================================================
Name, Age and Address Position Principal Occupations During
Past 5 Years
- --------------------------------------------------------------------------------------------------------------------------
* Kenneth D. Trumpfheller President President, Treasurer and Secretary of
Age: 40 and Trustee AmeriPrime Financial Services, Inc., the
1793 Kingswood Drive Fund's administrator, and AmeriPrime
Suite 200 Financial Securities, Inc., the Fund's
Southlake, Texas 76092 distributor, since 1994. Prior to December,
1994, a senior
client executive
with SEI
Financial
Services.
- --------------------------------------------------------------------------------------------------------------------------
Secretary, Secretary, Treasurer and Chief Financial
Age: Treasurer Officer of AmeriPrime Financial Services,
1793 Kingswood Drive Inc. and AmeriPrime Financial Securities,
Suite 200 Inc.
Southlake, Texas 76092
- --------------------------------------------------------------------------------------------------------------------------
Steve L. Cobb Trustee President of Chandler Engineering
Age: 41 Company, L.L.C., oil and gas services
2001 Indianwood Avenue company; various positions with Carbo
Broken Arrow, OK 74012 Ceramics, Inc., oil field manufacturing/
supply company,
from 1984 to
1997, most
recently Vice
President of
Marketing.
- --------------------------------------------------------------------------------------------------------------------------
Gary E. Hippenstiel Trustee Director, Vice President and Chief
Age: 51 Investment Officer of Legacy Trust
600 Jefferson Street Company since 1992; President and
Suite 350 Director of Heritage Trust Company from
Houston, TX 77063 1994-1996.
==========================================================================================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the fiscal year
ended October 31, 1998 is set forth in the following table. Trustee fees are
Trust expenses and each series of the Trust pays a portion of the Trustee fees.
- 8 -
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
===============================================================================================================
Name Aggregate Total Compensation
Compensation from Trust (the Trust is
from Trust not in a Fund Complex)
- ---------------------------------------------------------------------------------------------------------------
Kenneth D. Trumpfheller 0 0
- ---------------------------------------------------------------------------------------------------------------
Steve L. Cobb $4,000 $4,000
- ---------------------------------------------------------------------------------------------------------------
Gary E. Hippenstiel $4,000 $4,000
===============================================================================================================
</TABLE>
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.
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<PAGE>
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. For the period _________, 1998 (commencement of
operations) through October 31, 1998, the Fund paid brokerage commissions of
$________.
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, Martin
Luther King, Jr. 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 for the period indicated 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.
In addition to providing average annual total return, the Fund may also
provide nonstandardized quotations of total return for differing periods and may
provide 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 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
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<PAGE>
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. For the period _________, 1998
(commencement of operations) through October 31, 1998, the Fund's average annual
total return was ____%, annualized.
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 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
Unified Fund Services, Inc., 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, acts as the Fund's transfer agent and, in such
capacity, maintains the records of each Unified 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, Unified provides the Fund with certain monthly reports, record-keeping
and other management-related services. For the period ________, 1998
(commencement of operations) through October 31, 1998, Unified received $_______
from the Advisor (not the Fund) for these 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, 1999. McCurdy & Associates performs an
annual audit of the Fund's financial statements and provides financial, tax and
accounting consulting services as requested.
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<PAGE>
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.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (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. For the period _____________, 1998 (commencement of operations)
through October 31, 1998, the Administrator received $_________ from the Advisor
(not the Fund) for these services.
FINANCIAL STATEMENTS
The financial statements and independent auditor's report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Trust's Annual Report to Shareholders for the period ended
October 31, 1998. The Trust will provide the Annual Report without charge by
calling the Fund at 1-888-905-2283.
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<PAGE>
PROSPECTUS ___________________, 1999
Dobson Covered Call Fund
1793 Kingswood Drive, Suite 200
Southlake, Texas 76092
For Information, Shareholder Services and Requests:
(888)___-____
The investment objective of the Dobson Covered Call Fund is to provide
above average return consistent with lower risk than the S&P 500 Index. The
Fund's advisor, Dobson Capital Management, Inc., seeks to achieve this objective
by creating a broadly diversified and significantly hedged portfolio using
individual stock and stock index options. The Fund invests in common stocks of
issuers represented in the S&P 500 Index, maintaining industry weightings
similar to that Index. The Fund hedges its portfolio by selling covered call
options on individual securities and securities indexes.
The Fund is "no-load," which means that investors incur no sales
charges, commissions or deferred sales charges on the purchase or redemption of
their shares. The Fund is one of the mutual funds comprising AmeriPrime Funds,
an open-end management investment company, 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 dated _________________, 1999 has been filed
with the Securities and Exchange Commission (the "SEC"), is incorporated herein
by reference, and can be obtained without charge by calling the Fund at the
phone number listed above. The SEC maintains a Web Site (http://www.sec.gov)
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
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.
<PAGE>
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. In addition, the Fund does not
charge a 12b-1 fee. 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. The Advisor pays all of the expenses of the Fund except
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)1
Management Fees...................................1.50%
12b-1 Fees........................................NONE
Other Expenses2...................................0.00%
Total Fund Operating Expenses.....................1.50%
1 The Fund's total operating expenses are equal to the management fee
paid to the Advisor because the Advisor pays all of the Fund's
operating expenses (except as described above).
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 less than .01% 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:
1 Year 3 Years
------ -------
$-- $--
<PAGE>
THE FUND
The Dobson Covered Call Fund (the "Fund") was organized as a series of
AmeriPrime Funds, an Ohio business trust (the "Trust") on __________, 1998. 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 Dobson
Capital Management, Inc. (the "Advisor").
INVESTMENT OBJECTIVE AND STRATEGIES
The investment objective of the Fund is to achieve above average return
consistent with lower risk than the S&P 500 Index. The Advisor's basic strategy
is to create a broadly diversified and significantly hedged portfolio using
individual stock and stock index options. The Fund invests in common stocks of
issuers represented in the S&P 500 Index, maintaining industry weightings
similar to that Index. The Fund hedges its portfolio by selling covered call
options on individual securities and securities indexes.
Covered call options (selling a call option on securities already owned
by the Fund) will be written on the Fund's portfolio to reduce fluctuation in
total return. The writing of such options tends to reduce fluctuations in total
return because: 1) the premium received from selling the option will reduce any
loss on the underlying security by the amount of the premium and 2) the gain
will be limited to the difference between the strike price and the price of the
underlying security plus the premium received. In general, the premiums received
from writing call options on a broadly diversified portfolio will provide above
average total return in a modestly rising (rising 10% a year or less), flat or
down market as measured by the S&P 500. In a rapidly rising market such as
occurred in 1996 and 1997, a covered call strategy on a broadly diversified
portfolio will underperform the market as measured by the S&P 500. The the
extent the Fund receives premiums from expired options and profits from closing
purchase transactions, any return from dividends and appreciation will be
enhanced. For additional information about options and the risks of entering
into option transactions, see "Investment Policies and Techniques and Risk
Considerations"
The Fund will invest primarily in dividend paying common stocks that
have been approved by one or more exchange as underlying securities for listed
call options. The Fund has no maximum or minimum level that will be hedged, but
under normal market conditions anticipates being fully hedged with the exception
of the utility industry, for which option premiums have historically been low.
For temporary defensive purposes under abnormal market or economic
conditions, the Fund may hold all or a portion of its assets in money market
instruments, securities of other no-load registered investment companies or
repurchase agreements. The Fund may also invest in such instruments at any time
to maintain liquidity or pending selection of investments in accordance with its
policies. If the Fund acquires securities of another investment company, the
shareholders of the Fund will be subject to additional management fees.
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, it should be noted that, while the Fund's
portfolio manager has experience managing a mutual fund, both the Advisor and
the Fund have no operating history. 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. See "Investment Policies and Techniques
and Risk Considerations" for a more detailed discussion of the Fund's investment
practices.
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<PAGE>
HOW TO INVEST IN THE FUND
The Fund is "no-load" and shares of the Fund are sold directly to
investors on a continuous basis. There is no minimum on initial or subsequent
purchases of Fund shares by tax deferred retirement plans (including IRA,
SEP-IRA, Profit Sharing and Money Purchase Plans) or uniform gifts to minors
accounts. For other investors the minimum is $2500 for an initial purchase and
no minimum for subsequent purchases. [These minimums may be waived by the
Advisor for accounts participating in an automatic investment program.]
Investors choosing to purchase or redeem their shares through a
broker/dealer or other institution may be charged a fee by that institution.
Investors choosing to purchase or redeem shares directly from the Fund will not
incur charges on purchases or redemptions. To the extent investments of
individual investors are aggregated into an omnibus account established by an
investment adviser, broker or other intermediary, the account minimums apply to
the omnibus account, not to the account of the individual investor.
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 Dobson Covered Call Fund, and sent to the P.O. Box listed
below.
If you prefer overnight delivery, use the overnight address listed below.
U.S. Mail: Overnight:
Dobson Covered Call Fund Dobson Covered Call Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, Indiana 46204-6110 Indianapolis, Indiana 46204
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 Unified Fund Services, Inc. (the "Transfer Agent") at
888-___-____ 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: Dobson Covered Call 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 Star Bank, N.A. (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.
Additional Investments
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<PAGE>
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 Dobson Covered Call Fund and should be sent to the address
listed above. A bank wire should be sent as outlined above.
[Automatic Investment Plan
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $50 or more from your bank
checking account.
You may change the amount of your monthly purchase at any time.]
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 plans (IRAs); simplified employee pensions
(SEPs); SIMPLE plans; 401(k) plans; qualified corporate pension and profit
sharing plans (for employees); tax deferred investment 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
advisor 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. Investors choosing to purchase or redeem their
shares through a broker/dealer or other institution may be charged a fee by that
institution.
By Mail - You may redeem any part of your account in the Fund at no
charge by mail. Your request should be addressed to:
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<PAGE>
Dobson Covered Call Fund
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, Indiana 46204-6110
"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 Unified Fund 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 888___-____. 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 888 ___-____. 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 $2,500 due to 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 advisor 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 anytime 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.
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
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<PAGE>
exchange 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
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.
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.
- 6 -
<PAGE>
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 advisors 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 diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund retains various organizations to perform
specialized services.
The Fund retains the Advisor to manage the assets of the Fund.
The Fund retains Dobson Capital Management, Inc., 1422 S. Van Ness St.,
Santa Ana, CA 92707 (the "Advisor"), to manage the assets of the Fund. The
Advisor determines the 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 objective, policies and restrictions, and subject further to such
policies and instructions as the Board of Trustees may establish. The Advisor is
a California corporation established in September 1998.
Charles L. Dobson is the President, Director and sole shareholder of
the Advisor, and is primarily responsible for the day-to-day management of the
Fund's portfolio. Mr. Dobson was associated with Analytic/TSA Global Asset
Management for nearly twenty years, acting as Executive Vice President and
Portfolio Manager of the Analytic Optioned Equity Fund, and Executive Vice
President and Secretary of the Analytic Series Fund until May 1998. Mr. Dobson
graduated from the University of California at Irvine where he received an BA in
Economics and an MS in Administration.
The Fund is authorized to pay the Advisor a fee equal to an annual
average rate of 1.50% of its average daily net assets. The Advisor pays all of
the operating expenses of the Fund except brokerage, taxes, interest, fees and
expenses of non-interested person trustees and extraordinary expenses. In this
regard, it should be noted that most investment companies pay their own
operating expenses directly, while the Fund's expenses, except those specified
above, are paid by the Advisor.
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). The Fund retains Unified Fund Services, Inc., 431
North Pennsylvania Street, Indianapolis, Indiana 46204 (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,
- 7 -
<PAGE>
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. The Advisor (not the Fund) may pay certain financial
institutions (which may include banks, brokers, securities dealers and other
industry professionals) a "servicing fee" for performing certain administrative
functions for Fund shareholders to the extent these institutions are allowed to
do so by applicable statute, rule or regulation.
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ. The
Statement of Additional Information provides more information.
Equity Securities. Equity securities consist of common stock,
convertible preferred stock, rights and warrants. Common stocks, the most
familiar type, represent an equity (ownership) interest in a corporation.
Warrants are options to purchase equity securities at a specified price 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. Although equity
securities have a history of long-term growth in value, their prices fluctuate
based on changes in a company's financial condition and on overall market and
economic conditions.
Investments in equity securities are subject to inherent market risks
and fluctuations in value due to earnings, economic conditions and other factors
beyond the control of the Advisor. As a result, the return and net asset value
of a Fund will fluctuate. Securities in a Fund's portfolio may not increase as
much as the market as a whole and some undervalued securities may continue to be
undervalued for long periods of time. Although profits in some Fund holdings may
be realized quickly, it is not expected that most investments will appreciate
rapidly.
Covered Call Options. A call option gives the purchaser of the option
the right to buy, and the writer of the option has the obligation to sell the
underlying securities at the exercise price during the option period. The Fund,
as the writer of the option receives premium from the purchaser of the call
option. The writer, during the time he is obligated under the option, may be
assigned an exercise notice by the broker-dealer through whom the call was sold,
requiring him to deliver the underlying security against payment of the exercise
price. The obligation is terminated only upon expiration of the option or at
such earlier time as the writer purchases the option back (closing purchase
transaction). Once a writer has been assigned an exercise notice, he will
thereafter be unable to enter into a closing purchase transaction. So long as
the Fund is obligated as the writer of a call option, it will own the underlying
securities subject to the option.
To secure this obligation to deliver the underlying security, a covered
call option writer is required to deposit in escrow the underlying security or
other assets in accordance with the rules of the Clearing Corporation and the
exchange on which the call option is traded. To fulfill this obligation at the
time an option is written, the Fund, in compliance with its custodian agreement,
directs the Custodian of its investment securities, or a securities depository
acting for the Custodian, to act as the Fund's escrow agent by issuing an escrow
receipt to the Clearing Corporation respecting the option's underlying
securities. The Clearing Corporation will release the securities from this
escrow either upon the exercise of the option, the expiration of the option
without being exercised or when the Fund enters into a closing purchase
transaction. Until such release the Fund cannot sell the underlying securities
The covered call option writer gives up the opportunity to profit from
a price increase in the underlying security above the exercise price of the
option plus the premium received. If the underlying security does not advance to
or beyond the exercise price of the option plus the premium received, the writer
will increase his total
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<PAGE>
return. In some periods the Fund will receive less total return and in other
periods greater total return from than it would have received from its
underlying securities unoptioned. The Fund expects to increase its long-term
total return by writing options which in its opinion have sufficiently large
premiums to produce greater total return over the long-term.
The Fund will write options on such portion of its portfolio as
management determines is appropriate in seeking to attain the Fund's objective.
The Fund will write options when management believes that a liquid secondary
market will exist on a national securities exchange for options of the same
series so that the Fund can effect a closing purchase transaction if it desires
to close out its position. Consistent with the investment policies of the Fund,
a closing purchase transaction will ordinarily be effected to realize a profit
on an outstanding option, to prevent an underlying security from being called,
or to permit the sale of the underlying security. Effecting a closing purchase
transaction will permit the Fund to write another option on the underlying
security with either a different exercise price or expiration date or both.
The premium the Fund receives for writing an option will reflect, among
other things, the current market price of the underlying security, the
relationship of the exercise price to such market price, the historical price
volatility of the underlying security, the option period, supply and demand and
interest rates. The exercise price of an option may be below, equal to or above
the current market value of the underlying security at the time the option is
written. Options written by the Fund will normally have expiration dates between
one and nine months from the date written. From time to time, for tax and other
reasons, the Fund may purchase an underlying security for delivery in accordance
with an exercise notice assigned to it, rather than delivering such security
from its portfolio.
Risks of Opton Writing. In return for the premium received, a covered
call writer during the term of the option is subject to the risk of losing the
potential for capital appreciation of the underlying security beyond the
exercise price of the option. The gain may be less than not selling a call
option on the underlying security. The writer has no control over the time when
he has to fulfill his obligation as the writer of an option. Once an option
writer has received an exercise notice he cannot effect a closing purchase
transaction.
If a call expires unexercised, the covered writer realizes a gain in
the amount of the premium received, although there may have been a decline
(unrealized loss) in the market value of the underlying security during the
option period which may exceed such gain. If an underlying security should
decline by more than the option premium the call writer received, there will be
a loss on the overall position. The loss will be less than not selling a call
option on the underlying security.
If the covered writer has to sell the underlying security because of
the exercise of a call option, the writer will realize a gain or loss from the
sale of the underlying security with the proceeds being increased by the amount
of the option premium received. By permitting its underlying securities to be
called away or exercised, higher portfolio turnover will result and therefore
increased transaction costs. Portfolio turnover also results in capital gains
for income tax purposes. (The Fund will attempt to minimize portfolio turnover
by entering into closing purchase transactions that it deems appropriate to
achieve the Fund's objectives).
Stock Index Options. The Fund may sell exchange listed stock index call
options to hedge against risks of market wide price movements. The need to hedge
against such risks will depend on the extent of diversification of the Fund's
common stock and the sensitivity of its stock investments to factors influencing
the stock market as a whole. A stock index fluctuates with changes in the market
values of the securities included in the index. Options on securities indices
are generally similar to options on stocks except that the delivery requirements
are different. Instead of giving the right to take or make delivery of
securities at a specified price, an option on a stock or bond index gives the
holders the right to receive a cash "exercise settlement amount" equal to (a)
the
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<PAGE>
amount, if any, by which the fixed exercise price of the option exceeds (in the
case of a put) or is less than (in the case of a call) the closing value of the
underlying index on the date of the exercise, multiplied by (b) a fixed "index
multiplier." To cover the potential obligations involved in writing options, the
Fund will either (a) hold a portfolio of stocks substantially replicating the
movement of the index, or (b) the Fund will segregate with the Custodian high
grade liquid debt obligations equal to the market value of the stock index
option, marked to market daily.The Fund will only write stock index options when
in its opinion the underlying stocks will correlate with the index.
[Risks of Stock Index Options: The Fund's ability to hedge effectively
all or a portion of its securities through transactions in stock index options
depends on the degree to which price movements in the underlying securities
correlate with price movements in the relevant index. Inasmuch as such
securities will not duplicate the components of any index, the correlation will
not be perfect. Consequently, the Fund bears the risk that the prices of the
underlying securities being hedged will not move in same amount as the stock
index.]
Repurchase Agreements. The Fund may invest in repurchase agreements
fully collateralized by U.S. Government and agency obligations. A repurchase
agreement is a short-term investment in which the purchaser (i.e., the Fund)
acquires ownership of a U.S. Government or agency obligation (which may be of
any maturity) and the seller agrees to repurchase the obligation at a future
time at a set price, thereby determining the yield during the purchaser's
holding period (usually not more than seven days from the date of purchase). Any
repurchase transaction in which the Fund engages will require full
collateralization of the seller's obligation during the entire term of the
repurchase agreement. In the event of a bankruptcy or other default of the
seller, the Fund could experience both delays in liquidating the underlying
security and losses in value. However, the Fund intends to enter into repurchase
agreements only with Star Bank, N.A. (the Fund's Custodian), other banks with
assets of $1 billion or more and registered securities dealers determined by the
Advisor (subject to review by the Board of Trustees) to be creditworthy. The
Advisor monitors the creditworthiness of the banks and securities dealers with
which the Fund engages in repurchase transactions.
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. However, if the objectives of the
Fund would be better served, short-term profits or losses may be realized from
time to time. It is anticipated that the Fund's portfolio turnover rate will not
exceed 100% annually.
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
- 10 -
<PAGE>
shares he owns. All shares of the Fund have equal voting rights and liquidation
rights. Prior to the public offering of the Fund, _____________ purchased for
investment all of the outstanding shares of the Fund and may be deemed to
control the Fund.
Shareholder inquiries should be made by telephone to 800-___-____, or
by mail, c/o Unified Fund Services, Inc., to P.O. Box 6110, Indianapolis,
Indiana 46204-6110.
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 advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of 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. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
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 and the Dow Jones Industrial Average.
- 11 -
<PAGE>
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.
Investment Advisor Administrator
Dobson Capital Management, Inc. AmeriPrime Financial Services, Inc.
____________________________________ 1793 Kingswood Drive, Suite 200
__________________________________ Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchases and Independent Auditors
all redemption requests) McCurdy & Associates CPA's, Inc.
Unified Fund Services, Inc. 27955 Clemens Road
431 North Pennsylvania Street Westlake, Ohio 44145
Indianapolis, Indiana 46204
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>
DOBSON COVERED CALL FUND
STATEMENT OF ADDITIONAL INFORMATION
___________, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of Dobson Covered Call Fund dated
________, 1999. A copy of the Prospectus can be obtained by writing the Transfer
Agent at 431 North Pennsylvania Street, Indianapolis, Indiana 46204, or by
calling 1-888-________________.
<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.........................................................5
THE INVESTMENT ADVISOR.........................................................8
TRUSTEES AND OFFICERS..........................................................8
PORTFOLIO TRANSACTIONS AND BROKERAGE...........................................9
DETERMINATION OF SHARE PRICE..................................................10
INVESTMENT PERFORMANCE........................................................11
CUSTODIAN.....................................................................12
TRANSFER AGENT................................................................12
ACCOUNTANTS...................................................................12
DISTRIBUTOR...................................................................12
ADMINISTRATOR.................................................................12
<PAGE>
DESCRIPTION OF THE TRUST
The Dobson Covered Call 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 a series of funds
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 been titled 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. Options Transactions. The Fund may write (sell) covered call
options. A covered call option on a security is an agreement to sell a
particular portfolio security if the option is exercised at a specified price,
or before a set date. The Fund may also sell exchange listed stock index call
options to hedge against risks of market wide price movements. Options are sold
(written) on securities and market indices. The purchaser of an option on a
security pays the seller (the writer) a premium for the right granted but is not
obligated to buy or sell the underlying security. The purchaser of an option on
a market index pays the seller a premium for the right granted, and in return
the seller of such an option is obligated to make the payment. A writer of an
option may terminate the obligation prior to the expiration of the option by
making an offsetting purchase of an identical option. Options on securities
which the Fund sells (writes) will be covered or secured, which means that it
will own the underlying security (for a call option) or (for an option on a
stock index) will hold a portfolio of securities
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<PAGE>
substantially replicating the movement of the index (or, to the extent it does
not hold such a portfolio, will maintain a segregated account with the Custodian
of high quality liquid debt obligations equal to the market value of the option,
marked to market daily). When the Fund writes options, it may be required to
maintain a margin account, to pledge the underlying security or to deposit
liquid high quality debt obligations in a separate account with the Custodian.
When a Fund writes an option, the Fund profits from the sale of the option, but
gives up the opportunity to profit from any increase in the price of the stock
above the option price, and may incur a loss if the stock price falls. Risks
associated with writing covered call options include the possible inability to
effect closing transactions at favorable prices and an appreciation limit on the
securities set aside for settlement. When the Fund writes a covered call option,
it will receive a premium, but will assume the risk of loss should the price of
the underlying security fall below the exercise price.
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 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.
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 consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations promulgated
thereunder or interpretations of the Securities and Exchange Commission or its
staff.
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
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<PAGE>
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. 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 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 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).
1. 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.
2. Borrowing. The Fund will not engage in borrowing.
- 5 -
<PAGE>
3. 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.
4. Short Sales. The Fund will not effect short sales of securities.
5. Options. The Fund will not purchase or sell puts, calls, options or
straddles except as described in the Prospectus or Statement of Additional
Information.
6. Illiquid Investments. The Fund will not invest in securities for
which there are legal or contractual restrictions on resale and other illiquid
securities.
7. Loans of Portfolio Securities. The Fund will not make loans of
portfolio securities.
THE INVESTMENT ADVISOR
The Fund's investment advisor is Dobson Capital Management, Inc., 1422 S.
Van Ness Street, Santa Ana, California 92707. Charles L. Dobson may be deemed to
be a controlling person of the Advisor due to his ownership of a majority of its
shares.
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 operating expenses of the Fund except brokerage
fees and commissions, taxes, interest, fees and expenses of the non-interested
person trustees and such extraordinary expenses 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. (including
organizational 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 1.50% 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 "Dobson" 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 "Dobson"
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
- 6 -
<PAGE>
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.
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, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
<S> <C> <C>
==========================================================================================================================
Name, Age and Address Position Principal Occupations During
Past 5 Years
- --------------------------------------------------------------------------------------------------------------------------
* Kenneth D. Trumpfheller President President, Treasurer and Secretary of
Age: 40 and Trustee AmeriPrime Financial Services, Inc., the
1793 Kingswood Drive Fund's administrator, and AmeriPrime
Suite 200 Financial Securities, Inc., the Fund's
Southlake, Texas 76092 distributor, since 1994. Prior to December,
1994, a senior
client executive
with SEI
Financial
Services.
- --------------------------------------------------------------------------------------------------------------------------
Secretary, Secretary, Treasurer and Chief Financial
Age: Treasurer Officer of AmeriPrime Financial Services,
1793 Kingswood Drive Inc. and AmeriPrime Financial Securities,
Suite 200 Inc.
Southlake, Texas 76092
- --------------------------------------------------------------------------------------------------------------------------
Steve L. Cobb Trustee President of Chandler Engineering
Age: 41 Company, L.L.C., oil and gas services
2001 Indianwood Avenue company; various positions with Carbo
Broken Arrow, OK 74012 Ceramics, Inc., oil field manufacturing/
supply company,
from 1984 to
1997, most
recently Vice
President of
Marketing.
- --------------------------------------------------------------------------------------------------------------------------
Gary E. Hippenstiel Trustee Director, Vice President and Chief
Age: 51 Investment Officer of Legacy Trust
600 Jefferson Street Company since 1992; President and
Suite 350 Director of Heritage Trust Company from
Houston, TX 77063 1994-1996.
==========================================================================================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the fiscal year
ended October 31, 1998 is set forth in the following table. Trustee fees are
Trust expenses and each series of the Trust pays a portion of the Trustee fees.
- 7 -
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
===============================================================================================================
Name Aggregate Total Compensation
Compensation from Trust (the Trust is
from Trust not in a Fund Complex)
- ---------------------------------------------------------------------------------------------------------------
Kenneth D. Trumpfheller 0 0
- ---------------------------------------------------------------------------------------------------------------
Steve L. Cobb $4,000 $4,000
- ---------------------------------------------------------------------------------------------------------------
Gary E. Hippenstiel $4,000 $4,000
===============================================================================================================
</TABLE>
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.
- 8 -
<PAGE>
[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.]
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, Martin
Luther King, Jr. 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 for the period indicated 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.
In addition to providing average annual total return, the Fund may also
provide nonstandardized quotations of total return for differing periods and may
provide 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 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
- 9 -
<PAGE>
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 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
Unified Fund Services, Inc., 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, acts as the Fund's transfer agent and, in such
capacity, maintains the records of each Unified 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, Unified 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, 1999. 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
- 10 -
<PAGE>
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.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (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.
- 11 -
<PAGE>
PROSPECTUS____________, 1999
AUXIER EQUITY FUND
[25628 N.E. Glass Road
Aurora, OR 97002]
For Information, Shareholder Services and Requests:
(800) ____________
The investment objective of the Auxier Equity Fund (the "Fund") is to
provide long term capital appreciation. The Fund seeks to achieve its objective
by investing primarily in a portfolio of common stocks that the Advisor, Auxier
Investment Management, LLP, believes offers growth opportunities at a reasonable
price. The Advisor selects stocks on the basis of several criteria, including
price-earnings ratio, rate of earnings growth, depth of management, past
financial stability, present and projected industry position and dividend
record.
The Fund is "no-load," which means that investors incur no sales charges,
commissions or deferred sales charges on the purchase or redemption of their
shares. The Fund is one of the mutual funds comprising AmeriPrime Funds, an
open-end management investment company, 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 dated _____________, 1999 has been filed with the
Securities and Exchange Commission (the "SEC"), is incorporated herein by
reference, and can be obtained without charge by calling the Fund at the phone
number listed above. The SEC maintains a Web Site (http://www.sec.gov) that
contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
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.
<PAGE>
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. In addition, the Fund does not
charge a 12b-1 fee. 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. The Advisor pays all of the expenses of the Fund [(including
organizational expenses)] except 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)1
Management Fees............................................................1.20%
12b-1 Fees...................................................... ...........NONE
Other Expenses2............................................................0.00%
Total Fund Operating Expenses..............................................1.20%
1 The Fund's total operating expenses are equal to the management fee paid
to the Advisor because the Advisor pays all of the Fund's operating expenses
(except as described above).
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 less than .001% 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:
1 Year 3 Years
- ---- - -----
$-- $---
THE FUND
The Auxier Equity Fund (the "Fund") was organized as a series of AmeriPrime
Funds, an Ohio business trust (the "Trust") on ____________, 1998. 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 Auxier
Investment Management, LLC (the "Advisor").
INVESTMENT OBJECTIVE AND STRATEGIES
- 1 -
<PAGE>
The investment objective of the Fund is to provide long term capital
appreciation. The Fund seeks to achieve its objective by investing primarily in
a portfolio of common stocks that the Advisor believes offer growth
opportunities at a reasonable price. The Advisor selects stocks on the basis of
several criteria, including price-earnings ratio, rate of earnings growth, depth
of management, consistency in past operating results, present and projected
industry position and dividend record. As the Fund will primarily invest in
dividend-paying common stocks, it is expected that the Fund will generate some
current income in addition to long term capital appreciation.
Under normal circumstances, at least 65% of the total assets of the Fund
will be invested in equity securities. The Advisor generally plans to stay fully
invested in established companies whose securities, in the opinion of the
Advisor, enjoy a fair degree of marketability. Most equity securities in the
Fund's portfolio will be listed on a national exchange. The Fund may also invest
in debt securities. For temporary defensive purposes under abnormal market or
economic conditions, the Fund may hold all or a portion of its assets in money
market instruments, securities of other no-load registered investment companies
or U.S. government repurchase agreements. The Fund may also invest in such
instruments at any time to maintain liquidity or pending selection of
investments in accordance with its policies. If the Fund acquires securities of
another investment company, the shareholders of the Fund will be subject to
additional management fees.
PORTFOLIO MANAGER'S PAST PERFORMANCE
Jeffrey Auxier, the Fund's portfolio manager, has been managing equity
accounts since 1989. The performance of Mr. Auxier's accounts with investment
objectives, policies and strategies substantially similar to those of the Auxier
Equity Fund appears below. The data is provided to illustrate past performance
of Mr. Auxier in managing such accounts, as compared to the S&P 500 Index. Mr.
Auxier is responsible for the performance of the accounts and is also
responsible for the investment management of the Fund.
Summary of Investment Returns*
Period Auxier * S&P 500 Index**
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
Average Annual Total Return***
One Year 22.2% _____
Five Years 25.4% _____
Since January 1, 1991 26.0% _____
* Mr. Auxier formed the Advisor in July 1998. The account performance
prior to that date occurred while Mr. Auxier was employed by another
firm. The Auxier performance is the time-weighted, dollar-weighted
average total return associated with a composite of all fully
discretionary equity accounts having objectives similar to the Fund,
and is unaudited. From July 1, 1995 to the present, the minimum account
size for inclusion in the
- 2 -
<PAGE>
composite was $500,000 and accounts had to be at least 92% invested in
equity securities to be included in the composite. Prior to July 1,
1995, the minimum account size for inclusion in the composite was
$300,000 and accounts had to be at least 80% invested in equity
securities to be included in the composite. On January 1, 1989, Mr.
Auxier managed ____ accounts totaling $______. As of December 31, 1998
the composite consisted of ____ accounts totaling approximately $______
million. Performance figures reflected are [net of management fees] and
net of all expenses, including transaction costs and commissions.
[Results include the reinvestment of dividends and capital gains.] The
presentation of the performance composite complies with the Performance
Presentation Standards of the Association for Investment Management and
Research (AIMR).
** The S&P 500 Index is a widely recognized, unmanaged index of market
activity based upon the aggregate performance of a selected portfolio
of publicly traded common stocks, including monthly adjustments to
reflect the reinvestment of dividends and other distributions. The S&P
500 Index reflects the total return of securities comprising the Index,
including changes in market prices as well as accrued investment
income, which is presumed to be reinvested. Performance figures for the
S&P 500 Index do not reflect deduction of transaction costs or
expenses, including management fees.
*** Average Annual Returns for the periods ended December 31, 1998, using
AIMR calculations of performance (see above), which differs from the
standardized SEC calculation.
The performance of the accounts managed by the Advisor should not be
considered indicative of future performance of the Fund. Results may differ
because of, among other things, differences in brokerage commissions, account
expenses (including management fees), the size of positions taken in relation to
account size and diversification of securities, timing of purchases and sales,
availability of cash for new investments. In addition, the managed accounts are
not subject to certain investment limitations, diversification requirements and
other restrictions imposed by the Investment Company Act and the Internal
Revenue Code which, if applicable, may have adversely affected the performance
results of the managed accounts composite. The results for different periods may
vary.
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, it should be noted that the Advisor has not
previously managed assets organized as a mutual fund and the Fund has no
operating history. 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. See "Investment Policies and Techniques and Risk
Considerations" for a more detailed discussion of the Fund's investment
practices.
HOW TO INVEST IN THE FUND
The Fund is "no-load" and shares of the Fund are sold directly to investors
on a continuous basis, subject to a minimum initial investment of $2,000 and
minimum subsequent investments of $100. These minimums may be waived by the
Advisor for accounts participating in an automatic investment program. Investors
choosing to purchase or redeem their shares through a broker/dealer or other
institution may be charged a fee by that institution. Investors choosing to
purchase or redeem shares directly from the Fund will not incur charges on
purchases or redemptions. To the extent investments of individual investors are
aggregated into an omnibus account established by an investment adviser, broker
or other intermediary, the account minimums apply to the omnibus account, not to
the account of the individual investor.
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 Auxier Equity Fund, and sent to the P.O. Box listed below. If you
prefer overnight delivery, use the overnight address listed below.
- 3 -
<PAGE>
U.S. Mail: Overnight:
Auxier Equity Fund Auxier Equity Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, Indiana 46204-6110 Indianapolis, Indiana 46204
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: Auxier Equity 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.
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 Auxier Equity Fund and should be sent to the address listed
above. A bank wire should be sent as outlined above.
Automatic Investment Plan
You may make regular investments in the Fund with an Automatic Investment
Plan by completing the appropriate section of the account application and
attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
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 plans (IRAs); simplified employee pensions
(SEPs); SIMPLE plans; 401(k) plans; qualified corporate pension and profit
sharing plans (for employees); tax deferred investment 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
advisor 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
- 4 -
<PAGE>
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. Investors choosing to purchase or redeem their
shares through a broker/dealer or other institution may be charged a fee by that
institution.
By Mail - You may redeem any part of your account in the Fund at no charge
by mail. Your request should be addressed to:
Auxier Equity Fund
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, Indiana 46204-6110
"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 Unified Fund 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.
- 5 -
<PAGE>
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 $2,000 due to 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 advisor 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 anytime 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.
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 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.
Income dividends and capital gain distributions are automatically
reinvested in additional shares at the net asset value
- 6 -
<PAGE>
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
advisors 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 Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund retains various organizations to perform
specialized services. The Fund retains the Advisor to mange the assets of the
Fund. The Advisor determines the 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, and subject further to
such policies and instructions as the Board of Trustees may establish. The
Advisor, a Oregon corporation, is a private investment management company
controlled by J. Jeffrey Auxier.
Mr. Auxier is a graduate of the University of Oregon, and began his investment
career with Smith Barney in Portland, Oregon in 1982. Prior to founding the
Advisor in July 1998, Mr. Auxier was a Senior Vice President and Senior
Portfolio Management Director with Smith Barney. He is President and Chief
Investment Officer of the Advisor, responsible for the day-to-day management of
the Fund's portfolio. Mr. Auxier has extensive money management experience and
continues to expand his education through various continuing education programs.
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<PAGE>
The Fund is authorized to pay the Advisor a fee equal to an annual average
rate of 1.20% of its average daily net assets. The Advisor pays all of the
operating expenses of the Fund except brokerage, taxes, interest, fees and
expenses of non-interested person trustees and extraordinary expenses. In this
regard, it should be noted that most investment companies pay their own
operating expenses directly, while the Fund's expenses, except those specified
above, are paid by the Advisor.
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 Fund
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). The Fund retains Unified Fund Services, Inc., 431 North Pennsylvania
Street, Indianapolis, Indiana 46204 (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. The Advisor (not the Fund) may pay certain financial
institutions (which may include banks, brokers, securities dealers and other
industry professionals) a "servicing fee" for performing certain administrative
functions for Fund shareholders to the extent these institutions are allowed to
do so by applicable statute, rule or regulation.
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
This section contains general information about various types of securities
and investment techniques that the Fund may purchase or employ. The Statement of
Additional Information provides information.
Equity Securities. Equity securities consist of common stock, convertible
preferred stock, convertible bonds, rights and warrants. Common stocks, the most
familiar type, represent an equity (ownership) interest in a corporation.
Warrants are options to purchase equity securities at a specified price 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. Although equity
securities have a history of long-term growth in value, their prices fluctuate
based on changes in a company's financial condition and on overall market and
economic conditions.
The Fund may invest in foreign equity securities by purchasing American
Depository Receipts ("ADRs"). ADRs are certificates evidencing ownership of
shares of a foreign- based issuer held in trust by a bank or similar financial
institution. They are alternatives to the direct purchase of the underlying
securities in their national markets and currencies. To the extent that the Fund
does invest ADRs, such investments may be subject to special risks, such as
changes in restrictions on foreign currency transactions and rates of exchange,
and changes in the administrations or economic and monetary policies of foreign
governments. The Fund will not invest more than 20% of its net assets in ADRs.
Investments in equity securities are subject to inherent market risks and
fluctuations in value due to earnings, economic conditions and other factors
beyond the control of the Adviser. As a result, the return and net asset value
of the Fund will fluctuate. Securities in the Fund's portfolio may not increase
as much as the market as a whole and some undervalued securities may continue to
be undervalued for long periods of time. Although profits in some Fund holdings
may be realized quickly, it is not expected that most investments will
appreciate rapidly.
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<PAGE>
Debt Securities. The Fund may buy debt securities of all types and
qualities. Bonds and other debt instruments are used by issuers to borrow money
from investors. The issuer pays the investor a fixed or variable rate of
interest, and must repay the amount borrowed at maturity. Some debt securities,
such as zero coupon bonds, do not pay current interest, but are purchased at a
discount from their face values. Debt securities are generally interest rate
sensitive, which means that their volume will generally decrease when interest
rates rise and increase when interest rates fall. Debt securities, loans, and
other direct debt have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term bonds are generally more
sensitive to interest rate changes than short-term bonds.
Preferred Stock. Preferred stock has a preference in liquidation (and,
generally dividends) over common stock but is subordinated in liquidation to
debt. As a general rule the market value of preferred stocks with fixed dividend
rates and no conversion rights varies inversely with interest rates and
perceived credit risk, with the price determined by the dividend rate. Some
preferred stocks are convertible into other securities, (for example, common
stock) at a fixed price and ratio or upon the occurrence of certain events. The
market price of convertible preferred stocks generally reflects an element of
conversion value. Because many preferred stocks lack a fixed maturity date,
these securities generally fluctuate substantially in value when interest rates
change; such fluctuations often exceed those of long-term bonds of the same
issuer. Some preferred stocks pay an adjustable dividend that may be based on an
index, formula, auction procedure or other dividend rate reset mechanism. In the
absence of credit deterioration, adjustable rate preferred stocks tend to have
more stable market values than fixed rate preferred stocks. All preferred stocks
are also subject to the same types of credit risks of the issuer as corporate
bonds. In addition, because preferred stock is junior to debt securities and
other obligations of an issuer, deterioration in the credit rating of the issuer
will cause greater changes in the value of a preferred stock than in a more
senior debt security with similar yield characteristics. Preferred stocks may be
rated by S&P and Moody's although there is no minimum rating which a preferred
stock must have (and a preferred stock may not be rated) to be an eligible
investment for the Fund. [The Advisor expects, however, that generally the
preferred stocks in which the Fund invests will be rated at least CCC by S&P or
Caa by Moody's or, if unrated, of comparable quality in the opinion of the
Advisor. Preferred stocks rated CCC by S&P are regarded as predominantly
speculative with respect to the issuer's capacity to pay preferred stock
obligations and represent the highest degree of speculation among securities
rated between BB and CCC; preferred stocks rated Caa by Moody's are likely to be
in arrears on dividend payments. Moody's rating with respect to preferred stocks
does not purport to indicate the future status of payments of dividends.]
Convertible Securities. A convertible security is a bond or preferred stock
which may be converted at a stated price within a specific period of time into a
specified number of shares of common stock of the same or different issuer.
Convertible securities are senior to common stock in a corporation's capital
structure, but usually are subordinated to non-convertible debt securities.
While providing a fixed income stream generally higher in yield than in the
income derived from a common stock but lower than that afforded by a
non-convertible debt security, convertible security also affords an investor the
opportunity, through its conversion feature, to participate in the capital
appreciation of common stock into which it is convertible.
In general, the market value of a convertible security is the higher of its
investment value (its value as a fixed income security) or its conversion value
(the value of the underlying shares of common stock if the security is
converted). As a fixed income security, the market value of a convertible
security generally increases when interest rates decline and generally decreases
when interest rates rise; however, the price of a convertible security generally
increases as the market value of the underlying stock increases, and generally
decreases as the market value of the underlying stock declines. Investments in
convertible securities generally entail less risk than investments in the common
stock of the same issuer.
Repurchase Agreements. The Fund may invest in repurchase agreements fully
collateralized by U.S. Government obligations. A repurchase agreement is a
short-term investment in which the purchaser (i.e., the Fund) acquires ownership
of a U.S. Government or U.S. Government agency obligation (which may be of any
maturity) and the seller agrees to repurchase the obligation at a future time at
a set price, thereby determining the yield during the purchaser's holding period
(usually not more than seven days from the date of purchase). Any repurchase
transaction in which the Fund engages will require full collateralization of the
seller's obligation during the entire term of the repurchase
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<PAGE>
agreement. In the event of a bankruptcy or other default of the seller, the Fund
could experience both delays in liquidating the underlying security and losses
in value. However, the Fund intends to enter into repurchase agreements only
with Star Bank, N.A. (the Fund's Custodian), other banks with assets of $1
billion or more and registered securities dealers determined by the Advisor
(subject to review by the Board of Trustees) to be creditworthy. The Advisor
monitors the creditworthiness of the banks and securities dealers with which the
Fund engages in repurchase transactions.
General. The Fund may invest up to 15% of its net assets in illiquid securities,
including repurchase agreements maturing in more than seven days. The Fund may
invest up to 5% of its net assets in securities sold under Rule 144A
(unregistered securities that can be resold to institutions only under SEC Rule
144A). The Fund may borrow amounts up to 5% of its net assets to meet redemption
requests.
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. However, if the objectives of the Fund would be
better served, short-term profits or losses may be realized from time to time.
It is anticipated that portfolio turnover of the Fund will not exceed 100%.
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 public offering of the Fund, _____________________________
purchased for investment all of the outstanding shares of the Fund and may be
deemed to control the Fund.
Shareholder inquiries should be made by telephone to 800-___-____, or by
mail, c/o Unified Fund Services, Inc., to P.O. Box 6110, Indianapolis, Indiana
46204-6110.
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 advertise performance information (a "non-standardized
quotation") which is calculated differently from "average annual total return."
A non-standardized quotation of total return may be a cumulative return which
measures the percentage change in the value of an account between the beginning
and end of a period, assuming no activity in the account other than reinvestment
of dividends and capital gains distributions. A non-standardized quotation may
also be an average annual compounded rate of return over a specified period,
which may be a period different from those specified for "average annual total
return." In addition, a non-standardized quotation may be an indication of 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. A non-standardized
quotation will always be accompanied by the Fund's "average annual total return"
as described above.
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<PAGE>
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 and 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>
APPENDIX A
DESCRIPTION OF CORPORATE BOND RATINGS
STANDARD & POOR'S RATINGS SERVICES
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. Standard
& Poor's does not perform any audit in connection with any rating and may, on
occasion, rely on unaudited financial information. The ratings may be changed,
suspended or withdrawn as a result of changes in, or unavailability of, such
information or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default-capacity and willingness of the obliger as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation.
II. Nature and provisions of the obligation.
III. Protection afforded by, and relative position of the obligation in the
event of bankruptcy, reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA - Debt rated "AAA" has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.
AA - Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A - Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB - Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC, C - Debt rated "BB", "B", "CCC", "CC", and "C" is regarded,
on balance, as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation.
"BB" indicates the lowest degree of speculation and "C" the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
BB - Debt rate "BB" has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The "BB"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB" rating.
B - Debt rated "B" has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"BB" or "BB-" rating.
CCC - Debt rated "CCC" has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In the
event
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<PAGE>
of adverse business, financial or economic conditions, it is not likely to have
the capacity to pay interest and repay principal. The "CCC" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "B" or "B-" rating.
CC - The rating "CC" is typically applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.
C - The rating "C" is typically applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC-" debt rating. The "C" rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
C1 - The rating "C1" is reserved for income bonds on which no interest is
being paid.
D - Debt rated "D" is in payment default. The "D" rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period. The "D"
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
categories.
MOODY'S INVESTORS SERVICE, INC.
Aaa - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of protective
elements may be of greater amplitude, or there may be other elements present
which make the long-term risk appear somewhat greater than the Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the future.
Baa - Bonds which are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative elements:
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa - Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
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<PAGE>
Ca - Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C - Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Moody's applies numerical modifiers: 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category, the modifier 2 indicates a mid-range ranking, and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
Investment Advisor Administrator
Auxier Investment Management, LLC. AmeriPrime Financial Services, Inc.
25628 N.E. Glass Road 1793 Kingswood Drive, Suite 200
Oregon, OR 97002 Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchases and Independent Auditors
all redemption requests) McCurdy & Associates CPA's, Inc.
Unified Fund Services, Inc. 27955 Clemens Road
431 North Pennsylvania Street Westlake, Ohio 44145
Indianapolis, Indiana 46204
Legal Counsel
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street
Cincinnati, Ohio 45202
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
Shareholder Transaction Expenses
Annual Fund Operating Expenses
THE FUND
INVESTMENT OBJECTIVE AND STRATEGIES
HOW TO INVEST IN THE FUND
Initial Purchase
Additional Investments
Automatic Investment Plan
Tax Sheltered Retirement Plans
Other Purchase Information
HOW TO REDEEM SHARES
By Mail
By Telephone
Additional Information
SHARE PRICE CALCULATION
DIVIDENDS AND DISTRIBUTIONS
TAXES
OPERATION OF THE FUND
INVESTMENT POLICIES AND TECHNIQUES
Equity Securities
Repurchase Agreements
General
GENERAL INFORMATION
Fundamental Policies
Portfolio Turnover
Shareholder Rights
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<PAGE>
AUXIER EQUITY FUND
STATEMENT OF ADDITIONAL INFORMATION
_____________, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of Auxier Equity Fund dated
_____________, 1999. A copy of the Prospectus can be obtained by writing the
Transfer Agent at 431 North Pennsylvania Street, Indianapolis, Indiana 46204, or
by calling 1-888-____________________.
<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.........................................................5
THE INVESTMENT ADVISOR.........................................................8
TRUSTEES AND OFFICERS..........................................................8
PORTFOLIO TRANSACTIONS AND BROKERAGE...........................................9
DETERMINATION OF SHARE PRICE..................................................10
INVESTMENT PERFORMANCE........................................................11
CUSTODIAN.....................................................................12
TRANSFER AGENT................................................................12
ACCOUNTANTS...................................................................12
DISTRIBUTOR...................................................................12
ADMINISTRATOR.................................................................12
<PAGE>
DESCRIPTION OF THE TRUST
The Auxier Equity 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 a series of funds
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 been titled 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. American Depository Receipts (ADRs). ADRs are subject to risks
similar to those associated with direct investment in foreign securities. For
example, there may be less information publicly available about a foreign
company then about a U.S. company, and foreign companies are not generally
subject to accounting, auditing and financial reporting standards and practices
comparable to those in the U.S. Other risks associated with investments in
foreign securities include changes in restrictions on foreign currency
transactions and rates of exchanges, changes in the administrations or economic
and monetary policies of foreign governments, the imposition of exchange control
regulations, the possibility of expropriation decrees and other adverse foreign
governmental action, the imposition of foreign taxes, less liquid markets, less
government supervision of exchanges, brokers and issuers, difficulty in
enforcing contractual obligations, delays in settlement of securities
transactions and
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<PAGE>
greater price volatility. In addition, investing in foreign securities will
generally result in higher commissions than investing in similar domestic
securities.
B. Debt Securities. The Fund may invest in all types and qualities of debt
securities.
Corporate debt securities. Corporate debt securities are bonds or notes
issued by corporations and other business organizations, including business
trusts, in order to finance their credit needs. Corporate debt securities
include commercial paper which consist of short term (usually from one to two
hundred seventy days) unsecured promissory notes issued by corporations in order
to finance their current operations. Fixed rate corporate debt securities tend
to exhibit more price volatility during times of rising or falling interest
rates than securities with floating rates of interest. This is because floating
rate securities behave like short-term instruments in that the rate of interest
they pay is subject to periodic adjustments based on a designated interest rate
index. Fixed rate securities pay a fixed rate of interest and are more sensitive
to fluctuating interest rates. In periods of rising interest rates the value of
a fixed rate security is likely to fall. Fixed rate securities with short-term
characteristics are not subject to the same price volatility as fixed rate
securities without such characteristics. Therefore, they behave more like
floating rate securities with respect to price volatility.
Many corporate debt obligations permit the issuers to call the security
and thereby redeem their obligations earlier than the stated maturity dates.
Issuers are more likely to call bonds during periods of declining interest
rates. In these cases, if the Fund owns a bond which is called, the Fund will
receive its return of principal earlier than expected and would likely be
required to reinvest the proceeds at lower interest rates, thus reducing income
to the Fund.
Corporate zero coupon securities are: (i) notes or debentures which do
not pay current interest and are issued at substantial discounts from par value,
or (ii) notes or debentures that pay no current interest until a stated date one
or more years into the future, after which the issuer is obligated to pay
interest until maturity, usually at a higher rate than if interest were payable
from the date of issuance.
Variable rate securities. Variable rate demand notes are long-term
corporate debt instruments that have variable or floating interest rates and
provide the Fund with the right to tender the security for repurchase at its
stated principal amount plus accrued interest. Such securities typically bear
interest at a rate that is intended to cause the securities to trade at par. The
interest rate may float or be adjusted at regular intervals (ranging from daily
to annually), and is normally based on an interest index or a stated percentage
of a prime rate or another published rate. Many variable rate demand notes allow
the Fund to demand the repurchase of the security on not more than seven days
prior notice. Other notes only permit the Fund to tender the security at the
time of each interest rate adjustment or at other fixed intervals.
Floating rate securities. Floating rate securities are debt securities
with interest payments or maturity values that are not fixed, but float
inversely to an underlying index or price. These securities may be backed by
U.S. Government or corporate issuers, or by collateral such as mortgages. In
certain cases, a change in the underlying index or price may have a leveraging
effect on the periodic coupon payments, creating larger possible swings in the
prices of such securities than would be expected when taking into account their
maturities alone. The indices and prices upon which such securities can be based
include interest rates, currency rates and commodities prices.
- 4 -
<PAGE>
Floating rate securities pay interest according to a coupon which is
reset periodically. The reset mechanism may be formula based, or reflect the
passing through of floating interest payments on an underlying collateral pool.
The coupon is usually reset daily, weekly, monthly, quarterly or semi-annually,
but other schedules are possible. Floating rate obligations generally exhibit a
low price volatility for a given stated maturity or average life because their
coupons adjust with changes in interest rates. If their underlying index is not
an interest rate, or the reset mechanism lags the movement of rates in the
current market, greater price volatility may be experienced.
Inverse floating rate securities. Inverse floating rate securities are
similar to floating rate securities except that their coupon payments vary
inversely with an underlying index by use of a formula. Inverse floating rate
securities tend to exhibit greater price volatility than other floating rate
securities. Because the changes in the coupon are usually negatively correlated
with changes in overall interest rates, interest rate risk and price volatility
on inverse floating rate obligations can be high, especially if leverage is used
in the formula. Index securities pay a fixed rate of interest, but have a
maturity value that varies by formula, so that when the obligation matures, a
gain or loss is realized. The risk of index obligations depends on the
volatility of the underlying index, the coupon payment and the maturity of the
obligation.
Lower quality debt securities. 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.
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
- 5 -
<PAGE>
dividend coverage, asset coverage, earning prospects, and the experience
and managerial strength of the issuer.]
Municipal Securities. Municipal securities are generally issued to
finance public works, such as airports, bridges, highways, housing, hospitals,
mass transportation projects, schools, streets, and water and sewer works. They
are also issued to repay outstanding obligations, to raise funds for general
operating expenses, and to make loans to other public institutions and
facilities.
The two principal classifications of municipal securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. Interest on and principal of revenue bonds, however, are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority.
Municipal securities may carry fixed or floating rates of interest.
Most municipal securities pay interest in arrears on a semiannual or more
frequent basis. However, certain securities, typically known as capital
appreciation bonds or zero coupon bonds, do not provide for any interest
payments prior to maturity. Such securities are normally sold at a discount from
their stated value, or provide for periodic increases in their stated value to
reflect a compounded interest rate. The market value of these securities is also
more sensitive to changes in market interest rates than securities that provide
for current interest payments.
Municipal securities in the form of notes generally are used to provide
for short-term capital needs, in anticipation of an issuer's receipt of other
revenues or financing, and typically have maturities of up to three years. Such
instruments may include Tax Anticipation Notes, Revenue Anticipation Notes, Bond
Anticipation Notes, Tax and Revenue Anticipation Notes and Construction Loan
Notes. The obligations of an issuer of municipal notes are generally secured by
the anticipated revenues from taxes, grants or bond financing. An investment in
such instruments, however, presents a risk that the anticipated revenues will
not be received or that such revenues will be insufficient to satisfy the
issuer's payment obligations under the notes or that refinancing will be
otherwise unavailable.
C. Illiquid Securities. The Fund may invest up to 15% of its net assets
in illiquid securities. Illiquid securities generally include securities which
cannot be disposed of promptly and in the ordinary course of business without
taking a reduced price, and "restricted securities". Securities may be illiquid
due to contractual or legal restrictions on resale or lack of a ready market.
The following securities are considered to be illiquid: repurchase agreements
and reverse repurchase agreements maturing in more than seven days, nonpublicly
offered securities and restricted securities.
D. Restricted Securities. Restricted securities are securities the
resale of which is subject to legal or contractual restrictions. Restricted
securities may be sold only in privately negotiated transactions, in a public
offering with respect to which a registration statement is in effect under the
Securities Act of 1933 or pursuant to Rule 144 or Rule 144A promulgated under
such Act. Where registration is required, the Fund may be obligated to pay all
or part of the registration expense, and a considerable period may elapse
between the time of the
- 6 -
<PAGE>
decision to sell and the time such security may be sold 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 the price it could
have obtained when it decided to sell.
With respect to Rule 144A securities, these restricted securities are
treated as exempt from the 15% limit on illiquid securities, provided that a
dealer or institutional trading market in such securities exists. The Fund will
not, however invest more than 5% of its net assets in Rule 144A securities.
Under the supervision of the Board of Trustees of the Fund, the Advisor
determines the liquidity of restricted securities and, through reports from the
Advisor, the Board will monitor trading activity in restricted securities. If
institutional trading in restricted securities were to decline, the liquidity of
the Fund could be adversely affected.
E. Borrowing. The Fund may borrow amounts up to 5% of its net assets to
meet redemption requests. Because the Fund's investment swill fluctuate in
value, whereas the interest obligations on borrowed funds may be fixed, during
times of borrowing, the Fund's net asset value may tend to increase more then
its investments increase in value, and decrease more when its investments
decrease in value. in addition, interest costs on borrowings may fluctuate with
changing market interest rates and may partially offset or exceed the return
earned on the borrowed funds. Also, during times of borrowing under adverse
market conditions, the Fund might have to sell portfolio securities to meet
interest or principal payments at a time when fundamental investment
considerations would not favor such sales.
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 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.
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 consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations
- 7 -
<PAGE>
promulgated thereunder or interpretations of the Securities and Exchange
Commission or its staff.
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. 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 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 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).
- 8 -
<PAGE>
1. 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.
2. Borrowing. The Fund will not purchase any security while borrowings
(including reverse repurchase agreements) representing more than 5% of its total
assets are outstanding.
3. 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.
4. Short Sales. The Fund will not effect short sales of securities.
5. Options. The Fund will not purchase or sell puts, calls, options or
straddles except as described in the Prospectus or Statement of Additional
Information.
6. Illiquid Investments. The Fund will not invest more than 5% of its
net assets in securities for which there are legal or contractual restrictions
on resale and other illiquid securities.
7. Loans of Portfolio Securities. The Fund will not make loans of
portfolio securities.
THE INVESTMENT ADVISOR
The Fund's investment advisor is Auxier Investment Management, LLP, 25628
N.E. Glass Road, Oregon, OR 97002. J. Jeffrey Auxier may be deemed to be a
controlling person of the Advisor due to his ownership of a majority of its
shares.
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 (including organizational 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 1.20% 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 "Auxier" 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 "Auxier"
automatically ceases ninety days after
- 9 -
<PAGE>
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.
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, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
<S> <C> <C>
==========================================================================================================================
Name, Age and Address Position Principal Occupations During
Past 5 Years
- --------------------------------------------------------------------------------------------------------------------------
* Kenneth D. Trumpfheller President President, Treasurer and Secretary of
Age: 40 and Trustee AmeriPrime Financial Services, Inc., the
1793 Kingswood Drive Fund's administrator, and AmeriPrime
Suite 200 Financial Securities, Inc., the Fund's
Southlake, Texas 76092 distributor, since 1994. Prior to December,
1994, a senior
client executive
with SEI
Financial
Services.
- --------------------------------------------------------------------------------------------------------------------------
Secretary, Secretary, Treasurer and Chief Financial
Age: Treasurer Officer of AmeriPrime Financial Services,
1793 Kingswood Drive Inc. and AmeriPrime Financial Securities,
Suite 200 Inc.
Southlake, Texas 76092
- --------------------------------------------------------------------------------------------------------------------------
Steve L. Cobb Trustee President of Chandler Engineering
Age: 41 Company, L.L.C., oil and gas services
2001 Indianwood Avenue company; various positions with Carbo
Broken Arrow, OK 74012 Ceramics, Inc., oil field manufacturing/
supply company,
from 1984 to
1997, most
recently Vice
President of
Marketing.
- 10 -
<PAGE>
- --------------------------------------------------------------------------------------------------------------------------
Gary E. Hippenstiel Trustee Director, Vice President and Chief
Age: 51 Investment Officer of Legacy Trust
600 Jefferson Street Company since 1992; President and
Suite 350 Director of Heritage Trust Company from
Houston, TX 77063 1994-1996.
==========================================================================================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the fiscal year
ended October 31, 1998 is set forth in the following table. Trustee fees are
Trust expenses and each series of the Trust pays a portion of the Trustee fees.
<TABLE>
<CAPTION>
<S> <C> <C>
===============================================================================================================
Name Aggregate Total Compensation
Compensation from Trust (the Trust is
from Trust not in a Fund Complex)
- ---------------------------------------------------------------------------------------------------------------
Kenneth D. Trumpfheller 0 0
- ---------------------------------------------------------------------------------------------------------------
Steve L. Cobb $4,000 $4,000
- ---------------------------------------------------------------------------------------------------------------
Gary E. Hippenstiel $4,000 $4,000
===============================================================================================================
</TABLE>
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
- 11 -
<PAGE>
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.]
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, Martin
Luther King, Jr. 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 for the period indicated 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.
- 12 -
<PAGE>
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.
In addition to providing average annual total return, the Fund may also
provide nonstandardized quotations of total return for differing periods and may
provide 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 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 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
Unified Fund Services, Inc., 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, acts as the Fund's transfer agent and, in such
capacity, maintains the records of each Unified 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, Unified provides the Fund with certain monthly reports, record-keeping
and other management-related services.
- 13 -
<PAGE>
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, 1999. 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.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (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.
- 14 -
<PAGE>
PROSPECTUS _______________, 1999
Shepherd Values Market Neutral Fund
Shepherd Values Growth Fund
6760 Corporate Drive, Suite 230
Colorado Springs, CO 80919
For Information, Shareholder Services and Requests:
(888) ____________
(888) ____________
Shepherd Values Market Neutral Fund: The investment objective of the Shepherd
Values Market Neutral Fund is to provide long-term capital appreciation while
maintaining minimal exposure to general equity market risk. The Fund's
investment advisor, Cornerstone Capital Management, Inc. (the "Advisor"), seeks
to achieve this objective by taking long positions in U.S. equity securities
that the Advisor has identified as undervalued and short positions in such
stocks that the Advisor has identified as overvalued. This strategy is commonly
referred to as "market neutral investing". The Fund seeks a total return greater
than the return on 3 month U.S. Treasury Bills.
Shepherd Values Growth Fund: The investment objective of the Shepherd Values
Growth Fund is to provide long term capital appreciation. The Advisor seeks to
achieve this objective by investing primarily in common stocks which the Advisor
believes are undervalued by the market. In searching for investments for the
Fund, the Advisor employs a style that focuses on securities with a low current
price relative to the Advisor's view regarding long-term future value.
The Funds will not invest in and acquire ownership in businesses that
are engaged, directly or through subsidiaries, in the alcoholic
beverage, tobacco, pornographic and gambling industries or companies
involved in the business of aborting life before birth. In addition,
the Advisor reserves the right to exercise its best judgement to
exclude ownership in other companies whose corporate practices could be
found offensive to traditional Judeo Christian values.
Each Fund is one of the mutual funds comprising AmeriPrime Funds, an
open-end management investment company, 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 dated ___________________, 1999 has been
filed with the Securities and Exchange Commission (the "SEC"), is incorporated
herein by reference, and can be obtained without charge by calling the Fund at
the phone number listed above. The SEC maintains a Web Site (http://www.sec.gov)
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
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.
<PAGE>
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
each 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 Funds, unlike most other mutual
funds, do not pay directly for transfer agency, pricing, custodial, auditing or
legal services, nor do they pay directly any general administrative expenses.
The Advisor pays all of the expenses of the Fund except brokerage, taxes,
interest, fees and expenses of non-interested person trustees and extraordinary
expenses.
Market Neutral Growth
Shareholder Transaction Expenses Fund Fund
-------------------------------------------
Maximum Sales Load Imposed on Purchases (as a 3.00% 3.00%
percentage of offering price)
Sales Load Imposed on Reinvested Dividends None None
Redemption Fees (as a % of redemption amount) None None
Exchange Fees None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 2.25% 1.75%
12b-1 Charges 0.00% 0.00%
Other Expenses1 0.00% 0.00%
Total Fund Operating Expenses2 2.25% 1.75%
1 Each 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
less than .01% of average net assets for the first fiscal year. 2 Each Fund's
total operating expenses are equal to the management fee paid to the Advisor
because the Advisor pays all of the Fund's operating expenses (except as
described above).
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
a Fund.
Example As a shareholder in a Fund, you would pay the following expenses on a
$1,000 investment, assuming (1) a 5% annual return and (2) redemption at the end
of each time period:
1 Year 3 Years
------ -------
Shepherd Values Market Neutral Fund $__ $__
Shepherd Values Growth Fund $__ $__
<PAGE>
THE FUNDS
The Shepherd Values Market Neutral Fund and the Shepherd Values Growth
Fund (each a "Fund" or collectively the "Funds") were organized as series of
AmeriPrime Funds, an Ohio business trust (the "Trust") on ___________, 1998.
This prospectus offers shares of each Fund and each share represents an
undivided, proportionate interest in a Fund. The investment advisor to each Fund
is Cornerstone Capital Management, Inc. (the "Advisor").
INVESTMENT OBJECTIVE AND STRATEGIES
Shepherd Values Market Neutral Fund: The investment objective of the Fund is to
provide long-term capital appreciation while maintaining minimal exposure to
general equity market risk. The Fund's investment advisor, Cornerstone Capital
Management, Inc. (the "Advisor"), seeks to achieve this objective by taking long
positions in U.S. equity securities that the Advisor has identified as
undervalued and short positions in such stocks that the Advisor has identified
as overvalued. This strategy is commonly referred to as "market neutral
investing". The Fund seeks a total return greater than the return on 3 month
U.S. Treasury Bills.
The term "short position" means the Fund sells a stock that it does not
own, borrows the same stock from a broker or other institution to complete the
sale, and buys the same stock at a later date to repay the lender. If the stock
is overvalued, and the price declines before the Fund buys the stock, the Fund
makes a profit. If the price of the stock increases before the Fund buys the
stock, the Fund loses money. The Advisor's strategy of using short positions in
overvalued stocks along with long positions (purchases) in undervalued stocks is
intended to reduce the effects of general market movements on the Fund's
performance, although there is no assurance that the Advisor will be able to do
so.
The success of the market neutral strategy is dependent on the
Advisor's ability to correctly identify undervalued and overvalued stocks. If
the Advisor is not successful, the Fund may experience losses regardless of the
overall performance of the stock markets. In strong "bull" markets, when the
prices of nearly all stocks are rising regardless of the underlying value of the
companies, the Fund is expected to underperform the general markets because the
Fund's short positions will likely lose money.
The Advisor will determine the size of each long or short position by
analyzing the tradeoff between the attractiveness of each position and its
impact on the risk characteristics of the overall portfolio. The Fund seeks to
construct a diversified portfolio that has minimal net exposure to the U.S.
equity market generally and near neutral exposure to specific industries,
specific capitalization ranges and certain other risk factors. An investment in
the Fund is different from an investment in 3-month U.S. Treasury Bills because
Treasury Bills are backed by the full faith and credit of the U.S. Government,
and have a fixed rate of return. In contrast, investors in the Fund bear the
risk of losing their investment and an investment in the Fund is more volatile
than an investment in Treasury Bills.
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<PAGE>
The Fund engages in short selling activities which are significantly
different from the investment activities commonly associated with conservative
stock funds. Positions in shorted securities are more risky than long positions
(purchases) in stocks because the maximum sustainable loss on a stock purchased
is limited to the amount paid for the stock plus the transactions costs, whereas
there is no maximum attainable price of the shorted stock. Therefore, in theory,
stocks sold short have unlimited risk.
Shepherd Values Growth Fund: The investment objective of the Fund is to provide
long term capital appreciation. The Advisor seeks to achieve this objective by
investing primarily in common stocks which the Advisor believes are undervalued
by the market. In searching for investments for the Fund, the Advisor employs a
style that focuses on securities with a low current price relative to the
Advisor's view regarding long-term future value. The Advisor gauges the ability
of a company to build long-term value while minimizing long-term investment
risk, assesses the quality and quantity of a company's resources and estimates
how those resources might be converted into earnings over time. The Fund engages
in a "buy and hold" strategy emphasizing long-term investment. [The Fund's
portfolio consists largely of equity securities and some debt securities.]
Values Based Investing: As the final step in the investment process of each
Fund, the Advisor will utilize a set of non-financial screening criteria in
maintaining a portfolio of securities consistent with traditional values. This
specialization requires a substantial amount of additional primary and secondary
research and information resources above and beyond traditional financial
analysis. The Advisor will first identify its potential list of investment
holdings, and then screen such holdings to eliminate any companies not
consistent with the following values:
The Funds will not invest in and acquire ownership in businesses that
are engaged, directly or through subsidiaries, in the alcoholic beverage,
tobacco, pornographic and gambling industries or companies involved in the
business of aborting life before birth. In addition, the investment advisor
reserves the right to exercise its best judgement to exclude ownership in other
companies whose corporate practices could be found offensive to traditional
Judeo Christian values.
The values based investment policy does not apply to short positions of
the Shepherd Values Market Neutral Fund whereby the Fund does not technically
own any securities when initiating short sales as a hedging strategy for the
Fund. As a result, the Fund may have short positions in businesses whose
corporate practices are in violation of the Fund's values based policy.
General: For temporary defensive purposes under abnormal market or economic
conditions, each Fund may hold all or a portion of its assets in money market
instruments (including money market funds) or U.S. government repurchase
agreements. Each Fund may also invest in such instruments at any time to
maintain liquidity or pending selection of investments in accordance with its
policies. If a Fund acquires securities of a money market fund, the shareholders
of the Fund will be subject to additional management fees.
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, neither Fund can give any assurance that its investment objective
will be achieved. In addition, it should be noted that the Advisor has [not
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<PAGE>
previously managed assets organized as a mutual fund] and that the Funds have no
operating history. Rates of total return quoted by a Fund may be higher or lower
than past quotations, and there can be no assurance that any rate of total
return will be maintained. See "Investment Policies and Techniques and Risk
Considerations" for a more detailed discussion of each Fund's investment
practices.
HOW TO INVEST IN THE FUNDS
Each Fund is sold on a continuous basis, subject to a minimum initial
investment of $2,500 ($1,000 for qualified retirement accounts) and minimum
subsequent investments of $_____. For accounts participating in an automatic
investment program, the minimum initial investment is $500, and the minimum
subsequent investment is $50 per month. To the extent investments of individual
investors are aggregated into an omnibus account established by an investment
adviser, broker or other intermediary, the account minimums apply to the omnibus
account, not to the account of the individual investor.
Initial Purchase
By Mail - You may open an account and make initial investments through
securities dealers having a sales agreement with AmeriPrime Financial
Securities, Inc. (the "Distributor"). You may make a direct initial investment
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 appropriate fund, and sent to the
P.O. Box listed below. If you prefer overnight delivery, use the overnight
address listed below.
U.S. Mail: Overnight:
[Insert Name] Fund [Insert Name] Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, Indiana 46204-6110 Indianapolis, Indiana 46204
By Wire - You may also purchase shares of a 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 Unified Fund Services, Inc (the "Transfer Agent") at
888-___-____ 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 for: Market Neutral Fund
ABA #0420-0001-3 D.D.A.#
Attn: [Insert Name] Fund Growth Fund
Account Name _________________ D.D.A.#
(write in shareholder name)
For the Account # ______________
(write in account number)
You are required to mail a signed application to Star Bank, N.A. (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
- 5 -
<PAGE>
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.
Your purchase of shares of a Fund will be effected at the public
offering price. The public offering price is the next determined net asset value
per share plus a sales load as shown in the following table.
<TABLE>
<CAPTION>
<S> <C> <C>
================================================================================================================================
Sales Load as of % of:
Public Net
Offering Amount Dealer Reallowance as % of
Amount of Investment Price Invested Public Offering Price
================================================================================================================================
Less than $100,000 3.00% _.__% 3.00%
$100,000 but less than $250,000 2.50% _.__% 2.50%
$250,000 but less than $500,000 1.50% _.__% 1.50%
$500,000 but less than $1,000,000 1.00% 1.01% 1.00%
$1,000,000 or more None None None
================================================================================================================================
</TABLE>
Under certain circumstances, the Distributor may change the reallowance to
dealers. Dealers engaged in the sale of shares of the Fund may be deemed to be
underwriters under the Securities Act of 1933. The Distributor retains the
entire sales load on all direct initial investments in the Fund and on all
investments in accounts with no designated dealer of record.
Shares of the Fund are sold on a continuous basis at the public
offering price next determined after receipt of a purchase order by the Trust.
Purchase orders received by dealers prior to 4:00 p.m., Eastern time, on any
business day and transmitted to the Distributor by 5:00 p.m., Eastern time, that
day are confirmed at the public offering price determined as of the close of the
regular session of trading on the New York Stock Exchange on that day. It is the
responsibility of dealers to transmit properly completed orders so that they
will be received by the Distributor by 5:00 p.m., Eastern time. Dealers may
charge a fee for effecting purchase orders. Direct purchase orders received by
4:00 p.m., Eastern time, are confirmed at that day's public offering price.
Direct investments received after 4:00 p.m. and others received from dealers
after 5:00 p.m. are confirmed at the public offering price next determined on
the following business day.
Additional Investments
You may purchase additional shares of any Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. If your
securities dealer received concessions for selling shares of a Fund to you, such
securities dealer will receive the concessions described above with respect to
additional investments. 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 appropriate fund and should be sent
to the address listed above. A bank wire should be sent as outlined above.
Automatic Investment Plan
You may make regular investments in a Fund with an Automatic Investment
Plan by completing the appropriate section of the account application and
attaching a voided personal check.
- 6 -
<PAGE>
Investments may be made monthly to allow dollar-cost averaging by automatically
deducting $50 or more from your bank checking account. You may change the amount
of your monthly purchase at any time.
[Reduced Sales Load
You may use the Right of Accumulation to combine the cost or current
net asset value (whichever is higher) of your shares of a Fund with the amount
of your current purchases in order to take advance of the reduced sales load set
forth in the table above. Purchases made pursuant to a Letter of Intent may also
be eligible for the reduced sales loads. The minimum initial investment under a
Letter of Intent is $10,000. Shareholders should contact the Transfer Agent for
information about the Right of Accumulation and Letter of Intent.]
[Purchases at Net Asset Value
You may purchase shares of a Fund at net asset value when the payment
for your investment represents the proceeds from the redemption of shares of any
other mutual fund which has a front-end sales load. Your investment will qualify
for this provision if the purchase price of the shares of the other fund
included a sales load and the redemption occurred within one year of the
purchase of such shares and no more than sixty days prior to your purchase of
shares of the Fund. To make a purchase at net asset value pursuant to this
provision, you must submit photocopies of the confirmations (or similar
evidence) showing the purchase and redemption of shares of the other fund. Your
payment may be made with the redemption check representing the proceeds of the
shares redeemed, endorsed to the order of the Fund. The redemption of shares of
the other fund is, for federal income tax purposes, a sale on which you may
realize a gain or loss. These provisions may be modified or terminated at any
time. Contact your securities dealer or the Transfer Agent for further
information.
Banks, bank trust departments and savings and loan associations, in
their fiduciary capacity or for their own accounts, may also purchase shares of
each Fund at net asset value. To the extent permitted by regulatory authorities,
a bank trust department may charge fees to clients for whose account it
purchases shares at net asset value. Federal and state credit unions may also
purchase shares at net asset value.
Purchases may be effected at net asset value for the benefit of the
clients of brokers-dealers and registered investment advisers affiliated with a
broker-dealer, if such broker-dealer or investment adviser has entered into an
agreement with the Distributor providing specifically for the purchase of Fund
shares in connection with special investment products, such as wrap accounts or
similar fee based programs. In addition, shares of each Fund may be purchased at
net asset value by broker-dealers who have a sales agreement with the
Distributor, and their registered personnel and employees, including members of
the immediate families of such registered personnel and employees.
Trustees, directors, officers and employees of the Trust, the Advisor
or the Distributor, including members of the immediate family of such
individuals and employee benefit plans established by such entities, may also
purchase shares of each Fund at net asset value.]
Additional Information
For purposes of determining the applicable sales load, a purchaser includes
an individual, his
- 7 -
<PAGE>
spouse and their children under the age of 21, purchasing shares for his or
their own account; or a trustee or other fiduciary purchasing shares for a
single fiduciary account although more than one beneficiary is involved; or
employees of a common employer, provided that economies of scale are realized
through remittances from a single source and quarterly confirmation of such
purchases; or an organized group, provided that the purchases are made through a
central administration, or a single dealer, or by other means which result in
economy of sales effort or expense.
Tax Sheltered Retirement Plans
Since the Funds are oriented to longer term investments, shares of the
Funds may be an appropriate investment medium for tax sheltered retirement
plans, including: individual retirement plans (IRAs); simplified employee
pensions (SEPs); SIMPLE plans; 401(k) plans; qualified corporate pension and
profit sharing plans (for employees); tax deferred investment 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 advisor 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 Funds do
not issue share certificates. All shares are held in non-certificate form
registered on the books of each of the Funds and the Funds' 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 Funds. If your check or wire
does not clear, you will be responsible for any loss incurred by the Funds. If
you are already a shareholder, the Funds can redeem shares from any identically
registered account in the Funds as reimbursement for any loss incurred. You may
be prohibited or restricted from making future purchases in the Funds.
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 Funds reserve 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. Investors choosing to purchase or redeem their
shares through a broker/dealer or other institution may be charged a fee by that
institution.
By Mail - You may redeem any part of your account in a Fund at no
charge by mail. Your request should be addressed to:
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<PAGE>
[Insert Name] Fund
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, Indiana 46204-6110
"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
Funds require 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 each of the Funds or Unified Fund 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 a Fund by
calling the Transfer Agent 888-_______. 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 Funds or the Transfer Agent. During periods of extreme market
activity it is possible that shareholders may encounter some difficulty in
telephoning the Funds, although neither the Funds 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
Funds 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 (888) ________. 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 Funds may suspend redemptions or
postpone payment dates.
Because the Funds incur certain fixed costs in maintaining shareholder
accounts, each 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 $2,500 due to 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 advisor 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 each Fund is subject to redemption
- 9 -
<PAGE>
at anytime 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 Funds.
SHARE PRICE CALCULATION
The value of an individual share in each 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 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
Each 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.
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
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<PAGE>
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
Each Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended. By so qualifying,
a 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 each 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.
Each 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 advisors 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, each of the Funds 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,
each 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, a 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 applicable
Fund may make a corresponding charge against the account.
OPERATION OF THE FUNDS
Each 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 Trustees supervises the business activities of the Funds.
Like other mutual funds, the Funds retains various organizations to perform
specialized services. The Trust retains Cornerstone Capital Management, Inc.,
6760 Corporate Drive, Suite 230, Colorado Springs, CO 80919 (the "Advisor") to
manage the assets of each Fund. The Advisor, a Colorado corporation organized on
April 1, 1997, is an independent management firm specializing exclusively in
values-based investment management. The Advisor manages assets for corporations,
endowments, foundations, institutional investors, individuals and limited
partnerships. Jason D. Huntley and Daryl Conn are the controlling shareholders
of the Advisor.
The Advisor determines the securities to be held or sold by each Fund, and
the portion of each
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<PAGE>
Fund's assets to be held uninvested, subject always to the Fund's investment
objectives, policies and restrictions, and subject further to such policies and
instructions as the Board of Trustees may establish. The investment decisions of
the Funds are made by a committee of the Advisor, which is primarily responsible
for the day-to-day management of each Fund's portfolio.
The Shepard Values Market Neutral Fund is authorized to pay the Advisor
a fee equal to an annual average rate of 2.25% of the Fund's average daily net
assets. The Shepard Values Growth Fund is authorized to pay the Advisor a fee
equal to an annual average rate of 1.75% of the Fund's average daily net assets.
The Advisor pays all of the operating expenses of the Fund except brokerage,
taxes, interest, fees and expenses of non-interested person trustees and
extraordinary expenses. In this regard, it should be noted that most investment
companies pay their own operating expenses directly, while the Funds' expenses,
except those specified above, are paid by the Advisor.
The Funds retain AmeriPrime Financial Services, Inc. (the
"Administrator") to manage the Funds' business affairs and provide each 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 each Fund's
average daily net assets up to fifty million dollars, 0.075% of each Fund's
average daily net assets from fifty to one hundred million dollars and 0.050% of
each Fund's average daily net assets over one hundred million dollars (subject
to a minimum annual payment of $20,000). The Funds retain Unified Fund Services,
Inc., 431 North Pennsylvania Street, Indianapolis, Indiana 46204 (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 Funds' 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
a Fund as a factor in the selection of brokers and dealers to execute portfolio
transactions.
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
This section contains general information about various types of
securities and investment techniques that the Funds may purchase or employ. The
Statement of Additional Information provides more information.
Short Sales. Each Fund may a sell a security short in anticipation of a decline
in the market value of the security. When a Fund engages in a short sale, it
sells a security which it does not own. To complete the transaction, the Fund
must borrow the security in order to deliver it to the buyer. The Fund must
replace the borrowed security by purchasing it at the market price at the time
of replacement, which may be more or less than the price at which the Fund sold
the security. 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 profit
if the security declines in price between those dates.
In connection with its short sales, each Fund will be required to
maintain a segregated account
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<PAGE>
with the Custodian of cash or high grade liquid assets equal to the market value
of the securities sold less any collateral deposited with its broker. The Growth
Fund will limit its short sales so that no more than __% of its net assets (less
all its liabilities other than obligations under the short sales) will be
deposited as collateral and allocated to the segregated account. However, the
segregated account and deposits will not necessarily limit the Fund's potential
loss on a short sale, which is unlimited.
Equity Securities. Equity securities consist of common stock, convertible
preferred stock, convertible bonds, rights and warrants. Common stocks, the most
familiar type, represent an equity (ownership) interest in a corporation.
Warrants are options to purchase equity securities at a specified price 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. Although equity
securities have a history of long-term growth in value, their prices fluctuate
based on changes in a company's financial condition and on overall market and
economic conditions. Each Fund's investment in convertible securities will be
limited to those of investment grade.
Equity securities include S&P Depositary Receipts ("SPDRs") and other
similar instruments. SPDRs are shares of a publicly traded unit investment trust
which owns the stocks included in the S&P 500 Index, and changes in the price of
SPDRs track the movement of the Index relatively closely.
Equity securities also include common stocks and common stock
equivalents of domestic real estate investment trusts ("REITS") and other
companies which operate as real estate corporations or which have a significant
portion of their assets in real estate. A Fund will not acquire any direct
ownership of real estate.
Each Fund may invest up to 25% of its assets in foreign equity
securities through the purchase of American Depository Receipts ("ADRs"). ADRs
are certificates evidencing ownership of shares of a foreign- based issuer held
in trust by a bank or similar financial institution. They are alternatives to
the direct purchase of the underlying securities in their national markets and
currencies. To the extent that the Fund does invest in foreign securities, such
investments may be subject to special risks. There may be less information
publicly available about a foreign company than about a U.S. company, and
foreign companies are not generally subject to accounting, auditing and
financial reporting standards and practices comparable to those in the U.S.
Other risks associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes in
the administrations or economic and monetary policies of foreign governments,
the imposition of exchange control regulations, the possibility of expropriation
decrees and other adverse foreign governmental action, the imposition of foreign
taxes, less liquid markets, less government supervision of exchanges, brokers
and issuers, difficulty in enforcing contractual obligations, delays in
settlement of securities transactions and greater price volatility. In addition,
investing in foreign securities will generally result in higher commissions than
investing in similar domestic securities.
Investments in equity securities are subject to inherent market risks
and fluctuations in value due to earnings, economic conditions and other factors
beyond the control of the Advisor. As a result, the return and net asset value
of a Fund will fluctuate. Securities in a Fund's portfolio may not increase as
much as the market as a whole and some undervalued securities may continue to be
undervalued for long periods of time. Although profits in some Fund holdings may
be realized quickly, it is not expected that most investments will appreciate
rapidly.
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<PAGE>
Repurchase Agreements. Each Fund may invest in repurchase agreements fully
collateralized by U.S. Government obligations. A repurchase agreement is a
short-term investment in which the purchaser (i.e., the Fund) acquires ownership
of a U.S. Government obligation (which may be of any maturity) and the seller
agrees to repurchase the obligation at a future time at a set price, thereby
determining the yield during the purchaser's holding period (usually not more
than seven days from the date of purchase). Any repurchase transaction in which
the Fund engages will require full collateralization of the seller's obligation
during the entire term of the repurchase agreement. In the event of a bankruptcy
or other default of the seller, the Fund could experience both delays in
liquidating the underlying security and losses in value. However, each Fund
intends to enter into repurchase agreements only with Star Bank, N.A. (the
Fund's Custodian), other banks with assets of $1 billion or more and registered
securities dealers determined by the Advisor (subject to review by the Board of
Trustees) to be creditworthy. The Advisor monitors the creditworthiness of the
banks and securities dealers with which the Fund engages in repurchase
transactions.
Options on Stocks. Each Fund may write covered call options, and purchase put
options, on stocks. A call option gives the purchaser of the option the right to
buy, and obligates the writer to sell, the underlying security at the exercise
price at any time during the option period. Similarly, a put option gives the
purchaser of the option the right to sell, and obligates the writer to buy the
underlying security at the exercise price at any time during the option period.
A covered call option with respect to which a Fund owns the underlying security
sold by the Fund exposes the Fund during the term of the option to possible loss
of opportunity to realize appreciation in the market price of the underlying
security or to possible continued holding of a security which might otherwise
have been sold to protect against depreciation in the market price of the
security. A covered put option sold by a Fund exposes the Fund during the term
of the option to a decline in price of the underlying security.
Options on Stock Indices. Each Fund may write covered call options, and purchase
put options, on stock indices listed on domestic and foreign stock exchanges, in
lieu of direct investment in the underlying securities or for hedging purposes.
A stock index fluctuates with changes in the market values of the securities
included in the index. Options on securities indices are generally similar to
options on stocks except that the delivery requirements are different. Instead
of giving the right to take or make delivery of securities at a specified price,
an option on a stock or bond index gives the holders the right to receive a cash
"exercise settlement amount" equal to (a) the amount, if any, by which the fixed
exercise price of the option exceeds (in the case of a put) or is less than (in
the case of a call) the closing value of the underlying index on the date of the
exercise, multiplied by (b) a fixed "index multiplier." To cover the potential
obligations involved in writing options, the Fund will either (a) hold a
portfolio of stocks substantially replicating the movement of the index, or (b)
the Fund will segregate with the Custodian high grade liquid debt obligations
equal to the market value of the stock index option, marked to market daily.
Successful use by a Fund of options on security indices will be subject to the
Advisor's ability to predict correctly movement in the direction of the security
market generally or of a particular industry. This requires different skills and
techniques than predicting changes in the price of individual securities.
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
applicable Fund. The investment objective of each Fund may be changed without
the affirmative vote of a majority of the outstanding shares of the Fund. Any
such
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<PAGE>
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. Neither Fund intends to purchase or sell securities
for short term trading purposes. However, if the objectives of a Fund would be
better served, short-term profits or losses may be realized from time to time.
It is anticipated that the portfolio turnover rate of each Fund will not exceed
100% annually.
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 a Fund have equal voting rights and liquidation
rights. Prior to the public offering of the Funds, ___________ purchased for
investment all of the outstanding shares of each Fund and may be deemed to
control each Fund.
Each Fund acknowledges that it is solely responsible for the
information or any lack of information about it in this joint Prospectus and in
the joint Statement of Additional Information, and no other Fund is responsible
therefor. There is a possibility that one Fund might be deemed liable for
misstatements or omissions regarding another Fund in this Prospectus or in the
joint Statement of Additional Information; however, the Funds deem this
possibility slight.
Shareholder inquiries should be made by telephone to 888-________, or
by mail, c/o Unified Fund Services, Inc., to P.O. Box 6110, Indianapolis,
Indiana 46204-6110.
PERFORMANCE INFORMATION
Each Fund may periodically advertise "average annual total return." The
"average annual total return" of a 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.
Each Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of 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. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
Each 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).
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<PAGE>
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, the NASDAQ Composite Index and the Dow Jones Industrial
Average.
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<PAGE>
The advertised performance data of each Fund is based on historical
performance and is not intended to indicate future performance. Rates of total
return quoted by a 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 each Fund will fluctuate so that a
shareholder's shares, when redeemed, may be worth more or less than the
shareholder's original investment.
Investment Advisor
Cornerstone Capital Management, Inc.
6760 Corporate Drive, Suite 230
Colorado Springs, CO 80919
Administrator
AmriPrime Financial Services, Inc.
1793 Kingswood Drive, Suite 200
Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchases and Independent Auditors
all redemption requests) McCurdy & Associates CPA's, Inc.
Unified Fund Services, Inc. 27955 Clemens Road
431 North Pennsylvania Street Westlake, Ohio 44145
Indianapolis, Indiana 46204
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 a
Fund. This Prospectus does not constitute an offer by any of the Funds 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
- 18 -
<PAGE>
Shepherd Values Market Neutral Fund
Shepherd Values Growth Fund
STATEMENT OF ADDITIONAL INFORMATION
--------------------
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of Shepherd Values Market Neutral
Fund and Shepherd Values Growth Fund dated ________________. A copy of the
Prospectus can be obtained by writing the Transfer Agent at 431 North
Pennsylvania Street, Indianapolis, Indiana 46204, or by calling 1-888-
- -----------------.
<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.........................................................5
THE INVESTMENT ADVISOR.........................................................8
TRUSTEES AND OFFICERS..........................................................8
PORTFOLIO TRANSACTIONS AND BROKERAGE...........................................9
DETERMINATION OF SHARE PRICE..................................................10
INVESTMENT PERFORMANCE........................................................11
CUSTODIAN.....................................................................12
TRANSFER AGENT................................................................12
ACCOUNTANTS...................................................................12
DISTRIBUTOR...................................................................12
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DESCRIPTION OF THE TRUST
The Shepherd Values Market Neutral Fund and the Shepherd Values Growth
Fund (each a "Fund" or collectively, the "Funds") were organized as 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. Each Fund is one of a series of funds
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 been titled 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. American Depository Receipts (ADRs). ADRs are subject to risks
similar to those associated with direct investment in foreign securities. For
example, there may be less information publicly available about a foreign
company then about a U.S. company, and foreign companies are not generally
subject to accounting, auditing and financial reporting standards and practices
comparable to those in the U.S. Other risks associated with investments in
foreign securities include changes in restrictions on foreign currency
transactions and rates of exchanges, changes in the administrations or economic
and monetary policies of foreign governments, the imposition of exchange control
regulations, the possibility of expropriation decrees and other adverse foreign
governmental action, the imposition of foreign taxes, less liquid markets, less
government supervision of exchanges, brokers and issuers, difficulty in
enforcing contractual obligations, delays in settlement of securities
transactions and greater price volatility. In addition, investing in foreign
securities will generally result in higher commissions than investing in similar
domestic securities.
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<PAGE>
B. Option Transactions. The Funds may engage in option transactions
involving individual stocks as well as stock indexes. An option involves either
(a) the right or the obligation to buy or sell a specific instrument at a
specific price until the expiration date of the option, or (b) the right to
receive payments or the obligation to make payments representing the difference
between the closing price of a market index and the exercise price of the option
expressed in dollars times a specified multiple until the expiration date of the
option. Options are sold (written) on securities and market indexes. The
purchaser of an option on a security pays the seller (the writer) a premium for
the right granted but is not obligated to buy or sell the underlying security.
The purchaser of an option on a market index pays the seller a premium for the
right granted, and in return the seller of such an option is obligated to make
the payment. A writer of an option may terminate the obligation prior to
expiration of the option by making an offsetting purchase of an identical
option. Options are traded on organized exchanges and in the over-the-counter
market. Call options on securities which the Funds sell (write) will be covered
or secured, which means that the Fund will own the underlying security in the
case of a call option. When the Funds write options, they may be required to
maintain a margin account, to pledge the underlying securities or U.S.
government obligations or to deposit assets in escrow with the Custodian. The
Funds may also utilize spreads and straddle strategies. A spread is the
difference in price resulting from a combination of put and call options within
the same class on the same underlying security. A straddle strategy consists of
an equal number of put and call options on the same underlying stock, stock
index, or commodity future at the same strike price and maturity date.
The purchase and writing of options involves certain risks. The
purchase of options limits a Fund's potential loss to the amount of the premium
paid and can afford a Fund the opportunity to profit from favorable movements in
the price of an underlying security to a greater extent than if transactions
were effected in the security directly. However, the purchase of an option could
result in a Fund losing a greater percentage of its investment than if the
transaction were effected directly. When a Fund writes a covered call option, it
will receive a premium, but it will give up the opportunity to profit from a
price increase in the underlying security above the exercise price as long as
its obligation as a writer continues, and it will retain the risk of loss should
the price of the security decline. When a Fund writes a put option, it will
assume the risk that the price of the underlying security or instrument will
fall below the exercise price, in which case the Fund may be required to
purchase the security or instrument at a higher price than the market price of
the security or instrument. In addition, there can be no assurance that a Fund
can effect a closing transaction on a particular option it has written. Further,
the total premium paid for any option may be lost if the Fund does not exercise
the option or, in the case of over-the-counter options, the writer does not
perform its obligations.
C. Real Estate Investment Trust. A real estate investment trust
("REIT") is a corporation or business trust that invests substantially all of
its assets in interests in real estate. Equity REITs are those which purchase or
lease land and buildings and generate income primarily from rental income.
Equity REITs may also realize capital gains (or losses) when selling property
that has appreciated (or depreciated) in value. Mortgage REITs are those which
invest in real estate mortgages and generate income primarily from interest
payments on mortgage loans. Hydrid REITs generally invest in both real property
and mortgages. In addition, REITs are generally subject to risks associated with
direct ownership of real estate, such as decreases in real estate values or
fluctuations in rental income caused by a variety of factors, including
increases in interest rates, increases in property taxes and other operating
costs, casualty or condemnation losses, possible environmental liabilities and
changes in supply and demand for properties. Risks associated with REIT
investments include the fact that equity and mortgage REITs are dependent upon
specialized management skills and are not fully diversified.
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<PAGE>
These characteristics subject REITs to the risks associated with financing a
limited number of projects. They are also subject to heavy cash flow dependency,
defaults by borrowers, and self-liquidation. Additionally, equity REITs may be
affected by any changes in the value of the underlying property owned by the
trusts, and mortgage REITs may be affected by the quality of any credit
extended.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to each Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of each Fund. As used in the Prospectus and
the 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 Funds will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all 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.
2. Senior Securities. The Funds 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 consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations promulgated
thereunder or interpretations of the Securities and Exchange Commission or its
staff.
3. Underwriting. The Funds 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 Funds 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. The Funds 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 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.
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<PAGE>
6. Loans. The Funds 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. No Fund will 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 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).
1. Pledging. The Funds 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.
2. Borrowing. Neither Fund will purchase any security while borrowings
(including reverse repurchase agreements) representing more than 331/3% of its
total assets are outstanding.
3. Margin Purchases. Neither Fund will purchase securities or evidences
of interest thereon on "margin." This limitation is not applicable to short term
credit obtained by a 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.
4. Options. Neither Fund will purchase or sell puts, calls, options or
straddles except as described in the Funds' Prospectus and Statement of
Additional Information.
5. Illiquid Investments. Neither Fund will invest more than 5% of its
net assets in securities for which there are legal or contractual restrictions
on resale and other illiquid securities.
6. Loans of Portfolio Securities. Neither Fund will make loans of
portfolio securities.
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<PAGE>
THE INVESTMENT ADVISOR
The investment advisor to the Shepherd Values Growth Fund and Shepherd
Values Market Neutral Fund is Cornerstone Capital Management, Inc., 6760
Corporate Drive, Suite 230, Colorado Springs, CO 80919 (the "Advisor").
Under the terms of the management agreement (the "Agreement"), the
Advisor manages each Fund's investments subject to approval of the Board of
Trustees and pays all of the expenses of each 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, each Fund is obligated to pay the Advisor
a fee computed and accrued daily and paid monthly at an annual rate of 2.25% for
the Shepherd Values Market Neutral Fund and 1.75% for the Shepherd Values Growth
Fund 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 "Shepherd Values" 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 "Shepherd
Values" 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.
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, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
<S> <C> <C>
===================================================================================================================================
Name, Age and Address Position Principal Occupations During Past 5 Years
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*Kenneth D. Trumpfheller President President, Treasurer and Secretary of AmeriPrime Financial
Age: 40 and Trustee Services, Inc., the Fund's administrator, and AmeriPrime
1793 Kingswood Drive Financial Securities, Inc., the Fund's distributor, since
Suite 200 1994. Prior to December, 1994, a senior client executive
Southlake, Texas 76092 with SEI Financial Services.
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Secretary,
Age: Treasurer
1793 Kingswood Drive
Suite 200
Southlake, Texas 76092
- -----------------------------------------------------------------------------------------------------------------------------------
Steve L. Cobb Trustee President of Chandler Engineering Company, L.L.C., oil and
Age: 41 gas services company; various positions with Carbo Ceramics,
2001 Indianwood Avenue Inc., oil field manufacturing/supply company, from 1984 to
Broken Arrow, OK 74012 1997, most recently Vice President of Marketing.
- -----------------------------------------------------------------------------------------------------------------------------------
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of
Age: 51 Legacy Trust Company since 1992; President and Director of
600 Jefferson Street Heritage Trust Company from 1994-1996; Vice President and
Suite 350 Manager of Investments of Kanaly Trust Company from 1988
Houston, TX 77063 to 1992.
===================================================================================================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the fiscal year
ended October 31, 1998 is set forth in the following table. Trustee fees are
Trust expenses and each series of the Trust pays a portion of the Trustee fees.
<TABLE>
<CAPTION>
<S> <C> <C>
=====================================================================================================
Aggregate Total Compensation
Compensation from Trust (the Trust is
Name from Trust not in a Fund Complex)
- -----------------------------------------------------------------------------------------------------
Kenneth D. Trumpfheller 0 0
- -----------------------------------------------------------------------------------------------------
Steve L. Cobb $4,000 $4,000
- -----------------------------------------------------------------------------------------------------
Gary E. Hippenstiel $4,000 $4,000
=====================================================================================================
</TABLE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Advisor is responsible for each Fund's portfolio decisions and the placing
of each Fund's portfolio transactions. In placing portfolio transactions, the
Advisor seeks the best qualitative execution for each 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 Funds 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.
-8-
<PAGE>
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 Funds effect 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
Funds. Although research services and other information are useful to the Funds
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 Funds
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.]
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of each 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, Martin
Luther King, Jr. 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 for the period indicated that would equate the initial amount invested
to the ending redeemable value, according to the following formula:
-9-
<PAGE>
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.
In addition to providing average annual total return, the Funds may
also provide non-standardized quotations of total return for differing periods
and may provide the value of a $10,000 investment (made on the date of the
initial public offering of the Funds' shares) as of the end of a specified
period.
Each 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 each 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 any of the
Funds may be compared to indices of broad groups of unmanaged securities
considered to be representative of or similar to the portfolio holdings of the
Funds or considered to be representative of the stock market in general. The
Funds may use the Standard & Poor's 500 Stock Index, the NASDAQ Composite Index
or the Dow Jones Industrial Average.
In addition, the performance of any of the Funds 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 group
may not be the same as those of any of the Funds. 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 Funds' investments. The Custodian acts as the Funds'
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Funds' request and
maintains records in connection with its duties.
TRANSFER AGENT
Unified Fund Services, Inc., 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, acts as the Funds' 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
-10-
<PAGE>
Funds' shares, acts as dividend and distribution disbursing agent and performs
other accounting and shareholder service functions. In addition, Unified Fund
Services, Inc., provides the Funds 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, 1999. McCurdy & Associates performs an
annual audit of the Funds' 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
Funds. The Distributor is obligated to sell the shares of the Funds on a best
efforts basis only against purchase orders for the shares. Shares of the Funds
are offered to the public on a continuous basis.
-11-
<PAGE>
PROSPECTUS ________________, 1999
10K Smart Trust
5952 Royal Lane, Suite 270
Dallas, TX 85230
For Information, Shareholder Services and Requests:
(888)___-____
The investment objective of the 10K Smart Trust (the "Fund") is to
provide long term capital appreciation for its shareholders. The Fund's advisor,
Monument Investments, Inc. seeks to achieve this objective by investing
primarily in no-load mutual funds specializing in large capitalization value and
growth stocks.
The Fund is a unique way to give a gift to a child, grandchild, or
other individual. You may not invest in the Fund. Rather, your gift, which is
irrevocable, will be invested in the Fund by the 10K Smart Trust Trustee in
accordance with a trust established under a "________ Agreement." The minimum
initial gift requirement for the Fund is $10,000. The Fund is one of the mutual
funds comprising AmeriPrime Funds, an open-end management investment company,
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 dated ______________, 1999 has been filed
with the Securities and Exchange Commission (the "SEC"), is incorporated herein
by reference, and can be obtained without charge by calling the Fund at the
phone number listed above. The SEC maintains a Web Site (http://www.sec.gov)
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
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.
<PAGE>
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, unlike most other mutual
funds, does not pay directly for transfer agency, pricing, custodial, auditing
or legal services, nor does it pay directly any general administrative expenses.
The Advisor pays all of the expenses of the Fund except brokerage, taxes,
interest, fees and expenses of non-interested person trustees, expenses incurred
pursuant to the Fund's 12b-1 Distribution Plan and extraordinary expenses.
[Long-term shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers.]
Shareholder Transaction Expenses
Sales Load Imposed on Purchases 1.00%
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)1
Management Fees..................................... 1.25%
12b-1 Fees..................................1.00%...
Other Expenses2.............................0.00%...
Total Operating Expenses............................ 2.25%
1 The Fund's total operating expenses are equal to the management fee
paid to the Advisor plus the 12b-1 Fees because the Advisor pays all of
the Fund's operating expenses (except as described above).
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 less than .01% 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. To the extent that the Fund invests in other mutual funds, the Fund
will indirectly bear its proportionate share of any fees and expenses paid by
such other funds, in addition to the fees and expenses payable directly by the
Fund. Therefore, to the extent that the Fund invests in other mutual funds, the
Fund will incur higher expenses, many of which may be duplicative. These
expenses will be borne by the Fund, and are
- 1 -
<PAGE>
not included in the expenses reflected in the table or example above. See
"Investment Objectives and Policies."
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:
1 Year 3 Years
------ -------
$-- $--
THE FUND
The 10K Smart Trust (the "Fund") was organized as a series of
AmeriPrime Funds, an Ohio business trust ("AmeriPrime") on __________, 1998.
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 Monument Investments, Inc. (the "Advisor").
An Investment in the Fund is a unique way to give a gift to a child or
any individual. You cannot establish or make investments in a Fund account for
yourself or your spouse, nor can a Fund account be established that designates
anyone other than an individual (such as a corporation, partnership or other
profit or nonprofit organization) as a beneficiary. The minimum initial gift in
the Fund is $10,000.
The shares in a Fund account are held in trust by an independent
trustee until the maturity date you wish, but must be at least 10 years from the
time you make the first gift in the Fund or until the recipient reaches the age
of majority, whichever is later. The recipient will then receive the shares in
the account. The gift is irrevocable. Before the maturity date you specify,
neither you nor the beneficiary may amend the terms of the trust in any way.
After the maturity of the account, the beneficiary may continue to own the Fund
shares but, except for reinvestment of distributions, may not make additional
Fund investments.
[Each Fund account for which a tax return is filed will be charged a
$10 fee to help off-set a portion of the cost of preparing such return.
Additionally, each maturing Fund account will be charged a $100 administrative
fee to help cover the costs incurred by the Trustee as a result of the Fund
reaching maturity.]
The tax laws applicable to trusts in general are quite complex. You should
consider consulting your tax advisor or attorney before opening a Fund account.
See "Taxes".
- 2 -
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to provide long term capital
appreciation for its shareholders. The Advisor seeks to achieve this objective
by investing primarily in no-load mutual funds specializing in large
capitalization value and growth stocks. The Advisor selects the mutual funds
which the Adviser believes offer above average prospects for appreciation.
The Fund intends to invest principally in other mutual funds, and may
invest up to 25% of its assets in any one mutual fund, and up to 100% of its
assets in other mutual funds in general. The Fund may not invest in more than 3%
of the total outstanding voting securities of any one mutual fund. The foregoing
limitations are not applicable to investment company securities acquired as part
of a merger, consolidation, reorganization or other acquisition.
The Fund believes that investing in other mutual funds will provide the
Fund with opportunities to achieve greater diversification of portfolio
securities and investment techniques than the Fund could achieve by investing in
individual securities. The Fund will normally invest only in other mutual funds
that do not impose up-front sales loads or deferred sales loads or redemption
fees. If the Fund invests in a mutual fund that normally charges a sales load,
it will use available sales load waivers and quantity discounts to eliminate the
sales load. However, the Fund may invest in mutual funds that have 12b-1 plans
or shareholder services plans which permit the funds to pay certain distribution
and other expenses from fund assets. To the extent that the Fund invests in
other mutual funds, the Fund will indirectly bear its proportionate share of any
fees and expenses paid by such funds in addition to the fees and expenses
payable directly by the Fund. Therefore, to the extent that the Fund invests in
other mutual funds, the Fund will incur higher expenses, many of which may be
duplicative. [In addition, to the extent that the Fund invests in other mutual
funds, the Fund's shareholders may receive capital gains distributions to a
greater extent than if the shareholder owned the underlying mutual funds
directly.]
The Fund will invest only in other mutual funds that have an investment
objective similar to the Fund's, or that otherwise are a permitted investments
under the Fund's investment policies described herein. Nevertheless, the mutual
funds purchased by the Fund likely will have certain investment policies, and
use certain investment practices that are different from those of the Fund and
not described herein. These other policies and practices may subject the other
funds' assets to varying or greater degrees of risk. The Fund is independent
from any of the other mutual funds in which it invests and has little voice in
or control over the investment practices, policies or decisions of those funds.
If the Fund disagrees with those practices, policies or decisions, it may have
no choice other than to liquidate its investment in that fund, which can entail
further losses. However, a mutual fund is not required to redeem any of its
shares owned by another mutual fund in an amount exceeding 1% of the underlying
fund's shares during any period of less than 30 days. As a result, to the extent
that the Fund owns more than 1% of another mutual fund's shares, the Fund may
not be able to liquidate those shares in the event of adverse market conditions
or other considerations.
- 3 -
<PAGE>
Also, the investment advisers of the mutual funds in which a Fund
invests may simultaneously pursue inconsistent or contradictory courses of
action. For example, one fund may be purchasing securities of the same issuer
whose securities are being sold by another fund, with the result that the Fund
would incur an indirect expense without any corresponding investment or economic
benefit.
While the Fund intends to invest primarily in equity mutual funds, the
Fund may also invest directly in equity securities. For temporary defensive
purposes under abnormal market or economic conditions, the Fund may hold all or
a portion of its assets in money market instruments, money market funds or U.S.
Government repurchase agreements. The Fund may also invest in such instruments
at any time to maintain liquidity or pending selection of investments in
accordance with its policies.
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, it should be noted that the Advisor has not
previously managed assets organized as a mutual fund and that the Fund has no
operating history. 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. See "Investment Policies and Techniques and Risk
Considerations" for a more detailed discussion of the Fund's investment
practices.
HOW TO INVEST IN THE FUND
The Fund is sold on a continuous basis, subject to a minimum initial
gift of $10,000 and minimum subsequent investments of $5,000. [These minimums
may be waived by the Advisor for accounts participating in an automatic
investment program.] To the extent investments of individual investors are
aggregated into an omnibus account established by an investment adviser, broker
or other intermediary, the account minimums apply to the omnibus account, not to
the account of the individual investor.
Shares of the Fund are purchased at the public offering price which is
equal to the next determined net asset value per share plus a sales load. The
slaes load is equal to 1.0% of the public pffering price (1.01% of the net
amount invested). The entire sales load is paid to the dealer or record. Under
certain circumstances, AmeriPrime Financial Securities, Inc., the Fund's
distributor (the "Distributor"), may change the reallowance to dealers. Dealers
engaged in the sale of shares of the Fund may be deemed to be underwriters under
the Securities Acto of 1933. The Distributor retains the entire sales load on
all direct initial investments in the Fund and on all gifts in accounts with no
designated dealer of record.
Shares of the Fund are sold on a continuous basis at the public
offering price next determined after receipt of a purchase order by the Trust.
Purchase orders received by dealers prior to 4:00 p.m., Eastern time, on any
business day and transmitted to the Distributor by 5:00 p.m., Eastern time, that
- 4 -
<PAGE>
day are confirmed at the public offering price determined as of the close of the
regular session of trading on the New York Stock Exchange on that day. It is the
responsibility of dealers to transmit properly completed orders so that they
will be received by the Distributor by 5:00 p.m., Eastern time, are confirmed at
that day's public offering price. Direct investments received after 4:00 p.m.
and others received from dealers after 5:00 p.m. are confirmed at the public
offering price next determined on the following business day.
Initial Purchase
By Mail - You may open an account and make an initial gift through
securities dealers having a sales agreement with the Distributor. You may also
make a direct initial gift 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 Fund,
and sent to the P.O. Box listed below. If you prefer overnight delivery, use the
overnight address listed below.
U.S. Mail: Overnight:
10K Smart Trust 10K Smart Trust
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, Indiana 46204-6110 Indianapolis, Indiana 46204
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 Unified Fund Services, Inc. (the "Transfer Agent") at
888-___-____ 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: Monument Investment Credit Trust
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 Star Bank, N.A. (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.
- 5 -
<PAGE>
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.
Additional Investments
You may purchase additional shares of the Fund at any time (subject to
minimum investment requirements) through your securities dealer or directly from
the Fund, by mail, wire, [or automatic investment]. If your securities dealer
received a concession for selling shares of the Fund to you, such dealer will
receive additional concessions described above with respect to additional
investments. Each additional mail purchase request must contain your name, the
name of your account(s), your account number(s). Checks should be made payable
to 10K Smart Trust and should be sent to the address listed above. A bank wire
should be sent as outlined above.
[Reduced Sales Load
You may use the Right of Accumulation to combine the cost or current
net asset value (whichever is higher) of your shares of the Fund with the amount
of your current purchases in order to take advance of the reduced sales load set
forth in the table above. Purchases made pursuant to a Letter of Intent may also
be eligible for the reduced sales loads. The minimum initial investment under a
Letter of Intent is $______. Shareholders should contact the Transfer Agent for
information about the Right of Accumulation and Letter of Intent.]
[Purchases at Net Asset Value
You may purchase shares of the Fund at net asset value when the payment
for your investment represents the proceeds from the redemption of shares of any
other mutual fund which has a front-end sales load. Your investment will qualify
for this provision if the purchase price of the shares of the other fund
included a sales load and the redemption occurred within one year of the
purchase of such shares and no more than sixty days prior to your purchase of
shares of the Fund. To make a purchase at net asset value pursuant to this
provision, you must submit photocopies of the confirmations (or similar
evidence) showing the purchase and redemption of shares of the other fund. Your
payment may be made with the redemption check representing the proceeds of the
shares redeemed, endorsed to the order of the Fund. The redemption of shares of
the other fund is, for federal income tax purposes, a sale on which you may
realize a gain or loss. These provisions may be modified or terminated at any
time. Contact your securities dealer or the Fund for further information.
Banks, bank trust departments and savings and loan associations, in
their fiduciary capacity or for their own accounts, may also purchase shares of
the Fund at net asset value. To the extent permitted by regulatory authorities,
a bank trust department may charge fees to clients for whose
- 6 -
<PAGE>
account it purchases shares at net asset value. Federal and state credit unions
may also purchase shares at net asset value.
Purchases may be effected at net asset value for the benefit of the
clients of brokers-dealers and registered investment advisers affiliated with a
broker-dealer, if such broker-dealer or investment adviser has entered into an
agreement with the Distributor providing specifically for the purchase of Fund
shares in connection with special investment products, such as wrap accounts or
similar fee based programs. In addition, shares of the Fund may be purchased at
net asset value by broker-dealers who have a sales agreement with the
Distributor, and their registered personnel and employees, including members of
the immediate families of such registered personnel and employees.
Trustees, directors, officers and employees of the Trust, the Adviser
or the Distributor, including members of the immediate family of such
individuals and employee benefit plans established by such entities, may also
purchase shares of the Fund at net asset value.]
[Automatic Investment Plan
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $__ or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.]
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 plans (IRAs); simplified employee pensions
(SEPs); SIMPLE plans; 401(k) plans; qualified corporate pension and profit
sharing plans (for employees); tax deferred investment 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
advisor 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
- 7 -
<PAGE>
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.
Prior to maturity of a Fund account, redemptions are allowed only by the
Trustee, who is authorized by the Trust Agreement to make redemptions for the
purpose of paying applicable fees, expenses and taxes of the Fund account.
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 account
by redemption of shares. Investors choosing to purchase or redeem their shares
through a broker/dealer or other institution may be charged a fee by that
institution.
- 8 -
<PAGE>
By Mail - You may redeem any part of your account in the Fund at no
charge by mail. Your request should be addressed to:
10K Smart Trust
c/o Unified Fund Services, Inc.
P.O. Box 6110
Indianapolis, Indiana 46204-6110
"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 Unified Fund 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 888___-____. 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 888 ___-____. 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.
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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 $10,000 due to 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 advisor 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 anytime 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.
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 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 AmeriPrime.
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
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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.
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 advisors regarding specific questions as to federal, state or local taxes
and the tax effect of distributions and withdrawals from the Fund.
If the beneficiary of a matured trust has not complied with certain
provisions of the Internal Revenue Code and Regulations, the Fund is are
required by federal law to withhold and remit to the IRS 31% of reportable
payments (which may include dividends, capital gains distributions and
redemptions). Those regulations require the beneficiary of a matured trust to
certify that the Social Security number or tax identification number provided is
correct and that he/she is not subject to 31% withholding for previous
under-reporting to the IRS. The beneficiary of a matured trust will be asked to
make the appropriate certification upon maturity of the trust. Shareholders
should be
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<PAGE>
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. Redemption of Fund shares will be a
taxable transaction for federal income tax purposes and shareholders will
generally recognize gain or loss in an amount equal to the difference between
the basis of the shares and the amount received. Assuming that shareholders hold
such shares as a capital asset, the gain or loss will be a capital gain or loss
and will generally be considered long-term subject to tax at a maximum rate of
28% (28% rate gain/loss) if shareholders have held such shares for a period of
more than 12 months but no more than 18 months and long-term subject to tax at a
maximum rate of 20%, minimum of 10% (20% rate gain/loss) if shareholders have
held such shares for a period of more than 18 months.
[Because it is a gift of a future interest, an investment in the Fund
does not qualify for the annual gift tax exclusion of $10,000 (indexed for
inflation after 1998). If you open a Fund account, you must file a United States
Gift Tax Return. If you make additional investments in subsequent years, a Gift
Tax Return must be filed for each year's gift. No gift tax is payable until your
cumulative lifetime gifts exceed the exemption equivalent of $625,000 (beginning
in 1998 and increasing to $1 million in 2006). Each gift is applied against the
exemption equivalent that would otherwise be available in the future.]
The income of a Fund account is exempt from federal income tax until it
exceeds $100. The Trustee of the trust files federal and state income tax
returns and pays the income tax out of the assets of the trust. A $10 fee will
be charged against a Fund account in each year that the Trustee files at tax
return on behalf of such account. [The distribution to the beneficiary at the
maturity of a Fund account established before March 1, 1984 may be subject to
the throwback rules under Internal Revenue Code. The throwback rules may create
additional tax liability for a beneficiary who is age 21 or older at the time
the account matures]. More than one trust for the same beneficiary may be
subject to the provisions of the Internal Revenue Code with respect to multiple
trusts. [Distributions to beneficiaries of a Fund account established after
March 1, 1984 are not subject to the throwback rules.]
The tax laws applicable to trusts in general are quite complex. You
should consult your tax advisor or attorney before opening a Fund account.
OPERATION OF THE FUND
The Fund is a diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund retains various organizations to perform
specialized services. The Fund retains the Advisor to manage the assets of the
Fund. The Advisor determines the 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, and subject further to
such policies and instructions as the Board of Trustees may establish.
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<PAGE>
Jay Paul Hamilton, President and controlling shareholder of the
Advisor, is responsible for the day-to-day management of the Fund. Mr. Hamilton
founded the Advisor in 1996, and as of December 1, 1998 manages approximately
$31 million. From 1984 to 1996, he was a portfolio manager with the Texas Trust
Department.
The Fund is authorized to pay the Advisor a fee equal to an annual
average rate of 1.25% of its average daily net assets. The Advisor pays all of
the operating expenses of the Fund except brokerage, taxes, interest, fees,
expenses incurred pursuant to the Fund's 12b-1 Distribution Plan and expenses of
non-interested person trustees and extraordinary expenses. In this regard, it
should be noted that most investment companies pay their own operating expenses
directly, while the Fund's expenses, except those specified above, are paid by
the Advisor.
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). The Fund retains Unified Fund Services, Inc., 431
North Pennsylvania Street, Indianapolis, Indiana 46204 (the "Transfer Agent") to
serve as transfer agent, dividend paying agent and shareholder service agent.
AmeriPrime 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 AmeriPrime. 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. The Advisor (not the Fund) may pay certain financial
institutions (which may include banks, brokers, securities dealers and other
industry professionals) a "servicing fee" for performing certain administrative
functions for Fund shareholders to the extent these institutions are allowed to
do so by applicable statute, rule or regulation.
RULE 12b-1 DISTRIBUTION PLAN
A plan of distribution has been adopted under Rule 12b-1 of the
Investment Company Act of 1940 for the Fund. The plan provides that the Fund may
engage in any activity related to the distribution of its shares. These
activities may include, among others: (a) payments to securities dealers and
others that are engaged in the sale of shares, or that may be advising
shareholders regarding the purchase, sale or retention of shares; (b) payments
to securities dealers and others that hold shares for shareholders in omnibus
accounts or as shareholders of record or provide shareholder
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<PAGE>
support or administrative services to the Fund and its shareholders; (c)
expenses of maintaining personnel who engage in or support distribution of
shares or who render shareholder support services not otherwise provided by the
Trust's transfer agent; (d) costs of preparing, printing and distributing
prospectuses and statements of additional information and reports of the Fund
for recipients other than existing shareholders; and (e) costs of formulating
and implementing marketing and promotional activities. Payments to a securities
dealer or other entity generally will be based on a percentage of the value of
Fund shares held by clients of the entity. The plan provides that the Fund will
pay a 12b-1 fee at an annual rate of 1.00% of the Fund's average net assets
(1/12 of 1.00% monthly) [to the Advisor] for its distribution related services
and expenses and to compensate the Advisor for fees paid to the selling
broker-dealers. Of this amount, 0.75% is an asset based sales charge and 0.25%
is a service fee. Under the plan, the Advisor bears all distribution expenses of
the Fund in excess of the 12b-1 fees. The fees received by the Advisor for any
class of shares during any year may be more or less than its costs for
distribution related services provided to the class of shares. See "12b-1 Plan
of Distribution" in the Statement of Additional Information.
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
This section contains general information about various types of securities
and investment techniques that the Fund may purchase or employ. The Statement of
Additional Information provides more information.
Equity Securities. Equity securities consist of common stock,
convertible preferred stock, convertible bonds, rights and warrants. Common
stocks, the most familiar type, represent an equity (ownership) interest in a
corporation. Convertible stocks and bonds are securities that can be converted
into common stock pursuant to its terms. Warrants are options to purchase equity
securities at a specified price 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. Although equity securities have a history of
long-term growth in value, their prices fluctuate based on changes in a
company's financial condition and on overall market and economic conditions. The
Fund may not directly invest more than 5% of its net assets in either
convertible preferred stocks or convertible bonds. The Advisor will limit the
Fund's investment in convertible securities to those rated A or better by Moodys
Investors Service, Inc. or Standard & Poors Rating Group or, if unrated, of
comparable quality in the opinion of the Advisor.
The Fund may invest up to 20% of its net assets in foreign equity
securities by purchasing American Depository Receipts (ADRs). ADRs are
certificates evidencing ownership of shares of a foreign- based issuer held in
trust by a bank or similar financial institution. They are alternatives to the
direct purchase of the underlying securities in their national markets and
currencies. To the extent that the Fund does invest ADRs, such investments may
be subject to special risks. For example, there may be less information publicly
available about a foreign company than about a U.S. company, and foreign
companies are not generally subject to accounting, auditing and financial
reporting standards and practices comparable to those in the U.S. Other risks
associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and
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<PAGE>
rates of exchanges, changes in the administrations or economic and monetary
policies of foreign governments, the imposition of exchange control regulations,
the possibility of expropriation decrees and other adverse foreign governmental
action, the imposition of foreign taxes, less liquid markets, less government
supervision of exchanges, brokers and issuers, difficulty in enforcing
contractual obligations, delays in settlement of securities transactions and
greater price volatility. In addition, investing in foreign securities will
generally result in higher commissions than investing in similar domestic
securities.
Investments in equity securities whether directly or through another
mutual fund, are subject to inherent market risks and fluctuations in value due
to earnings, economic conditions and other factors beyond the control of the
Advisor. As a result, the return and net asset value of the Fund will fluctuate.
Securities in the Fund's portfolio may not increase as much as the market as a
whole and some undervalued securities may continue to be undervalued for long
periods of time. Although profits in some Fund holdings may be realized quickly,
it is not expected that most investments will appreciate rapidly.
Repurchase Agreements. The Fund may invest in repurchase agreements
fully collateralized by U.S. Government or agency obligations. A repurchase
agreement is a short-term investment in which the purchaser (i.e., the Fund)
acquires ownership of a U.S. Government or agency obligation (which may be of
any maturity) and the seller agrees to repurchase the obligation at a future
time at a set price, thereby determining the yield during the purchaser's
holding period (usually not more than seven days from the date of purchase). Any
repurchase transaction in which the Fund engages will require full
collateralization of the seller's obligation during the entire term of the
repurchase agreement. In the event of a bankruptcy or other default of the
seller, the Fund could experience both delays in liquidating the underlying
security and losses in value. However, the Fund intends to enter into repurchase
agreements only with Star Bank, N.A. (the Fund's Custodian), other banks with
assets of $1 billion or more and registered securities dealers determined by the
Advisor (subject to review by the Board of Trustees) to be creditworthy. The
Advisor monitors the creditworthiness of the banks and securities dealers with
which the Fund engages in repurchase transactions.
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.
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<PAGE>
Portfolio Turnover. The Fund does not intend to purchase or sell
securities for short term trading purposes. However, if the objective of the
Fund would be better served, short-term profits or losses may be realized from
time to time. It is anticipated that the portfolio turnover rate of the Fund
will not exceed [100%] annually.
Shareholder Rights. Any Trustee of AmeriPrime may be removed by vote of
the shareholders holding not less than two-thirds of the outstanding shares of
AmeriPrime. AmeriPrime 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 public offering of the Fund, __________________ purchased
for investment all of the outstanding shares of the Fund and may be deemed to
control the Fund.
Shareholder inquiries should be made by telephone to 800-___-____, or
by mail, c/o Unified Fund Services, Inc., to P.O. Box 6110, Indianapolis,
Indiana 46204-6110.
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 advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of 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. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
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
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<PAGE>
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 and the Dow Jones Industrial
Average.
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<PAGE>
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.
Investment Advisor Administrator
Monument Investments, Inc. AmeriPrime Financial Services, Inc.
5952 Royal Lane, Suite 270 1793 Kingswood Drive, Suite 200
Dallas, TX 85230 Southlake, Texas 76092
Custodian Distributor
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
425 Walnut Street, M.L. 6118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45202 Southlake, Texas 76092
Transfer Agent (all purchases and Independent Auditors
all redemption requests) McCurdy & Associates, Inc.
Unified Fund Services, Inc. 27955 Clemens Road
431 North Pennsylvania Street Westlake, Ohio 44145
Indianapolis, Indiana 46204
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
THE FUND
INVESTMENT OBJECTIVE AND STRATEGIES
HOW TO INVEST IN THE FUND
HOW TO REDEEM SHARES
SHARE PRICE CALCULATION
DIVIDENDS AND DISTRIBUTIONS
TAXES
OPERATION OF THE FUND
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
GENERAL INFORMATION
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<PAGE>
10K SMART TRUST
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of 10K Smart Trust dated
________________. A copy of the Prospectus can be obtained by writing the
Transfer Agent at 431 North Pennsylvania Street, Indianapolis, Indiana 46204, or
by calling 1-888-___________.
<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.........................................................5
THE INVESTMENT ADVISOR.........................................................8
TRUSTEES AND OFFICERS..........................................................8
PORTFOLIO TRANSACTIONS AND BROKERAGE...........................................9
DETERMINATION OF SHARE PRICE..................................................10
INVESTMENT PERFORMANCE........................................................11
CUSTODIAN.....................................................................12
TRANSFER AGENT................................................................12
ACCOUNTANTS...................................................................12
DISTRIBUTOR...................................................................12
ADMINISTRATOR.................................................................12
<PAGE>
DESCRIPTION OF THE TRUST
The 10K Smart Trust (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 a series of funds
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 been titled 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.
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 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
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<PAGE>
reverse repurchase transactions.
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 consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations promulgated
thereunder or interpretations of the Securities and Exchange Commission or its
staff.
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. 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 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 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
- 4 -
<PAGE>
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).
1. 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.
2. Borrowing. The Fund will not engage in borrowing.
3. 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.
4. Short Sales. The Fund will not effect short sales of securities.
5. Options. The Fund will not purchase or sell puts, calls, options or
straddles.
6. Illiquid Investments. The Fund will not invest in securities for
which there are legal or contractual restrictions on resale and other illiquid
securities.
7. Loans of Portfolio Securities. The Fund will not make loans of
portfolio securities.
THE INVESTMENT ADVISOR
The Fund's investment advisor is Monument Investments, Inc. (the
"Advisor"). Jay Paul Hamilton may be deemed to be a controlling person of the
Advisor due to his ownership of a majority of its shares.
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 (including organizational 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 1.25% 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 10K Smart Trust 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 10K Smart
Trust automatically ceases ninety days after termination of the Agreement and
may be withdrawn by the Advisor on ninety days
- 5 -
<PAGE>
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.
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, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
<S> <C> <C>
==========================================================================================================================
Name, Age and Address Position Principal Occupations During
Past 5 Years
- --------------------------------------------------------------------------------------------------------------------------
* Kenneth D. Trumpfheller President President, Treasurer and Secretary of
Age: 40 and Trustee AmeriPrime Financial Services, Inc., the
1793 Kingswood Drive Fund's administrator, and AmeriPrime
Suite 200 Financial Securities, Inc., the Fund's
Southlake, Texas 76092 distributor, since 1994. Prior to December,
1994, a senior
client executive
with SEI
Financial
Services.
- --------------------------------------------------------------------------------------------------------------------------
Secretary, Secretary, Treasurer and Chief Financial
Age: Treasurer Officer of AmeriPrime Financial Services,
1793 Kingswood Drive Inc. and AmeriPrime Financial Securities,
Suite 200 Inc.
Southlake, Texas 76092
- --------------------------------------------------------------------------------------------------------------------------
Steve L. Cobb Trustee President of Chandler Engineering
Age: 41 Company, L.L.C., oil and gas services
2001 Indianwood Avenue company; various positions with Carbo
Broken Arrow, OK 74012 Ceramics, Inc., oil field manufacturing/
supply company,
from 1984 to
1997, most
recently Vice
President of
Marketing.
- 6 -
<PAGE>
- --------------------------------------------------------------------------------------------------------------------------
Gary E. Hippenstiel Trustee Director, Vice President and Chief
Age: 51 Investment Officer of Legacy Trust
600 Jefferson Street Company since 1992; President and
Suite 350 Director of Heritage Trust Company from
Houston, TX 77063 1994-1996.
==========================================================================================================================
</TABLE>
The compensation paid to the Trustees of the Trust for the fiscal year
ended October 31, 1998 is set forth in the following table. Trustee fees are
Trust expenses and each series of the Trust pays a portion of the Trustee fees.
<TABLE>
<CAPTION>
<S> <C> <C>
===============================================================================================================
Name Aggregate Total Compensation
Compensation from Trust (the Trust is
from Trust not in a Fund Complex)
- ---------------------------------------------------------------------------------------------------------------
Kenneth D. Trumpfheller 0 0
- ---------------------------------------------------------------------------------------------------------------
Steve L. Cobb $4,000 $4,000
- ---------------------------------------------------------------------------------------------------------------
Gary E. Hippenstiel $4,000 $4,000
===============================================================================================================
</TABLE>
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
- 7 -
<PAGE>
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.]
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, Martin
Luther King, Jr. 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 for the period indicated 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
- 8 -
<PAGE>
value on the reinvestment dates and that a complete redemption occurs at
the end of the applicable period.
In addition to providing average annual total return, the Fund may also
provide nonstandardized quotations of total return for differing periods and may
provide 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 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
- 9 -
<PAGE>
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 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
Unified Fund Services, Inc., 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, acts as the Fund's transfer agent and, in such
capacity, maintains the records of each Unified 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, Unified 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, 1999. 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
- 10 -
<PAGE>
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.
ADMINISTRATOR
The Fund retains AmeriPrime Financial Services, Inc., 1793 Kingswood
Drive, Suite 200, Southlake, TX 76092, (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.
- 11 -
<PAGE>
AmeriPrime Funds
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements.
The following will be supplied in a subsequent Post-Effective
Amendment:
Part A:
Financial Highlights of Carl Domino Equity Income
Fund, AIT Vision U.S. Equity Portfolio, GLOBALT
Growth Fund, The NewCap Contrarian Fund, IMS Capital
Value Fund, Corbin Small-Cap Value Fund, Florida
Street Bond Fund, Florida Street Growth Fund,
Marathon Value Fund, AAM Equity Fund and Fountainhead
Special Value Fund for the period ended October 31,
1998 are included in their respective Prospectus.
Part B:
Financial Statements, comprised of the following
items, of Carl Domino Equity Income Fund, AIT Vision
U.S. Equity Portfolio, GLOBALT Growth Fund, The
NewCap Contrarian Fund, IMS Capital Value Fund,
Corbin Small-Cap Value Fund, Florida Street Bond
Fund, Florida Street Growth Fund, Marathon Value
Fund, AAM Equity Fund and Fountainhead Special Value
Fund are incorporated in their respective Statement
of Additional Information by reference to their
respective Annual Report to Shareholders:
Report of Independent Accountants.
Schedule of Investments, October 31, 1998.
Statement of Assets and Liabilities, October 31, 1998.
Statement of Operations for the period ended October 31, 1998.
Statement of changes in Net Assets for the period
ended October 31, 1998. Financial Highlights for the
period ended October 31, 1998.
Notes to Financial Statements.
(b) Exhibits
(1) (i) Copy of Registrant's Declaration of Trust, which was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 11, is hereby
incorporated by reference.
(ii) Copy of Amendment No. 1 to Registrant's Declaration of Trust, which
was filed as an Exhibit to Registrant's Post-Effective Amendment No.
11, is hereby incorporated by reference.
<PAGE>
(iii) Copy of Amendment No. 2 to
Registrant's Declaration of Trust,
which was filed as an Exhibit to
Registrant's Post-Effective
Amendment No. 1, is hereby
incorporated by reference.
(iv) Copy of Amendment No. 3 to
Registrant's Declaration of Trust,
which was filed as an Exhibit to
Registrant's Post-Effective
Amendment No. 4, is hereby
incorporated by reference.
(v) Copy of Amendment No. 4 to
Registrant's Declaration of Trust,
which was filed as an Exhibit to
Registrant's Post-Effective
Amendment No. 4, is hereby
incorporated by reference.
(vi) Copy of Amendment No. 5 and
Amendment No. 6 to Registrant's
Declaration of Trust, which were
filed as an Exhibit to Registrant's
Post-Effective Amendment No. 8, are
hereby incorporated by reference.
(viii) Copy of Amendment No. 7 to Registrant's Declaration of Trust, which
was filed as an Exhibit to Registrant's Post-Effective Amendment No.
11, is hereby incorporated by reference.
(ix) Copy of Amendment No. 8 to
Registrant's Declaration of Trust,
which was filed as an Exhibit to
Registrant's Post-Effective
Amendment No. 12, is hereby
incorporated by reference.
(x) Copy of Amendment No. 9 to
Registrant's Declaration of Trust
which was filed as an Exhibit to
Registrant's Post-Effective
Amendment No. 15, is hereby
incorporated by reference.
(xi) Copy of Amendment No. 10 to
Registrant's Declaration of
Trust,which was filed as an Exhibit
to Registrant's Post-Effective
Amendment No. 16, is hereby
incorporated by reference.
(xii) Copy of Amendment No. 11 to
Registrant's Declaration of Trust,
which was filed as an Exhibit to
Registrant's Post-Effective
Amendment No. 17, is hereby
incorporated by reference.
(2) Copy of Registrant's By-Laws, which was
filed as an Exhibit to Registrant's
Post-Effective Amendment No. 11, 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, which was
filed as an Exhibit to Registrant's
Post-Effective Amendment No. 11, is
hereby incorporated by reference.
(ii) Copy of Registrant's Management
Agreement with Jenswold, King &
Associates, Adviser to Fountainhead
Special Value Fund, which was filed
as an Exhibit to Registrant's
Post-Effective Amendment No. 8, is
hereby incorporated by reference.
<PAGE>
(iii) Copy of Registrant's Management
Agreement with Advanced Investment
Technology, Inc., Adviser to AIT
Vision U.S. Equity Portfolio, which
was filed as an Exhibit to
Registrant's Post-Effective
Amendment No. 11, is hereby
incorporated by reference.
(iv) Copy of Registrant's Management
Agreement with GLOBALT, Inc.,
Adviser to GLOBALT Growth Fund,
which was filed as an Exhibit to
Registrant's Post-Effective
Amendment No. 11, is hereby
incorporated
by reference.
(v) Copy of Registrant's Management
Agreement with Newport Investment
Advisors, Inc., Adviser to the MAXIM
Contrarian Fund, which was filed as
an Exhibit to Registrant's
Post-Effective Amendment No. 2, is
hereby incorporated by reference.
(vi) Copy of Registrant's Management
Agreement with IMS Capital
Management, Inc., Adviser to the IMS
Capital Value Fund, which was filed
as an Exhibit to Registrant's
Post-Effective Amendment No. 2, is
hereby incorporated by reference.
(vii) Copy of Registrant's Management
Agreement with Commonwealth
Advisors, Inc., Adviser to Florida
Street Bond Fund and Florida Street
Growth Fund, which was filed as an
Exhibit to Registrant's
Post-Effective Amendment No. 8, is
hereby incorporated by reference.
(viii) Copy of Registrant's Management
Agreement with Corbin & Company,
Adviser to Corbin Small-Cap Fund,
which was filed as an Exhibit to
Registrant's Post-Effective
Amendment No. 8, is hereby
incorporated by reference.
(ix) Copy of Registrant's proposed
Management Agreement with Vuong
Asset Management Company, LLC,
Adviser to MAI Enhanced Index Fund,
MAI Growth & Income Fund, MAI
Aggressive Growth Fund, MAI
High-Yield Income Fund, MAI Capital
Appreciation Fund and MAI Global
Equity Fund (the "MAI Family of
Funds"), which was filed as an
Exhibit to Registrant's
Post-Effective Amendment No. 12, is
hereby incorporated by reference.
(x) Copy of Registrant's proposed
Management Agreement with CWH
Associates, Inc., Advisor to
Worthington Theme Fund, which was
filed as an Exhibit to Registrant's
Post-Effective Amendment No. 10, is
hereby incorporated by reference.
(xi) Copy of Registrant's Management
Agreement with Burroughs &
Hutchinson, Inc., Advisor to the
Marathon Value Fund, which was filed
as an Exhibit to Registrant's
Post-Effective Amendment No. 15, is
hereby incorporated by reference.
(xii) Copy of Registrant's proposed
Management Agreement with The Jumper
Group, Inc., Adviser to the Jumper
Strategic Reserve Fund, which was
filed as an Exhibit to Registrant's
Post-Effective Amendment No. 13, is
hereby incorporated by reference.
<PAGE>
(xiii) Copy of Registrant's Management
Agreement with Appalachian Asset
Management, Inc., Advisor to the AAM
Equity Fund, which was filed as an
Exhibit to Registrant's
Post-Effective Amendment No. 17, is
hereby incorporated by reference.
(xiv) Copy of Registrant's proposed
Management Agreement with Paul B.
Martin, Jr. d/b/a Martin Capital
Advisors, Advisor to the Austin
Opportunity Fund, which was filed as
an Exhibit to Registrant's
Post-Effective Amendment No. 17, is
hereby incorporated by reference.
(xv) Copy of Registrant's proposed
Management Agreement with Paul B.
Martin, Jr. d/b/a Martin Capital
Advisors, Advisor to the Texas
Opportunity Fund, which was filed as
an Exhibit to Registrant's
Post-Effective Amendment No. 17, is
hereby incorporated by reference.
(xvi) Copy of Registrant's proposed
Management Agreement with Paul B.
Martin, Jr. d/b/a Martin Capital
Advisors, Advisor to the U.S.
Opportunity Fund, which was filed as
an Exhibit to Registrant's
Post-Effective Amendment No. 17, is
hereby incorporated by reference.
(xvii) Copy of Registrant's Proposed
Management Agreement with Gamble,
Jones, Morphy & Bent, Advisor to the
GJMB Growth Fund, which was filed as
an Exhibit to Registrant's
Post-Effective Amendment No.18, is
hereby incorporated by reference.
(xviii) Copy of Registrant's Proposed
Management Agreement with
Cornerstone Investment Management,
Advisor to the Cornerstone MVP Fund
which was filed as an Exhibit to
Registrant's Post-Effective
Amendment No.18, is hereby
incorporated by reference.
(xix) Copy of Registrant's Proposed
Management Agreement with Carl
Domino Associates, L.P., Advisor to
the Carl Domino Growth Fund which
was filed as an Exhibit to
Registrant's Post-Effective
Amendment No.18, is hereby
incorporated by reference.
(xx) Copy of Registrant's Proposed
Management Agreement with Carl
Domino Associates, L.P., Advisor to
the Carl Domino Global Equity Income
Fund which was filed as an Exhibit
to Registrant's Post-Effective
Amendment No.18, is hereby
incorporated by reference.
(xxi) Copy of Registrant's Proposed
Management Agreement with Dobson
Capital Management, Inc,. Advisor to
the Dobson Covered Call Fund, is
filed herewith.
(xxii) Copy of Registrant's Proposed
Management Agreement with Auxier
Investment Management, LLC, Advisor
to the Auxier Equity Fund, is filed
herewith.
(xxiii) Copy of Registrant's Proposed
Management Agreement with
Cornerstone Capital Management,
Inc., Advisor to the Shepherd Values
Market Neutral Fund, is filed
herewith.
<PAGE>
(xxiv) Copy of Registrant's Proposed Management Agreement with
Cornerstone Capital Management, Inc., Advisor to the Shepherd Values
Growth Fund, is filed herewith.
(xxv) Copy of Registrant's Proposed
Management Agreement with Monument
Investments, Inc., Advisor to the
10K Smart Trust, is filed herewith.
(6) (i) Copy of Registrant's Amended and
Restated Underwriting Agreement with
AmeriPrime Financial Securities,
Inc., which was filed as an Exhibit
to Registrant's Post-Effective
Amendment No. 8, is hereby
incorporated by reference.
(ii) Copy of Registrant's proposed
Underwriting Agreement with
AmeriPrime Financial Securities,
Inc. and OMNI Financial Group, LLC,
which was filed as an Exhibit to
Registrant's Post-Effective
Amendment No. 12, is hereby
incorporated by reference.
(7) Bonus, Profit Sharing, Pension or Similar
Contracts for the benefit of Directors or
Officers - None.
(8) (i) Copy of Registrant's Agreement
with the Custodian, Star Bank, N.A.,
which was filed as an Exhibit to
Registrant's Post-Effective
Amendment No. 11, is hereby
incorporated by reference.
(ii) Copy of Registrant's Appendix B to
the Agreement with the Custodian,
Star Bank, N.A., which was filed as
an Exhibit to Registrant's
Post-Effective Amendment No. 8, is
hereby incorporated by reference.
(9) Copy of Registrant's Agreement with the
Administrator, AmeriPrime Financial
Services, Inc., which was filed as an
Exhibit to Registrant's Post-Effective
Amendment No. 11, is hereby incorporated by
reference.
(10) Opinion and Consent of Brown, Cummins &
Brown Co., L.P.A., which was filed as an
Exhibit to Registrant's Post-Effective
Amendment No. 9, is hereby incorporated by
reference.
(11) Consent of Accountant is filed herewith.
(12) Financial Statements Omitted from Item 23 - None.
(13) Copy of Letter of Initial Stockholders,
which was filed as an Exhibit to
Registrant's Post-Effective Amendment No.
11, 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 MAXIM
Contrarian Fund (now the NewCap
Contrarian Fund), which was filed as
an Exhibit to Registrant's
Post-Effective Amendment No. 1, is
hereby incorporated by reference.
<PAGE>
(ii) Form of Registrant's Rule 12b-1
Service Agreement which was filed as
an Exhibit to Registrant's
Post-Effective Amendment No. 1, is
hereby incorporated by reference.
(iii) Copy of Registrant's Rule 12b-1
Distribution Plan for the Austin
Opportunity Fund, which was filed as
an Exhibit to Registrant's
Post-Effective Amendment No. 17, is
hereby incorporated by reference.
(iv) Copy of Registrant's Rule 12b-1
Distribution Plan for the Texas
Opportunity Fund, which was filed as
an Exhibit to Registrant's
Post-Effective Amendment No. 17, is
hereby incorporated by reference.
(v) Copy of Registrant's Rule 12b-1
Distribution Plan for the U.S.
Opportunity Fund, which was filed as
an Exhibit to Registrant's
Post-Effective Amendment No. 17, is
hereby incorporated by reference.
(vi) Copy of Registrant's Proposed Rule
12b-1 Distribution Plan for the 10K
Smart Trust is filed herewith.
(16) Schedules for Computation of Each Performance Quotation, which were filed
as an Exhibit to Registrant's Post-Effective Amendment No. 12, are hereby
incorporated by reference.
(17) Financial Data Schedule - None.
(18 Rule 18f-3 Plan for the Carl Domino Equity Income Fund, which was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 16, is hereby
incorporated by reference.
(19) (i) Power of Attorney for Registrant
and Certificate with respect
thereto, which were filed as an
Exhibit to Registrant's
Post-Effective Amendment No. 5, are
hereby incorporated by reference.
(ii) Powers of Attorney for Trustees and Officers which were filed as an
Exhibit to Registrant's Post-Effective Amendment No. 5, are hereby
incorporated by reference.
(iii) Power of Attorney for the Treasurer
of the Trust, which was filed as an
Exhibit to Registrant's
Post-Effective Amendment No. 8, is
hereby
incorporated by reference.
Item 25. Persons Controlled by or Under Common Control with the Registrant
- -------- -----------------------------------------------------------------
(As of November 18, 1998)
The Carl Domino Associates, L.P., Profit Sharing Trust may be
deemed to control the Carl Domino Equity Income Fund; U.S. Trust
Company of Florida, as Trustee of the Killian Charitable Remainder
Unitrust, may be deemed to control the AIT Vision U.S. Equity
Portfolio; and Cheryl and Kenneth Holeski may be deemed to control The
NewCap Contrarian Fund, as a result of their respective beneficial
ownership of those Funds; _____________ may be deemed to control the
Jumper Strategic Reserve Fund.
Item 26. Number of Holders of Securities (as of November 18, 1998)
- -------- -------------------------------------------------------------
<PAGE>
Title of Class Number of Record Holders
Carl Domino Equity Income Fund (Investor Class) 168
Carl Domino Equity Income Fund (Class A Shares) 0
Carl Domino Growth Fund 0
Carl Domino Global Equity Income Fund 0
Fountainhead Special Value Fund 129
AIT Vision U.S. Equity Portfolio 27
GLOBALT Growth Fund 85
NewCap Contrarian Fund 23
IMS Capital Value Fund 368
Florida Street Bond Fund 17
Florida Street Growth Fund 13
Corbin Small-Cap Value Fund 90
MAI Enhanced Equity Benchmark Fund 0
MAI Enhanced Growth and Income Fund 0
MAI Enhanced Aggressive Growth Fund 0
MAI Enhanced Income Fund 0
MAI Enhanced Capital Appreciation Fund 0
MAI Enhanced Global Fund 0
Worthington Theme Fund 0
Marathon Value Fund 35
Jumper Strategic Reserve Fund 1
AAM Equity Fund 19
Austin Opportunity Fund 0
Texas Opportunity Fund 0
U.S. Opportunity Fund 0
GJMB Growth Fund 0
Cornerstone MVP Fund 0
Dobson Covered Call Fund 0
Auxier Equity Fund 0
Shepherd Values Market Neutral Fund 0
Shepherd Values Growth Fund 0
10K Smart Trust 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
<PAGE>
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 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, 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
<PAGE>
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, the
Carl Domino Growth Fund and the Carl Domino Global
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)
Lawrence Katz, a partner in CDA, is an orthopedic surgeon in private practice.
(b) Saltzman Partners, a partner in CDA,
is a limited partnership that
invests in companies and businesses.
(c) Cango Inversiones, SA, a partner in CDA, is a foreign business entity
that invests in U.S. companies and businesses.
B. King Investment Advisors Inc., 1980 Post Oak
Boulevard, Suite 2400, Houston, Texas 77056-3898 ("
King"), adviser to the Fountainhead Special Value
Fund, is a registered investment adviser.
(1) King 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 King during the
past two years.
(a) John Servis, a director of King, is a
licensed real estate broker.
C. Advanced Investment Technology, Inc., 311 Park Place
Boulevard, Suite 250, Clearwater, Florida 34619
("AIT"), adviser to AIT Vision U.S. Equity Portfolio,
is a registered investment adviser.
(1) AIT 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 AIT during the
past two fiscal years.
(a) Dean S. Barr, director and the CEO
of AIT, has been the managing
director , head of research at State
Street Global Advisors in Boston,
Massachasetts since October 1997.
<PAGE>
(b) Nicholas Lopardo, a director of AIT,
is the Investment Advisor CEO of
State Street Bank and Trust in
Boston, Massachusetts.
(c)
Raymond L. Killian, a director of AIT, is the Chairman of the Board of
Investment Technology Group, Inc., 900 3rd Avenue, New York, New York.
(d) Marc Simmons, a director of AIT, is
a principal of State Street Global
Advisors.
(e) Alan Brown, a director of AIT, is
the CEO of State Street Global
Advisors, 28 King Street, London,
England.
(f) John Snow, a director of AIT, is the
managing director of State Street
Global Advisors.
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 Investment Advisors, Inc., 20600 Chagrin
Boulevard, Suite 1020, Shaker Heights, Ohio 44122
("Newport"), adviser to The MAXIM Contrarian Fund, is
a registered investment adviser.
(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) Kenneth Holeski, president of
Newport, is the vice president of
Newport Evaluation Services, Inc., a
fiduciary consulting business 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.
(b) Donn M. Goodman, vice president of
Newport, is the president of Newport
Evaluation Services, Inc.
<PAGE>
F. IMS Capital Management, Inc., 10159 S.E. Sunnyside
Road, Suite 330, Portland, Oregon 97015, ("IMS"),
Adviser to the IMS Capital Value Fund, is a
registered investment adviser.
(1) IMS 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 IMS during the
past two years - None.
G. CommonWealth Advisors, Inc., 929 Government Street,
Baton Rouge, Louisiana 70802, ("CommonWealth"),
Adviser to the Florida Street Bond Fund and the
Florida Street Growth Fund, is a registered
investment adviser.
(1) CommonWealth 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 CommonWealth
during the past two years.
(a) Walter A. Morales, President/Chief Investment Officer of CommonWealth
was the Director of an insurance/broadcasting corporation, Guaranty Corporation,
929 Government Street, Baton Rouge, Louisiana 70802 from August 1994 to February
1996. From September 1994 through the present, a registered representative of a
Broker/Dealer company, Securities Service Network, 2225 Peters Road, Knoxville,
Tennessee 37923. Beginning August 1995 through the present, an instructor at the
University of Southwestern Louisiana in Lafayette, Louisiana.
H. Corbin & Company, 1320 S. University Drive, Suite
406, Fort Worth, Texas 76107, ("Corbin"), Adviser to
the Corbin Small-Cap Value Fund, is a registered
investment adviser.
(1) Corbin 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 Corbin during the
past two years - None.
I. Vuong Asset Management Company, LLC, 6575 West Loop
South, Suite 110, Houston, Texas 77401, ("VAMCO"),
Adviser to the MAI Family of Funds, is a registered
investment adviser.
(1) VAMCO has engaged in no other business during the past two fiscal
years.
(2) The following list sets forth substantial business activities
of the directors and officers of VAMCO during the past two
years.
(a) Qui Tu Vuong, the Chief Investment Officer and head
of Equity Asset Management of VAMCO, is the Chief
Executive Officer of Vuong & Co., LLC, a holding
company at 6575 West Loop South #110, Bellaire, Texas
77401; and Sales Manager/Equities Regulation
Representative of Omni Financial Group, LLC, a
securities brokerage company at 6575 West Loop South
#110, Bellaire, Texas 77401; and President of
<PAGE>
Oishiicorp, Inc., an investment advising corporation
at 6575 West Loop South #110, Bellaire, Texas 77401;
and Managing General Partner of Sigma Delta Capital
Appreciation Funds, LP, an investment company at 6575
West Loop South #110, Bellaire, Texas 77401; and
President of Premier Capital Management and
Consulting Group, Inc., a financial consulting
corporation at 6575 West Loop South #170, Bellaire,
Texas 77401; and from August, 1992 through February,
1996, he was a registered representative of
Securities America, Inc., a securities brokerage
corporation at 6575 West Loop South #170, Bellaire,
Texas 77401.
(b) Quyen Ngoc Vuong, President, Chairman and Chief
Financial Officer of VAMCO, is the Manager of Vuong &
Company, LLC, and Manager of Omni Financial Group,
LLC.
J. CWH Associates, Inc., 200 Park Avenue, Suite 3900, New York,
New York 10166, ("CWH"), Advisor to the Worthington Theme
Fund, is a registered investment Advisor.
(1) CWH 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
CWH during the past two years.
Andrew M. Abrams, the Chief Operating Officer of CWH,
is a General Partner of Abrams Investment Partners,
L.P., an investment limited partnership at 200 Park
Avenue, Suite 3900, New York, New York 10166.
K. Burroughs & Hutchinson, Inc., 702 West Idaho Street, Suite
810, Boise, Idaho ("B&H"), advisor to Marathon Value Fund, is
a registered investment adviser.
(1) B&H 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
B&H during the past two years
L. The Jumper Group, Inc., 1 Union Square, Suite 505,
Chattanooga, Tennessee 37402, ("Jumper"), Advisor to the
Jumper Strategic Reserve Fund, is a registered investment
advisor.
(1) Jumper has engaged in no other business during the past
two fiscal years.
(2) The following list set forth other substantial
business activities of the directors and officers of
Jumper during the past two years - None.
M. Appalachian Asset Management, Inc., 1018 Kanawha Blvd., East,
Suite 209, Charleston, WV 25301 ("AAM"), advisor to AAM Equity
Fund, is a registered investment advisor.
<PAGE>
(1) AAM 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
AAM during the past two years - None.
N. Paul B. Martin, Jr. d/b/a Martin Capital Advisors, 812 San
Antonio, Suite G14, Austin, TX 78701 ("Martin"), advisor to
Austin Opportunity Fund, Texas Opportunity Fund, and U.S.
Opportunity Fund, is a registered investment advisor.
(1) Martin has engaged in no other business during the past
two fiscal years.
O. Gamble, Jones, Morphy & Bent, Inc., 301 East Colorado
Boulevard, Suite 802, Pasadena, California 91101 ("GJMB"),
Advisor to the GJMB Fund, is a registered investment advisor.
(1) GJMB 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
GJMB during the past two years - None.
P. Cornerstone Investment Management, L.L.C. 132 West Main
Street, Aspen, Colorado 81611 ("Cornerstone"), Advisor to the
Cornerstone MVP Fund, is a registered investment advisor.
(1) Cornerstone 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
Cornerstone during the past two years:
Christopher Shawn Ryan, managing member of Cornerstone, was Vice President-
Portfolio Manager at NationsBank in Dallas, Texas from January 1994 to October
1997.
Q. Dobson Capital Management, Inc., 1422 Van Ness Street., Santa
Ana, CA 92707 ("Dobson"), Advisor to the Dobson Covered Call
Fund, is a registered investment advisor.
(1) Dobson 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 Dobson during the past two years: [to be supplied]
R. Auxier Investment, Inc., LLC, 25628 N.E. Glass Road, Oregon,
OR 97002 ("Auxier"), Advisor to the Auxier Equity Fund, is
registered investment advisor.
(1) Auxier 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 Auxier during the past two years: [to be supplied]
S. Cornerstone Capital Management, Inc., 6760 Corporate Drive,
Suite 230, Colorado Springs, CO 80919 ("CCM"), Adviser to the
Shepherd Value Market Fund and the Shepherd Value Growth Fund,
is a registered investment advisor.
(1) CCM has engaged in no other business during the past two
fiscal years.
<PAGE>
(2) The following list sets forth other substantial business activities of
the directors and officers of CCM during the past two years: [to be supplied]
T. Monument Investments, Inc., 5952 Royal Lane, Suite 270,
Dallas, TX 85230 ("Monument"), Advisor to the 10K Smart Trust,
is a registered investment advisor.
(1) Monument 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
Monument during the past two years:
Gerald R. James, Jr. a director of Monument, has been a Vice President/Bank
Manager at First State Bank of North Texas in Dallas, Texas since February 1998.
From February 1996 to February 1998, Mr. James served as Vice President of
Fidelity Bank in Dallas, Texas.
Robert W. Manry, a director of Monument, has been an
Account Executive at Global Dallas (a trucking
company) in Irving, Texas since 1987.
Item 29. Principal Underwriters
A. AmeriPrime Financial Securities, Inc., is the
Registrant's principal 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.
B. Omni Financial Group, LLC ("OMNI") acts as
co-distributor, along with AmeriPrime Financial
Securities, Inc., of the MAI Family of Funds. Qui T.
Vuong, Quyen N. Vuong and Diep N. Vuong, each of
whose principal business address is 6575 West Loop
South, Suite 125, Bellaire, Texas 77401, are the
managers of OMNI, and they hold no offices or
position with the Registrant.
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 agents, American Data
Services, Inc., Hauppauge Corporate Center, 150 Motor Parkway,
Hauppauge, New York 11760 and Unified Fund Services, Inc., 431
Pennsylvania Street, Indianapolis, IN 46204.
Item 31. Management Services Not Discussed in Parts A or B
None.
Item 32. Undertakings
(a) Not Applicable.
<PAGE>
(b) The Registrant hereby undertakes to furnish each
person to whom a prospectus is delivered with a copy
of the Registrant's latest applicable annual report
to shareholders, upon request and without charge.
<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 30th day of
November, 1998.
AmeriPrime Funds
By:
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:
Donald S. Mendelsohn,
Julie A. Feleo, Treasurer Attorney-in-Fact
Steve L. Cobb, Trustee November 30, 1998
Gary E. Hippenstiel, Trustee
EXHIBIT INDEX
EXHIBIT
1. Proposed Management Agreement for the Dobson Covered Call Fund .............
EX-99.B5.1
2. Proposed Management Agreement for the Auxier Equity Fund...................
EX-99.B5.2
3. Proposed Management Agreement for the Shepherd Values Market Neutral Fund...
EX-99.B5.3
4. Proposed Management Agreement for the Shepherd Values Growth Fund...........
EX-99.B5.4
5. Proposed Management Agreement for the 10K Smart Trust.......................
EX-99.B5.5
6. Consent of Public Accountant................................................
EX-99.B11
7. Proposed 12b-1 Plan for the 10K Smart Trust.................................
EX-99.B15
MANAGEMENT AGREEMENT
TO: Dobson Capital Management, Inc.
1422 S. Van Ness Street
Santa Ana, California 92707
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 Dobson Covered Call 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 effective 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 operating expenses 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
<PAGE>
preparing prospectuses and statements of additional information for delivery to
the Fund's current and prospective shareholders; the cost of printing or
preparing stock certificates or any other documents, statements or reports to
shareholders; expenses of shareholders' meetings and proxy solicitations;
advertising, promotion and other expenses incurred directly or indirectly in
connection with the sale or distribution of the Fund's shares excluding expenses
which the Fund is authorized to pay pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "1940 Act"); and all other 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. The Fund will also pay expenses which it is
authorized to pay pursuant to Rule 12b-1 under the 1940 Act. 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.
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 1.50% 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.
<PAGE>
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 to the Fund and/or the other accounts
over which you exercise investment discretion. You are authorized to pay a
broker or 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 (the "1940 Act"), 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 1940 Act or
the rules thereunder, neither you nor your shareholders, members, 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,
member, shareholder 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, member,
<PAGE>
shareholder or agent of you, or one under your control or direction, even though
paid by you.
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall take effect on the date of its execution,
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 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 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
"Dobson" or any variation thereof belong 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 "Dobson" 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 "Dobson" 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 this
name.
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
interpretations of the 1940 Act by the Securities and Exchange Commission or its
staff) by vote of the holders of a majority of the outstanding voting securities
of the series to which the amendment relates.
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,
<PAGE>
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) For the purpose of this Agreement, the terms "majority of
the outstanding voting securities," "control" and "interested person" shall have
their respective meanings as defined in the 1940 Act and rules and regulations
thereunder, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under the 1940 Act; and the term "brokerage
and research services" shall have the meaning given in the Securities Exchange
Act of 1934.
(c) 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 1940 Act shall be resolved by reference to such term or
provision of the 1940 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 the Securities and Exchange Commission or its staff. In addition, where the
effect of a requirement of the 1940 Act, reflected in any provision of this
Agreement, is revised by rule, regulation, order or interpretation of the
Securities and Exchange Commission or its staff, such provision shall be deemed
to incorporate the effect of such rule, regulation, order or interpretation.
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 1422 S. Van Ness Street, Santa Ana, California 92707.
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.
<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,
ATTEST:
AmeriPrime Funds
By: By:
Name/Title: Kenneth D. Trumpfheller, President
Dated: ___________, 1998
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST:
Dobson Capital Management, Inc.
By: By:
Name/Title: Name/Title:
Dated: ___________, 1998
MANAGEMENT AGREEMENT
TO: Auxier Investment Management, LLP
25628 N.E. Glass Road
Oregon, OR 97002
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 Auxier Equity 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 effective 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 operating expenses 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
<PAGE>
preparing prospectuses and statements of additional information for delivery to
the Fund's current and prospective shareholders; the cost of printing or
preparing stock certificates or any other documents, statements or reports to
shareholders; expenses of shareholders' meetings and proxy solicitations;
advertising, promotion and other expenses incurred directly or indirectly in
connection with the sale or distribution of the Fund's shares excluding expenses
which the Fund is authroized to pay pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "1940 Act"); and all other 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. The Fund will also pay expenses which it is
authroized to pay pursuant to Rule 12b-1 under the 1940 Act. 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.
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 1.20% 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.
<PAGE>
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 to the Fund and/or the other accounts
over which you exercise investment discretion. You are authorized to pay a
broker or 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 (the "1940 Act"), 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 1940 Act or
the rules thereunder, neither you nor your shareholders, members, 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,
member, shareholder 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, member,
<PAGE>
shareholder or agent of you, or one under your control or direction, even though
paid by you.
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall take effect on the date of its execution,
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 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 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
"Auxier" or any variation thereof belong 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 "Auxier" 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 "Auxier" 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 this
name.
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
interpretations of the 1940 Act by the Securities and Exchange Commission or its
staff) by vote of the holders of a majority of the outstanding voting securities
of the series to which the amendment relates.
<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) For the purpose of this Agreement, the terms "majority of
the outstanding voting securities," "control" and "interested person" shall have
their respective meanings as defined in the 1940 Act and rules and regulations
thereunder, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under the 1940 Act; and the term "brokerage
and research services" shall have the meaning given in the Securities Exchange
Act of 1934.
(c) 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 1940 Act shall be resolved by reference to such term or
provision of the 1940 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 the Securities and Exchange Commission or its staff. In addition, where the
effect of a requirement of the 1940 Act, reflected in any provision of this
Agreement, is revised by rule, regulation, order or interpretation of the
Securities and Exchange Commission or its staff, such provision shall be deemed
to incorporate the effect of such rule, regulation, order or interpretation.
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 25628 N.E. Glass Road, Oregon, OR 97002.
<PAGE>
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.
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,
ATTEST:
AmeriPrime Funds
By: By:
Name/Title: Kenneth D. Trumpfheller, President
Dated: ___________, 1998
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST:
Auxier Investment Management, LLP
By: By:
Name/Title: Name/Title:
Dated: ___________, 1998
MANAGEMENT AGREEMENT
TO: Cornerstone Capital Management, Inc.
6760 Corporate Drive
Suite 230
Colorado Springs, CO 80919
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 "Shepherd Values Market Neutral 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 effective 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 operating expenses 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
<PAGE>
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 and prospective shareholders; the cost of
printing or preparing stock certificates or any other documents, statements or
reports to shareholders; expenses of shareholders' meetings and proxy
solicitations; advertising, promotion and other expenses incurred directly or
indirectly in connection with the sale or distribution of the Fund's shares
excluding expenses which the Fund is authorized to pay pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended (the "1940 Act"); and all
other 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. The Fund will also pay expenses which it is
authorized to pay pursuant to Rule 12b-1 under the 1940 Act. 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.
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 2.25% 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.
<PAGE>
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 to the Fund and/or the other accounts
over which you exercise investment discretion. You are authorized to pay a
broker or 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 (the "1940 Act"), 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 1940 Act or
the rules thereunder, neither you nor your shareholders, members, 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,
member, shareholder 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, member,
<PAGE>
shareholder or agent of you, or one under your control or direction, even though
paid by you.
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall take effect on the date of its execution,
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 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 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
"Shepherd Values" or any variation thereof belong 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 "Shepherd Values" 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 "Shepherd Values" 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 this name.
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
interpretations of the 1940 Act by the Securities and Exchange Commission or its
staff) by vote of the holders of a majority of the outstanding voting securities
of the series to which the amendment relates.
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
The term "AmeriPrime Funds" means and refers to the Trustees from time to
time
<PAGE>
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) For the purpose of this Agreement, the terms "majority of
the outstanding voting securities," "control" and "interested person" shall have
their respective meanings as defined in the 1940 Act and rules and regulations
thereunder, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under the 1940 Act; and the term "brokerage
and research services" shall have the meaning given in the Securities Exchange
Act of 1934.
(c) 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 1940 Act shall be resolved by reference to such term or
provision of the 1940 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 the Securities and Exchange Commission or its staff. In addition, where the
effect of a requirement of the 1940 Act, reflected in any provision of this
Agreement, is revised by rule, regulation, order or interpretation of the
Securities and Exchange Commission or its staff, such provision shall be deemed
to incorporate the effect of such rule, regulation, order or interpretation.
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 6760 Corporate Drive, Suite 230, Colorado Springs, CO
80919.
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.
<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,
ATTEST:
AmeriPrime Funds
By: By:
Name/Title: Name/Title:
Dated: ___________, 1998
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST:
Cornerstone Capital Management, Inc.
By: By:
Name/Title: Name/Title:
Dated: ___________, 1998
MANAGEMENT AGREEMENT
TO: Cornerstone Capital Management, Inc.
6760 Corporate Drive
Suite 230
Colorado Springs, CO 80919
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 "Shepherd Values Growth 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 effective 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 operating expenses 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
<PAGE>
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 and prospective shareholders; the cost of
printing or preparing stock certificates or any other documents, statements or
reports to shareholders; expenses of shareholders' meetings and proxy
solicitations; advertising, promotion and other expenses incurred directly or
indirectly in connection with the sale or distribution of the Fund's shares
excluding expenses which the Fund is authorized to pay pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended (the "1940 Act"); and all
other 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. The Fund will also pay expenses which it is
authorized to pay pursuant to Rule 12b-1 under the 1940 Act. 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.
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 1.75% 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.
<PAGE>
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 to the Fund and/or the other accounts
over which you exercise investment discretion. You are authorized to pay a
broker or 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 (the "1940 Act"), 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 1940 Act or
the rules thereunder, neither you nor your shareholders, members, 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,
member, shareholder 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, member,
<PAGE>
shareholder or agent of you, or one under your control or direction, even though
paid by you.
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall take effect on the date of its execution,
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 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 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
"Shepherd Values" or any variation thereof belong 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 "Shepherd Values" 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 "Shepherd Values" 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 this name.
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
interpretations of the 1940 Act by the Securities and Exchange Commission or its
staff) by vote of the holders of a majority of the outstanding voting securities
of the series to which the amendment relates.
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
The term "AmeriPrime Funds" means and refers to the Trustees from time to
time
<PAGE>
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) For the purpose of this Agreement, the terms "majority of
the outstanding voting securities," "control" and "interested person" shall have
their respective meanings as defined in the 1940 Act and rules and regulations
thereunder, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under the 1940 Act; and the term "brokerage
and research services" shall have the meaning given in the Securities Exchange
Act of 1934.
(c) 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 1940 Act shall be resolved by reference to such term or
provision of the 1940 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 the Securities and Exchange Commission or its staff. In addition, where the
effect of a requirement of the 1940 Act, reflected in any provision of this
Agreement, is revised by rule, regulation, order or interpretation of the
Securities and Exchange Commission or its staff, such provision shall be deemed
to incorporate the effect of such rule, regulation, order or interpretation.
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 6760 Corporate Drive, Suite 230, Colorado, CO 80919.
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.
<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,
ATTEST:
AmeriPrime Funds
By: By:
Name/Title: Kenneth D. Trumpfheller, President
Dated: ___________, 1998
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST:
Cornerstone Capital Management, Inc.
By: By:
Name/Title: Name/Title:
Dated: ___________, 1998
MANAGEMENT AGREEMENT
TO: Monument Investments, Inc.
5952 Royal Lane, Suite 270
Dallas, TX 85230
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 10K Smart Trust (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 effective 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 operating expenses 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
<PAGE>
preparing prospectuses and statements of additional information for delivery to
the Fund's current and prospective shareholders; the cost of printing or
preparing stock certificates or any other documents, statements or reports to
shareholders; expenses of shareholders' meetings and proxy solicitations;
advertising, promotion and other expenses incurred directly or indirectly in
connection with the sale or distribution of the Fund's shares excluding expenses
which the Fund is authorized to pay pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "1940 Act"); and all other 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, expenses
incurred pursuant to the Fund's 12b-1 Distribution Plan 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. The Fund will also pay expenses which it is authroized to pay
pursuant to Rule 12b-1 under the 1940 Act. 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.
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 1.25% 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.
<PAGE>
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 to the Fund and/or the other accounts
over which you exercise investment discretion. You are authorized to pay a
broker or 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 1940 Act, 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 1940 Act or
the rules thereunder, neither you nor your shareholders, members, 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,
member, shareholder 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,
<PAGE>
employee, member, shareholder or agent of you, or one under your control or
direction, even though paid by you.
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall take effect on the date of its execution,
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 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 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 "10K
Smart Trust" or any variation thereof belong 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 "10K Smart Trust" 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 "10K Smart Trust" 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 this name.
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
interpretations of the 1940 Act by the Securities and Exchange Commission or its
staff) by vote of the holders of a majority of the outstanding voting securities
of the series to which the amendment relates.
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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) For the purpose of this Agreement, the terms "majority of
the outstanding voting securities," "control" and "interested person" shall have
their respective meanings as defined in the 1940 Act and rules and regulations
thereunder, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under the 1940 Act; and the term "brokerage
and research services" shall have the meaning given in the Securities Exchange
Act of 1934.
(c) 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 1940 Act shall be resolved by reference to such term or
provision of the 1940 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 the Securities and Exchange Commission or its staff. In addition, where the
effect of a requirement of the 1940 Act, reflected in any provision of this
Agreement, is revised by rule, regulation, order or interpretation of the
Securities and Exchange Commission or its staff, such provision shall be deemed
to incorporate the effect of such rule, regulation, order or interpretation.
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 5952 Royal Lane, Suite 270, Dallas, Texas 85230.
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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.
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,
ATTEST:
AmeriPrime Funds
By: By:
Name/Title: Name/Title:
Dated: ___________, 1998
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST:
Monument Investments, Inc.
By: By:
Name/Title: Name/Title:
Dated: ___________, 1998
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the use in this Post-Effective Amendment No. 19 to the AmeriPrime
Funds' Registration Statement on Form N-1A to the references made to us under
the captions "Financial Highlights" and "Auditors" included in each Prospectus
and under the caption "Accountants" included in each Statement of Additional
Information. With respect to those series registered pursuant to Post-Effective
Amendments Nos. 17 and 18, we consent, upon their respective effective dates, to
the use of our name under the caption "Auditors" included in each Prospectus and
under the caption "Accountants" included in each Statement of Additional
Information.
/s/
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
November 30, 1998
THE 10K SMART FUND
DISTRIBUTION PLAN
WHEREAS, The AmeriPrime Funds, an Ohio business trust (the "Trust"),
engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares
of beneficial interest without par value (the "Shares"), which may be divided
into one or more series of Shares ("Series"); and
WHEREAS, the Trust currently offers several Series, one of which is the
10K Smart Trust (the "Fund"); and
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are
not interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Qualified Trustees"), having determined, in the
exercise of reasonable business judgment and in light of their fiduciary duties
under state law and under Section 36(a) and (b) of the 1940 Act, that there is a
reasonable likelihood that this Plan will benefit the Fund and its shareholders,
have approved this Plan by votes cast in person at a meeting called for the
purpose of voting hereon and on any agreements related hereto;
NOW THEREFORE, the Trust hereby adopts this Plan for the Fund, subject
to shareholder approval, in accordance with Rule 12b-1 under the 1940 Act, on
the following terms and conditions:
1. Distribution Activities. Subject to the supervision of the Trustees of
the Trust, ------------------------ the Trust may, directly or indirectly,
engage in any activities related to the distribution of Shares of the Fund,
which activities may include, but are not limited to, the following: (a)
payments, including incentive compensation, to securities dealers or other
financial intermediaries, financial institutions, investment advisors and others
that are engaged in the sale of Shares, or that may be advising shareholders of
the Trust regarding the purchase, sale or retention of Shares; (b) payments,
including incentive compensation, to securities dealers or other financial
intermediaries, financial institutions, investment advisors and others that hold
Shares for shareholders in omnibus accounts or as shareholders of record or
provide shareholder support or administrative services to the Fund and its
shareholders; (c) expenses of maintaining personnel (including personnel of
organizations with which the Trust has entered into agreements related to this
Plan) who engage in or support distribution of Shares or who render shareholder
support services, including, but not limited to, allocated overhead, office
space and equipment, telephone facilities and expenses, answering routine
inquiries regarding the Trust, processing shareholder transactions, and
providing such other shareholder services as the Trust may reasonably request;
(d) costs of preparing,
<PAGE>
printing and distributing prospectuses and statements of
additional information and reports of the Fund for recipients
other than existing shareholders of the Fund; (e) costs of
formulating and implementing marketing and promotional
activities, including, but not limited to, sales seminars,
direct mail promotions and television, radio, newspaper,
magazine and other mass media advertising; (f) costs of
preparing, printing and distributing sales literature; (g)
costs of obtaining such information, analyses and reports with
respect to marketing and promotional activities as the Trust
may, from time to time, deem advisable; and (h) costs of
implementing and operating this Plan. The Trust is authorized
to engage in the activities listed above, and in any other
activities related to the distribution of Shares, either
directly or through other persons with which the Trust has
entered into agreements related to this Plan.
2. Maximum Expenditures. The expenditures to be made by the Trust
pursuant to this Plan and the basis upon which payment of such
expenditures will be made shall be determined by the Trustees
of the Trust, but in no event may such expenditures exceed in
any fiscal year an amount calculated at the rate of 1.00% of
the average daily net asset value of the Fund. Such payments
for distribution activities may be made directly by the Trust
or the Trust's investment adviser may pay such expenses and
obtain reimbursement from the Trust.
3. Term and Termination. (a) This Plan shall become effective
upon the commencement of the operations of the Fund.
(b) Unless terminated as herein provided, this Plan shall
continue in effect for one year from the effective date and
shall continue in effect for successive periods of one year
thereafter, but only so long as each such continuance is
specifically approved by votes of a majority of both (i) the
Trustees of the Trust and (ii) the Qualified Trustees, cast in
person at a meeting called for the purpose of voting on such
approval. (c) This Plan may be terminated at any time by the
vote of a majority of the Qualified Trustees or by vote of a
majority of the outstanding voting securities (as defined in
the 1940 Act) of the Fund. If this Plan is terminated, the
Fund will not be required to make any payments for expenses
incurred after the date of termination.
4. Amendments. All material amendments to this Plan must be
approved in the manner provided for annual renewal of this
Plan in Section 3(b) hereof. In addition, this Plan may not be
amended to increase the amount of expenditures provided for in
Section 2 hereof unless such amendment is approved by a vote
of the majority of the outstanding voting securities of the
Fund (as defined in the 1940 Act).
5. Selection and Nomination of Trustees. While this Plan is in
effect, the selection and nomination of Trustees who are not
interested persons (as defined in the 1940 Act) of the Trust
shall be committed to the discretion of the Trustees who are
not
<PAGE>
interested persons of the Trust.
6. Quarterly Reports. The Treasurer of the Trust shall provide to
the Trustees and the Trustees shall review, at least
quarterly, a written report of the amounts expended pursuant
to this Plan and any related agreement and the purposes for
which such expenditures were made.
7. Recordkeeping. The Trust shall preserve copies of this Plan
and any related agreement and all reports made pursuant
Section 6 hereof, for a period of not less than six years from
the date of this Plan, the agreements or such reports, as the
case may be, the first two years in an easily accessible
place.
8. Limitation of Liability. A copy of the Agreement and
Declaration of Trust of the Trust, as amended, is on file with
the Secretary of the 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
obligations of this instrument are not binding upon the
Trustees, the shareholders of the Trust individually or the
assets or property of any other series of the Trust, but are
binding only upon the assets and property of the Fund.
<PAGE>