SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
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Pre-Effective Amendment No. / /
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Post-Effective Amendment No. 28 /X/
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 29 /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 February 13, 1999 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.
FOUNTAINHEAD
KALEIDOSCOPE FUND
PROSPECTUS
OCTOBER __, 1999
INVESTMENT OBJECTIVE:
Long-term capital growth
c/o Unified Fund Services, Inc.
431 N. Pennsylvania Street
Indianapolis, Indiana 46204
(800) 868-9535
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
PAGE
ABOUT THE FUND
COSTS OF INVESTING IN THE FUND
HOW TO BUY SHARES
HOW TO REDEEM SHARES
DETERMINATION OF NET ASSET VALUE
DIVIDENDS, DISTRIBUTIONS AND TAXES
MANAGEMENT OF THE FUND
OTHER INFORMATION ABOUT INVESTMENTS
YEAR 2000 ISSUE
<PAGE>
ABOUT THE FUND
INVESTMENT OBJECTIVE
The investment objective of the Fountainhead Kaleidoscope Fund is
long-term capital growth.
PRINCIPAL STRATEGIES
The Fund invests primarily in common stocks of small capitalization
companies (those with a market capitalization between $50 million and $1.8
billion). The Fund's investment advisor, King Investment Advisors, Inc., selects
stocks that it believes are selling at attractive prices relative to their
intrinsic value.
The advisor is a bottom-up value manager selecting securities based 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:
o 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),
o its five-year projected earnings growth rate (unlike many typical value
managers who buy only low P/E or price/book stocks), or
o 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 and sectors, certain industries are likely to be
overweighted compared to others because the advisor seeks the best investment
values regardless of industry.
PRINCIPAL RISKS OF INVESTING IN THE FUND
o SMALL COMPANY RISK. The risks associated with investing in smaller
companies include:
o The earnings and prospects of smaller companies are more volatile than
larger companies.
o Smaller companies may experience higher failure rates than do larger
companies.
o The trading volume of securities of smaller companies is normally less than
that of larger companies and, therefore, may disproportionately affect
their market price, tending to make them fall more in response to selling
pressure than is the case with larger companies
o Smaller companies may have limited markets, product lines or financial
resources and may lack management depth.
o COMPANY RISK. The value of the Fund may decrease in response to the
activities and financial prospects of an individual company in the Fund's
portfolio. The value of an individual company can be more volatile than the
market as a whole.
o MARKET RISK. Overall stock market risks may also affect the value of the
Fund. Factors such as domestic economic growth and market conditions,
interest rate levels, and political events affect the securities markets.
o CONCENTRATION RISK. If the Fund's portfolio is overweighted in a certain
industry, any negative development affecting that industry will have a
greater impact on the Fund than a fund that is not overweighted in that
industry.
o The Fund is not a complete investment program. As with any mutual fund
investment, the Fund's returns will vary and you could lose money.
IS THE FUND RIGHT FOR YOU?
The Fund may be suitable for:
o Long-term investors seeking a fund with a value investment strategy
o Investors willing to accept price fluctuations in their investment
o Investors who can tolerate the risks associated with common stock investments
o Investors willing to accept the greater market price fluctuations of smaller
companies
COSTS OF INVESTING IN THE FUND
The tables describe the fees and expenses that you may pay if you buy and hold
shares of the Fund.
SHAREHOLDER FEES (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases .........................NONE
Maximum Deferred Sales Charge (Load)......................................NONE
Redemption Fee (as a percentage of amount redeemed, if applicable)........1.00%
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
Management Fees...........................................................1.75%
Distribution (12b-1) Fees.................................................NONE
Other Expenses............................................................0.00%
Total Annual Fund Operating Expenses......................................1.75%
Fee Waiver1...............................................................0.50%
Total Annual Fund Operating Expenses......................................1.25%
1 The Adviser has contractually agreed to waive fees by the amount shown
through __________, 2000. The Adviser may not unilaterally change the contract
until _______, 2000.
Expense Example:
The example below is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example uses
the same assumptions as other mutual fund prospectuses: a $10,000 initial
investment for the time periods indicated, reinvestment of dividends and
distributions, 5% annual total return, constant operating expenses, and sale of
all shares at the end of each time period. Although your actual expenses may be
different, based on these assumptions your costs will be:
1 YEAR 3 YEARS
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You would pay the following expenses if you did not sell the your
shares:
1 YEAR 3 YEARS
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<PAGE>
HOW TO BUY SHARES
The minimum initial investment in the Fund is $5,000 ($2,000 for IRAs)
and minimum subsequent investments are $1,000. There is no minimum for separate
employee accounts of corporate retirement plans. If your investment is
aggregated into an omnibus account established by an investment advisor, broker
or other intermediary, the account minimums apply to the omnibus account, not to
your individual investment. If you purchase or redeem shares through a
broker/dealer or another intermediary, you may be charged a fee by that
intermediary.
INITIAL PURCHASE
BY MAIL- You may make a direct initial investment by following these
steps: o complete and sign the investment application form which accompanies
this Prospectus; o write a check (subject to the minimum amounts) made payable
to the Fund; o mail the application and check to:
U.S. Mail: Overnight:
Fountainhead Kaleidoscope Fountainhead Kaleidoscope
Fund Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 North Pennsylvania Street
Indianapolis, Indiana 46206-6110 Indianapolis, Indiana 46204
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. To wire money,
you must call Unified Fund Services, Inc. the Fund's 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,
provide your bank with the following information for purposes of wiring your
investment:
Firstar Bank, N.A.
ABA #0420-0001-3
Attn: Fountainhead Kaleidoscope Fund
Account Name _________________(write in shareholder name) For the
Account # ______________(write in account number) D.D.A.# [483885570]
You must mail a signed application to Firstar Bank, N.A, the Fund's
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 Fund
may charge shareholders for this service in the future.
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) -a check made payable to Fountainhead Kaleidoscope Fund
Checks should be sent to the Fountainhead Kaleidoscope Fund at 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, 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 Fund's transfer agent for the procedure to open an IRA or SEP
plan, as well as more specific information regarding these retirement plan
options. Please consult with an attorney or tax advisor regarding these plans.
You must pay custodial fees for your IRA by redemption of sufficient shares of
the Fund from the IRA unless you pay the fees directly to the IRA custodian.
Call the Fund's transfer agent about the IRA custodial fees.
OTHER PURCHASE INFORMATION
The Fund may limit the amount of purchases and to refuse to sell to any
person. 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
You 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
may charge for this service in the future. Any charges for wire redemptions will
be deducted from your Fund account by redemption of shares. If you redeem your
shares through a broker/dealer or other institution, you 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 Kaleidoscope Fountainhead Kaleidoscope
Fund 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 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. The Fund may 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 the Fund
or the Fund's transfer agent, 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 Fund's 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 Fund or the transfer agent may terminate the telephone redemption
and exchange procedures at any time. 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.
EARLY REDEMPTION FEE - The Fund charges a redemption fee of 1% of the
current net asset value of shares redeemed if the shares are owned less than 180
days. The fee is charged for the benefit of remaining shareholders to defray
Fund portfolio transaction expenses and facilitate portfolio management. This
fee applies to shares being redeemed in the order in which they are purchased.
The Fund reserves the right to modify the terms of or terminate the fee at any
time.
The fee is waived for shares purchased:
(a) for an account registered as either an Individual Retirement Account or a
tax-qualified retirement plan on the books of the Fund's transfer agent, or
on the books of certain other third parties that are authorized agents of
the Fund; and
(b) shares purchased with reinvested capital gain or dividend distributions.
If you purchase shares through a broker-dealer or other financial
intermediary who maintains your individual account on its books and an omnibus
account with the Fund's transfer agent, your recordkeeper may not be able to
apply the fee waiver in all of the circumstances discussed above. Before
purchasing shares, please check with the Fund to determine if the fee waiver is
available.
ADDITIONAL INFORMATION - If you are not certain of the requirements for
a redemption please call the Fund's 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
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 the right may require you to redeem all of your shares in the
Fund on 30 days' written notice if the value of your 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. You may increase the value of your shares in the Fund to the
minimum amount within the 30-day period. Your shares are 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.
DETERMINATION OF NET ASSET VALUE
The price you pay for your shares is based on the Fund's net asset
value per share (NAV). The NAV is calculated at the close of trading (normally
4:00 p.m. Eastern time) on each day the New York Stock Exchange is open for
business (the Stock Exchange is closed on weekends, Federal holidays and Good
Friday). The NAV is calculated by dividing the value of the Fund's total assets
(including interest and dividends accrued but not yet received) minus
liabilities (including accrued expenses) by the total number of shares
outstanding.
The Fund's assets are generally valued at their market value. If market
prices are not available, or if an event occurs after the close of the trading
market that materially affects the values, assets may be valued at their fair
value.
Requests to purchase and sell shares are processed at the NAV next
calculated after we receive your order in proper form.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS. The Fund typically distributes
substantially all of its net investment income in the form of dividends and
taxable capital gains to its shareholders on an annual basis. These
distributions are automatically reinvested in the Fund unless you request cash
distributions on your application or through a written request. The Fund expects
that its distributions will consist primarily of [long-term capital gains].
TAXES. In general, selling shares of the Fund and receiving
distributions (whether reinvested or taken in cash) are taxable events.
Depending on the purchase price and the sale price, you may have a gain or a
loss on any shares sold. Any tax liabilities generated by your transactions or
by receiving distributions are your responsibility. Because distributions of
long-term capital gains are subject to capital gains taxes, regardless of how
long you have owned your shares, you may want to avoid making a substantial
investment when a Fund is about to make a long-term capital gains distribution.
Early each year, the Fund will mail to you a statement setting forth
the federal income tax information for all distributions made during the
previous year. If you do not provide your taxpayer identification number, your
account will be subject to backup withholding.
The tax considerations described in this section do not apply to
tax-deferred accounts or other non-taxable entities. Because each investor's tax
circumstances are unique, please consult with your tax advisor about your
investment.
MANAGEMENT OF THE FUND
King Investment Advisors, Inc., 1980 Post Oak Boulevard, Suite 2400,
Houston, Texas 77056-3898, serves as investment advisor to the Fund. The advisor
provides value-oriented equity and balanced management for both taxable and
tax-exempt clients, and currently manages approximately $750 million in assets.
Roger E. King is the majority shareholder of the advisor and has served as its
president since 1986 and as chairman since 1993. Mr. King co-founded the firm in
1981 and has been primarily responsible for the day-to-day management of the
Fund's portfolio since its inception.
The Fund is authorized to pay the advisor a fee equal to an annual
average rate of ____% of its average daily net assets.
OTHER INFORMATION ABOUT INVESTMENTS
The investment objective of the Fund may be changed without shareholder
approval. 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 generally be 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.
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.
TEMPORARY INVESTMENTS
From time to time, the Fund may take temporary defensive positions that
are inconsistent with the Fund's principal investment strategies in attempting
to respond to adverse market, economic, political, or other conditions. For
example, the Fund may hold all or a portion of its assets in money market
instruments, securities of other no-load mutual funds or repurchase agreements.
If the Fund invests in shares of another mutual fund, the shareholders of the
Fund generally will be subject to duplicative management fees. As a result of
engaging in these temporary measures, the Fund may not achieve its investment
objective. The Fund may also invest in such instruments at any time to maintain
liquidity or pending selection of investments in accordance with its policies.
YEAR 2000 ISSUE
Like other mutual funds, financial and business organizations and
individuals around the world, the Fund could be adversely affected if the
computer systems used by the Fund's advisor or the Fund's various service
providers do not properly process and calculate date-related information and
data from and after January 1, 2000. This is commonly known as the "Year 2000
Issue."
The Fund's advisor has taken steps that it believes are reasonably
designed to address the Year 2000 Issue with respect to computer systems that
are used and to obtain reasonable assurances that comparable steps are being
taken by the Funds' major service providers. At this time, however, there can be
no assurance that these steps will be sufficient to avoid any adverse impact on
the Fund. In addition, the Fund's advisor cannot make any assurances that the
Year 2000 Issue will not affect the companies in which the Fund invests or
worldwide markets and economies.
<PAGE>
[BACK COVER PAGE]
Several additional sources of information are available to you. The
Statement of Additional Information (SAI), incorporated into this prospectus by
reference, contains detailed information on Fund policies and operations.
Shareholder reports contain management's discussion of market conditions,
investment strategies and performance results as of the Fund's latest
semi-annual or annual fiscal year end.
Call the Funds at 800-868-9535 to request free copies of the SAI and
the Fund's annual and semi-annual reports, to request other information about
the Fund and to make shareholder inquiries.
You may also obtain information about the Fund (including the SAI and
other reports) from the Securities and Exchange Commission on their Internet
site at http://www.sec.gov or at their Public Reference Room in Washington, D.C.
Call the SEC at 800-SEC-0330 for room hours and operation. You may also obtain
fund information by sending a written request and duplicating fee to the Public
Reference Section of the SEC, Washington, D.C. 20549-6609.
Investment Company Act #811-9096
FOUNTAINHEAD KALEIDOSCOPE FUND
STATEMENT OF ADDITIONAL INFORMATION
October __, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of Fountainhead Kaleidoscope Fund
dated October __, 1999. A free copy of the Prospectus can be obtained by writing
the Transfer Agent at 431 North Pennsylvania Street, Indianapolis, Indiana
46204, or by calling 1-800-868-9535
TABLE OF CONTENTS PAGE
DESCRIPTION OF THE TRUST AND THE FUND..........................................1
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...................................................................
<PAGE>
DESCRIPTION OF THE TRUST AND THE FUND
Fountainhead Kaleidoscope Fund (the "Fund") was organized as a
diversified series of AmeriPrime Funds (the "Trust") on ____________, 1999. 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 investment advisor
to the Fund is King Investment Advisors, Inc.
(the "Advisor").
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.
Prior to the public offering of the Fund, Kenneth D. Trumpfheller, 1793
Kingswood Drive, Suite 200, Southlake, Texas 76092, purchased all of the
outstanding shares of the Fund and may be deemed to control the Fund. After the
public offering commences, it is anticipated that Mr. Trumpfheller will no
longer control the Fund. As the controlling shareholder, Mr. Trumpfheller would
control the outcome of any proposal submitted to the shareholders for approval,
including changes to the Fund's fundamental policies or the terms of the
management agreement with the Fund's advisor.
For information concerning the purchase and redemption of shares of the
Fund, see "How to Buy Shares" 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 "Determination of Net Asset Value" in the
Funds' Prospectus.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a more detailed discussion of some of the
investments the Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objectives and Strategies" and
"Investment Policies and Techniques and Risk Considerations").
A. Equity Securities. Equity securities include common stock, preferred
stock and common stock equivalents (such as convertible preferred stock, rights
and warrants). Convertible preferred stock is preferred stock that can be
converted into common stock pursuant to its terms. Warrants are options to
purchase equity securities at a specified price valid for a specific time
period. Rights are similar to warrants, but normally have a short duration and
are distributed by the issuer to its shareholders. The Fund may invest up to 5%
of its net assets at the time of purchase in rights or warrants.
B. 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 are long-term 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 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 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.
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.
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.
D. 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. The Fund will not invest more
than 5% of its net assets in reverse repurchase agreements.
E. 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 15% of
its net assets in illiquid securities.
F. 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.
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.
G. Foreign Securities. . 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 (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. The Fund may also 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
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.
H. 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 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.
I. 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. 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.
J. 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.
K. Loans of Portfolio Securities. The Fund may make 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 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.
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 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).
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 generally borrow only for liquidity
purposes. 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 then 5% of its net assets in 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. 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.
5. Illiquid Investments. The Fund may invest up to 15% of its net
assets in securities for which there are legal or contractual restrictions on
resale and other illiquid securities.
6. Repurchase Agreements. The Fund will not invest more than 5% of its
net assets in repurchase agreements. ---------------------
THE INVESTMENT ADVISOR
The investment advisor to the Fountainhead Kaleidoscope Fund is King
Investment Advisors, Inc., 1980 Post Oak Boulevard, Suite 2400, Houston, Texas
77056-3898(the "Advisor"). 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 each Fund's investments subject to approval of the Board of
Trustees and pays all of the expenses of the Fund except brokerage, taxes,
borrowing costs (such as (a) interest and (b) dividend expenses on securities
sold short), 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 (based on average daily net assets) computed and accrued daily and paid
monthly at the annual rate 1.75%.
The Advisor retains the right to use the names "Fountainhead,"
"Kaleidoscope" or any variation thereof 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 Kaleidoscope"
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 Board of Trustees supervises the business activities of the Trust.
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>
==================================== ---------------- ======================================================================
NAME, AGE AND ADDRESS POSITION PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
==================================== ---------------- ======================================================================
<S> <C> <C>
*Kenneth D. Trumpfheller President and President, Treasurer and Secretary of AmeriPrime Financial Services,
Age: 40 Trustee Inc., the Fund's administrator, and AmeriPrime Financial Securities,
1793 Kingswood Drive Inc., the Fund's distributor, since 1994. Prior to December, 1994,
Suite 200 a senior client executive with SEI Financial Services.
Southlake, Texas 76092
==================================== ---------------- ======================================================================
Paul S. Bellany Secretary, Secretary, Treasurer and Chief Financial Officer of AmeriPrime
Age: 39 Treasurer Financial Services, Inc. and AmeriPrime Financial Securities, Inc.;
1793 Kingswood Drive various positions with Fidelity Investments from 1987 to 1998; most
Suite 200 recently Fund Reporting Unit Manager.
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 Avenue field manufacturing/supply company, from 1984 to 1997, most recently
Broken Arrow, OK 74012 Vice President of Marketing.
==================================== ================ ======================================================================
Gary E. Hippenstiel Trustee Director, Vice President and Chief Investment Officer of Legacy
Age: 51 Trust Company since 1992; President and Director of Heritage Trust
600 Jefferson Street Company from 1994-1996; Vice President and Manager of Investments of
Suite 350 Kanaly Trust Company from 1988 to 1992.
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>
==================================== ----------------------- ==================================
AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM TRUST (THE TRUST IS
NAME FROM TRUST NOT IN A FUND COMPLEX)
==================================== ----------------------- ==================================
<S> <C> <C>
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. 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 Trust as a factor in
the selection of brokers and dealers to execute portfolio transactions.
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 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
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.
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 "Determination of Net
Asset Value" in the Prospectus.
INVESTMENT PERFORMANCE
The Fund may periodically advertise "average annual total return."
"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 that the maximum sales load is
deducted from the initial $1,000 and that a complete redemption occurs at the
end of the applicable period. If the Fund has been in existence less than one,
five or ten years, the time period since the date of the initial public offering
of shares will be substituted for the periods stated.
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 of total return will always be
accompanied by the Fund's average annual total return as described above.
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, the NASDAQ Composite Index, the Russell
2000 Index or the Dow Jones Industrial Average.
In addition, the performance of the Fund may be compared to other
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 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
Firstar 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. ("Unified"), 431 North 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
shareholder 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 fund accounting services, which
includes certain monthly reports, record-keeping and other management-related
services. For its services as fund accountant, Unified receives an annual fee
from the Advisor equal to 0.0275% of the Fund's assets up to $100 million
(subject to various monthly minimum fees, the maximum being $2,000 per month for
assets of $20 to $100 million).
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. (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.
<PAGE>
AMERIPRIME FUNDS
PART C. OTHER INFORMATION
Item 23. Exhibits
(a) Articles of Incorporation.
(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.
(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.
(xiii) Copy of Amendment No. 12 to Registrant's Declaration of Trust, which was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 23, is hereby
incorporated by reference.
(xiv) Copy of Amendment No. 13 to Registrant's Declaration of Trust, which was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 23, is hereby
incorporated by reference.
(xv) Copy of Amendments No. 14-17 to Registrant's Declaration of Trust, which
were filed as Exhibits to Registrant's Post-Effective Amendment No. 27, are
hereby incorporated by reference.
(b) By-Laws. 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.
(c) Instruments Defining Rights of Security Holders. - None other than in the
Declaration of Trust, as amended, and By-Laws of the Registrant.
(d) Investment Advisory Contracts.
(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.
(iii) 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.
(iv) 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.
(v) 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.
(vi) 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.
(vii) 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.
(viii) 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.
(ix) 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.
(x) Copy of Registrant's Management Agreement with The Jumper Group, Inc.,
Adviser to the Jumper Strategic Advantage Fund, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 23, is hereby incorporated by
reference.
(xi) 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.
(xii) Copy of Registrant's Management Agreement with Martin Capital Advisors,
L.L.P., Advisor to the Austin Opportunity Fund, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 23, is hereby incorporated by
reference.
(xiii) 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.
(xiv) 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.
(xv) Copy of Registrant's 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. 23, is hereby incorporated by
reference.
(xvi) 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.
(xvii) Copy of Registrant's 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. 23, is hereby incorporated by
reference.
(xviii) Copy of Registrant's 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. 23, is hereby
incorporated by reference.
(xix) Copy of Registrant's Management Agreement with Dobson Capital Management,
Inc,. Advisor to the Dobson Covered Call Fund, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 25, is hereby incorporated by
reference.
(xx) Copy of Registrant's Proposed Management Agreement with Auxier Asset
Management, LLC, Advisor to the Auxier Focus Fund, which was filed as an Exhibit
to Registrant's Post-Effective Amendment No. 19, is hereby incorporated by
reference.
(xxi) Copy of Registrant's Management Agreement with Cornerstone Capital
Management, Inc., Advisor to the Shepherd Values Market Neutral Fund, which was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 27, is hereby
incorporated by reference.
(xxii) Copy of Registrant's Management Agreement with Cornerstone Capital
Management, Inc., Advisor to the Shepherd Values Growth Fund, which was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 27, is hereby
incorporated by reference.
(xxiii) Copy of Registrant's Proposed Management Agreement with Columbia
Partners, L.L.C., Investment Management, Advisor to the Columbia Partners Equity
Fund, which was filed as an Exhibit to Registrant's Post-Effective Amendment No.
20, is hereby incorporated by reference.
(xxiv) Copy of Registrant's Proposed Management Agreement with Legacy Investment
Group, LLC, d/b/a Cash Management Systems ("CMS"), Adviser to The Cash Fund,
which was filed as an Exhibit to Registrant's Post-Effective Amendment No. 22,
is hereby incorporated by reference.
(xxv) Copy of Sub-Advisory Agreement between Cash Management Systems, Inc. and
Milestone Capital Management, L.P., Sub-Advisors to The Cash Fund - to be
supplied.
(xxvi) Copy of Registrant's Management Agreement with Ariston Capital
Management Corporation, Advisor to the Ariston Convertible Securities
Fund, which was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 27, is hereby incorporated by reference.
(xxvii) Copy of Registrant's Proposed Management Agreement with Leader Capital
Corp., Advisor to the Leader Converted Mutual Bank Fund, which was
filed as an Exhibit to Registrant's Post Effective Amendment No. 25, is
hereby incorporated by reference.
(xxviii) Copy of Registrant's Proposed Management Agreement with Cornerstone
Capital Management, Inc., Advisor to the Shepherd Values VIF Equity
Fund, which was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 26, is hereby incorporated by reference.
(xxix) Copy of Registrant's Proposed Management Agreement with Cornerstone
Capital Management, Inc., Advisor to the Shepherd Values Small-Cap
Fund, which was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 26, is hereby incorporated by reference.
(xxx) Copy of Registrant's Proposed Management Agreement with Cornerstone
Capital Management, Inc., Advisor to the Shepherd Values International
Fund, which was filed as an Exhibit to Registrant's Post-Effective
Amendment No.
26, is hereby incorporated by reference.
(xxxi) Copy of Registrant's Proposed Management Agreement with Cornerstone
Capital Management, Inc., Advisor to the Shepherd Values Fixed Income
Fund, which was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 26, is hereby incorporated by reference.
(xxxii) Sub-Advisory Agreements for the International Fund, the Small-Cap Fund,
and the Fixed Income Fund [to be supplied].
(xxxiii) Copy of Registrant's Proposed Management Agreement with Aegis Asset
Management, Inc., Advisor to the Westcott Nothing But Net Fund, which
was filed as an Exhibit to Registrant's Post-Effective Amendment No.
27, is hereby incorporated by reference.
(xxxiv) Copy of Registrant's Proposed Management Agreement with Aegis Asset
Management, Inc., Advisor to the Westcott Multi-National Large-Cap
Fund, which was filed as an Exhibit to Registrant's Post
Effective-Amendment No. 27, is hereby incorporated by reference.
(xxxv) Copy of Registrant's Proposed Management Agreement with Aegis Asset
Management, Inc., Advisor to the Westcott Fixed Income Fund, which was
filed as an Exhibit to Registrant's Post-Effective Amendment No. 27, is
hereby incorporated by reference.
(xxxvi) Copy of Registrant's Proposed Management Agreement with Jenswold, King
& Associates, Adviser to the Fountainhead Kaleidoscope Fund, is filed
herewith.
(e) Underwriting Contracts.
(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.
(f) Bonus or Profit Sharing Contracts.- None.
(g) Custodial Agreements.
(i) Copy of Registrant's Agreement with the Custodian, Firstar Bank, N.A.
(formerly Star Bank), 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.
(iii) Copy of Registrant's Agreement with UMB Bank, N.A., Custodian to the
Dobson Covered Call Fund, is filed herewith.
(h) Other Material Contracts. 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.
(i) Legal Opinion.
(i) Opinion 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.
(ii) Consent of Brown, Cummins & Brown Co., L.P.A is filed herewith.
(j) Other Opinions. Consent of Accountant is filed herewith.
(k) Omitted Financial Statements.- None.
(l) Initial Capital Agreements. 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.
(m) Rule 12b-1 Plan.
(i) 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.
(ii) 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.
(iii) 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.
(iv) 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.
(v) Copy of Registrant's Rule 12b-1 Distribution Plan for the Jumper Strategic
Advantage Fund, which was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 24, is hereby incorporated by reference.
(vi) Copy of Registrant's Rule 12b-1 Distribution Plan for the Dobson Covered
Call Fund, which was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 24, is hereby incorporated by reference.
(vii) Copy of Registrant's Rule 12b-1 Distribution Plan for the Ariston
Convertible Securities Fund, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 27, is hereby incorporated by reference.
(viii) Copy of Registrant's Rule 12b-1 Distribution Plan for the Leader
Converted Mutual Bank Fund, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 27, is hereby incorporated by reference.
(ix) Copy of Registrant's Proposed Rule 12b-1 Distribution Plan for the Westcott
Nothing But Net Fund is filed herewith.
(x) Copy of Registrant's Proposed Rule 12b-1 Distribution Plan for the Westcott
Multi-National Large-Cap Fund is filed herewith.
(xi) Copy of Registrant's Proposed Rule 12b-1 Distribution Plan for the Westcott
Fixed Income Fund is filed herewith.
(n) Financial Data Schedule - None.
(o) Rule 18f-3 Plan.
(i) 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.
(ii) Rule 18f-3 Plan for the Jumper Strategic Advantage Fund, which was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 21, is hereby
incorporated by reference.
(iii) Proposed Rule 18f-3 Plan for the Westcott Funds is filed herewith.
(p) Power of Attorney.
(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. 24, is hereby incorporated
by reference.
Item 24. Persons Controlled by or Under Common Control with the Registrant (As
of June 1, 1999)
(a) Sun Trust Bank (a national bank), as custodian, may be deemed to control
the Jumper Strategic Advantage Fund as a result of its beneficial
ownership of the Fund. The Registrant is unaware of any person under
common control with the Fund.
(b) Michael F. Horn, Sr. may be deemed to control the Columbia Partners Equity
Fund as a result of his beneficial ownership of his Fund. The Registrant
is unaware of any person under common control with the Fund.
(c) Each of Mary A. Trapani and Marilyn C. Franken may be deemed to control
the Shepherd Values Market Neutral Fund as a result of their respective
beneficial ownership of the Fund (52.2% and 35.5% respectively). The
Registrant is unaware of any persons under common control with the Fund.
(d) Each of Carl Domino and Carl Domino Associates, L.P., may be deemed to
control the Domino Global Equity Income Fund as a result of their
respective beneficial ownership of the Fund (62.1% and 37.9%
respectively). Carl Domino may be deemed to control the Domino Growth Fund
as a result of his beneficial ownership of the Fund (72.0%). Carl Domino
controls Carl Domino Associates, L. P. (a Florida limited partnership)
because he controls the general partner. As a result, Carl Domino
Associates, L.P., the Domino Growth Fund and the Domino Global Equity
Income Fund may be deemed to be under the common control of Carl Domino.
(e) Marilyn C. Franken may be deemed to control the Shepherd Values Growth Fund
as a result of her beneficial ownership of the Fund. The Registrant is
unaware of any person under common control with the Fund.
(f) Charles L. Dobson, may be deemed to control the Dobson Covered Call Fund as
a result of his beneficial ownership of the Fund (63.6%). Charles L. Dobson
controls Dobson Capital Management, Inc. (a California corporation) because
he owns 100% of its shares. As a result, Dobson Capital Management, Inc.
and the Fund may be deemed to be under the common control of Charles L.
Dobson.
Item 25. Indemnification
(a) Article VI of the Registrant's Declaration of Trust provides for
indemnification of officers and Trustees as follows:
Section 6.4 Indemnification of Trustees, Officers, etc. Subject to and
except as otherwise provided in the Securities Act of 1933, as amended, and the
1940 Act, the Trust shall indemnify each of its Trustees and officers (including
persons who serve at the Trust's request as directors, officers or trustees of
another organization in which the Trust has any interest as a shareholder,
creditor or otherwise (hereinafter referred to as a "Covered Person") against
all liabilities, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Trustee or officer, director or trustee, and except that no Covered
Person shall be indemnified against any liability to the Trust or its
Shareholders to which such Covered Person would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or 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.
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 26. Business and Other Connections of Investment Adviser
A. Carl Domino Associates, L.P., 580 Village Boulevard, Suite 225, West Palm
Beach, Florida 33409, ("CDA"), adviser to the Carl Domino Equity Income Fund,
the Carl Domino Growth Fund and the Carl Domino International 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 King"), adviser to the Fountainhead Special Value Fund
and the Fountainhead Kaleidoscope 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 JKA King, is a licensed real estate broker.
C. 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.
D. 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.
E. 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.
F. 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.
G. 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 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.
(c) Can Viet Le, Manager of VAMCO, is the Manager of Vuong and Company, LLC, and
was Co Founder and Chief Financial Officer of Tribe Computer Works, a
manufacturing network in Alameda, California from April 1990 through January,
1996.
H. 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.
I. 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.
Mark R. Matsko, Vice President and Director of B&H, was broker with D.A.
Davidson & Co., a broker/dealer in Boise, Idaho, from 1994 to 1996.
J. The Jumper Group, Inc., 1 Union Square, Suite 505, Chattanooga, Tennessee
37402, ("Jumper"), Advisor to the Jumper Strategic Advantage 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.
K. Appalachian Asset Management, Inc., 1018 Kanawha Blvd., East, Suite 209,
Charleston, WV 25301 ("AAM"), advisor to AAM Equity Fund, is a registered
investment advisor.
(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.
L. Martin Capital Advisors, L.L.P. ("Martin"), 816 Congress Ave., Suite 1540,
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.
(2) The following list sets forth other substantial business activities of the
directors and officers of GJMB during the past two years - None.
M. 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.
N. 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.
O. 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: Charles L. Dobson,
President of Dobson, was the Director of Trading with Analytic/TSA Global Asset
Management, 700 S. Flower Street, Suite 2400, Los Angeles CA, from 1996 to 1998.
P. Auxier Asset Management, LLC, 8050 S.W. Warm Springs, Suite 130, Tualatin, OR
97062 ("Auxier"), Advisor to the Auxier Focus 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: Jeffrey Auxier,
Managing Member of Auxier, was a Senior Portfolio Management Director with Smith
Barney, Inc. until 1998.
Q. 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.
(2) The following list sets forth other substantial business activities of the
directors and officers of CCM during the past two years:
a) Ted M. Ehrlichman, Director of CCM, was a principal with SunTek, Inc.,
Colorado Springs, CO, a pension consulting firm, from 1995 to 1997.
b) Frank Franiak, Director of CCM, is the President of Monroe Capital, Inc.,
Chicago, IL, a consulting firm, and a registered representative of March
Capital, Inc., Chicago, IL, a broker-dealer.
c) Jason D. Huntley, Director of CCM, was Director of Institutional Services
with First Affirmative/Walnut Street Advisers, Colorado Springs, CO, an
investment advisory firm, from 1996 to 1997.
d) Craig D. Van Hulzen, Director of CCM, was Director of Research with First
Affirmative/Walnut Street Advisers, and a registered representative of Walnut
Street Securities, Colorado Springs, CO, a broker-dealer, from 1995 to 1997.
R. Columbia Partners, L.L.C., Investment Management, 1775 Pennsylvania Avenue,
N.W., Washington, DC 20006 ("Columbia"), Advisor to the Columbia Partners Equity
Fund, is a registered investment advisor.
(1) Columbia 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 Columbia during the past two years:
Rhys H. Williams, a principal of Columbia, has been a portfolio manager at
Columbia since late 1997. Prior to that time, Mr. Williams was the Senior Vice
President at Prudential Securities in Philadelphia, PA since 1987.
S. Legacy Investment Group, LLC, d/b/a Cash Management Systems, 290 Turnpike
Road, #338, Westborogh, Massachusetts ("CMS), Advisor to The Cash Fund, is a
registered investment advisor.
1. CMS has engaged in no other business during the past two years.
2. The following list sets forth other substantial business activities of
the directors and officers of CMS during the past two years:
David W. Reavill, Member of CMS, was a Vice President with Fixed Income Discount
Advisory Corp., Shrewsbury, MA, a money market firm, from 1997 to 1998 and a
Vice President of Reich & Tang, LLC, Westlake Village, CA, a money market firm,
from 1996 to 1997.
T. Ariston Capital Management Corporation, 40 Lake Bellevue Drive, Suite 220,
Bellevue, Washington 98005 ("Ariston"), Advisor to the Ariston Convertible
Securities Fund, is a registered investment advisor.
1. Ariston has engaged in no other business during the past two years.
2. The following list sets forth other substantial business activities of the
directors and officers of Ariston during the past two years: None.
U. Leader Capital Corp., 121 S.W. Morrison St., Ste. 450, Portland, OR 97204
("Leader"), Adviser to the Leader Converted Mutual Bank Fund, is a registered
investment advisor.
1. Leader 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 Leader during the past two years:
(a) John Lekas, President of Leader, was a registered representative with Smith
Barney from July 1993 to November 1997.
(b) Jason McMillen, Vice President of Leader, was a research assistant with
Smith Barney from December 1996 to December 1997.
(c) Carey Guenther, Secretary of Leader, was a customer account representative
with Columbia Funds from July 1997 to January, 1998.
V. Aegis Asset Management, Inc. ("Aegis"), 230 Westcott, Suite 1, Houston, Texas
77007, Adviser to Westcott Nothing But Net Fund, Westcott Multi-National
Large-Cap Fund and Westcott Fixed Income Fund, is a registered investment
adviser.
1. Aegis 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 Aegis during the past two years: to be
supplied.
Item 27. 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. It is also the
underwriter for the AmeriPrime Insurance Trust, the Kenwood Funds, the Rockland
Funds Trust, the TANKA Funds, Inc. and the Grand Prix Fund.
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 28. 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 29. Management Services Not Discussed in Parts A or B
None.
Item 30. Undertakings
None.
<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, duly authorized, in the
City of Cincinnati, State of Ohio, on the __ day of July, 1999.
AmeriPrime Funds
By:_______/s/____________________________
Donald S. Mendelsohn,
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Kenneth D. Trumpfheller,
President and Trustee
By:____________/s/_____________________
Donald S. Mendelsohn,
Gary E. Hippensteil, Trustee Attorney-in-Fact
Steve L. Cobb, Trustee July 29, 1999
Paul S. Bellany, Treasurer
<PAGE>
EXHIBIT INDEX
1. Proposed Management Agreement with King Investment Advisors, Inc.,
for the Fountainhead Kaleidoscope Fund...........................EX-99.B5.1
2. Agreement with UMB Bank, N.A., Custodian to the Dobson
Covered Call Fund..................................................EX-99.B8
3. Consent of Counsel.................................................EX99.B10
4. Consent of Accountant.............................................EX-99.B11
5. Proposed Class B 12b-1 Plan for the Westcott....................EX-99.B15.1
6. Proposed Class A 12b-1 Plan for the Westcott Fund...............EX-99.B15.2
7. Proposed 18f-3 Plan for the Westcott Nothing But Net Fund.......EX-99.B18.1
8. Proposed 18f-3 Plan for the Westcott Multi-National
Large-Cap Fund..................................................EX-99.B18.2
9. Proposed 18f-3 Plan for the Westcott Fixed Income Fund..........EX-99.B18.3
MANAGEMENT AGREEMENT
TO: King Investment Advisors, Inc.
Two Post Oak Central
1980 Post Oak Blvd. Suite 2400
Houston, Texas 77056-3898
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 Fountainhead Kaleidoscope 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 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")
as amended); and all other operating expenses not specifically assumed by the
Fund.
<PAGE>
fam_fund.doc
7/30/99
.........The Fund will pay all brokerage fees and commissions, taxes,
borrowing costs (such as (a) interest and (b) dividend expenses on securities
sold short), 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.
.........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,
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
"Fountainhead," "Kaleidoscope" 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 "Fountainhead Kaleidoscope" 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 "Fountainhead Kaleidoscope" 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 Two Post Oak Central, 1980 Post Oak Blvd., Suite 2400,
Houston, Texas 77056-3898.
<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
Dated: ___________, 1999
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST: .........
......... King Investment Advisors, Inc.
By:_________________________________ By:_________________________________
Name/Title... Roger E. King, President
Dated: ___________, 1999
CUSTODY AGREEMENT
DATED FEBRUARY 19, 1999
BETWEEN
UMB BANK, N.A.
AND
THE DOBSON COVERED CALL FUND
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
SECTION PAGE
1. Appointment of Custodian 1
2. Definitions 1
(a) Securities 1
(b) Assets 1
(c) Instructions and Special Instructions 1
3. Delivery of Corporate Documents 2
4. Powers and Duties of Custodian and Domestic Subcustodian 2
(a) Safekeeping 3
(b) Manner of Holding Securities 3
(c) Free Delivery of Assets 4
(d) Exchange of Securities 4
(e) Purchases of Assets 4
(f) Sales of Assets 5
(g) Options 5
(h) Futures Contracts 6
(i) Segregated Accounts 6
(j) Depositary Receipts 6
(k) Corporate Actions, Put Bonds, Called Bonds, Etc. 6
(l) Interest Bearing Deposits 7
(m) Foreign Exchange Transactions 7
(n) Pledges or Loans of Securities 8
(o) Stock Dividends, Rights, Etc. 8
(p) Routine Dealings 8
(q) Collections 8
(r) Bank Accounts 9
(s) Dividends, Distributions and Redemptions 9
(t) Proceeds from Shares Sold 9
(u) Proxies and Notices; Compliance with the Shareholders
Communication Act of 1985 9
(v) Books and Records 9
(w) Opinion of Fund's Independent Certified Public Accountants 10
(x) Reports by Independent Certified Public Accountants 10
(y) Bills and Others Disbursements 10
5. Subcustodians 10
(a) Domestic Subcustodians 10
(b) Foreign Subcustodians 10
(c) Interim Subcustodians 11
(d) Special Subcustodians 11
(e) Termination of a Subcustodian 11
(f) Certification Regarding Foreign Subcustodians 11
6. Standard of Care 12
(a) General Standard of Care 12
(b) Actions Prohibited by Applicable Law, Events Beyond Custodian's Control, Armed 12
Conflict, Sovereign Risk, etc.
(c) Liability for Past Records 12
(d) Advice of Counsel 12
(e) Advice of the Fund and Others 12
(f) Instructions Appearing to be Genuine 13
(g) Exceptions from Liability 13
7. Liability of the Custodian for Actions of Others 13
(a) Domestic Subcustodians 13
(b) Liability for Acts and Omissions of Foreign Subcustodians 13
(c) Securities Systems, Interim Subcustodians, Special Subcustodians, Securities 13
Depositories and Clearing Agencies
(d) Defaults or Insolvency's of Brokers, Banks, Etc. 14
(e) Reimbursement of Expenses 14
8. Indemnification 14
(a) Indemnification by Fund 14
(b) Indemnification by Custodian 14
9. Advances 14
10. Liens 15
11. Compensation 15
12. Powers of Attorney 15
13. Termination and Assignment 15
14. Additional Funds 15
15. Notices 16
16. Miscellaneous 16
</TABLE>
<PAGE>
CUSTODY AGREEMENT
This agreement made as of this 19th day of February, 1999, between UMB
Bank, n.a., a national banking association with its principal place of business
located in Kansas City, Missouri (hereinafter "Custodian"), and the AmeriPrime
Funds, an Ohio Business Trust, (The "Trust") on behalf of the Dobson Covered
Call Fund, together with such additional Funds which shall be made parties to
this Agreement by the execution of Appendix B hereto (individually, a "Fund" and
collectively, the "Funds").
WITNESSETH:
WHEREAS, each Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended; and
WHEREAS, each Fund desires to appoint Custodian as its custodian for
the custody of Assets (as hereinafter defined) owned by such Fund which Assets
are to be held in such accounts as such Fund may establish from time to time;
and
WHEREAS, Custodian is willing to accept such appointment on the terms
and conditions hereof.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, mutually covenant and
agree as follows:
1. APPOINTMENT OF CUSTODIAN.
Each Fund hereby constitutes and appoints the Custodian as custodian of
Assets belonging to each such Fund which have been or may be from time to time
deposited with the Custodian. Custodian accepts such appointment as a custodian
and agrees to perform the duties and responsibilities of Custodian as set forth
herein on the conditions set forth herein.
2. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings so indicated:
(a) "Security" or "Securities" shall mean stocks, bonds, bills, rights,
script, warrants, interim certificates and all negotiable or nonnegotiable paper
commonly known as Securities and other instruments or obligations.
(b) "Assets" shall mean Securities, monies and other property held by
the Custodian for the benefit of a Fund.
(c)(1) "Instructions", as used herein, shall mean: (i) a tested telex,
a written (including, without limitation, facsimile transmission) request,
direction, instruction or certification signed or initialed by or on behalf of a
Fund by an Authorized Person; (ii) a telephonic or other oral communication from
a person the Custodian reasonably believes to be an Authorized Person; or (iii)
a communication effected directly between an electro-mechanical or electronic
device or system (including, without limitation, computers) on behalf of a Fund.
Instructions in the form of oral communications shall be confirmed by the
appropriate Fund by tested telex or in writing in the manner set forth in clause
(i) above, but the lack of such confirmation shall in no way affect any action
taken by the Custodian in reliance upon such oral Instructions prior to the
Custodian's receipt of such confirmation. Each Fund authorizes the Custodian to
record any and all telephonic or other oral Instructions communicated to the
Custodian.
(c)(2) "Special Instructions", as used herein, shall mean Instructions
countersigned or confirmed in writing by the Treasurer or any Assistant
Treasurer of a Fund or any other person designated by the Treasurer of such Fund
in writing, which countersignature or confirmation shall be included on the same
instrument containing the Instructions or on a separate instrument relating
thereto.
(c)(3) Instructions and Special Instructions shall be delivered to the
Custodian at the address and/or telephone, facsimile transmission or telex
number agreed upon from time to time by the Custodian and each Fund.
(c)(4) Where appropriate, Instructions and Special Instructions shall
be continuing instructions.
3. DELIVERY OF CORPORATE DOCUMENTS.
Each of the parties to this Agreement represents that its execution
does not violate any of the provisions of its respective charter, articles of
incorporation, articles of association, declaration of trust or bylaws and all
required corporate action to authorize the execution and delivery of this
Agreement has been taken.
Each Fund has furnished the Custodian with copies, properly certified
or authenticated, with all amendments or supplements thereto, of the following
documents:
(a) Certificate of Incorporation (or equivalent document) of the Fund
as in effect on the date hereof;
(b) By-Laws of the Fund as in effect on the date hereof;
(c) Resolutions of the Board of Directors of the Fund appointing the
Custodian and approving the form of this Agreement; and
(d) The Fund's current prospectus and statements of additional
information.
Each Fund shall promptly furnish the Custodian with copies of any
updates, amendments or supplements to the foregoing documents.
In addition, each Fund has delivered or will promptly deliver to the
Custodian, copies of the Resolution(s) of its Board of Directors or Trustees and
all amendments or supplements thereto, properly certified or authenticated,
designating certain officers or employees of each such Fund who will have
continuing authority to certify to the Custodian: (a) the names, titles,
signatures and scope of authority of all persons authorized to give Instructions
or any other notice, request, direction, instruction, certificate or instrument
on behalf of each Fund, and (b) the names, titles and signatures of those
persons authorized to countersign or confirm Special Instructions on behalf of
each Fund (in both cases collectively, the "Authorized Persons" and
individually, an "Authorized Person"). Such Resolutions and certificates may be
accepted and relied upon by the Custodian as conclusive evidence of the facts
set forth therein and shall be considered to be in full force and effect until
delivery to the Custodian of a similar Resolution or certificate to the
contrary. Upon delivery of a certificate which deletes or does not include the
name(s) of a person previously authorized to give Instructions or to countersign
or confirm Special Instructions, such persons shall no longer be considered an
Authorized Person authorized to give Instructions or to countersign or confirm
Special Instructions. Unless the certificate specifically requires that the
approval of anyone else will first have been obtained, the Custodian will be
under no obligation to inquire into the right of the person giving such
Instructions or Special Instructions to do so. Notwithstanding any of the
foregoing, no Instructions or Special Instructions received by the Custodian
from a Fund will be deemed to authorize or permit any director, trustee,
officer, employee, or agent of such Fund to withdraw any of the Assets of such
Fund upon the mere receipt of such authorization, Special Instructions or
Instructions from such director, trustee, officer, employee or agent.
4. POWERS AND DUTIES OF CUSTODIAN AND DOMESTIC SUBCUSTODIAN.
Except for Assets held by any Subcustodian appointed pursuant to
Sections 5(b), (c), or (d) of this Agreement, the Custodian shall have and
perform the powers and duties hereinafter set forth in this Section 4. For
purposes of this Section 4 all references to powers and duties of the
"Custodian" shall also refer to any Domestic Subcustodian appointed pursuant to
Section 5(a).
<PAGE>
(a) Safekeeping.
The Custodian will keep safely the Assets of each Fund which are
delivered to it from time to time. The Custodian shall not be responsible for
any property of a Fund held or received by such Fund and not delivered to the
Custodian.
(b) Manner of Holding Securities.
(1) The Custodian shall at all times hold Securities of each Fund
either: (i) by physical possession of the share certificates or other
instruments representing such Securities in registered or bearer form; or (ii)
in book-entry form by a Securities System (as hereinafter defined) in accordance
with the provisions of sub-paragraph (3) below.
(2) The Custodian may hold registrable portfolio Securities which
have been delivered to it in physical form, by registering the same in the name
of the Custodian or its nominee, for whose actions the Custodian shall be fully
responsible. Upon the receipt of Instructions, the Custodian shall hold such
Securities in street certificate form, so called, with or without any indication
of fiduciary capacity. However, unless it receives Instructions to the contrary,
the Custodian will register all such portfolio Securities in the name of the
Custodian's authorized nominee. All such Securities shall be held in an account
of the Custodian containing only assets of the appropriate Fund or only assets
held by the Custodian as a fiduciary, provided that the records of the Custodian
shall indicate at all times the Fund or other customer for which such Securities
are held in such accounts and the respective interests therein.
(3) The Custodian may deposit and/or maintain domestic Securities
owned by a Fund in, and each Fund hereby approves use of: (a) The Depository
Trust Company; (b) The Participants Trust Company; and (c) any book-entry system
as provided in (i) Subpart O of Treasury Circular No. 300, 31 CFR 306.115, (ii)
Subpart B of Treasury Circular Public Debt Series No. 27-76, 31 CFR 350.2, or
(iii) the book-entry regulations of federal agencies substantially in the form
of 31 CFR 306.115. Upon the receipt of Special Instructions, the Custodian may
deposit and/or maintain domestic Securities owned by a Fund in any other
domestic clearing agency registered with the Securities and Exchange Commission
("SEC") under Section 17A of the Securities Exchange Act of 1934 (or as may
otherwise be authorized by the SEC to serve in the capacity of depository or
clearing agent for the Securities or other assets of investment companies) which
acts as a Securities depository. Each of the foregoing shall be referred to in
this Agreement as a "Securities System", and all such Securities Systems shall
be listed on the attached Appendix A. Use of a Securities System shall be in
accordance with applicable Federal Reserve Board and SEC rules and regulations,
if any, and subject to the following provisions:
(i) The Custodian may deposit the Securities directly or
through one or more agents or Subcustodians which are also qualified to act as
custodians for investment companies.
(ii) The Custodian shall deposit and/or maintain the
Securities in a Securities System, provided that such Securities are represented
in an account ("Account") of the Custodian in the Securities System that
includes only assets held by the Custodian as a fiduciary, custodian or
otherwise for customers.
(iii) The books and records of the Custodian shall at all
times identify those Securities belonging to any one or more Funds which are
maintained in a Securities System.
(iv) The Custodian shall pay for Securities purchased for the
account of a Fund only upon (a) receipt of advice from the Securities System
that such Securities have been transferred to the Account of the Custodian in
accordance with the rules of the Securities System, and (b) the making of an
entry on the records of the Custodian to reflect such payment and transfer for
the account of such Fund. The Custodian shall transfer Securities sold for the
account of a Fund only upon (a) receipt of advice from the Securities System
that payment for such Securities has been transferred to the Account of the
Custodian in accordance with the rules of the Securities System, and (b) the
making of an entry on the records of the Custodian to reflect such transfer and
payment for the account of such Fund. Copies of all advices from the Securities
System relating to transfers of Securities for the account of a Fund shall be
maintained for such Fund by the Custodian. The Custodian shall deliver to a Fund
on the next succeeding business day daily transaction reports that shall include
each day's transactions in the Securities System for the account of such Fund.
Such transaction reports shall be delivered to such Fund or any agent designated
by such Fund pursuant to Instructions, by computer or in such other manner as
such Fund and Custodian may agree.
(v) The Custodian shall, if requested by a Fund pursuant to
Instructions, provide such Fund with reports obtained by the Custodian or any
Subcustodian with respect to a Securities System's accounting system, internal
accounting control and procedures for safeguarding Securities deposited in the
Securities System.
(vi) Upon receipt of Special Instructions, the Custodian shall
terminate the use of any Securities System on behalf of a Fund as promptly as
practicable and shall take all actions reasonably practicable to safeguard the
Securities of such Fund maintained with such Securities System.
(c) Free Delivery of Assets.
Notwithstanding any other provision of this Agreement and except as
provided in Section 3 hereof, the Custodian, upon receipt of Special
Instructions, will undertake to make free delivery of Assets, provided such
Assets are on hand and available, in connection with a Fund's transactions and
to transfer such Assets to such broker, dealer, Subcustodian, bank, agent,
Securities System or otherwise as specified in such Special Instructions.
(d) Exchange of Securities.
Upon receipt of Instructions, the Custodian will exchange portfolio
Securities held by it for a Fund for other Securities or cash paid in connection
with any reorganization, recapitalization, merger, consolidation, or conversion
of convertible Securities, and will deposit any such Securities in accordance
with the terms of any reorganization or protective plan.
Without Instructions, the Custodian is authorized to exchange Securities
held by it in temporary form for Securities in definitive form, to surrender
Securities for transfer into a name or nominee name as permitted in Section
4(b)(2), to effect an exchange of shares in a stock split or when the par value
of the stock is changed, to sell any fractional shares, and, upon receiving
payment therefor, to surrender bonds or other Securities held by it at maturity
or call.
(e) Purchases of Assets.
(1) Securities Purchases. In accordance with Instructions, the
Custodian shall, with respect to a purchase of Securities, pay for such
Securities out of monies held for a Fund's account for which the purchase was
made, but only insofar as monies are available therein for such purpose, and
receive the portfolio Securities so purchased. Unless the Custodian has received
Special Instructions to the contrary, such payment will be made only upon
receipt of Securities by the Custodian, a clearing corporation of a national
Securities exchange of which the Custodian is a member, or a Securities System
in accordance with the provisions of Section 4(b)(3) hereof. Notwithstanding the
foregoing, upon receipt of Instructions: (i) in connection with a repurchase
agreement, the Custodian may release funds to a Securities System prior to the
receipt of advice from the Securities System that the Securities underlying such
repurchase agreement have been transferred by book-entry into the Account
maintained with such Securities System by the Custodian, provided that the
Custodian's instructions to the Securities System require that the Securities
System may make payment of such funds to the other party to the repurchase
agreement only upon transfer by book-entry of the Securities underlying the
repurchase agreement into such Account; (ii) in the case of Interest Bearing
Deposits, currency deposits, and other deposits, foreign exchange transactions,
futures contracts or options, pursuant to Sections 4(g), 4(h), 4(l), and 4(m)
hereof, the Custodian may make payment therefor before receipt of an advice of
transaction; and (iii) in the case of Securities as to which payment for the
Security and receipt of the instrument evidencing the Security are under
generally accepted trade practice or the terms of the instrument representing
the Security expected to take place in different locations or through separate
parties, such as commercial paper which is indexed to foreign currency exchange
rates, derivatives and similar Securities, the Custodian may make payment for
such Securities prior to delivery thereof in accordance with such generally
accepted trade practice or the terms of the instrument representing such
Security.
(2) Other Assets Purchased. Upon receipt of Instructions and except as
otherwise provided herein, the Custodian shall pay for and receive other Assets
for the account of a Fund as provided in Instructions.
(f) Sales of Assets.
(1) Securities Sold. In accordance with Instructions, the Custodian
will, with respect to a sale, deliver or cause to be delivered the Securities
thus designated as sold to the broker or other person specified in the
Instructions relating to such sale. Unless the Custodian has received Special
Instructions to the contrary, such delivery shall be made only upon receipt of
payment therefor in the form of: (a) cash, certified check, bank cashier's
check, bank credit, or bank wire transfer; (b) credit to the account of the
Custodian with a clearing corporation of a national Securities exchange of which
the Custodian is a member; or (c) credit to the Account of the Custodian with a
Securities System, in accordance with the provisions of Section 4(b)(3) hereof.
Notwithstanding the foregoing, Securities held in physical form may be delivered
and paid for in accordance with "street delivery custom" to a broker or its
clearing agent, against delivery to the Custodian of a receipt for such
Securities, provided that the Custodian shall have taken reasonable steps to
ensure prompt collection of the payment for, or return of, such Securities by
the broker or its clearing agent, and provided further that the Custodian shall
not be responsible for the selection of or the failure or inability to perform
of such broker or its clearing agent or for any related loss arising from
delivery or custody of such Securities prior to receiving payment therefor.
(2) Other Assets Sold. Upon receipt of Instructions and except as
otherwise provided herein, the Custodian shall receive payment for and deliver
other Assets for the account of a Fund as provided in Instructions.
(g) Options.
(1) Upon receipt of Instructions relating to the purchase of an option
or sale of a covered call option, the Custodian shall: (a) receive and retain
confirmations or other documents, if any, evidencing the purchase or writing of
the option by a Fund; (b) if the transaction involves the sale of a covered call
option, deposit and maintain in a segregated account the Securities (either
physically or by book-entry in a Securities System) subject to the covered call
option written on behalf of such Fund; and (c) pay, release and/or transfer such
Securities, cash or other Assets in accordance with any notices or other
communications evidencing the expiration, termination or exercise of such
options which are furnished to the Custodian by the Options Clearing Corporation
(the "OCC"), the securities or options exchanges on which such options were
traded, or such other organization as may be responsible for handling such
option transactions.
(2) Upon receipt of Instructions relating to the sale of a naked option
(including stock index and commodity options), the Custodian, the appropriate
Fund and the broker-dealer shall enter into an agreement to comply with the
rules of the OCC or of any registered national securities exchange or similar
organizations(s). Pursuant to that agreement and such Fund's Instructions, the
Custodian shall: (a) receive and retain confirmations or other documents, if
any, evidencing the writing of the option; (b) deposit and maintain in a
segregated account, Securities (either physically or by book-entry in a
Securities System), cash and/or other Assets; and (c) pay, release and/or
transfer such Securities, cash or other Assets in accordance with any such
agreement and with any notices or other communications evidencing the
expiration, termination or exercise of such option which are furnished to the
Custodian by the OCC, the securities or options exchanges on which such options
were traded, or such other organization as may be responsible for handling such
option transactions. The appropriate Fund and the broker-dealer shall be
responsible for determining the quality and quantity of assets held in any
segregated account established in compliance with applicable margin maintenance
requirements and the performance of other terms of any option contract.
<PAGE>
(h) Futures Contracts.
Upon receipt of Instructions, the Custodian shall enter into a futures
margin procedural agreement among the appropriate Fund, the Custodian and the
designated futures commission merchant (a "Procedural Agreement"). Under the
Procedural Agreement the Custodian shall: (a) receive and retain confirmations,
if any, evidencing the purchase or sale of a futures contract or an option on a
futures contract by such Fund; (b) deposit and maintain in a segregated account
cash, Securities and/or other Assets designated as initial, maintenance or
variation "margin" deposits intended to secure such Fund's performance of its
obligations under any futures contracts purchased or sold, or any options on
futures contracts written by such Fund, in accordance with the provisions of any
Procedural Agreement designed to comply with the provisions of the Commodity
Futures Trading Commission and/or any commodity exchange or contract market
(such as the Chicago Board of Trade), or any similar organization(s), regarding
such margin deposits; and (c) release Assets from and/or transfer Assets into
such margin accounts only in accordance with any such Procedural Agreements. The
appropriate Fund and such futures commission merchant shall be responsible for
determining the type and amount of Assets held in the segregated account or paid
to the broker-dealer in compliance with applicable margin maintenance
requirements and the performance of any futures contract or option on a futures
contract in accordance with its terms.
(i) Segregated Accounts.
Upon receipt of Instructions, the Custodian shall establish and maintain
on its books a segregated account or accounts for and on behalf of a Fund, into
which account or accounts may be transferred Assets of such Fund, including
Securities maintained by the Custodian in a Securities System pursuant to
Paragraph (b)(3) of this Section 4, said account or accounts to be maintained
(i) for the purposes set forth in Sections 4(g), 4(h) and 4(n) and (ii) for the
purpose of compliance by such Fund with the procedures required by the SEC
Investment Company Act Release Number 10666 or any subsequent release or
releases relating to the maintenance of segregated accounts by registered
investment companies, or (iii) for such other purposes as may be set forth, from
time to time, in Special Instructions. The Custodian shall not be responsible
for the determination of the type or amount of Assets to be held in any
segregated account referred to in this paragraph, or for compliance by the Fund
with required procedures noted in (ii) above.
(j) Depositary Receipts.
Upon receipt of Instructions, the Custodian shall surrender or cause to be
surrendered Securities to the depositary used for such Securities by an issuer
of American Depositary Receipts or International Depositary Receipts
(hereinafter referred to, collectively, as "ADRs"), against a written receipt
therefor adequately describing such Securities and written evidence satisfactory
to the organization surrendering the same that the depositary has acknowledged
receipt of instructions to issue ADRs with respect to such Securities in the
name of the Custodian or a nominee of the Custodian, for delivery in accordance
with such instructions.
Upon receipt of Instructions, the Custodian shall surrender or cause to be
surrendered ADRs to the issuer thereof, against a written receipt therefor
adequately describing the ADRs surrendered and written evidence satisfactory to
the organization surrendering the same that the issuer of the ADRs has
acknowledged receipt of instructions to cause its depository to deliver the
Securities underlying such ADRs in accordance with such instructions.
(k) Corporate Actions, Put Bonds, Called Bonds, Etc.
Upon receipt of Instructions, the Custodian shall: (a) deliver warrants,
puts, calls, rights or similar Securities to the issuer or trustee thereof (or
to the agent of such issuer or trustee) for the purpose of exercise or sale,
provided that the new Securities, cash or other Assets, if any, acquired as a
result of such actions are to be delivered to the Custodian; and (b) deposit
Securities upon invitations for tenders thereof, provided that the consideration
for such Securities is to be paid or delivered to the Custodian, or the tendered
Securities are to be returned to the Custodian.
Notwithstanding any provision of this Agreement to the contrary, the
Custodian shall take all necessary action, unless otherwise directed to the
contrary in Instructions, to comply with the terms of all mandatory or
compulsory exchanges, calls, tenders, redemptions, or similar rights of security
ownership, and shall notify the appropriate Fund of such action in writing by
facsimile transmission or in such other manner as such Fund and Custodian may
agree in writing.
The Fund agrees that if it gives an Instruction for the performance of an
act on the last permissible date of a period established by any optional offer
or on the last permissible date for the performance of such act, the Fund shall
hold the Bank harmless from any adverse consequences in connection with acting
upon or failing to act upon such Instructions.
(l) Interest Bearing Deposits.
Upon receipt of Instructions directing the Custodian to purchase interest
bearing fixed term and call deposits (hereinafter referred to, collectively, as
"Interest Bearing Deposits") for the account of a Fund, the Custodian shall
purchase such Interest Bearing Deposits in the name of such Fund with such banks
or trust companies, including the Custodian, any Subcustodian or any subsidiary
or affiliate of the Custodian (hereinafter referred to as "Banking
Institutions"), and in such amounts as such Fund may direct pursuant to
Instructions. Such Interest Bearing Deposits may be denominated in U.S. dollars
or other currencies, as such Fund may determine and direct pursuant to
Instructions. The responsibilities of the Custodian to a Fund for Interest
Bearing Deposits issued by the Custodian shall be that of a U.S. bank for a
similar deposit. With respect to Interest Bearing Deposits other than those
issued by the Custodian, (a) the Custodian shall be responsible for the
collection of income and the transmission of cash to and from such accounts; and
(b) the Custodian shall have no duty with respect to the selection of the
Banking Institution or for the failure of such Banking Institution to pay upon
demand.
(m) Foreign Exchange Transactions.
(l) Each Fund hereby appoints the Custodian as its agent in the
execution of all currency exchange transactions. The Custodian agrees to provide
exchange rate and U.S. Dollar information, in writing, to the Funds. Such
information shall be supplied by the Custodian at least by the business day
prior to the value date of the foreign exchange transaction, provided that the
Custodian receives the request for such information at least two business days
prior to the value date of the transaction.
(2) Upon receipt of Instructions, the Custodian shall settle foreign
exchange contracts or options to purchase and sell foreign currencies for spot
and future delivery on behalf of and for the account of a Fund with such
currency brokers or Banking Institutions as such Fund may determine and direct
pursuant to Instructions. If, in its Instructions, a Fund does not direct the
Custodian to utilize a particular currency broker or Banking Institution, the
Custodian is authorized to select such currency broker or Banking Institution as
it deems appropriate to execute the Fund's foreign currency transaction.
(3) Each Fund accepts full responsibility for its use of third party
foreign exchange brokers and for execution of said foreign exchange contracts
and understands that the Fund shall be responsible for any and all costs and
interest charges which may be incurred as a result of the failure or delay of
its third party broker to deliver foreign exchange. The Custodian shall have no
responsibility or liability with respect to the selection of the currency
brokers or Banking Institutions with which a Fund deals or the performance of
such brokers or Banking Institutions.
(4) Notwithstanding anything to the contrary contained herein, upon
receipt of Instructions the Custodian may, in connection with a foreign exchange
contract, make free outgoing payments of cash in the form of U.S. Dollars or
foreign currency prior to receipt of confirmation of such foreign exchange
contract or confirmation that the countervalue currency completing such contract
has been delivered or received.
(5) The Custodian shall not be obligated to enter into foreign exchange
transactions as principal. However, if the Custodian has made available to a
Fund its services as a principal in foreign exchange transactions and subject to
any separate agreement between the parties relating to such transactions, the
Custodian shall enter into foreign exchange contracts or options to purchase and
sell foreign currencies for spot and future delivery on behalf of and for the
account of the Fund, with the Custodian as principal.
(n) Pledges or Loans of Securities.
(1) Upon receipt of Instructions from a Fund, the Custodian will
release or cause to be released Securities held in custody to the pledgees
designated in such Instructions by way of pledge or hypothecation to secure
loans incurred by such Fund with various lenders including but not limited to
UMB Bank, n.a.; provided, however, that the Securities shall be released only
upon payment to the Custodian of the monies borrowed, except that in cases where
additional collateral is required to secure existing borrowings, further
Securities may be released or delivered, or caused to be released or delivered
for that purpose upon receipt of Instructions. Upon receipt of Instructions, the
Custodian will pay, but only from funds available for such purpose, any such
loan upon re-delivery to it of the Securities pledged or hypothecated therefor
and upon surrender of the note or notes evidencing such loan. In lieu of
delivering collateral to a pledgee, the Custodian, on the receipt of
Instructions, shall transfer the pledged Securities to a segregated account for
the benefit of the pledgee.
(2) Upon receipt of Special Instructions, and execution of a separate
Securities Lending Agreement, the Custodian will release Securities held in
custody to the borrower designated in such Instructions and may, except as
otherwise provided below, deliver such Securities prior to the receipt of
collateral, if any, for such borrowing, provided that, in case of loans of
Securities held by a Securities System that are secured by cash collateral, the
Custodian's instructions to the Securities System shall require that the
Securities System deliver the Securities of the appropriate Fund to the borrower
thereof only upon receipt of the collateral for such borrowing. The Custodian
shall have no responsibility or liability for any loss arising from the delivery
of Securities prior to the receipt of collateral. Upon receipt of Instructions
and the loaned Securities, the Custodian will release the collateral to the
borrower.
(o) Stock Dividends, Rights, Etc.
The Custodian shall receive and collect all stock dividends, rights, and
other items of like nature and, upon receipt of Instructions, take action with
respect to the same as directed in such Instructions.
(p) Routine Dealings.
The Custodian will, in general, attend to all routine and mechanical
matters in accordance with industry standards in connection with the sale,
exchange, substitution, purchase, transfer, or other dealings with Securities or
other property of each Fund except as may be otherwise provided in this
Agreement or directed from time to time by Instructions from any particular
Fund. The Custodian may also make payments to itself or others from the Assets
for disbursements and out-of-pocket expenses incidental to handling Securities
or other similar items relating to its duties under this Agreement, provided
that all such payments shall be accounted for to the appropriate Fund.
(q) Collections.
The Custodian shall (a) collect amounts due and payable to each Fund with
respect to portfolio Securities and other Assets; (b) promptly credit to the
account of each Fund all income and other payments relating to portfolio
Securities and other Assets held by the Custodian hereunder upon Custodian's
receipt of such income or payments or as otherwise agreed in writing by the
Custodian and any particular Fund; (c) promptly endorse and deliver any
instruments required to effect such collection; and (d) promptly execute
ownership and other certificates and affidavits for all federal, state, local
and foreign tax purposes in connection with receipt of income or other payments
with respect to portfolio Securities and other Assets, or in connection with the
transfer of such Securities or other Assets; provided, however, that with
respect to portfolio Securities registered in so-called street name, or physical
Securities with variable interest rates, the Custodian shall use its best
efforts to collect amounts due and payable to any such Fund. The Custodian shall
notify a Fund in writing by facsimile transmission or in such other manner as
such Fund and Custodian may agree in writing if any amount payable with respect
to portfolio Securities or other Assets is not received by the Custodian when
due. The Custodian shall not be responsible for the collection of amounts due
and payable with respect to portfolio Securities or other Assets that are in
default.
(r) Bank Accounts.
Upon Instructions, the Custodian shall open and operate a bank account or
accounts on the books of the Custodian; provided that such bank account(s) shall
be in the name of the Custodian or a nominee thereof, for the account of one or
more Funds, and shall be subject only to draft or order of the Custodian. The
responsibilities of the Custodian to any one or more such Funds for deposits
accepted on the Custodian's books shall be that of a U.S. bank for a similar
deposit.
(s) Dividends, Distributions and Redemptions.
To enable each Fund to pay dividends or other distributions to
shareholders of each such Fund and to make payment to shareholders who have
requested repurchase or redemption of their shares of each such Fund
(collectively, the "Shares"), the Custodian shall release cash or Securities
insofar as available. In the case of cash, the Custodian shall, upon the receipt
of Instructions, transfer such funds by check or wire transfer to any account at
any bank or trust company designated by each such Fund in such Instructions. In
the case of Securities, the Custodian shall, upon the receipt of Special
Instructions, make such transfer to any entity or account designated by each
such Fund in such Special Instructions.
(t) Proceeds from Shares Sold.
The Custodian shall receive funds representing cash payments received for
shares issued or sold from time to time by each Fund, and shall credit such
funds to the account of the appropriate Fund. The Custodian shall notify the
appropriate Fund of Custodian's receipt of cash in payment for shares issued by
such Fund by facsimile transmission or in such other manner as such Fund and the
Custodian shall agree. Upon receipt of Instructions, the Custodian shall: (a)
deliver all federal funds received by the Custodian in payment for shares as may
be set forth in such Instructions and at a time agreed upon between the
Custodian and such Fund; and (b) make federal funds available to a Fund as of
specified times agreed upon from time to time by such Fund and the Custodian, in
the amount of checks received in payment for shares which are deposited to the
accounts of such Fund.
(u) Proxies and Notices; Compliance with the Shareholders Communication
Act of 1985.
The Custodian shall deliver or cause to be delivered to the appropriate
Fund all forms of proxies, all notices of meetings, and any other notices or
announcements affecting or relating to Securities owned by such Fund that are
received by the Custodian, any Subcustodian, or any nominee of either of them,
and, upon receipt of Instructions, the Custodian shall execute and deliver, or
cause such Subcustodian or nominee to execute and deliver, such proxies or other
authorizations as may be required. Except as directed pursuant to Instructions,
neither the Custodian nor any Subcustodian or nominee shall vote upon any such
Securities, or execute any proxy to vote thereon, or give any consent or take
any other action with respect thereto.
The Custodian will not release the identity of any Fund to an issuer which
requests such information pursuant to the Shareholder Communications Act of 1985
for the specific purpose of direct communications between such issuer and any
such Fund unless a particular Fund directs the Custodian otherwise in writing.
(v) Books and Records.
The Custodian shall maintain such records relating to its activities under
this Agreement as are required to be maintained by Rule 31a-1 under the
Investment Company Act of 1940 ("the 1940 Act") and preserve them for the
periods prescribed in Rule 31a-2 under the 1940 Act. These records shall be open
for inspection by duly authorized officers, employees or agents (including
independent public accountants) of the appropriate Fund during normal business
hours of the Custodian.
The Custodian shall provide accountings relating to its activities under
this Agreement as shall be agreed upon by each Fund and the Custodian.
(w) Opinion of Fund's Independent Certified Public Accountants.
The Custodian shall take all reasonable action as each Fund may request to
obtain from year to year favorable opinions from each such Fund's independent
certified public accountants with respect to the Custodian's activities
hereunder and in connection with the preparation of each such Fund's periodic
reports to the SEC and with respect to any other requirements of the SEC.
(x) Reports by Independent Certified Public Accountants.
At the request of a Fund, the Custodian shall deliver to such Fund a
written report prepared by the Custodian's independent certified public
accountants with respect to the services provided by the Custodian under this
Agreement, including, without limitation, the Custodian's accounting system,
internal accounting control and procedures for safeguarding cash, Securities and
other Assets, including cash, Securities and other Assets deposited and/or
maintained in a Securities System or with a Subcustodian. Such report shall be
of sufficient scope and in sufficient detail as may reasonably be required by
such Fund and as may reasonably be obtained by the Custodian.
(y) Bills and Other Disbursements.
Upon receipt of Instructions, the Custodian shall pay, or cause to be
paid, all bills, statements, or other obligations of a Fund.
5. SUBCUSTODIANS.
From time to time, in accordance with the relevant provisions of this
Agreement, the Custodian may appoint one or more Domestic Subcustodians, Foreign
Subcustodians, Special Subcustodians, or Interim Subcustodians (as each are
hereinafter defined) to act on behalf of any one or more Funds. A Domestic
Subcustodian, in accordance with the provisions of this Agreement, may also
appoint a Foreign Subcustodian, Special Subcustodian, or Interim Subcustodian to
act on behalf of any one or more Funds. For purposes of this Agreement, all
Domestic Subcustodians, Foreign Subcustodians, Special Subcustodians and Interim
Subcustodians shall be referred to collectively as "Subcustodians".
(a) Domestic Subcustodians.
The Custodian may, at any time and from time to time, appoint any bank as
defined in Section 2(a)(5) of the 1940 Act or any trust company or other entity,
any of which meet the requirements of a custodian under Section 17(f) of the
1940 Act and the rules and regulations thereunder, to act for the Custodian on
behalf of any one or more Funds as a subcustodian for purposes of holding Assets
of such Fund(s) and performing other functions of the Custodian within the
United States (a "Domestic Subcustodian"). The Custodian's appointment of any
such Domestic Subcustodian shall not be effective without prior written approval
of the appointment by the Fund(s). Each such duly approved Domestic Subcustodian
shall be listed on Appendix A attached hereto, as it may be amended, from time
to time.
(b) Foreign Subcustodians.
The Custodian may at any time appoint, or cause a Domestic Subcustodian to
appoint, any bank, trust company or other entity meeting the requirements of an
"eligible foreign custodian" under Section 17(f) of the 1940 Act and the rules
and regulations thereunder to act for the Custodian on behalf of any one or more
Funds as a subcustodian or sub-subcustodian (if appointed by a Domestic
Subcustodian) for purposes of holding Assets of the Fund(s) and performing other
functions of the Custodian in countries other than the United States of America
(hereinafter referred to as a "Foreign Subcustodian" in the context of either a
subcustodian or a sub-subcustodian); provided that the Custodian shall have
obtained prior written confirmation from each Fund of the approval of the Board
of Directors or other governing body of each such Fund (which approval may be
withheld in the sole discretion of such Board of Directors or other governing
body or entity) with respect to (i) the identity of any proposed Foreign
Subcustodian (including branch designation), (ii) the country or countries in
which, and the securities depositories or clearing agencies (hereinafter
"Securities Depositories and Clearing Agencies"), if any, through which, the
Custodian or any proposed Foreign Subcustodian is authorized to hold Securities
and other Assets of each such Fund, and (iii) the form and terms of the
subcustodian agreement to be entered into with such proposed Foreign
Subcustodian. Each such duly approved Foreign Subcustodian and the countries
where and the Securities Depositories and Clearing Agencies through which they
may hold Securities and other Assets of the Fund(s) shall be listed on Appendix
A attached hereto, as it may be amended, from time to time. Each Fund shall be
responsible for informing the Custodian sufficiently in advance of a proposed
investment which is to be held in a country in which no Foreign Subcustodian is
authorized to act, in order that there shall be sufficient time for the
Custodian, or any Domestic Subcustodian, to effect the appropriate arrangements
with a proposed Foreign Subcustodian, including obtaining approval as provided
in this Section 5(b). In connection with the appointment of any Foreign
Subcustodian, the Custodian shall, or shall cause the Domestic Subcustodian to,
enter into a subcustodian agreement with the Foreign Subcustodian in form and
substance approved by each such Fund. The Custodian shall not consent to the
amendment of, and shall cause any Domestic Subcustodian not to consent to the
amendment of, any agreement entered into with a Foreign Subcustodian, which
materially affects any Fund's rights under such agreement, except upon prior
written approval of such Fund pursuant to Special Instructions.
(c) Interim Subcustodians.
Notwithstanding the foregoing, in the event that a Fund shall invest in an
Asset to be held in a country in which no Foreign Subcustodian is authorized to
act, the Custodian shall notify such Fund in writing by facsimile transmission
or in such other manner as such Fund and the Custodian shall agree in writing of
the unavailability of an approved Foreign Subcustodian in such country; and upon
the receipt of Special Instructions from such Fund, the Custodian shall, or
shall cause its Domestic Subcustodian to, appoint or approve an entity (referred
to herein as an "Interim Subcustodian") designated in such Special Instructions
to hold such Security or other Asset.
(d) Special Subcustodians.
Upon receipt of Special Instructions, the Custodian shall, on behalf of a
Fund, appoint one or more banks, trust companies or other entities designated in
such Special Instructions to act for the Custodian on behalf of such Fund as a
subcustodian for purposes of: (i) effecting third-party repurchase transactions
with banks, brokers, dealers or other entities through the use of a common
custodian or subcustodian; (ii) providing depository and clearing agency
services with respect to certain variable rate demand note Securities, (iii)
providing depository and clearing agency services with respect to dollar
denominated Securities, and (iv) effecting any other transactions designated by
such Fund in such Special Instructions. Each such designated subcustodian
(hereinafter referred to as a "Special Subcustodian") shall be listed on
Appendix A attached hereto, as it may be amended from time to time. In
connection with the appointment of any Special Subcustodian, the Custodian shall
enter into a subcustodian agreement with the Special Subcustodian in form and
substance approved by the appropriate Fund in Special Instructions. The
Custodian shall not amend any subcustodian agreement entered into with a Special
Subcustodian, or waive any rights under such agreement, except upon prior
approval pursuant to Special Instructions.
(e) Termination of a Subcustodian.
The Custodian may, at any time in its discretion upon notification to the
appropriate Fund(s), terminate any Subcustodian of such Fund(s) in accordance
with the termination provisions under the applicable subcustodian agreement, and
upon the receipt of Special Instructions, the Custodian will terminate any
Subcustodian in accordance with the termination provisions under the applicable
subcustodian agreement.
(f) Certification Regarding Foreign Subcustodians.
Upon request of a Fund, the Custodian shall deliver to such Fund a
certificate stating: (i) the identity of each Foreign Subcustodian then acting
on behalf of the Custodian; (ii) the countries in which and the Securities
Depositories and Clearing Agencies through which each such Foreign Subcustodian
is then holding cash, Securities and other Assets of such Fund; and (iii) such
other information as may be requested by such Fund, and as the Custodian shall
be reasonably able to obtain, to evidence compliance with rules and regulations
under the 1940 Act.
6. STANDARD OF CARE.
(a) General Standard of Care.
The Custodian shall be liable to a Fund for all losses, damages and
reasonable costs and expenses suffered or incurred by such Fund resulting from
the negligence or willful misfeasance of the Custodian or any Domestic
Subcustodian.
(b) Actions Prohibited by Applicable Law, Events Beyond Custodian's
Control, Sovereign Risk, Etc.
In no event shall the Custodian or any Domestic Subcustodian incur
liability hereunder (i) if the Custodian or any Subcustodian or Securities
System, or any subcustodian, Securities System, Securities Depository or
Clearing Agency utilized by the Custodian or any such Subcustodian, or any
nominee of the Custodian or any Subcustodian (individually, a "Person") is
prevented, forbidden or delayed from performing, or omits to perform, any act or
thing which this Agreement provides shall be performed or omitted to be
performed, by reason of: (a) any provision of any present or future law or
regulation or order of the United States of America, or any state thereof, or of
any foreign country, or political subdivision thereof or of any court of
competent jurisdiction (and neither the Custodian nor any other Person shall be
obligated to take any action contrary thereto); or (b) any event beyond the
control of the Custodian or other Person such as armed conflict, riots, strikes,
lockouts, labor disputes, equipment or transmission failures, natural disasters,
or failure of the mails, transportation, communications or power supply; or (ii)
for any loss, damage, cost or expense resulting from "Sovereign Risk." A
"Sovereign Risk" shall mean nationalization, expropriation, currency
devaluation, revaluation or fluctuation, confiscation, seizure, cancellation,
destruction or similar action by any governmental authority, de facto or de
jure; or enactment, promulgation, imposition or enforcement by any such
governmental authority of currency restrictions, exchange controls, taxes,
levies or other charges affecting a Fund's Assets; or acts of armed conflict,
terrorism, insurrection or revolution; or any other act or event beyond the
Custodian's or such other Person's control.
(c) Liability for Past Records.
Neither the Custodian nor any Domestic Subcustodian shall have any
liability in respect of any loss, damage or expense suffered by a Fund, insofar
as such loss, damage or expense arises from the performance of the Custodian or
any Domestic Subcustodian in reliance upon records that were maintained for such
Fund by entities other than the Custodian or any Domestic Subcustodian prior to
the Custodian's employment hereunder.
(d) Advice of Counsel.
The Custodian and all Domestic Subcustodians shall be entitled to receive
and act upon advice of counsel of its own choosing on all matters. The Custodian
and all Domestic Subcustodians shall be without liability for any actions taken
or omitted in good faith pursuant to the advice of counsel.
(e) Advice of the Fund and Others.
The Custodian and any Domestic Subcustodian may rely upon the advice of
any Fund and upon statements of such Fund's accountants and other persons
believed by it in good faith to be expert in matters upon which they are
consulted, and neither the Custodian nor any Domestic Subcustodian shall be
liable for any actions taken or omitted, in good faith, pursuant to such advice
or statements.
<PAGE>
(f) Instructions Appearing to be Genuine.
The Custodian and all Domestic Subcustodians shall be fully protected and
indemnified in acting as a custodian hereunder upon any Resolutions of the Board
of Directors or Trustees, Instructions, Special Instructions, advice, notice,
request, consent, certificate, instrument or paper appearing to it to be genuine
and to have been properly executed and shall, unless otherwise specifically
provided herein, be entitled to receive as conclusive proof of any fact or
matter required to be ascertained from any Fund hereunder a certificate signed
by any officer of such Fund authorized to countersign or confirm Special
Instructions.
(g) Exceptions from Liability.
Without limiting the generality of any other provisions hereof, neither
the Custodian nor any Domestic Subcustodian shall be under any duty or
obligation to inquire into, nor be liable for:
(i) the validity of the issue of any Securities purchased by or for
any Fund, the legality of the purchase thereof or evidence of ownership required
to be received by any such Fund, or the propriety of the decision to purchase or
amount paid therefor;
(ii) the legality of the sale of any Securities by or for any Fund, or
the propriety of the amount for which the same were sold; or
(iii) any other expenditures, encumbrances of Securities, borrowings
or similar actions with respect to any Fund's Assets;
and may, until notified to the contrary, presume that all Instructions or
Special Instructions received by it are not in conflict with or in any way
contrary to any provisions of any such Fund's Declaration of Trust, Partnership
Agreement, Articles of Incorporation or By-Laws or votes or proceedings of the
shareholders, trustees, partners or directors of any such Fund, or any such
Fund's currently effective Registration Statement on file with the SEC.
7. LIABILITY OF THE CUSTODIAN FOR ACTIONS OF OTHERS.
(a) Domestic Subcustodians
The Custodian shall be liable for the acts or omissions of any Domestic
Subcustodian to the same extent as if such actions or omissions were performed
by the Custodian itself.
(b) Liability for Acts and Omissions of Foreign Subcustodians.
The Custodian shall be liable to a Fund for any loss or damage to such
Fund caused by or resulting from the acts or omissions of any Foreign
Subcustodian to the extent that, under the terms set forth in the subcustodian
agreement between the Custodian or a Domestic Subcustodian and such Foreign
Subcustodian, the Foreign Subcustodian has failed to perform in accordance with
the standard of conduct imposed under such subcustodian agreement and the
Custodian or Domestic Subcustodian recovers from the Foreign Subcustodian under
the applicable subcustodian agreement.
(c) Securities Systems, Interim Subcustodians, Special Subcustodians,
Securities Depositories and Clearing Agencies.
The Custodian shall not be liable to any Fund for any loss, damage or
expense suffered or incurred by such Fund resulting from or occasioned by the
actions or omissions of a Securities System, Interim Subcustodian, Special
Subcustodian, or Securities Depository and Clearing Agency unless such loss,
damage or expense is caused by, or results from, the negligence or willful
misfeasance of the Custodian or any Domestic Subcustodian.
<PAGE>
(d) Defaults or Insolvency's of Brokers, Banks, Etc.
The Custodian shall not be liable for any loss, damage or expense suffered
or incurred by any Fund resulting from or occasioned by the actions, omissions,
neglects, defaults or insolvency of any broker, bank, trust company or any other
person with whom the Custodian may deal (other than any of such entities acting
as a Subcustodian, Securities System or Securities Depository and Clearing
Agency, for whose actions the liability of the Custodian is set out elsewhere in
this Agreement) unless such loss, damage or expense is caused by, or results
from, the negligence or willful misfeasance of the Custodian.
(e) Reimbursement of Expenses.
Each Fund agrees to reimburse the Custodian for all out-of-pocket expenses
incurred by the Custodian in connection with this Agreement, but excluding
salaries and usual overhead expenses.
8. INDEMNIFICATION.
(a) Indemnification by Fund.
Subject to the limitations set forth in this Agreement, each Fund agrees
to indemnify and hold harmless the Custodian and its nominees from all losses,
damages and expenses (including attorneys' fees) suffered or incurred by the
Custodian or its nominee caused by or arising from actions taken by the
Custodian, its employees or agents in the performance of its duties and
obligations under this Agreement, including, but not limited to, any
indemnification obligations undertaken by the Custodian under any relevant
subcustodian agreement; provided, however, that such indemnity shall not apply
to the extent (i) such loss, damage or expense is incurred by, or results from,
the negligence or willful misfeasance of the Custodian or any Domestic
Subcustodian, or (ii) the Custodian is liable under Section 6 or 7 hereof.
If any Fund requires the Custodian to take any action with respect to
Securities, which action involves the payment of money or which may, in the
opinion of the Custodian, result in the Custodian or its nominee assigned to
such Fund being liable for the payment of money or incurring liability of some
other form, such Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
(b) Indemnification by Custodian.
Subject to the limitations set forth in this Agreement and in addition to
the obligations provided in Sections 6 and 7, the Custodian agrees to indemnify
and hold harmless each Fund from all losses, damages and expenses suffered or
incurred by each such Fund caused by the negligence or willful misfeasance of
the Custodian or any Domestic Subcustodian.
9. ADVANCES.
In the event that, pursuant to Instructions, the Custodian or any
Subcustodian, Securities System, or Securities Depository or Clearing Agency
acting either directly or indirectly under agreement with the Custodian (each of
which for purposes of this Section 9 shall be referred to as "Custodian"), makes
any payment or transfer of funds on behalf of any Fund as to which there would
be, at the close of business on the date of such payment or transfer,
insufficient funds held by the Custodian on behalf of any such Fund, the
Custodian may, in its discretion without further Instructions, provide an
advance ("Advance") to any such Fund in an amount sufficient to allow the
completion of the transaction by reason of which such payment or transfer of
funds is to be made. In addition, in the event the Custodian is directed by
Instructions to make any payment or transfer of funds on behalf of any Fund as
to which it is subsequently determined that such Fund has overdrawn its cash
account with the Custodian as of the close of business on the date of such
payment or transfer, said overdraft shall constitute an Advance. Any Advance
shall be payable by the Fund on behalf of which the Advance was made on demand
by Custodian, unless otherwise agreed by such Fund and the Custodian, and shall
accrue interest from the date of the Advance to the date of payment by such Fund
to the Custodian at a rate agreed upon in writing from time to time by the
Custodian and such Fund. It is understood that any transaction in respect of
which the Custodian shall have made an Advance, including but not limited to a
foreign exchange contract or transaction in respect of which the Custodian is
not acting as a principal, is for the account of and at the risk of the Fund on
behalf of which the Advance was made, and not, by reason of such Advance, deemed
to be a transaction undertaken by the Custodian for its own account and risk.
The Custodian and each of the Funds which are parties to this Agreement
acknowledge that the purpose of Advances is to finance temporarily the purchase
or sale of Securities for prompt delivery in accordance with the settlement
terms of such transactions or to meet emergency expenses not reasonably
foreseeable by a Fund. The Custodian shall promptly notify the appropriate Fund
of any Advance. Such notification shall be sent by facsimile transmission or in
such other manner as such Fund and the Custodian may agree.
10. LIENS.
If the Bank advances cash or securities to the Fund for any purpose or in
the event that the Bank or its nominee shall incur or be assessed any taxes,
charges, expenses, assessments, claims or liabilities in connection with the
performance of its duties hereunder, except such as may arise from its or its
nominee's negligent action, negligent failure to act or willful misconduct, any
Property at any time held for the Custody Account shall be security therefor and
the Fund hereby grants a security interest therein to the Bank. The Fund shall
promptly reimburse the Bank for any such advance of cash or securities or any
such taxes, charges, expenses, assessments, claims or liabilities upon request
for payment, but should the Fund fail to so reimburse the Bank, the Bank shall
be entitled to dispose of such Property to the extent necessary to obtain
reimbursement. The Bank shall be entitled to debit any account of the Fund with
the Bank including, without limitation, the Custody Account, in connection with
any such advance and any interest on such advance as the Bank deems reasonable.
11. COMPENSATION.
Each Fund will pay to the Custodian such compensation as is agreed to in
writing by the Custodian and each such Fund from time to time. Such
compensation, together with all amounts for which the Custodian is to be
reimbursed in accordance with Section 7(e), shall be billed to each such Fund
and paid in cash to the Custodian. The Custodian may debit such Fund's account
if any such bill is not paid on a timely basis.
12. POWERS OF ATTORNEY.
Upon request, each Fund shall deliver to the Custodian such proxies,
powers of attorney or other instruments as may be reasonable and necessary or
desirable in connection with the performance by the Custodian or any
Subcustodian of their respective obligations under this Agreement or any
applicable subcustodian agreement.
13. TERMINATION AND ASSIGNMENT.
Any Fund or the Custodian may terminate this Agreement by notice in
writing, delivered or mailed, postage prepaid (certified mail, return receipt
requested) to the other not less than 90 days prior to the date upon which such
termination shall take effect. Upon termination of this Agreement, the
appropriate Fund shall pay to the Custodian such fees as may be due the
Custodian hereunder as well as its reimbursable disbursements, costs and
expenses paid or incurred. Upon termination of this Agreement, the Custodian
shall deliver, at the terminating party's expense, all Assets held by it
hereunder to the appropriate Fund or as otherwise designated by such Fund by
Special Instructions. Upon such delivery, the Custodian shall have no further
obligations or liabilities under this Agreement except as to the final
resolution of matters relating to activity occurring prior to the effective date
of termination.
This Agreement may not be assigned by the Custodian or any Fund without
the respective consent of the other, duly authorized by a resolution by its
Board of Directors or Trustees.
<PAGE>
14. ADDITIONAL FUNDS.
An additional Fund or Funds may become a party to this Agreement after the
date hereof by an instrument in writing to such effect signed by such Fund or
Funds and the Custodian. If this Agreement is terminated as to one or more of
the Funds (but less than all of the Funds) or if an additional Fund or Funds
shall become a party to this Agreement, there shall be delivered to each party
an Appendix B or an amended Appendix B, signed by each of the additional Funds
(if any) and each of the remaining Funds as well as the Custodian, deleting or
adding such Fund or Funds, as the case may be. The termination of this Agreement
as to less than all of the Funds shall not affect the obligations of the
Custodian and the remaining Funds hereunder as set forth on the signature page
hereto and in Appendix B as revised from time to time.
15. NOTICES.
As to the Dobson Covered Call Fund, notices, requests, instructions and
other writings delivered to Dobson Capital Management, Attn. Chuck Dobson, 1422
S. Van Ness, Santa Ana, California 92707 postage prepaid, with a copy to
AmeriPrime Financial Services, Inc. Attn: Ken Trumpfheller, 175 Westwood, Suite
500, Southlake, TX 76092, postage prepaid, or to such other address as the Fund
may have designated to the Custodian in writing, shall be deemed to have been
properly delivered or given to the Fund. For every other Fund, such notices,
requests, instructions and other writings delivered to AmeriPrime Securities
Inc., as set forth above, or to such other address as the Fund may have
designated to the Custodian in writing, shall be deemed to have been properly
delivered or given to the Fund.
Notices, requests, instructions and other writings delivered to the
Securities Administration department of the Custodian at its office at 928 Grand
Blvd., 10th Floor, Attn: Ralph Santoro, Kansas City, Missouri 64106, or mailed
postage prepaid, to the Custodian's Securities Administration department, Post
Office Box 226, Attn: Ralph Santoro, Kansas City, Missouri 64141, or to such
other addresses as the Custodian may have designated to each Fund in writing,
shall be deemed to have been properly delivered or given to the Custodian
hereunder; provided, however, that procedures for the delivery of Instructions
and Special Instructions shall be governed by Section 2(c) hereof.
16. MISCELLANEOUS.
(a) This Agreement is executed and delivered in the State of Missouri and
shall be governed by the laws of such state.
(b) All of the terms and provisions of this Agreement shall be binding
upon, and inure to the benefit of, and be enforceable by the respective
successors and assigns of the parties hereto.
(c) No provisions of this Agreement may be amended, modified or waived, in
any manner except in writing, properly executed by both parties hereto;
provided, however, Appendix A may be amended from time to time as Domestic
Subcustodians, Foreign Subcustodians, Special Subcustodians, and Securities
Depositories and Clearing Agencies are approved or terminated according to the
terms of this Agreement.
(d) 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.
(e) This Agreement shall be effective as of the date of execution hereof.
(f) This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(g) The following terms are defined terms within the meaning of this
Agreement, and the definitions thereof are found in the following sections of
the Agreement:
<PAGE>
Term Section
- ---- -------
Account 4(b)(3)(ii)
ADR'S 4(j)
Advance 9
Assets 2(b)
Authorized Person 3
Banking Institution 4(1)
Domestic Subcustodian 5(a)
Foreign Subcustodian 5(b)
Instruction 2(c)(1)
Interim Subcustodian 5(c)
Interest Bearing Deposit 4(1)
Liens 10
OCC 4(g)(1)
Person 6(b)
Procedural Agreement 4(h)
SEC 4(b)(3)
Securities 2(a)
Securities Depositories and Clearing Agencies 5(b)
Securities System 4(b)(3)
Shares 4(s)
Sovereign Risk 6(b)
Special Instruction 2(c)(2)
Special Subcustodian 5(d)
Subcustodian 5
1940 Act 4(v)
(h) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid by any court of competent
jurisdiction, the remaining portion or portions shall be considered severable
and shall not be affected, and the rights and obligations of the parties shall
be construed and enforced as if this Agreement did not contain the particular
part, term or provision held to be illegal or invalid.
(i) This Agreement constitutes the entire understanding and agreement
of the parties hereto with respect to the subject matter hereof, and accordingly
supersedes, as of the effective date of this Agreement, any custodian agreement
heretofore in effect between the Fund and the Custodian.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Custody
Agreement to be executed by their respective duly authorized officers.
AMERIPRIME FUNDS
Attest: /s/ Monta B. Henry By: /s/
- --------------------------------
------------------------------------------
Name: Kenneth D. Trumpfheller
-------------------------------------------
Title: President
-------------------------------------------
Date: February 19, 1999
-------------------------------------------
UMB BANK, N.A.
Attest: By:
- --------------------------------- /s/
------------------------------------------
Name: Ralph R. Santoro
------------------------------------------
Title: Senior Vice President
------------------------------------------
Date: February 19, 1999
------------------------------------------
<PAGE>
APPENDIX A
CUSTODY AGREEMENT
DOMESTIC SUBCUSTODIANS:
United Missouri Trust Company of New York
SECURITIES SYSTEMS:
Federal Book Entry
Depository Trust Company
Participant Trust Company
SPECIAL SUBCUSTODIANS:
<TABLE>
<CAPTION>
SECURITIES DEPOSITORIES
COUNTRIES FOREIGN SUBCUSTODIANS CLEARING AGENCIES
Euroclear
<S> <C>
AMERIPRIME FUNDS UMB BANK, N.A.
By: /s/ By:
- ------------------------------------------------------ ---------------------------------------------------
Name: Kenneth D. Trumpfheller Name: Ralph R. Santoro
- ------------------------------------------------------ ---------------------------------------------------
Title: President Title: Senior Vice President
- ------------------------------------------------------ ---------------------------------------------------
Date: February 19, 1999 Date: February 19, 1999
- ------------------------------------------------------ ---------------------------------------------------
</TABLE>
<PAGE>
APPENDIX B
CUSTODY AGREEMENT
The following open-end management investment companies ("Funds") are
hereby made parties to the Custody Agreement dated February 19, 1999, with UMB
Bank, n.a. ("Custodian") and the AmeriPrime Funds, and agree to be bound by all
the terms and conditions contained in said Agreement:
THE DOBSON COVERED CALL FUND
AMERIPRIME FUNDS
Attest: /s/ Monta B. Henry By:
- ---------------------------------- /s/
--------------------------------------
Name: Kenneth D. Trumpfheller
--------------------------------------
Title: President
--------------------------------------
Date: February 19, 1999
--------------------------------------
UMB BANK, N.A.
Attest: By:
- --------------------------------- /s/
--------------------------------------
Name: Ralph R. Santoro
-------------------------------------
Title: Senior Vice President
--------------------------------------
Date: February 19, 1999
--------------------------------------
BROWN, CUMMINS & BROWN CO., L.P.A.
ATTORNEYS AND COUNSELORS AT LAW
3500 CAREW TOWER
J. W. BROWN (1911-1995) 441 VINE STREET JOANN M. STRASSER
JAMES R. CUMMINS CINCINNATI, OHIO 45202 AARON A. VANDERLAAN
ROBERT S BROWN TELEPHONE (513) 381-2121
DONALD S. MENDELSOHN TELECOPIER (513) 381-2125 OF COUNSEL
LYNNE SKILKEN GILBERT BETTMAN
AMY G. APPLEGATE
KATHRYN KNUE PRZYWARA
MELANIE S. CORWIN
July 29, 1999
AmeriPrime Funds
1793 Kingswood Drive, Suite 200
Southlake, Texas 76092
Gentlemen:
A legal opinion that we prepared was filed with Post-Effective
Amendment No. 9 to your Registration Statement (the "Legal Opinion"). We hereby
give you our consent to incorporate by reference the Legal Opinion into
Post-Effective Amendment No. 28 to your Registration Statement (the
"Amendment"), and consent to all references to us in your Amendment.
Very truly yours,
/s/
Brown, Cummins & Brown Co., L.P.A.
BCB/jlm
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to all references made to us in this Post-Effective Amendment No. 28
to AmeriPrime Fund's Registration Statement on Form N1-A.
________/s/____________________
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
July 27, 1999
AMERIPRIME FUNDS
CLASS B MASTER DISTRIBUTION PLAN
PURSUANT TO RULE 12B-1
WHEREAS, 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; 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 each series listed on Exhibit
A (each a "Fund", collectively the "Funds);
NOW THEREFORE, the Trust hereby adopts this Plan for the Class B Shares of
each Fund, 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, each Fund may, directly or indirectly, engage in any
activities related to the distribution of Class B 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 Class B Shares, or
that may be advising shareholders of the Fund regarding the purchase,
sale or retention of Class B Shares; (b) expenses of maintaining
personnel (including personnel of organizations with which the Fund
has entered into agreements related to this Plan) who engage in or
support distribution of Class B Shares; (c) costs of preparing,
printing and distributing prospectuses and statements of additional
information and reports of the Fund for recipients other than existing
shareholders of the Fund; (d) 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; (e) costs of
preparing, printing and distributing sales literature; (f) costs of
obtaining such information, analyses and reports with respect to
marketing and promotional activities as the Fund may, from time to
time, deem advisable; and (g) 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
Class B Shares, either directly or through other persons with which
the Trust has entered into agreements related to this Plan.
2. Fees.
(a) Annual Fees. Fund will pay the Fund's investment adviser ("the
Adviser") an annual fee for the Adviser's services in connection with
the sales and promotion of the Fund, including its expenses in
connection therewith (collectively, "Distribution Expenses"). The
annual fee paid to the Adviser under this Plan will be calculated
daily and paid monthly by the Fund on the first day of each month at
an annual rate of 0.75% of the average daily net assets of the Class B
shares of the Fund.
(b) Service Fees. In addition to the payments provided for in Section 2
and in order to further enhance the distribution of the Fund's Class B
Shares, each Fund shall pay the Adviser a fee at the rate of 0.25% of
the average daily net assets of the Class B Shares of the Fund for
payments made to securities dealers or other financial intermediaries,
financial institutions, investment advisors and others that (a) hold
Class B Shares for shareholders in omnibus accounts or as shareholders
of record or provide shareholder support or administrative services to
the Fund and its shareholders or (b) render shareholder support
services not otherwise provided by the Trust's transfer agent,
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. If the NASD adopts a definition of "service fees"
for purposes of Section 26(d) of the Rules of Fair Practice of the
NASD (or any successor to such rule) that differs from the definition
of service fees hereunder, the definition of service fees hereunder
shall be automatically amended, without further action of the parties,
to conform to such NASD definition.
(c) Payments received by the Adviser pursuant to this Plan are in addition
to fees paid by the Fund pursuant to the Management Agreement
3. Term and Termination.
(a) This Plan shall become effective with respect to each Fund listed on
Exhibit A (which may be amended) upon (i) execution of an exhibit
adopting this Plan and (ii) the first issuance of Class B shares 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 with respect to a Fund at any time by the
vote of a majority of the Rule 12b-1 Trustees or by vote of a majority
of the outstanding voting securities (as defined in the 1940 Act) of
the Class B Shares of the Fund; and Exhibit A shall be amended
accordingly. If this Plan is terminated with respect to a Fund, the
Fund will not be required to make any payments for expenses incurred
after the date of termination.
5. Amendments. All material amendments to this Plan must be approved in
the manner provided for annual renewal of this Plan in Section 4(b)
hereof. In addition, this Plan may not be amended to increase
materially the amount of expenditures provided for in Sections 2 and 3
hereof unless such amendment is approved by a vote of the majority of
the outstanding voting securities (as defined in the 1940 Act) of the
Class B Shares of the Fund to which the increase applies.
6. 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 interested persons of
the Trust.
7. 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.
8. Recordkeeping. The Trust shall preserve copies of this Plan and any
related agreement and all reports made pursuant to Section 7 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.
9. Limitation of Liability. A copy of the Agreement and Declaration of
Trust of the Trust 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 Plan are not binding upon the Trustees, the
shareholders of the Trust individually or , with respect to each Fund,
the assets or property of any other series of the Trust, but are
binding only upon the assets and property of each Fund, respectively.
<PAGE>
Exhibit A
AMERIPRIME FUNDS
CLASS B MASTER DISTRIBUTION PLAN
The Class B Master Distribution Plan has been adopted with respect to the
following Funds:
Westcott Nothing But Net Fund
Westcott Multi-National Large-Cap Fund
Westcott Fixed Income Fund
AmeriPrime Funds
Date: ______________ By: ____________________________________
Kenneth Trumpfheller
AMERIPRIME FUNDS
CLASS A MASTER DISTRIBUTION PLAN
PURSUANT TO RULE 12B-1
WHEREAS, 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; 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 each series listed on Exhibit
A (each a "Fund", collectively the "Funds");
NOW THEREFORE, the Trust hereby adopts this Plan for the Class A Shares of
each Fund, 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, each Fund may, directly or indirectly, engage in any
activities related to the distribution of Class A 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 Class A Shares, or
that may be advising shareholders of the Fund regarding the purchase,
sale or retention of Class A Shares, or that hold Class A Shares for
shareholders in omnibus accounts or as shareholders of record or
provide shareholder support or administrative services to the Fund and
its shareholders; (b) payments made to securities dealers or other
financial intermediaries, financial institutions, investment advisors
and others that render shareholder support services not otherwise
provided by the Fund's transfer agent, including, but not limited to,
allocated overhead, office space and equipment, telephone facilities
and expenses, answering routine inquiries regarding the Fund,
processing shareholder transactions, and providing such other
shareholder services as the Trust may reasonably request; (c) expenses
of maintaining personnel (including personnel of organizations with
which the Fund has entered into agreements related to this Plan) who
engage in or support distribution of Class A Shares; (d) costs of
preparing, 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 Fund 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
Class A Shares, either directly or through other persons with which
the Trust has entered into agreements related to this Plan.
2. Annual Fee. Each Fund will pay the Fund's investment adviser ("the
Adviser") an annual fee for the Adviser's services in connection with
the sales and promotion of the Fund, including its expenses in
connection therewith (collectively, "Distribution Expenses"). The
annual fee paid to the Adviser under this Plan will be calculated
daily and paid monthly by the Fund on the first day of each month at
an annual rate of 0.25% of the average daily net assets of the Class A
shares of the Fund. Payments received by the Advisor pursuant to this
Plan are in addition to fees paid by the Fund pursuant to the
Management Agreement.
3. Term and Termination.
(a) This Plan shall become effective with respect to each Fund listed on
Exhibit A (which may be amended) upon (i) execution of an exhibit
adopting this Plan and (ii) the first issuance of Class A shares 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 with respect to a Fund at any time by the
vote of a majority of the Rule 12b-1 Trustees or by vote of a majority
of the outstanding voting securities (as defined in the 1940 Act) of
the Class A Shares of the Funds; and Exhibit A shall be amended
accordingly. If this Plan is terminated with respect to a Fund, 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
materially 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 (as defined in the 1940 Act) of the
Class A Shares of the Fund to which the increase applies.
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 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 to 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 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 Plan are not binding upon the Trustees, the
shareholders of the Trust individually or, with respect to each Fund,
the assets or property of any other series of the Trust, but are
binding only upon the assets and property of each Fund, respectively.
<PAGE>
Exhibit A
AMERIPRIME FUNDS
CLASS A MASTER DISTRIBUTION PLAN
The Class A Master Distribution Plan has been adopted with respect to the
following Funds:
Westcott Nothing But Net Fund
Westcott Multi-National Large-Cap Fund
Westcott Fixed Income Fund
AmeriPrime Funds
Date: ______________ By: ____________________________________
Kenneth Trumpfheller
THE AMERIPRIME FUNDS
MULTIPLE CLASS PLAN PURSUANT TO RULE 18F-3
FOR THE WESTCOTT NOTHING BUT NET FUND
This Multiple Class Plan (the "Plan") is adopted in accordance with
Rule 18f-3 (the "Rule") under the Investment Company Act of 1940, as amended
(the "Act") by AmeriPrime Funds (the "Trust") on behalf of the Westcott Nothing
But Net Fund (the "Fund"). A majority of the Trustees, including a majority of
the Trustees who are not interested persons of the Trust (as defined in the
Act), having determined that the Plan is in the best interests of each class of
the Fund individually and of the Trust as a whole, have approved the Plan.
The provisions of the Plan are:
1. General Description Of Classes. Each class of shares of the Fund shall
represent interests in the same portfolio of investments of the Fund
and shall be identical in all respects, except that each class shall
differ with respect to: (i) Rule 12b-1 Plans adopted with respect to
the class; (ii) distribution and related services and expenses as
provided for in the Plans; (iii) such differences relating to purchase
minimums, eligible investors and exchange privileges as may be set
forth in the prospectus and statement of additional information of the
Fund, as the same may be amended or supplemented from time to time;
and (iv) the designation of each class of shares. There currently are
three classes designated: Class A, Class B, and Institutional.
a. Class A Shares are offered and sold at net asset value plus a maximum
sales load of 5.00%. Purchases of $1 million or more are sold at net
asset value with no sales load, but are subject to a CDSC of 1.00% if
redeemed within one year of the date of purchase. Class A Shares are
subject to a maximum 0.25% annual distribution fee.
b. Class B Shares are offered at net asset value, without initial sales
charge, subject to a maximum 1.00% annual distribution fee (of which
.75% is an asset based sales charge and 0.25% is a service fee) and a
maximum CDSC, based on the lower of the shares' cost and current net
asset value, of 5.00%.
c. Institutional Shares are available for purchase by registered
investment advisers on behalf of their clients. Institutional
shareholders pay no sales load or 12b-1 fees.
2. Expense Allocations To Each Class.
a. In addition to the service and distribution fees described above,
certain expenses may be attributable to a particular class of shares
of the Fund ("Class Expenses"). Class Expenses are charged directly to
net assets of the class to which the expense is attributed and are
borne on a pro rata basis by the outstanding shares of that class.
Class Expenses may include;
(i) expenses incurred in connection with a meeting of shareholders;
(ii) litigation expenses;
(iii) printing and postage expenses of shareholders reports, prospectuses
and proxies to current shareholders of a specific class;
(iv) expenses of administrative personnel and services required to support
the shareholders of a specific class;
(v) transfer agent fees and shareholder servicing expenses; and
(vi) such other expenses incurred by or attributable to a specific class.
b. All other expenses of the Fund are allocated to each class on the
basis of the net asset value of that class in relation to the net
asset value of the Fund. Notwithstanding the foregoing, the
distributor or adviser of the Fund may waive or reimburse the expenses
of a specific class or classes to the extent permitted under the Rule.
3. Class Designation. Subject to the approval by the Trustees of the
Trust, the Fund may alter the nomenclature for the designations of one
or more of its classes of shares.
4. Additional Information. This plan is qualified by and subject to the
terms of the then current Prospectus for the applicable class of
shares; provided, however, that none of the terms set forth in any
such Prospectus shall be inconsistent with the terms of this Plan. The
Prospectus for each class contains additional information about the
class and the Fund's multiple class structure.
5. Effective Date. This Plan is effective on __________, 1999, provided
that this Plan shall not become effective with respect to the Fund or
class unless first approved by a majority of the Trustees, including a
majority of the Trustees who are not interested persons of the Trust
(as defined in the Act). This Plan may be terminated or amended at any
time with respect to the Fund or class thereof by a majority of the
Trustees, including a majority of the Trustees who are not interested
persons of the Trust (as defined in the Act).
THE AMERIPRIME FUNDS
MULTIPLE CLASS PLAN PURSUANT TO RULE 18F-3
FOR THE WESTCOTT MULTI-NATIONAL LARGE CAP FUND
This Multiple Class Plan (the "Plan") is adopted in accordance with
Rule 18f-3 (the "Rule") under the Investment Company Act of 1940, as amended
(the "Act") by AmeriPrime Funds (the "Trust") on behalf of the Westcott
Multi-National Large-Cap-Fund (the "Fund"). A majority of the Trustees,
including a majority of the Trustees who are not interested persons of the Trust
(as defined in the Act), having determined that the Plan is in the best
interests of each class of the Fund individually and of the Trust as a whole,
have approved the Plan.
The provisions of the Plan are:
1. General Description Of Classes. Each class of shares of the Fund shall
represent interests in the same portfolio of investments of the Fund
and shall be identical in all respects, except that each class shall
differ with respect to: (i) Rule 12b-1 Plans adopted with respect to
the class; (ii) distribution and related services and expenses as
provided for in the Plans; (iii) such differences relating to purchase
minimums, eligible investors and exchange privileges as may be set
forth in the prospectus and statement of additional information of the
Fund, as the same may be amended or supplemented from time to time;
and (iv) the designation of each class of shares. There currently are
three classes designated: Class A, Class B, and Institutional.
a. Class A Shares are offered and sold at net asset value plus a maximum
sales load of 5.00%. Purchases of $1 million or more are sold at net
asset value with no sales load, but are subject to a CDSC of 1.00% if
redeemed within one year of the date of purchase. Class A Shares are
subject to a maximum 0.25% annual distribution fee.
b. Class B Shares are offered at net asset value, without initial sales
charge, subject to a maximum 1.00% annual distribution fee (of which
.75% is an asset based sales charge and 0.25% is a service fee) and a
maximum CDSC, based on the lower of the shares' cost and current net
asset value, of 5.00%.
c. Institutional Shares are available for purchase by registered
investment advisers on behalf of their clients. Institutional
shareholders pay no sales load or 12b-1 fees.
2. Expense Allocations To Each Class.
a. In addition to the service and distribution fees described above,
certain expenses may be attributable to a particular class of shares
of the Fund ("Class Expenses"). Class Expenses are charged directly to
net assets of the class to which the expense is attributed and are
borne on a pro rata basis by the outstanding shares of that class.
Class Expenses may include;
(i) exhpenses incurred in connection with a meeting of shareholders;
(ii) litigation expenses;
(iii) printing and postage expenses of shareholders reports, prospectuses
and proxies to current shareholders of a specific class;
(iv) expenses of administrative personnel and services required to support
the shareholders of a specific class;
(v) transfer agent fees and shareholder servicing expenses; and
(vi) such other expenses incurred by or attributable to a specific class.
b. All other expenses of the Fund are allocated to each class on the
basis of the net asset value of that class in relation to the net
asset value of the Fund. Notwithstanding the foregoing, the
distributor or adviser of the Fund may waive or reimburse the expenses
of a specific class or classes to the extent permitted under the Rule.
3. Class Designation. Subject to the approval by the Trustees of the
Trust, the Fund may alter the nomenclature for the designations of one
or more of its classes of shares.
4. Additional Information. This plan is qualified by and subject to the
terms of the then current Prospectus for the applicable class of
shares; provided, however, that none of the terms set forth in any
such Prospectus shall be inconsistent with the terms of this Plan. The
Prospectus for each class contains additional information about the
class and the Fund's multiple class structure.
5. Effective Date. This Plan is effective on __________, 1999, provided
that this Plan shall not become effective with respect to the Fund or
class unless first approved by a majority of the Trustees, including a
majority of the Trustees who are not interested persons of the Trust
(as defined in the Act). This Plan may be terminated or amended at any
time with respect to the Fund or class thereof by a majority of the
Trustees, including a majority of the Trustees who are not interested
persons of the Trust (as defined in the Act).
THE AMERIPRIME FUNDS
MULTIPLE CLASS PLAN PURSUANT TO RULE 18F-3
FOR THE WESTCOTT FIXED INCOME FUND
This Multiple Class Plan (the "Plan") is adopted in accordance with
Rule 18f-3 (the "Rule") under the Investment Company Act of 1940, as amended
(the "Act") by AmeriPrime Funds (the "Trust") on behalf of the Westcott Fixed
Income Fund (the "Fund"). A majority of the Trustees, including a majority of
the Trustees who are not interested persons of the Trust (as defined in the
Act), having determined that the Plan is in the best interests of each class of
the Fund individually and of the Trust as a whole, have approved the Plan.
The provisions of the Plan are:
1. General Description Of Classes. Each class of shares of the Fund shall
represent interests in the same portfolio of investments of the Fund
and shall be identical in all respects, except that each class shall
differ with respect to: (i) Rule 12b-1 Plans adopted with respect to
the class; (ii) distribution and related services and expenses as
provided for in the Plans; (iii) such differences relating to purchase
minimums, eligible investors and exchange privileges as may be set
forth in the prospectus and statement of additional information of the
Fund, as the same may be amended or supplemented from time to time;
and (iv) the designation of each class of shares. There currently are
three classes designated: Class A, Class B, and Institutional.
a. Class A Shares are offered and sold at net asset value plus a maximum
sales load of 3.00%. Purchases of $1 million or more are sold at net
asset value with no sales load, but are subject to a CDSC of 1.00% if
redeemed within one year of the date of purchase. Class A Shares are
subject to a maximum 0.25% annual distribution fee.
b. Class B Shares are offered at net asset value, without initial sales
charge, subject to a maximum 1.00% annual distribution fee (of which
.75% is an asset based sales charge and 0.25% is a service fee) and a
maximum CDSC, based on the lower of the shares' cost and current net
asset value, of 3.00%.
c. Institutional Shares are available for purchase by registered
investment advisers on behalf of their clients. Institutional
shareholders pay no sales load or 12b-1 fees.
2. Expense Allocations To Each Class.
a. In addition to the service and distribution fees described above,
certain expenses may be attributable to a particular class of shares
of the Fund ("Class Expenses"). Class Expenses are charged directly to
net assets of the class to which the expense is attributed and are
borne on a pro rata basis by the outstanding shares of that class.
Class Expenses may include;
(i) expenses incurred in connection with a meeting of shareholders;
(ii) litigation expenses;
(iii) printing and postage expenses of shareholders reports, prospectuses
and proxies to current shareholders of a specific class;
(iv) expenses of administrative personnel and services required to support
the shareholders of a specific class;
(v) transfer agent fees and shareholder servicing expenses; and
(vi) such other expenses incurred by or attributable to a specific class.
b. All other expenses of the Fund are allocated to each class on the
basis of the net asset value of that class in relation to the net
asset value of the Fund. Notwithstanding the foregoing, the
distributor or adviser of the Fund may waive or reimburse the expenses
of a specific class or classes to the extent permitted under the Rule.
3. Class Designation. Subject to the approval by the Trustees of the
Trust, the Fund may alter the nomenclature for the designations of one
or more of its classes of shares.
4. Additional Information. This plan is qualified by and subject to the
terms of the then current Prospectus for the applicable class of
shares; provided, however, that none of the terms set forth in any
such Prospectus shall be inconsistent with the terms of this Plan. The
Prospectus for each class contains additional information about the
class and the Fund's multiple class structure.
5. Effective Date. This Plan is effective on __________, 1999, provided
that this Plan shall not become effective with respect to the Fund or
class unless first approved by a majority of the Trustees, including a
majority of the Trustees who are not interested persons of the Trust
(as defined in the Act). This Plan may be terminated or amended at any
time with respect to the Fund or class thereof by a majority of the
Trustees, including a majority of the Trustees who are not interested
persons of the Trust (as defined in the Act).
